By DON McIVER
THERE was a time when government budgets were simple statements of account. In the early days, they were handwritten —transcribed into print by the diligent Hansard reporters only while being actually delivered. As recently as the Louis St-Laurent era, it is famously reputed that the prime minister required his finance minister to personally type his budget speech — so as to avoid any risk of compromising secrecy.
Along the way, budgets have morphed from simple statements into protracted processes. There are pre-budget consultations, community engagement sessions, multi-year projections and strategic pre-releases. That would all be laudable — it is, after all, our money being spent and we should all participate in the process — but unfortunately, the end result is more than confusing; it is downright confounding. Take the recent provincial budget, for example
In less than 12 months, Nova Scotians have been presented with four markedly different assessments of prospects for the current fiscal year. The first, prepared during the dying days of the previous administration, predicted a substantial budgetary surplus. A couple of months later, a private firm, appointed by the government, predicted a massive deficit of more than $700 million. In September, the initial budget of the new government called for fiscal balance — i.e., a zero deficit; and the latest budget forecast predicts a deficit of $222 million.
Of course, the past year or so has seen some pretty tumultuous economic and financial developments, and fiscal accountants might reasonably expect to be cut a little slack in their figuring — even though a swing of almost $1 billion in a matter of a few weeks seems a bit beyond the pale!
But it was not unpredicted swings in the economic fundamentals that spoiled the calculations; it was the deliberate distortion of current expenditures. After roundly criticizing the previous administration for arbitrarily shifting spending from one year to the next, the government itself made a mockery of the accounts by making advance payments to the university sector. The effect was to artificially increase spending in 2009-2010 and decrease it by a similar amount this year.
The government has rightly called attention to the dangers of widening deficits and mounted an intensive campaign to engage Nova Scotians in helping to head off that trend. To make informed recommendations, the public is entitled to straightforward financial statements. Instead, people have been presented with an unfounded premise: that tax increases are essential to balancing the budget.
Much worse, the totally arbitrary shifting of expenditures allows the government to present the false impression that it is heeding its own counsel by curbing its spending profligacy. As a result, the budget projected a seemingly laudable decline of 0.3 per cent in this year’s total spending. Had they used the spending base calculated by the accounting firm they themselves commissioned at public expense last summer, spending growth this year would be more accurately projected as a whopping 6.8 per cent increase.
So who cares? Only a small handful of Nova Scotians are motivated to plow through the arcane minutiae of the provincial budget. But that is the point. We shouldn’t have to. Budgets should be clear, concise and transparent. If our bureaucracy can’t meet those specifications, then we might do better to return to the old-fashioned statement of accounts. Perhaps next year, the finance minister should be asked to type his own speech!
Don McIver is a Halifax-based economist. His commentary “A balancing act: Tips to walking Nova Scotia’s fiscal tightrope” is available on the Atlantic Institute for Market Studies website at www.aims.ca.