There was never anything essentially wise – beyond the obviously political considerations – about the Government of Canada’s white-knuckled determination to balance its budget come hell or Armageddon.
In their quietest moments even the fiscal hawks among us must admit that into all lives, some red ink must fall. Individuals, banks, commercial enterprises and, yes, even governments do, from time to time, deficit-finance their way to durable prosperity. That’s simply because the coincidence of opportunity and solvency is not always – in fact, never – perfect.
Knowing this, then, we ought not become the saps that campaigners on the hustings seem to think we are when they point to their debt-defying antics as proof of their unimpeachable sagacity.
Of course, the Harper government isn’t the first in this country to claim that it, and only it, has the best interests of the average tax payer at heart when it refuses to consider any alternative to a bottom line that reads: zero.
The problem is this ambition just doesn’t appear sensible, or even achievable, at the moment.
“Rotten Luck”, thy name is Torytown.
Oil prices are slumping more deeply than anyone expected. The economic revival in the United States is losing steam. The tragi-comedy that is the Grecian formula for European recession unfolds even as a downturn in our Greater Canuckistan’s resource-fired economy conjures the dreaded “R-word” here.
Now, the Parliamentary Budget Officer, Jean-Denis Frechette, says all of this is becoming a lethal cocktail for Conservatives.
According to a CBC report last week, “The government had projected a slim, $1.4-billion surplus for 2015 in its budget, which was presented last April.
The PBO estimates a budget outlook updated with the lower GDP numbers alone would show a $1.5-billion deficit at the end of this year and a $0.1 billion, or $100 million, deficit in 2016-17. Canada would be back at a $1.5 billion surplus in 2017-18, according to the PBO projection.
Added the public broadcaster: “But that’s not the whole picture. Weak GDP growth, the budget office says, would be partially offset by higher inflation and lower interest rates. Once those are taken into account, the projected deficit is $1 billion this year, with a small surplus of $0.6 billion, or $600 million, in 2016-17, and $2.2 billion in 2017-18.”
In fact, writing in the Globe and Mail earlier this year, Jim Stanford, an economist with Unifor, had this to say:
“From the outset, the battle to slay the deficit was all about political optics, not economics. Canada’s deficits after the 2008-09 meltdown were among the smallest in the world. Our debt burden (the more important concern) is small compared to those of other countries and other periods in history. Indeed, as a share of GDP, the debt has been shrinking since 2012. So whether Ottawa has a small surplus or deficit any year is irrelevant.
“For this government, though, it’s a political imperative. Nothing will prevent the Conservatives from forecasting balance next year.”
Nothing, so far, has. Ignoring the writing on the wall has become a singular pastime in Ottawa. And no one plays the game more stubbornly than Finance Minister Joe Oliver who continued to insist – despite the rather compelling, new evidence to the contrary – that the government will better than balance the budget.
“We have looked at our numbers and we are very comfortable that we will have a surplus this year,” he said last week.
Such insistence, once merely economically unwise, is now becoming politically perilous to the self-described standard-bearers of wise money management.
Are certain petards about to hoist certain MPs, after all?