A dishonest budget

One of the most disappointing things in this dismaying budget is how, well, dishonest it is. This is a perennial problem, of course: from the Mulroney government’s absurdly optimistic economic forecasts to Paul Martin’s experiments in fiscal time travel, shuffling spending backwards and forwards between years to make the surplus rise or fall as needed, successive Canadian finance ministers have taken what ought to be a solemn annual reckoning with the taxpaying public and turned it into a game of three-card monte....

But I cannot recall a government that said things so cheerfully that so transparently just ain’t so -- a disregard for the facts rooted in contempt for the public, and redoubled in their lame attempts to justify the original misstatements.

Last year’s centrepiece in this regard was the tax “cut” that was actually a tax increase. The previous Liberal government, in one of its last acts, had cut the bottom rate of tax for 2005 from 16% to 15%. The May budget then raised it back to 15.5%. But because the Liberal tax cut had not yet been formally enacted into law, the Tories claimed the 15.5% rate actually represented, not an increase from 15%, but a cut from 16%.

But that was child’s play compared to this year’s installment. Yesterday’s column talked about the government’s misuse of the term “tax cuts” to refer to what are really spending programs, delivered through the tax system -- what the budget elsewhere accounts as tax expenditures, $14.8-billion of them in all. A few other examples:

Item. The budget maintains, notwithstanding a $25-billion increase in spending over two years, that the government is showing unwavering fiscal discipline. How? Because it has kept the growth in spending to no more than the growth in the economy, “on average.”

Now, people like me would argue the percent-of-GDP measure is misleading: it implies that, so long as spending has not grown faster than the economy, it has not grown at all. But I supppose that’s within the bounds of acceptable political chicanery.

Or would be, if in fact spending had grown slower than the economy. But, again, the budget’s own figures show that it hasn’t. Program spending was 12.8% of GDP in fiscal 2006, 13.1% in 2007, and will be 13.3% in 2008.

How, then, do the Tories maintain that spending has grown no faster than the economy, even “on average?” By including in the average fiscal 2006, a year in which nominal spending actually declined slightly (though only after a nearly 15% gain the previous year). Just one problem: the Liberals were in power in fiscal 2006, or all but the last two months of it. The Tories are claiming credit for Liberal “restraint.”

Item. The budget claims to have solved “the fiscal imbalance” -- a debatable claim about a debatable problem. It does so largely by way of changes to the equalization system, among them a provision that would include 50% of provincial resource revenues in calculating the standard to which provinces must be “equalized.” Yet the Tories campaigned on a promise to exclude these revenues from the equalization formula, in their entirety.

A broken promise, right? Not according to the budget. Thanks to various add-ons and one-time payments, it claims, no province will be worse off under the 50% inclusion rate than it would be if resources were kept out entirely. This, it says, will “fulfill the Government’s commitment to fully exclude non-renewable natural resources revenues from the calculation of Equalization.” But it didn’t fully exclude them. It half-included them. It might have compensated provinces for breaking its promise, but it still broke the promise.

Item. Although the budget radically increases transfers to the provinces for health care, post-secondary education and the like -- at more than $40-billion, they are twice what they were a decade ago -- the government still maintains that it is disentangling Ottawa from areas of provincial jurisdiction, in the name of “clarifying roles and responsibilities,” “limiting the use of the federal spending power” and other good things.

So far, so debatable. But then it goes on to provide figures, showing how the bulk of any new spending in the budget goes to transfers to the provinces, with its own spending confined largely to areas of federal jurisdiction. Thus, spending in areas of “federal/shared responsibility” is presented as 29% of the total in 2007, 45% in 2008, 32% in 2009 and so on, with “funding to provinces and terroritories” taking the remainder.

But wait a minute: what’s that bit about “shared responsibility”? Well, a note to the figures says, it includes agriculture, environment, immigration -- and health care. Health care? Since when did health care become a federal or even shared responsibility? Or if it is, how is it any different from post-secondary education, child care and whatnot? And what do these labels even matter, since it all goes into general revenues anyway?

I might dislike all the new spending in the budget; you might like it. That’s a policy decision, on which reasonable people can differ. But can’t we at least have an honest accounting of just how much spending there was, and where it all went?