‘Clock is ticking’: feds should release fiscal update, recovery plan soon, says Page

Where are Bill Morneau's new shoes? That's the question being asked around Parliament Hill as a former parliamentary budget officer says that the “clock is ticking” for the government to release a fiscal update so Canadians can see its plan for a recovery from the economic crisis brought on by the coronavirus pandemic. The government cancelled its planned budget that was set to take place at the end of March and Prime Minister Justin Trudeau (Papineau, Que.) told reporters last week that there is no timeline for one to take place. “Before the summer break, I think there should be at the very minimum some type of fiscal outlook or fiscal update,” said Kevin Page, who was Canada's first parliamentary budget officer (PBO) from 2008 to 2013. Kevin Page says a fiscal update should have 'some essence' of a fiscal plan. The Hill Times file photograph Mr. Page, now the president of the Institute of Fiscal Studies and Democracy at the University of Ottawa, told The Hill Times that the fiscal update would show the size of the deficit, and the impact to revenues and spending. He added that the government should signal there will be an update and move “quickly” over the “next few months” to be able to announce one. “The government knows they have to produce these sets of documents sooner rather than later,” he said. “We are reading IMF reports on Canada, we are reading PBO reports on Canada, we should be reading the minister of finance's fiscal update.” Mr. Trudeau told reporters on May 4 that “a budget typically is an expression of what people can expect in the coming year, both in terms of how the economy is going to unfold, what sort of measures are going to be brought in.” “And in normal times, it’s usually pretty accurate. Right now, we’re in a situation where there is a tremendous degree of uncertainty as to what the economy could look like six months from now,” he said. “While we are continuing to be open and transparent, the reflections on at what point we might be able to present a budget or even just an economic update is ongoing.” The most recent fiscal update given by Finance Minister Bill Morneau (Toronto Centre, Ont.) was last December when he announced a projected deficit of $26.6-billion for the fiscal year, jumping to $28.1-billion in the following year, and declining to $11.6-billion by 2024-2025. Parliamentary Budget Officer Yves Giroux published a report on April 30 that projected a deficit of $252.1-billion in the current fiscal year, with program expenses totalling nearly $510-billion and budgetary revenues dropping to $280.8-billion. The report suggests that the federal debt will rise to $962.3-billion in the 2020-2021 fiscal year, up from $710.2-billion the year before. That would mean the percentage of debt-to-GDP would rise 17.6 points to 48.4 per cent. Without a fiscal update, the PBO report is the best indication Canadians have about the state of the economy. “Right now we don't really have a fiscal plan, other than we have statements from the finance minister and the prime minister that they will do whatever it takes to buffer the blow of the virus,” Mr. Page said. “That's not a plan per se.” “Even in the fiscal update, there needs to be some essence of a fiscal plan,” he said. Mr. Page noted only the government—and not the PBO—can produce that plan. Canadians will want to know what will happen to Canada's economy in the fall and how the emergency fiscal measures will get drawn back, as well as if there will be additional fiscal stimulus to jump-start the economy, Mr. Page said. Prime Minister Justin Trudeau has repeatedly stressed the need to support Canadians through the coronavirus pandemic, but has offered few details of a fiscal plan to drawback from emergency spending measures. The Hill Times photograph by Andrew Meade He added that the government should also be planning to have a budget sometime in the fall. Mr. Page said while there is a lack of transparency from the government around fiscal balances, it does deserve some breathing space as it tries to put out the fire that is the spread of COVID-19. Professor Kevin Milligan of the Vancouver School of Economics at the University of British Columbia said that once the government has a handle on emergency support measures, they should shift their attention to a budget. “There is a role for the Department of Finance and the government to put some framework on what they're doing,” he said, adding that he would hope to see a budget by some time in June to plan a way forward. “I think would be appropriate so that we have some structure going forward,” Prof. Milligan said. Fiscal update should come but economy too uncertain for budget, say others Canadian Centre for Policy Alternatives senior economist David Macdonald said that there should be a fiscal update, but only one that covers up to the end of the last fiscal year at the end of last March. Mr. Macdonald said many of those projections have not changed significantly due to COVID-19, as the emergency spending measures came later. “You could at least get a snapshot of the end of the fiscal year,” he said, adding that there is questionable value of any long-term projections associated with the update. “There's some tension here between putting out a number that is almost certainly wrong, and putting out no number at all,” he said. Finance Minister Bill Morneau last provided a fiscal update in December when he announced a deficit projection of $26.6-billion. The Hill Times photograph by Andrew Meade Mr. Macdonald said it isn't a matter of transparency that there hasn't been a budget. No one can “reasonably” say what the economic future will look like a year from now or what the spending programs will cost a year from now, he said. He added that the need is so great in the short term that there shouldn't be long-term planning. “We should be creating and implementing short-term plans quickly and rapidly,” Mr. Macdonald said. “There will be a time to start to transition these emergency plans to longer term benefits,” he said. “We aren't at that point. Maybe we'll be at that point in September. Maybe we will be at that point in the fall. But maybe we will be in a second wave of the pandemic.” Aaron Wudrick, federal director of the Canadian Taxpayers Federation, said that if the government released a budget now, it would soon be out of date. “I believe transparency and accountability are extremely important,” he said, “but if they were to table a budget say now it would be out of date in a month.” He said that the government should be aiming to have a budget by the fall, adding that it will become more important as provincial economies are reopening. “I would be satisfied with a fiscal update for sometime in 2020,” he added. Mr. Wudrick said Canadians have a “relatively good idea” on the federal government's spending through the PBO's tracking, but he said the question mark is on revenues. He said the government needs to be as transparent as possible, while not coming out with an official plan forward until the recovery is more clear. When a fiscal update is released, Mr. Wudrick said it should be laid out that the temporary emergency measures don't become permanent measures. Lack of budget leads to questions of government accountability, says watchdog It is important to have the budgetary baseline for government spending so the opposition, the public, and watchdogs can measure the actual spending against the baseline, said Duff Conacher, co-founder of Democracy Watch. “You can't have accountability unless you have that information disclosed by the government,” Mr. Conacher said. Duff Conacher says without a budget the government can't be held to account for its decisions. Photograph courtesy of Duff Conacher “The government not introducing a budget is a way of the government escaping accountability for spending and it shouldn't be allowed,” he said. “There's no reason why the government can't do a budget for the next year even if they would have to adjust things.” “I don't think much more of a delay is justifiable,” Mr. Conacher said. On the whole, Mr. Conacher said the government has tried to escape accountability by not convening Parliament and proposing an initial spending bill that would give the government spending powers with no parliamentary accountability through 2021. Aside from the forecasting of the PBO, the Office of the Auditor General has been asked by the House of Commons to perform audits on emergency spending measures. But they are yet to be listed on the office's Planned Reports website. Mr. Page said the “larger role” for the Auditor General will be one or two years down the road. “There will be a significant role to make sure that we did have appropriate checks and balances financial controls in the system,” he said. “Where Parliament and Canadians and the media are really going to need the Auditor General is more the ex-post review audit,” Mr. Page said. “Making sure these financial controls were in place.” nmoss@hilltimes.com The Hill Times This is the first of a three-part series entitled Transparency, Trust, and Transition, a look into government accountability and public trust around policy-making as the COVID-19 pandemic has put public health authorities to the test, created economic havoc from coast to coast and changed politics in Canada.

‘Clock is ticking’: feds should release fiscal update, recovery plan soon, says Page

'We are reading IMF reports on Canada, we are reading PBO reports on Canada, we should be reading the minister of finance's fiscal update,' says Kevin Page. Meanwhile, a PBO report published last month projects a deficit of $252.1-billion in the current fiscal year.

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‘Clock is ticking’: feds should release fiscal update, recovery plan soon, says Page

'We are reading IMF reports on Canada, we are reading PBO reports on Canada, we should be reading the minister of finance's fiscal update,' says Kevin Page. Meanwhile, a PBO report published last month projects a deficit of $252.1-billion in the current fiscal year.

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