OTTAWA--Every year since the elimination of the federal budget deficit in 1997, the government's record of forecasting its own surplus has been abysmal--and this year is no different, according to a study released today by the Canadian Centre for Policy Alternatives.
Crying Wolf Again? A Pre-Budget Assessment of Federal Finances, an Alternative Federal Budget technical paper by CCPA economist Ellen Russell, foresees a budget surplus of $8.3 billion for 2003/04, dwarfing the $2.3 billion forecast by the Martin government.
While adopting, wherever possible, the same macroeconomic assumptions the federal government employs, for years now the AFB has consistently delivered a much more accurate estimate of the budget surplus than has the Finance Minister.
"The federal government has significantly overestimated spending and underestimated revenue. This, along with the government's own $2.3 billion surplus estimate, allows the AFB to arrive at its projected $8.3 billion surplus," explains Russell.
Even with $2 billion transferred to support health care--money the government can easily afford--the federal government can still direct significant funding towards other spending priorities. Furthermore, if the $8.3 billion surplus were directed towards program spending rather than debt repayment, the debt/GDP ratio would still decline.
"As has been the case in previous years the federal cupboard is far from bare and Canadians need not be discouraged by the government's cries of wolf," concludes Russell.