Crawl Across the Ocean

Monday, May 01, 2006

Budget Day

So tomorrow (today for you 'Easterners') is budget day - it seems like just yesterday that the Liberals were laying out their 5 year plan. At the time I was worried that announcing 5 years worth of spending every year would lead to big spending increases over time, but the change of government short-circuited those concerns.

Before the budget is revealed, a reminder of the CAtO rules of budget analysis:

1) How much per year?
2) For how many years?
3) How much is new money?
4) Is the money allocated for sure or conditionally?

Anyone breathlessly referring to $X billion dollars for such and such - when the X billion is over 5 years and half the money was previously announced - will be mocked ruthlessly, or, in keeping with the gentle spirit here, with a small quantity of ruth.


  • Just the other day you were mentioning about the fear of a left government not wanting to pay down the debt with extra surplus. Well, it appears that a Conservative government is not going to do the same with this bit I saw today:

    "On the agenda for those talks would be issues such as equalization payments, long-term funding for post-secondary education and the benefits of directing a chunk of any unplanned federal surplus to the Canada and Quebec pension plans. "

    That was taken from the Globe in their report about the Budget. I understand the need to make sure that pension plans are fully funded for the future given that Canada is getting older but isn't that why they made those major changes to the CPP in 90s for? Didn't they make sure that the CPP was funded for the next 100 years? That a big success of the Liberals in the early 90s that I don't think they got enough credit for.

    Anyways, I'm sad to see that the Conservatives don't see the wisdom in paying down the debt.

    By Blogger Bailey, at 2:09 PM  

  • "That a big success of the Liberals in the early 90s that I don't think they got enough credit for."

    The Liberals got as much credit as they deserved, since all they did was increase contribution requirements, but yes - I believe the CPP is considered to be actuarially-sound now.

    "Anyways, I'm sad to see that the Conservatives don't see the wisdom in paying down the debt."

    Note, though, that it only applies to "unplanned" surpluses. I would also like to see the debt reduced, but I could live without "unplanned" surpluses, since it usually means that the Minister of Finance just didn't want to come clean on the budget...

    By Blogger deaner, at 3:37 PM  

  • They way the Liberals fixed the CPP may have seemed like a no-brainer, but they were way ahead of the curve compared to a lot of other industrialized nations in terms of coping with an aging population.

    In countries like the US and France (most of Europe, as I understand it), nobody has emerged with the leadership and/or courage needed to address the demographic shift. They'd much rather slough the problem on to future administrations (and generations) than make the tough call and either raise taxes or cut spending.

    The main reason why the Liberals deserve credit for it is because this is the kind of problem which get worse and worse the longer you leave it. By fixing it relatviely early, they've saved Canadians a lot of pain down the road.

    Although I'm puzzled and slightly suspicious as to why these funds need to be topped up, I'm glad that the Conservatives are keeping a watchful eye on the shifting demographics. Perhaps they looked at interest rates and investment returns and decided that putting more money in the funds got more bang for the buck than paying down the debt. Canadian households make decisions like that all the time.

    Investing money in the funds might actually be a better savings plan than paying down the debt.

    By Anonymous famousringo, at 1:23 AM  

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