afransen
Senior Member
All I can say is *sigh*.
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Tories blamed for coming deficits
GST cut, spending driving Canada into red, Budget officer Kevin Page warns
David Akin
Canwest News Service
Thursday, November 20, 2008
Page said Conservative policy decisions, not global financial conditions, are to blame for the current fiscal situation.
CREDIT: Chris Wattie/Reuters
Page said Conservative policy decisions, not global financial conditions, are to blame for the current fiscal situation.
OTTAWA - Parliamentary budget officer Kevin Page told MPs Thursday that Canada's deficit next year could be as high as $13 billion and that Conservative government decisions to cut the GST and raise government spending are to blame, not global economic events.
"The weak fiscal performance to date is largely attributable to previous policy decisions as opposed to weakened economic conditions," Page wrote in his first report to parliamentarians on the government's economic and fiscal position.
Page concluded Ottawa could run a deficit as high as $13.8 billion next year, in 2009-10. Deficits could remain higher than $11 billion each year through to 2013, adding nearly $50-billion to Canada's debt over the next five years.
Page provided a range of deficit scenarios for MPs. His most optimistic scenario shows Ottawa with a surplus of $1.3 billion next year and a surplus that would grow to $11.8 billion by 2013. What he described as his "average" scenario has deficits of $3.9 billion and $1.4 billion for next year and the year after that before Ottawa returns to the black.
But in a briefing with reporters, Page said he believes the most likely outcome "would tend towards the lower scenario," in which the deficit could be greater than $13 billion next year.
Page's report gave Prime Minister Stephen Harper's political opponents fresh ammunition as they stepped up attacks on the Conservative's ability to manage the federal treasury.
"Mr. Page came out with a report this morning which leaves the prime minister absolutely nowhere to hide in terms of direct and personal responsibility for Canada's impending budget deficit - the first in more than a decade," Liberal MP John McCallum said in the House of Commons within minutes of the release of Page's report.
The Parliamentary Budget Office was created by the Conservatives as part of their Federal Accountability Act. Its mission is to provide independent analysis to senators and MPs on the state of the nation's finances. Page, though, can be fired by cabinet, without cause, raising questions about his office's independence.
"In black and white, the prime minister's own appointee says that our impending deficit - and he says we will be in deficit for at least the next two years- is due to actions taken by the government and not to the deteriorating global or Canadian economy; actions like reckless spending increases by this finance minister to the point where he is the biggest spender in Canadian history, the erosion of the tax base and, worst of all, the spending of Canada's contingency reserve, which is our safeguard against going back into deficit," McCallum said.
But Harper said his government's tax and spending policies have helped the Canadian economy weather the economic crisis better than its peers.
"The government undertook last year, as the crisis began, to act earlier than most other countries, engaging in long term fiscal stimulus both on the tax side and in infrastructure investments. We make no apologies for them. Those actions deliberately reduced the size of the surplus," Harper said in the House. "At a time of an economic downturn the government puts activity into the economy, it does not hoard it in the government itself. That is what this government did. It did it earlier. Other countries are doing it later. They are already in deficit. They are increasing their deficits."
Finance Minister Jim Flaherty will present his annual fall economic and fiscal statement in the House of Commons on Nov. 27. That update will provide the latest information on how the government is doing this year and should provide some better direction as to where the government thinks it will end up next year. Flaherty, though, has warned that his update will not contain any new tax or spending initiatives.
"We will be setting out our own economic forecasts, as well as those of private sector forecasters," Flaherty said.
In the Commons Thursday, Harper said his government will take "additional fiscal stimulus" - in other words, increase government spending - to help boost Canada's economic growth. The government has not provided any indication how much it will spend to do that.
Page's presentation to MPs was based on assumptions in which there were no new spending announcements or anything other than previously announced tax cuts. If the government does increase spending next year, then Page's deficit projection could be even worse.
Page said tax revenues are down $353 million this year compared to last year.
"(That is) due in large part to recent policy measures, such as the one-percentage point reduction in the Goods and Services Tax and reductions in corporate income taxes."
Corporate income taxes are scheduled to fall further next year.
Last year, the Conservatives said they would cut the corporate tax rate to 19 per cent from 19.5 per cent. The Conservatives say they remain committed to this plan and the Opposition Liberals support that initiative.
The NDP, though, will vote against that plan, saying the government cannot afford a further tax cut.
The Liberals have criticized the GST cuts and increased government spending over the last three years.
"This is a made-in-Canada deficit," said McCallum, the Liberal's chief spokesman on economic issues.
-------------------------------------------------------------
Tories blamed for coming deficits
GST cut, spending driving Canada into red, Budget officer Kevin Page warns
David Akin
Canwest News Service
Thursday, November 20, 2008
Page said Conservative policy decisions, not global financial conditions, are to blame for the current fiscal situation.
CREDIT: Chris Wattie/Reuters
Page said Conservative policy decisions, not global financial conditions, are to blame for the current fiscal situation.
OTTAWA - Parliamentary budget officer Kevin Page told MPs Thursday that Canada's deficit next year could be as high as $13 billion and that Conservative government decisions to cut the GST and raise government spending are to blame, not global economic events.
"The weak fiscal performance to date is largely attributable to previous policy decisions as opposed to weakened economic conditions," Page wrote in his first report to parliamentarians on the government's economic and fiscal position.
Page concluded Ottawa could run a deficit as high as $13.8 billion next year, in 2009-10. Deficits could remain higher than $11 billion each year through to 2013, adding nearly $50-billion to Canada's debt over the next five years.
Page provided a range of deficit scenarios for MPs. His most optimistic scenario shows Ottawa with a surplus of $1.3 billion next year and a surplus that would grow to $11.8 billion by 2013. What he described as his "average" scenario has deficits of $3.9 billion and $1.4 billion for next year and the year after that before Ottawa returns to the black.
But in a briefing with reporters, Page said he believes the most likely outcome "would tend towards the lower scenario," in which the deficit could be greater than $13 billion next year.
Page's report gave Prime Minister Stephen Harper's political opponents fresh ammunition as they stepped up attacks on the Conservative's ability to manage the federal treasury.
"Mr. Page came out with a report this morning which leaves the prime minister absolutely nowhere to hide in terms of direct and personal responsibility for Canada's impending budget deficit - the first in more than a decade," Liberal MP John McCallum said in the House of Commons within minutes of the release of Page's report.
The Parliamentary Budget Office was created by the Conservatives as part of their Federal Accountability Act. Its mission is to provide independent analysis to senators and MPs on the state of the nation's finances. Page, though, can be fired by cabinet, without cause, raising questions about his office's independence.
"In black and white, the prime minister's own appointee says that our impending deficit - and he says we will be in deficit for at least the next two years- is due to actions taken by the government and not to the deteriorating global or Canadian economy; actions like reckless spending increases by this finance minister to the point where he is the biggest spender in Canadian history, the erosion of the tax base and, worst of all, the spending of Canada's contingency reserve, which is our safeguard against going back into deficit," McCallum said.
But Harper said his government's tax and spending policies have helped the Canadian economy weather the economic crisis better than its peers.
"The government undertook last year, as the crisis began, to act earlier than most other countries, engaging in long term fiscal stimulus both on the tax side and in infrastructure investments. We make no apologies for them. Those actions deliberately reduced the size of the surplus," Harper said in the House. "At a time of an economic downturn the government puts activity into the economy, it does not hoard it in the government itself. That is what this government did. It did it earlier. Other countries are doing it later. They are already in deficit. They are increasing their deficits."
Finance Minister Jim Flaherty will present his annual fall economic and fiscal statement in the House of Commons on Nov. 27. That update will provide the latest information on how the government is doing this year and should provide some better direction as to where the government thinks it will end up next year. Flaherty, though, has warned that his update will not contain any new tax or spending initiatives.
"We will be setting out our own economic forecasts, as well as those of private sector forecasters," Flaherty said.
In the Commons Thursday, Harper said his government will take "additional fiscal stimulus" - in other words, increase government spending - to help boost Canada's economic growth. The government has not provided any indication how much it will spend to do that.
Page's presentation to MPs was based on assumptions in which there were no new spending announcements or anything other than previously announced tax cuts. If the government does increase spending next year, then Page's deficit projection could be even worse.
Page said tax revenues are down $353 million this year compared to last year.
"(That is) due in large part to recent policy measures, such as the one-percentage point reduction in the Goods and Services Tax and reductions in corporate income taxes."
Corporate income taxes are scheduled to fall further next year.
Last year, the Conservatives said they would cut the corporate tax rate to 19 per cent from 19.5 per cent. The Conservatives say they remain committed to this plan and the Opposition Liberals support that initiative.
The NDP, though, will vote against that plan, saying the government cannot afford a further tax cut.
The Liberals have criticized the GST cuts and increased government spending over the last three years.
"This is a made-in-Canada deficit," said McCallum, the Liberal's chief spokesman on economic issues.
