Ottawa ReportJuly 18, 2016
Last fall, the Liberals campaigned on a promise of openness and transparency. They promised to develop evidence-based policy and improve access to information for the public and for the administrative institutions that support Parliament.
The Parliamentary Budget Officer (PBO), Mr. Jean-Denis Fréchette, is a non-partisan Officer of the Library of Parliament tasked with reporting on how governments spend money. He is largely dependent on the transparency of a government’s financial data to carry out his work. Given the Liberals’ commitment to openness and transparency, one would assume that financial reporting would be a straightforward exercise for the PBO.
But in a report issued this spring, the PBO had some surprising findings.
The PBO began his report by stating that the Liberal government “has made changes to the presentation of its fiscal plan that have made it more difficult for parliamentarians to scrutinize public finances [emphasis added],” and that the government failed to provide the data on which they base many of their financial calculations.
One of the most critical calculations made by any government is the national short-term economic rate of growth. After all, it is the basis on which other spending calculations are made. However, the PBO uncovered some questionable calculations made by the Liberal government in this regard. He found that the government “judged it appropriate to lower the private sector forecast of nominal GDP – the broadest single measure of the tax base – by $40 billion per year over 2016 to 2020.” This means that that the Liberals’ financial plans are based on much lower tax revenues than what are likely to be generated, and distorts all other calculations.
The Liberals also predicted that the economy would only grow by 0.4 percent this year, despite the fact that most private sector economists are forecasting growth between 1.8 and 2.4 percent. It’s not only the PBO who caught these questionable calculations; financial experts – including Scotiabank economists – have questioned the data on which the government based their economic forecast.
The PBO described this as an “excessive” downplay of growth, presumably to lower public expectations and then surpass them. He also found that some financial information was wholly absent. Neil Macdonald of the CBC described this as “fine as a political strategy, but hardly any way to write a national budget.”
Moreover, the PBO found that the previous financial figures released by the Liberals did not match the financial figures published in the 2016 federal budget. If a government doesn’t provide detailed financial data or breakdowns, how credible are its total spending figures? Macdonald said it best: “The answer: Not very credible at all.”
The PBO’s findings are ironic given that the Liberals once proclaimed that the “government should base its policies on fact, not make up facts based on policy,” while touting the need for “reliable economic indicators for sound economic policy.”
Referring to the current Liberal government, Kevin Page, Canada’s former parliamentary budget officer, said “I don’t think it is [more transparent]. The documents – they’re not better from a government that promised to better, more transparent…there’s no more information, perhaps even less information, than what we got from the previous government.”
Furthermore, the PBO’s most recent report, released just last week, confirmed that the Liberals’ questionable accounting is no way to manage the federal finances. The PBO found that Liberal spending is on an unsustainable path, racking up nearly $11 billion in unsustainable spending per year.
While the Liberals may try to make facts based on policy, as a member of the Official Opposition, we will continue to critique them and hold them accountable.