Operating deficits piled up from the Pierre Trudeau years through the 1980s and early 1990s

Operating deficits piled up from the Pierre Trudeau years through the 1980s and early 1990s

Do balanced budgets really matter?

Stephen Harper may have engineered the sudden surplus confirmed last week, and Justin Trudeau wants to return to deficits

The federal election campaign has produced a jumble of conflicting claims about whether or not Canada has a balanced budget or a deficit, how it was determined, and whether it even matters.

The definitive word on this came out last week, with the release of the Government of Canada Annual Financial Report, signed off by Auditor General Michael Ferguson.

“The government posted a budgetary surplus of $1.9 billion for the fiscal year ended March 31, 2015, compared to a budgetary deficit of $5.2 billion in 2013-14,” the report says.

“Revenues increased by $10.7 billion, or 3.9 per cent, from 2013-14, reflecting increases across all major revenue streams. Program expenses increased by $5.2 billion, reflecting increases in major transfers to persons and other levels of government, offset in part by a decrease in direct program expenses.”

The Conservative government’s pre-election budget calculated that last year was in deficit, and this year would be the first in the black since 2008. Ottawa pundits say this “surprise surplus” was engineered with intentionally pessimistic budget estimates, so Prime Minister Stephen Harper would get a boost right about now.

Liberal leader Justin Trudeau claimed last year’s surplus was partly generated by cuts to Veterans’ Affairs and Aboriginal Affairs. Wrong and wrong. Veterans’ Affairs spending was up 13 per cent, and Aboriginal Affairs spending rose nearly 30 per cent.

(See page 16 of this report for details.)

Trudeau has also insisted Canada is in recession now, which helps his suddenly adopted position that a Liberal government would run deficits for the next three years to build infrastructure.

Harper ran the biggest deficits in Canadian history after the 2009 crash, bailing out auto makers and building lots of “shovel ready” infrastructure, as did the U.S. and other countries. The question raised by Trudeau’s plan is whether it’s a good idea to keep doing that without a financial crisis.

France, for example, has run operating deficits every year since the early 1970s, although the current Socialist government vows to balance the books by 2017. France’s operating debt is now equal to 91 per cent of its Gross Domestic Product.

Canada’s net debt-to-GDP ratio is currently around 30 per cent, down from frightening levels in the 1990s before the Chrétien government finally balanced the budget.

(Fun fact: then-finance minister Paul Martin not only cut transfers to provinces, unlike the current government, he inflicted the largest-ever cuts to the CBC. Harper’s CBC cuts were part of government-wide reductions, again due to that 2009 crisis.)

NDP leader Thomas Mulcair has promised to balance the budget every year of his mandate, should he form Canada’s first-ever socialist government. He will spend the rest of the campaign trying to reconcile this promise with the grandiose spending plans he has piled up.

Meanwhile in B.C., Finance Minister Mike de Jong may have benefited from Harper’s lowball budget. In his first quarter update last week, de Jong reported that his February budget forecast is on track, with a $277 million surplus.

This is despite a $300 million bill for forest firefighting, thanks to personal and corporate income tax revenue expected to be $374 million higher than budgeted. B.C. bases its tax revenue figures on federal estimates, and the ones they got early this year were clearly low.

Understated or not, this is a nice problem to have. De Jong says that at the current pace, B.C. will pay off its accumulated operating debt by 2020.

The last time the province was free of operating debt was 1982. The big debt peak came during the NDP 1990s, with another spike from 2009 to 2013 under the B.C. Liberals.

Tom Fletcher is legislature reporter and columnist for Black Press. Twitter: @tomfletcherbc

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Kimberly Proctor, 18, was murdered in 2010. Her family has spent many of the years since pushing for a law in her honour, that they say would help to prevent similar tragedies. (Courtesy of Jo-Anne Landolt)
Proposed law honouring murdered Langford teen at a standstill, lacks government support

Ministry of Mental Health and Addictions has concerns with involuntary detainment portion of act

The speculation and vacancy tax raised about $1.21 million in Sidney and North Saanich combined. (Black Press Media file photo).
North Saanich and Sidney property owners paid $1.21 million in speculation and vacancy tax

Speculation and vacancy tax raised 6.5 million in Greater Victoria

Saanich parks staff will be applying a herbicide called Garlon XRT in Sayward Hill Park between Jan. 18 to 29 to control the invasive species English holly and hawthorn. (Devon Bidal/News Staff)
Herbicide used to target ‘priority’ invasive species in Saanich park

Treatment applied to English holly, hawthorn stumps, in Sayward Hill Park

Located at 9750 West Saanich Rd., this North Saanich mansion is on the market for $10.25 million. (Realtor.ca photo)
Located at 9750 West Saanich Rd., this North Saanich mansion is on the market for $8.65 million. (Realtor.ca photo)
The five most expensive homes for sale in Greater Victoria

A roundup of luxury estates currently on the market

BC Coroners Service is currently investigating a death at Canoe Cove Marina and Boatyard in North Saanich. (Black Press Media File)
Drowning death in North Saanich likely first in B.C. for 2021

Investigation into suspected drowning Monday night continues

Thursday, Jan. 28, 2021 is International Lego Day. (Jenna Hauck/ Chilliwack Progress)
Unofficial holidays: Here’s what people are celebrating for the week of Jan. 24 to 30

Lego Day, Talk Like a Grizzled Prospector Day and Puzzle Day are all coming up this week

Terry Keogh, an RDN Transit driver, used his paramedic skills the morning of Jan. 22 after coming across an unconscious woman along his route in downtown Nanaimo. (RDN Transit photo)
Nanaimo transit driver stops his bus and helps get overdosing woman breathing again

Former EMT from Ireland performed CPR on a woman in downtown Nanaimo on Friday

Chief Public Health Officer Theresa Tam speaks during a daily briefing in Ottawa. (THE CANADIAN PRESS/Adrian Wyld)
31 cases of COVID-19 variants detected in Canada: Health officials

Dr. Theresa Tam made announces 13 more variant COVID-19 cases in Canada

An Atlantic salmon is seen during a Department of Fisheries and Oceans fish health audit at the Okisollo fish farm near Campbell River, B.C. in 2018. The First Nations Leadership Council says an attempt by industry to overturn the phasing out of salmon farms in the Discovery Islands in contrary to their inherent Title and Rights. (THE CANADIAN PRESS /Jonathan Hayward photo)
First Nations Leadership Council denounces attempt to overturn salmon farm ban

B.C.’s producers filed for a judicial review of the Discovery Islands decision Jan. 18

Daily COVID-19 cases reported to each B.C. health region, to Jan. 20, 2021. Island Health in blue, Northern Health green, Interior Health orange, Vancouver Coastal in red and Fraser Health in purple. (B.C. Centre for Disease Control)
B.C.’s COVID-19 infection rate stays stable with 508 cases Friday

Vaccine delivered to more than 110,000 high-risk people

More than 100 B.C. fishermen, fleet leaders, First Nations leaders and other salmon stakeholders are holding a virtual conference Jan. 21-22 to discuss a broad-range of issues threatening the commercial salmon fishery. (Black Press file photo)
B.C. commercial salmon fishermen discuss cures for an industry on the brink

Two-day virtual conference will produce key reccomendations for DFO

Black Press file photo
Investigation at remote burned-out Vancouver Island cabin reveals human remains

Identity of victim not released, believed to be the owner of an SUV vehicle found parked nearby

Angela Waldick is the new team photographer for the Nanaimo NightOwls. (Nanaimo NightOwls photo)
Half-blind photographer will help new Island baseball team look picture-perfect

Nanaimo NightOwls say legally blind team photographer is making history

School District 57 headquarters in Prince George. (Mark Nielsen, Local Journalism Initiative Reporter)
Prince George school district settles with sexual abuse victim

Terms were part of an out-of-court settlement reached with Michael Bruneau, nearly four years after he filed a lawsuit

Most Read