Parliamentary budget officer Kevin Page questions need for deep cuts

hereSome $5.2 billion in departmental spending cuts, 19,000 public service jobs slashed, a major diminution in environmental protections, the whittling away of our public broadcaster, government pensions and social services — these were just some of the measures contained in the nearly 500-page 2012 federal budget, the most austere since the mid-1990s.

The cuts were deep but necessary, we were told, if we were going to weather the aftershocks of the global recession without raising taxes.

But a new report from indefatigable parliamentary budget officer Kevin Page suggests that Canada’s economic reality may not be quite as bleak as the Conservative government would have us believe. In an analysis of the government’s latest economic update, Page argues that the finance department overstated the likely cost to the government of the weak economy by $4.7 billion per year over five years. In fact, Page concludes, the government should be running a surplus by spring 2015, a year ahead of projections and, conveniently, just in time for a pre-election good-news budget.

Though Finance Minister Jim Flaherty’s office dismissed Page’s report, the government’s projections have other economists scratching their heads, too. TD Bank chief economist Craig Alexander told The Canadian Press that he was “surprised by how much weaker the government was projecting revenues.” Indeed, Finance appears to have reduced its revenue expectations by roughly three times the level recommended by a panel of private-sector economists in the lead-up to the latest update — a decision that Page has rightly asked the government to explain.

There’s nothing new about hyperbolically cautious federal financial projections. As finance minister, Paul Martin consistently and significantly underestimated his often-huge surpluses during the late ’90s and early 2000s. A little prudence is good policy and under-promising and over-delivering is even better politics.

But in the case of this government, which is now using these projections not only to contain spending but also to justify deep cuts with deep consequences, the stakes are higher. Page wants to know how the government arrived at its numbers so the two vastly different projections can be reconciled. If the government continues to insist that given the numbers austerity is the only way, it owes Canadians a full accounting.

Original Article
Source: the star
Author: editorial