Show me the real numbers

Democratic reform and government
February 1, 2004

Paul Martin has made democratic reform a hallmark of his leadership. According to the throne speech, the government promises to "make Parliament what it was intended to be - a place where Canadians can see and hear their views debated and their interests heard." But it is pretty clear that no democracy can function without clear and accurate information about what the government is really doing. After all, how can Canadians engage effectively with our elected representatives if we don't know the real facts and figures?

Nowhere is this absence of reliable information more shocking than in the official government estimates of the current state of federal finances. Answers to fundamental questions - like "is the government running a budget surplus right now?" and "if so, how large?" remain shrouded in mystery.

To provide Canadians with information about the state of federal finances, the government provides the public with an estimate of the current year's budget surplus. These estimates typically portray the upcoming budget surplus as quite modest - usually about $2 or 3 billion. Then when the fiscal year ends - surprise, surprise - it is revealed that the government is sitting on a sizeable budget surplus. How big a surplus do they disclose at year-end? As much as $20 billion in 2000/01, but a hefty $7 billion in the last two fiscal years as well.

In spite of the recent rhetoric of democratic renewal, the same pattern seems to be continuing this year. The government tells us in the most recent Economic and Fiscal Update that the current budget surplus is $2.3 billion. At the CCPA we estimate the real budget surplus to be $8.3 billion. This is not new either; every year since 1999, the CCPA's estimates of the federal budget surplus have been substantially more accurate than the official estimates published by the government.

The federal government's miserable track record in estimating the budget surplus should give Canadians pause. We could forgive the occasional mistake, especially given the fact that the unforeseen can occur. But when the government is wrong seven years in a row - and wrong by such a significant amount, one has to wonder if the government is being entirely straightforward in its assessment of its current financial position.

Why would the government so consistently low-ball their estimates of the budget surplus by such a wide margin? Well, for one thing, it is a very effective way of reducing Canadians' expectations. If Canadians are persuaded that the government is in dire financial straits, we are less likely to make demands on government that have a price tag attached - demands that, for example, require reinvestment in our battered social infrastructure.

If the Canadian government is knowingly presenting a distorted picture of federal finances, this is itself a violation of democratic principles. The democratic process relies on the honest disclosure of financial information. With the consistent low-balling of federal surpluses, debate on fiscal priorities is limited at the outset because Canadians are under a mistaken impression of the government's true financial situation.

To have genuine democratic reform in Canada, all Canadians must have access to the real numbers. If Mr. Martin is truly committed to democratic reform, he needs to address the ongoing deficit in accurate fiscal forecasting immediately.

Ellen Russell is a Senior Economist with the Canadian Centre for Policy Alternatives.