The incredible shrinking deficit

What will it take to get back to surplus?

Stephen Gordon and Kevin Page assess yesterday’s economic update. Somewhat relatedly, in a blog post last week, Scott Clark and Peter DeVries questioned the government’s projections.

When the federal budget is to return to balance is an interesting question, but so is how the federal budget will return to balance. As of July, the Parliamentary Budget Office still did not have the information it needed to complete an analysis of the spending reductions contained in the 2012 budget. In June, the PBO summarized the information it had obtained as follows.

Fourteen organizations submitted information by the May 10, 2013 deadline. Forty-six submitted information after the deadline, but before the preparation of this report. Thus, this analysis includes 60 of 82 federal organizations included in Budget 2012, Annex I.8

As presented in Figure 3-1, all provided a brief description of each initiative and corresponding staffing reductions. Some provided details regarding cash inflows and outflows. Few provided information regarding service level impacts, with several organizations indicating that these data are deemed to fall outside of the PBO’s legislative mandate

Only a partial, high-level analysis can be performed with respect to short-term implementation risk because details regarding cash outflows have not been fully provided. Similarly, no empirical analysis on long-term sustainability can be performed, given that very few data were provided regarding changes to service levels.

The matter of the PBO and what information it is entitled to have remains a matter for Parliament, and perhaps ultimately the courts, to settle. The ability of Parliament to fully scrutinize government spending is, on its own, an interesting question for the institution.

In addition to the savings announced in the 2012 budget, there were spending reductions announced in the 2011 budget and now the Harper government wants to freeze departmental operating budgets for two years. When all of that is done, will the federal government be providing the sorts of services it needs to provide? Will it be providing those services as well as it needs to provide them? Last year, the government cut 15,000 public service jobs. Last month, the PBO reported that since March 2010, over 20,000 positions had been eliminated. What will that mean for our collective governance?

Every so often some bit of news is made about something that has been cut or reduced. There is currently some consternation over the closing of nine Veterans Affairs offices. The environment commissioner recently raised concerns about cuts at Parks Canada.

There are perhaps two discussions to be had, or at least two sides of the same discussion. What to do with a surplus? And what was the impact of getting to that surplus? (And hanging over that is a discussion about how much Parliament should be able to know about how the government is spending public funds.)

Looking for more?

Get the Best of Maclean's sent straight to your inbox. Sign up for news, commentary and analysis.