Thursday, March 30, 2006

Common myths of Liberal government

#1 Fiscal Prudence. William Robson in the Financial Post:

In the past five years, Ottawa has underestimated its fiscal capacity -- how much new revenue it would bring in, and how much interest saving it would enjoy -- by some $34-billion. A fraction of this extra fiscal room turned into surpluses that paid down a small amount of Ottawa's half-trillion-dollar debt. But most of it -- more than $27-billion -- spilled out in unbudgeted spending. The over-run in the most recent fiscal year was a stunning $17.7-billion -- more than the entire cost of Employment Insurance, fiscal equalization or defence, and fully 59 times more than the much-ballyhooed $300-million that income trusts were estimated to "cost" the federal treasury.

These kinds of in-year spending over-runs preclude other fiscal choices, such as larger debt pay-downs or tax relief. They expand the size of the federal government -- not because of strategic thinking about what the country needs, but just because the money is there.