During a recession....After a long stretch of deficits in times of economic growth. A piss poor demonstration of fiscal incompetence and electioneering at the cost of responsible economic planning.~$2B surplus... good news for Cons
Oops... The cupboard is now bare, at the cost of Canadians all for Harper's Conservatives to try and buy an election during their watch over yet another recession.Analysis
Surplus during recession seems like bad economic planning: Don Pittis
Not just anti-Keynesian, but the complete opposite
If the time for deficit spending is when the economy is in recession, then the Harper government seems to have got it backwards.
According to the latest figures, during the years when Canada was reaping the staggering benefits of an oil and commodities boom, the government piled on more debt. We now know that it was only after the economy began shrinking and needed help that the government squeezed out a surplus.
The current government may not be enamoured of a Keynesian analysis, but whether intentionally or by an error in planning, they have done the exact opposite.
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The savings that went into the government's surplus were accumulated from spring of last year, just before oil prices began their slide from about $100 to about $50 US a barrel. The period of savings covered in yesterday's budget document continued right through to the first quarter of this year, when a commodities crash caused the Canadian economy to shrink by a little less than one per cent.
And it didn't end there. Harper has also boasted that he had created a surplus during the April-to-June period, when, as we later found out, Canada had entered a technical recession.
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The Liberals and others have said the surplus was "phoney" and that Harper was actually running a deficit. It is true that the government had a political motivation to massage the numbers, including the fact that some of their election promises were contingent upon getting into surplus.
But if we take the numbers at face value, there is no question that the government was fanning the flames of the resource economy when it was burning hot, and taking away fuel when it was cooling.
The modern equivalent of storehouses full of grain is the tax system.
One of the ways the government fanned the flames was with tax breaks. The modern way to create a national war chest is to hold taxes slightly higher than what the government is spending. The accumulating pool of cash can be held in reserve for the bad times.
There is no reserve. So where did the money go instead?
Against the warnings of economists from many different parts of the political spectrum, the government started in 2006 to cut the Goods and Services Tax or sales tax, which immediately increased the deficit. There were also personal income tax cuts that benefited the employed and better off.
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By now, those of us who got those tax breaks have either spent all that money or used it to bid up investments like stocks and houses. If stocks and houses start to fall, you tell me where the money has gone.
Cuts in corporate taxes, especially to companies in the resource sector, have also disappeared. Some of the money companies saved was re-invested, but for big resource and industrial firms owned by foreigners, a lot of those tax cuts have left the country as profits and dividends. It could be argued that the money that was invested is disappearing too, as resource firms scale back.
It is good to be optimistic, but it is not yet clear that the Canadian economy is out of the woods. There are dire predictions the commodities bust could last for years. A new-economy boom remains a phantom.
It seems clear to me that the Harper government's greatest sin was one of optimism. Enthused by a private sector-led resource boom, they were more shocked than anyone that their spend-now-and-cut-later plan had gone sour. And by then they were locked into their optimism-laced promises.
But if the hard times continue, no matter who eventually takes the reins of government, the cupboard will be bare. There are no significant government savings and raising taxes will just take money out of one part of the economy and move it around. At that point, the only way to return to the stimulus of deficits will be to borrow from the future.
The Harper government played deceptive and dishonest politics by previously announcing faux budgets for key areas, only to demand near record restraint from ministries and demand the unspent money returned to general revenue.Economic prudence, or ‘cuts by stealth?’ Federal departments left $8.7 billion unspent last year
Conservative Leader Stephen Harper on Monday defended federal departments for holding on to billions of dollars last year. The unspent money was instead returned to the federal treasury, and played a huge role in the Conservative government posting a $1.9-billion budget surplus in the last fiscal year.
Finance Canada reported the federal surplus Monday, after initial projections in April had suggested a $2-billion deficit. The report said a variety of factors were responsible for the surplus, including a slight bump in government revenue from corporate and personal income tax.
But federal departments and agencies also chipped in by handing back an estimated $8.7 billion for different programs that had been requested — and in some cases publicly announced — by the government and approved by Parliament.
The Harper government, during a recession, chose to practically force a budgetary surplus at nearly all costs, all for electioneering points. In a recession ordered to implement austerity measures to harm ministerial missions and goals, defer costs and purchases to after the election for an even GREATER FISCAL EXPENSE.However, last year’s lapse, as unspent federal funds are called, was anything but normal. The Conservatives’ own budget plan in April, which projected only a $7.2-billion lapse, said government spending through February was “well below the historical average.” Spending to that point was also “at the lowest level in a decade.”
While the Conservatives have portrayed lapses as proof of economic prudence, critics say they amount to cuts by stealth. They say this is how the government can take money from Veterans Affairs, National Defence and other departments without actually cutting budgets.
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Canadians won’t know exactly which departments or programs were affected until after the election, when the government publishes its annual detailed accounts. But figures produced by the Parliamentary Budget Office over the weekend provide an idea of where some of the money came from.
The PBO figures aren’t final as not all departments, agencies and Crown corporations have reported their full end-of-year spending. But they do suggest hundreds of millions set aside for new military equipment, processing refugee applications, First Nations communities and transportation infrastructure went unspent.
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Former parliamentary budget officer Kevin Page said he had no doubt the Conservative government ordered senior public servants to “put the brakes” to spending to ensure a surplus during the election campaign. “It’s a big chunk of spending,” he said. “And it’s not easy for a lot of the departments.”
Page, who now teaches at the University of Ottawa, said lapsed funding has a direct impact on Canadians, and whoever wins the election will face a difficult situation that may involve either re-opening the taps or making more cuts.
“They’re going to look at that spending framework and say, ‘Is this sustainable?’” he said. “Is the Coast Guard going to function the way it should function? Are we going to have the sort of food inspection we need? Are we going to be able to get the cheques out the door for seniors and unemployed people?”
Spungo, I don't have the time at the moment to correct you upon much of your misinformed hyperbole upon party policy regarding the petroleum industry..
If you're not willing to sell it, we might be forced to "liberate" Canada.Take that up with your own levels of government for not enabling you to effectively leech off of another country's assets. Sorry, intentionally provocative with that last snipe.
So you're saying Harper controls China's economy? That's impressive. Harper also crashed Australia's economy because Australia exports tons of stuff to China.As far as the Keneysian economics -- Japan has its own domestic issues stemming back to the 1990s' and it is utterly incomparable to Canadian economic performance and Canada's 2015 recession lead by the Harper government.
Bill Clinton famously "balanced" the budget by stealing money from the social security trust fund, and he's generally considered the best president we've had in decades. I don't see why Canada would play by different rules. Creating fake balanced budgets is a good thing.Spungo, irrespective of enacted policy and the climate it is in, you blast past reality and straight on to theoretical and economic ideological thought all to argue for these self serving and near sighted electioneering actions by the Harper government not be harmful?
If you're not willing to sell it, we might be forced to "liberate" Canada.
Liberal Leader Justin Trudeau served notice Tuesday that he would seek to defeat a Stephen Harper government on its first speech from the throne should the Conservatives emerge with a minority on Oct. 19.
“I have spent my entire political career fighting against Mr. Harper’s narrow and meaner vision of what Canada can be and what the government should do,” Trudeau told reporters. “There are no circumstances in which I would support Stephen Harper to continue.”
As you are repeating Harper dogma, you as do not accept nor comprehend the Westminster parliamentary system....I do tend to believe that if any parties do actually end up in coalition, they should campaign on such a front...
??? How does the electorate not? They are capable of knowing which candidates are on the ballot and vote for them. Once elected, it is the House of Commons composition of MPs that decides the confidence in government and if a coalition to form government is in each parties federal governance interest.The electorate has a right to know what they're voting for.
Excuse me? Ignorance is the practice of disengaging from discussion and knowledge. cbrunny, as you are too frustrated in my accurate challenging of posts and this topic, you are blatantly hypocritical in your action to place me "on your ignore list." That is explicit ignorance.Whiskey obviously is ignorant to...
As you are repeating Harper dogma
you as do not accept nor comprehend the Westminster parliamentary system.
you're reading my words in a very partisan, very distorted lens.cbrunny, you are spouting irrational nonsense.
thanks, tips. I went to high-school. I know how the system works. And because I have knowledge of how the system works, and I'm educated, and I know what my own opinions and preferences are, I'm able to have preferences that are or are not different from the current status quo by varying degrees of significance.??? How does the electorate not? They are capable of knowing which candidates are on the ballot and vote for them. Once elected, it is the House of Commons composition of MPs that decides the confidence in government and if a coalition to form government is in each parties federal governance interest.
Excuse me? Ignorance is the practice of disengaging from discussion and knowledge. cbrunny, as you are too frustrated in my accurate challenging of posts and this topic, you are blatantly hypocritical in your action to place me "on your ignore list." That is explicit ignorance.
Probably. The US has a law banning the export of crude oil, so the US has very high refining capacity. Most of it is just fake refining anyway. You put crude oil in, you "refine" it without actually doing anything to it, mark the final product as refined oil, and export it. Although the US is a net importer of oil, that doesn't mean the US has no exports. It's possible for Texas to export 1 unit of oil to Mexico, and California imports 2 units of oil from Mexico. It's like that old joke of two trucks carrying trees passing each other on the road.Newfoundland does have a ton of oil, and it recently (10ish years ago...?) became a "have" province (as opposed to a "have not"). I'm not entirely sure where it's oil goes though. I assume tankers take it south to the gulf but not sure.
Bingo. It's exactly the same argument used for football stadiums. Politicians will promise jobs and a booming economy, but their only interest is in giving billions of dollars to their friends. I was laughing when I was in Edmonton a couple years ago. They had this plan of moving the city's hockey arena downtown. The existing hockey arena is already located in the city limits, it's connected to the largest highway in Canada, it has lots of parking, it has its own bus terminal, and it has a train station. Why would anyone want to move the arena downtown where there's no highway, no parking, no bus station, and no train station? Because politicians have friends, and those friends like getting paid. There's big money in building shit nobody asked for. Sometimes it's an arena, sometimes it's a bridge, sometimes it's an oil refinery.That being said, a real refinery in Canada also makes little sense as it creates very few permanent jobs (apparently they take relatively small numbers of people to operate once they're constructed. Construction is a huge project, probably years, but still temporary.), is extremely expensive to construct, would be unable to supply Canada with enough gasoline to make any real difference, would probably come as a public-private-partnership costing taxpayers billions, and would probably just be tossed around as a political tool rather than a proper solution.
The environmental portion is interesting. Harper claims greenhouse gas emissions are down. May claims emissions have been rising since the Great Recession. Both are correct, depending on where you start the trend line:
I suspect that Harper has subscribed to the opinion that "If you can't feed your family, pollution controls aren't important" - to an extent I can agree with this. I think now that the economy has largely stabilized (Relative to the year or two following the recession) it is worth the investment in green energy and environmental controls. That being said, I'm really not sure of the best way to actually do that. Normally I'd defer to experts but as far as I can tell even the experts don't agree.
http://www.thestar.com/news/federal...on-majority-government-new-poll-suggests.html
Uhh what? And from The Star even?
Darn, missed it.