Taking another look at Martin's fiscal legacy

Cuts to government programs painful and unnecessary--report
November 28, 2003

OTTAWA--Paul Martin's sterling reputation as the deficit hero may not be entirely justified, according to a study released today by the Alternative Federal Budget (AFB) project, coordinated by the Canadian Centre for Policy Alternatives.

Paul Martin, the Deficit, and the Debt: Taking Another Look, by economist Jim Stanford, is the first of ten papers examining the Paul Martin record since he brought down his first budget. The entire series will be released by the AFB in the run-up to next year's speech from the throne and the federal budget.

"Canada was not alone in balancing its budget," Stanford explained. "Eighteen OECD countries balanced their budgets during the late 1990s almost as quickly as Canada, but with a fraction of the damage to public programs and infrastructure."

Federal program spending declined far faster and far deeper during the Martin era than in any other major industrial economy - even those starting out with larger deficits and debts.

Public concern with the state of essential services (like health care, education, and water treatment) is the real legacy of the needlessly one-sided focus of Mr. Martin's fiscal strategy. "As Canadians spend more time this winter waiting for hospital treatment and boiling their tap water, they might well begin to question whether our experience with deficit-elimination was really as successful as it is typically described," said Stanford.

The study singles out federal budget-making practices under Mr. Martin for particular criticism. Since 1994, federal finances have missed their official budget targets by an average of $9 billion per year; these consistent errors reflect deliberate efforts by Finance Canada to understate the true strength of federal finances.

"There is nothing 'prudent' about budgets which are consistently, and deliberately, billions of dollars off of their underlying true values," Stanford concluded. "In the private sector, this type of budgeting would not be tolerated."

The Alternative Federal Budget group is holding a major consultation with civil society organizations today at the National Press Club in Ottawa. Participants will address their budget priorities and how to move the Martin government in this direction.

The AFB represents a coalition of social, environmental, and labour organizations and is coordinated by the CCPA.