Budget 2005: Kafka would blush
The thing you have to remember about federal budgets is that they don’t actually mean anything. That isn’t to say they mean nothing: that would be far too specific. They aren’t devoid of meaning, they’re beside it. They exist in a world where the very concept of meaning is meaningless.
They could mean something, in theory, and once upon a time they very nearly did. These are, after all, our employees, spending our money. So it would seem a simple enough task, not to say fiduciary obligation, to tell us in as straightforward a way as possible just what they intend to do with our money in the coming year.
Instead, well, just look at what the budget has become. Spending cuts are announced that aren’t cuts, but merely increases that weren’t quite as rapid as previously planned. Unless of course the desire is to impress upon you how much spending has increased, in which case annual increases are summed across many years -- sometimes two, sometimes five, occasionally fifteen -- in much the same manner as a weather man might add up the temperature over the week and announce that it was a “cumulative” 120 below.
Time itself expands, contracts and turns in upon itself at the Finance minister’s command. Spending in the current year is accounted as if it had taken place in the last, while spending in far-off future years is brought forward into the present, by means of an array of off-budget “foundations.” I suppose there’s no particular reason why we should be attached to twelve consecutive months as the relevant period of account, but having selected that arbitrary interval we should not then make nonsense of it.
There’s more. Tax credits are netted against revenues, as if they were reductions in taxes, rather than being counted as spending, which is what they are. Hey presto: spending and revenues are both understated, to the tune of billions of dollars a year. And that’s when we are not being told of tax “cuts” that are simply forgone increases -- as in the inflation indexing that accounted for $18-billion of the famous $58-billion tax cut a few budgets back (which has since mysteriously grown to “$100-billion”), on which the Liberals are still coasting.
All of which is expressed in that unfathomable dialect of euphemism that is the real official language of Ottawa, a sing-song patois of government “commitments” to this and “initiatives” in support of that, as if it were their money. Take this gem, from the section on Kyoto, where the government is still struggling to come up with a plan to reduce Canada’s CO2 emissions, eight years after it committed itself to reducing them. The previous grab-bag of ditsy schemes having failed utterly, at huge expense, the budget as much as announces it has gone back to the drawing board.
But listen to how they say it. “The government of Canada,” it says on page 173, “will learn from past investments.” I had grown accustomed to hearing “investments” used as a euphemism for spending. But I had not before seen it used to mean “mistakes.”
Yet every once in a while a ray of sunshine breaks through, a little moment of unintended veracity in which the curtain parts and the thinking of the budget’s creators is revealed. Such a moment occurred this year on page 112. It’s a sort of flow-chart, intended to give readers the big picture, the vision underlying the government’s whole approach to the economy. There’s a box across the bottom marked “Economic Policy Framework,” supported by a series of little boxes marked “Sound macroeconomic policy,” “Open international trade and investment,” etc., which leads via a little triangle (marked “Create”) to Opportunity. And what happens then? Another triangle, hanging ominously overhead, says it all:
“Seize.”
That’s about it in a nutshell, the budget in brief. Whatever opportunity economic growth creates for new spending, the government will seize it. The economic policy framework is sound enough, I’ll give them that: reasonably low inflation, reasonably free markets, reasonably punitive taxes. From that has flowed an abundance of revenues: more than $200-billion this fiscal year, half-again as much as it took in a decade ago. And the government is spending it. All of it.
Or nearly all. Of the $42-billion in surpluses over six years projected before the budget’s measures -- but after last fall’s federal-provincial agreements on health care and equalization, which would add, respectively, another $19-billion and $14-billion to that total -- the government proposes to give back roughly $13-billion in tax reduction. That’s about one dollar in six. The rest is spending.
(A word on those surplus projections: the $83-billion in fiscal room the government has used up since last year’s budget is almost exactly the figure the Conservatives used as the basis of their election platform, on the not implausible grounds that the Liberals were lowballing the surplus. For this they were denounced from pillar to post as reckless, spendthrift and worse. Remember the “$50-billion black hole”?)
And what spending! It’s difficult to get a handle on this just by looking at one year’s figures, and not only because the annual figures have become so meaningless. The $161-billion in program spending projected for the coming fiscal year, for example, may be seen as a mere 2% increase over the year just ended. But it’s 9% more than the government said it would spend last year at this time. And since both figures, last year and this, are likely to be revised upward -- they always are -- it’s a safe bet that the final increase will be higher still.
You really have to look at it over several years. Since fiscal 2000, when the Liberals put aside their previous commitment to fiscal discipline, program spending has increased by nearly 50%. Adjusting for increases in prices and population, spending is now back to where it was in fiscal 1994, a 22% increase in real per capita terms from its recent lows.
But the budget does not tell us the government is nearly a quarter larger now that it was five years ago: not in so many words. Why not?
They could mean something, in theory, and once upon a time they very nearly did. These are, after all, our employees, spending our money. So it would seem a simple enough task, not to say fiduciary obligation, to tell us in as straightforward a way as possible just what they intend to do with our money in the coming year.
Instead, well, just look at what the budget has become. Spending cuts are announced that aren’t cuts, but merely increases that weren’t quite as rapid as previously planned. Unless of course the desire is to impress upon you how much spending has increased, in which case annual increases are summed across many years -- sometimes two, sometimes five, occasionally fifteen -- in much the same manner as a weather man might add up the temperature over the week and announce that it was a “cumulative” 120 below.
Time itself expands, contracts and turns in upon itself at the Finance minister’s command. Spending in the current year is accounted as if it had taken place in the last, while spending in far-off future years is brought forward into the present, by means of an array of off-budget “foundations.” I suppose there’s no particular reason why we should be attached to twelve consecutive months as the relevant period of account, but having selected that arbitrary interval we should not then make nonsense of it.
There’s more. Tax credits are netted against revenues, as if they were reductions in taxes, rather than being counted as spending, which is what they are. Hey presto: spending and revenues are both understated, to the tune of billions of dollars a year. And that’s when we are not being told of tax “cuts” that are simply forgone increases -- as in the inflation indexing that accounted for $18-billion of the famous $58-billion tax cut a few budgets back (which has since mysteriously grown to “$100-billion”), on which the Liberals are still coasting.
All of which is expressed in that unfathomable dialect of euphemism that is the real official language of Ottawa, a sing-song patois of government “commitments” to this and “initiatives” in support of that, as if it were their money. Take this gem, from the section on Kyoto, where the government is still struggling to come up with a plan to reduce Canada’s CO2 emissions, eight years after it committed itself to reducing them. The previous grab-bag of ditsy schemes having failed utterly, at huge expense, the budget as much as announces it has gone back to the drawing board.
But listen to how they say it. “The government of Canada,” it says on page 173, “will learn from past investments.” I had grown accustomed to hearing “investments” used as a euphemism for spending. But I had not before seen it used to mean “mistakes.”
Yet every once in a while a ray of sunshine breaks through, a little moment of unintended veracity in which the curtain parts and the thinking of the budget’s creators is revealed. Such a moment occurred this year on page 112. It’s a sort of flow-chart, intended to give readers the big picture, the vision underlying the government’s whole approach to the economy. There’s a box across the bottom marked “Economic Policy Framework,” supported by a series of little boxes marked “Sound macroeconomic policy,” “Open international trade and investment,” etc., which leads via a little triangle (marked “Create”) to Opportunity. And what happens then? Another triangle, hanging ominously overhead, says it all:
“Seize.”
That’s about it in a nutshell, the budget in brief. Whatever opportunity economic growth creates for new spending, the government will seize it. The economic policy framework is sound enough, I’ll give them that: reasonably low inflation, reasonably free markets, reasonably punitive taxes. From that has flowed an abundance of revenues: more than $200-billion this fiscal year, half-again as much as it took in a decade ago. And the government is spending it. All of it.
Or nearly all. Of the $42-billion in surpluses over six years projected before the budget’s measures -- but after last fall’s federal-provincial agreements on health care and equalization, which would add, respectively, another $19-billion and $14-billion to that total -- the government proposes to give back roughly $13-billion in tax reduction. That’s about one dollar in six. The rest is spending.
(A word on those surplus projections: the $83-billion in fiscal room the government has used up since last year’s budget is almost exactly the figure the Conservatives used as the basis of their election platform, on the not implausible grounds that the Liberals were lowballing the surplus. For this they were denounced from pillar to post as reckless, spendthrift and worse. Remember the “$50-billion black hole”?)
And what spending! It’s difficult to get a handle on this just by looking at one year’s figures, and not only because the annual figures have become so meaningless. The $161-billion in program spending projected for the coming fiscal year, for example, may be seen as a mere 2% increase over the year just ended. But it’s 9% more than the government said it would spend last year at this time. And since both figures, last year and this, are likely to be revised upward -- they always are -- it’s a safe bet that the final increase will be higher still.
You really have to look at it over several years. Since fiscal 2000, when the Liberals put aside their previous commitment to fiscal discipline, program spending has increased by nearly 50%. Adjusting for increases in prices and population, spending is now back to where it was in fiscal 1994, a 22% increase in real per capita terms from its recent lows.
But the budget does not tell us the government is nearly a quarter larger now that it was five years ago: not in so many words. Why not?
2/24/2005
