OTTAWA—In its presentation to the House of Commons Standing Committee on Finance today the Canadian Centre for Policy Alternatives announced that Canadians can continue to expect large federal surpluses in the coming years.
CCPA Senior Economist Ellen Russell is projecting budget surpluses of $11.4 billion in 2005/06, $12.5 billion in 2006/07, and $15.4 billion in 2007/08.
Last year’s $1.6 billion surplus does not reflect any deterioration in the government’s underlying financial position. Instead, it is the result of last-minute “surprise” expenditures. Atomic Energy Canada Ltd’s $2.3 billion environmental liabilities were expensed in one lump sum, and $2.8 billion for Offshore Revenues Accords were expensed in fiscal year 2004/05 rather than over several years (as was indicated in Budget 2005). If it had not prepaid these expenses, the 2004/05 surplus would have been over $6.5 billion.
“The government must not deflect criticism of its forecasting record by arbitrarily rearranging expenses to engineer a low surplus,” Russell says. “On the contrary—such practices intensify our concerns about the accuracy and transparency of fiscal forecasts.”
Canadians should be increasingly concerned about the government’s lack of fiscal transparency in light of the proposed budget surplus allocation act. “This trend toward the contingent allocation of surpluses will inevitably intensify political pressures on government bookkeeping,” she says.
“At a minimum, the Finance Department should be obliged to immediately make public any departure from its previous public statements on the timing of large revenues and expenditures. Establishing an independent body to provide objective and unbiased forecasts of the nation’s finances—and of budgetary proposals—would be the best way of increasing transparency and accountability in the budget process,” Russell concludes.
The CCPA’s report to the House of Commons Standing Committee on Finance is available on the CCPA web page at http://www.policyalternatives.ca
For more information contact Kerri-Anne Finn, CCPA Communications Officer, at 613-563-1341 x306.