Liberals’ $9.5B mystery fund
Trying to keep track of every dollar Ottawa spends is a pseudoscience like the one practised by crypto-zoologists looking for Bigfoot — only the gullible would ever believe in a happy outcome.
Take last week’s fiscal update. To much fanfare, it announced $16.4 billion in new spending measures, principally the $14 billion on accelerated investment incentives to address competitiveness.
Yet on page 107, there is one line that quietly ushers in the expenditure of a further $9.5 billion on “non-announced measures.”
That money is now built into the fiscal framework, adding to the deficits that disappear over the government’s planning horizon.
What the billions are being spent on is a mystery. A footnote is the only hint, suggesting the provision is for “anticipated Cabinet decisions not yet made and funding decisions related to national security, commercial sensitivity, trade agreements and litigation issues.”
Pierre-olivier Herbert, press secretary to Finance Minister Bill Morneau, proved he has a sense of humour when he suggested the government has “set a new bar for transparency” in its financial statements.
It is true that the Trudeau government provides information on what happens between fall statements and budgets in a way its Conservative predecessor did not. But the former parliamentary budget officer, Kevin Page, worked at the Department of Finance in the 1980s and the Privy Council Office in the 1990s, and does not recall any previous government adjusting the fiscal framework without telling people what it is doing with the money.
Herbert said the details will be released in due course — it is understood that the supply management package that will compensate dairy farmers for loss of market share due to the United States-mexico-canada free trade deal is included in the aggregate amount.
But the opposition parties are not happy about the way the government is announcing — or non-announcing — such a large, fiscally material spending plan.
Daniel Blaikie, the NDP’S Treasury Board critic, said it is understandable for any government anticipating a large expense, such as the settlement of a collective agreement, to budget for it while not disclosing the amount during negotiations.
But these measures have a five-year time horizon and provide no details for MPS to judge whether the spending is appropriate or not, he said.
He noted that the $516 million of “non-announced measures” allocated in the 2018-19 budget is now forecast to be $1.75 billion.
“I do think this government is pioneering new ways to keep their spending out of the spotlight. It’s not consistent with their commitment to transparency,” he said.
Gerard Deltell, the Conservative Treasury Board critic, called the non-announced measures “a slush fund.”
“We’re talking about billions of dollars. I’m very concerned. Governments do need a pillow to address emergency issues. But we’re now reading about $10 billion. It’s very tough to see exactly what they will do with that,” he said.
Page, now president of the Institute of Fiscal Studies and Democracy at the University of Ottawa, said there might be merit in the government letting Parliament know in advance it is planning to adjust the fiscal planning framework for measures to be announced later.
In the run-up to a general election, it will allow the government to make spending announcements without having to revise deficit projections upward.
But he pointed out it does not create confidence in the budgeting process.
No kidding. The basis of the Westminster system is that ministers seek the prior sanction of Parliament, by outlining to legislators what they intend to spend money on.
The government will still have to seek approval for spending but the Parliamentary Budget Office is looking into opposition concerns that new expenditures will be mulched into departmental spending, making it harder to reconcile down the road.
It certainly does not make following the money any easier.
That, at the end of the day, may be the purpose.
The Liberals have a fiscal conundrum. Any credibility they have on managing the public finances rests on the federal debt-to-gdp number ticking downward over the next five years. According to the government’s figures, it does just that — going from 30.9 per cent this year to 28.5 per cent by 2023-24.
Yet that rosy projection relies on the Liberals constraining direct program expenses (and thus deficits) over the next five years.
The fall statement suggests total direct program expenses will rise from $149 billion in 2018-19 to $161.1 billion in 2023-24 — a 7.5 per cent increase over five years.
But this is a government that has increased spending by 22 per cent during its three years in office.
The fiscal update says program expenses as a percentage of GDP will fall from 6.7 per cent to 6 per cent. That’s an austerity drive that would make Stephen Harper proud.
Does anyone in Canada believe Justin Trudeau’s Liberals are going to cut anything, beyond the commitment to their “fiscal anchor?”
Any takers should stretch their credulity still further and join the crypto-zoologists in their hunt for hidden animals.