Still Surplus, Not Deficit!

While Ralph Goodale sheds crocodile tears about "how Stephen Harper ruined our national balance sheet", it turns out that the Federal government may actually exceed the $10.2B surplus expected for the 2007/08. As of the end of February, the Federal surplus stood at $12.9B.

The figure does not include $2.5 billion in spending announced by the government that will be accounted for next month, including the $1 billion development trust fund to help communities hit hard by the manufacturing and forestry slump.

Still, that would leave the up-to-date surplus at $10.4 billion, slightly above the $10.2 billion forecast in Finance Minister Jim Flaherty's February budget, with one more month of tax collection and spending to account for.

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That's despite the GST cut and other small tax breaks that were announced in last fall's fiscal update (with many income tax breaks applied retroactively to all of 2007). So what is Ralph Goodale upset about?

Goodale mentions the "federal financial flexibility of about $100-billion" which was projected over the next 5 years. But whose money was it? Was it some sort of national dividend the feds were expected to receive from the Bank of Canada? Or maybe the Bank of Canada was simply planning to print out that kind of money and grant it to the feds, so they release those funds into circulation? No, that was taxpayers' money. So the Conservatives did the right thing returning it back to taxpayers.

The $100B over five years - I'll leave it on Ralph Goodale's conscience. It would have never been that much; not with the Liberal spending habits. But their last budgets (2003, 2004, 2005) are still remembered. In all those years, the projected revenues were understated in the actual budget, so that the Liberals could play Santa later on, announcing more and more unbudgeted spendings, most of them - to special interest groups and Liberal-voting communities.

Year 2005 would probably be the best example. First they announced a meager $100 increase in personal exemption - that's $16 in annual tax savings. In May the budget was amended to appease the NDP, canceling the tax cuts proposed for 2008 and adding more spendings effective immediately. Finally, in November they came up with a pre-election mini-budget which, among other things, included 1% reduction in lowest income tax rate and a $500 increase in personal exemption...

Could it be that Ralph Goodale simply didn't know back then how much money would there be available in 9 month time? I doubt it. Most likely, Mr Goodale purposely underestimated the revenues so that he could have some extra billions set aside to bribe the NDP and to buy votes in the anticipated early election. So what upsets him now is that this vote buying cushion will no longer be available. Even if the Liberals form the government after the next election - they'll have to raise taxes to fulfill their election promises.

Of course, they'll try to blame it on the Conservatives. When talking about the Conservative budgets, Goodale claims that "their budgets have ballooned by more than $40-billion in just over two years", calling it the biggest spending increase ever. And then he complains that even with all the surplus handy, Harper abolished the court challenges program - one that allowed special interest groups to sue the government at taxpayers expense. So it's not really the spendings that concern Goodale.

By claiming that the government boosted spendings by $40B over 2 years (even though the actual number is ~$27B), he wants us to believe that Stephen Harper's government brought us into deficit and that a GST hike is imminent to balance the books. By mourning the loss of the court challenges program he makes it clear that the extra cash is needed not to balance the books (they are perfectly fine) but to pay for their tax-and-spend election promises.

After all, we've seen that in Ontario. The very first thing the Liberal government did was blaming the Ontario PC on a $2.2B deficit. The Liberals then canceled the proposed tax cuts, abolished tax breaks for independent schools (retroactively, to 2003), rolled back tax cuts for corporations and small businesses, discontinued the RRSP-like home buyer's saving program, delisted eye exams, chiropractor services and many others (but not abortions!), slapped in healthcare premiums... And, after doing all that in just 6-month time (so much for Mr McGuinty's "I won't raise your taxes"), they ended up with... much higher deficit - nearly $6-billion.

If the Liberals ever form a government - expect just that.