New day dawning as far as budget is concerned: Secrecy and
surprises both appear to be something of the past on the big day
The Vancouver Sun
Mon 19 Mar 2007
Page: C8 / Front

Section: BusinessBC
Byline: Don Cayo
Column: Don Cayo
Source:
Vancouver Sun

Time was when budget day really was the big deal that we
in the media still make it out to be.

Budget secrecy was taken seriously, and virtually all the numbers, all the
tax measures, and all the spending plans could come as a big surprise.

Fifty years ago, federal Finance Minister Walter Harris was ready to resign
when he thought his budget had been leaked. In 1983, Marc Lalonde added $2
million of last-minute spending so he could pretend there was no leak after he
was filmed flipping through the pages of his budget book. And in 1989,
journalist Doug Small, at the time Global's Ottawa bureau chief, was hauled into
court for reporting on a budget pamphlet discarded by a printing company.

Today, no self-respecting reporter would stoop to pawing through garbage to
pursue a budget leak. Why bother? It's a safe bet that most of the substance of
what Finance Minister Jim Flaherty will have to say today has been, if not
leaked, then clearly telegraphed well in advance.

For example, Prime Minister Stephen Harper has been spending like a drunken
sailor -- or a politician expecting an election sometime soon. He'll address
"the fiscal imbalance" -- i.e. give billions to the provinces. He'll contribute
a couple of hundred million to the greening of Gordon Campbell. And so on ...

Flaherty himself has promised some fairly small tax measures, like
income-splitting for seniors, and a tax break for people who salt away savings
to support disabled friends or relatives. And it's pretty clear that he has no
room for -- or is no stomach for? -- any dramatic big cuts.

His forecast for Canada's economic performance next year will be a low-ball
version of what private forecasters have been telling us, and him, for months.
And actual economic performance will, of course, be subject to the many
unknowables that will goose it up or wrestle it down.

As for revenue and expenditure, if history is a guide, these estimates will
be shots in the dark -- guestimates about as credible as what Environment Canada
has to say about next weekend's weather.

C.D. Howe Institute has
published a new study that shows how bad a job governments do of estimating how
much they'll spend and where they'll get it.

The federal government over-estimated its expenditures by roughly three per
cent in three of the past 10 years, but it under-estimated the rest of the time
-- in 2004-05 by a whopping 9.19 per cent. The result is that, in total, it
spent about four per cent -- or almost $21 billion -- more than it planned to
over the decade. This was middling performance, worse than six but better than
seven provinces or territories.

B.C. did a little better, placing fourth with overruns that averaged three
per cent and added up to $5 billion. The worst year, in terms of forecast
accuracy, was 2001-02, the first year of Liberal rule, when spending was nearly
five per cent over budget.

Federal ministers did less well -- ninth-worst of 14 -- on the revenue side.
They took in an average of 3.8 per cent, or $60 billion, more than expected,
exceeding their estimates every year of the decade but one.

B.C. ranked fourth in the accuracy of revenue estimates, but it looks like
better luck than management. The average error over the decade was just 2.7 per
cent, but the year-by-year estimates were wildly too high in some years and
wildly too low in others. At least four finance ministers -- Joy McPhail, Paul
Ramsey, Gary Collins and Colin Hansen -- had a hand in budgets that were seven
to 11 per cent off the mark.

I don't suggest that government budgets, or government policy, don't matter
any more. They do.

But budget day itself has fewer and fewer secrets to reveal. And some of what
it tells you isn't very credible.

[email-masked]

Edition: Final
Story Type: Business; Column

Length: 653 words