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  • Report looks at captured nature of BC’s Oil and Gas Commission August 6, 2019
    From an early stage, BC’s Oil and Gas Commission bore the hallmarks of a captured regulator. The very industry that the Commission was formed to regulate had a significant hand in its creation and, too often, the interests of the industry it regulates take precedence over the public interest. This report looks at the evolution […]
    Canadian Centre for Policy Alternatives
  • Correcting the Record July 26, 2019
    Earlier this week Kris Sims and Franco Terrazzano of the Canadian Taxpayers Federation wrote an opinion piece that was published in the Calgary Sun, Edmonton Sun, Winnipeg Sun, Ottawa Sun and Toronto Sun. The opinion piece makes several false claims and connections regarding the Corporate Mapping Project (CMP), which we would like to correct. The […]
    Canadian Centre for Policy Alternatives
  • Rental Wage in Canada July 18, 2019
    Our new report maps rental affordability in neighbourhoods across Canada by calculating the “rental wage,” which is the hourly wage needed to afford an average apartment without spending more than 30% of one’s earnings.  Across all of Canada, the average wage needed to afford a two-bedroom apartment is $22.40/h, or $20.20/h for an average one […]
    Canadian Centre for Policy Alternatives
  • Towards Justice: Tackling Indigenous Child Poverty in Canada July 9, 2019
    CCPA senior economist David Macdonald co-authored a new report, Towards Justice: Tackling Indigenous Child Poverty in Canada­—released by Upstream Institute in partnership with the Assembly of First Nations (AFN) and the Canadian Centre for Policy Alternatives (CCPA)—tracks child poverty rates using Census 2006, the 2011 National Household Survey and Census 2016. The report is available for […]
    Canadian Centre for Policy Alternatives
  • Fossil-Power Top 50 launched July 3, 2019
    What do Suncor, Encana, the Royal Bank of Canada, the Fraser Institute and 46 other companies and organizations have in common? They are among the entities that make up the most influential fossil fuel industry players in Canada. Today, the Corporate Mapping Project (CMP) is drawing attention to these powerful corporations and organizations with the […]
    Canadian Centre for Policy Alternatives
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Mommy, Where Do Deficits Come From?

Political debate and media reporting on today’s economic “Report to Canadians” have emphasized one of the first tables in the document, in which the government claims to have “committed” 80% of budgeted stimulus spending (page 14 of 230).

Equally interesting, but perhaps less noticed, are the two “Fiscal Outlook” tables near the end of the document (pages 219 and 221). They provide an accounting of the $50-billion deficit figure, which I summarize below:
Federal Fiscal Projections ($ billions)


Budget 2009







EI Benefits

$ 18.9

$ 21.7


Transfers to Persons

$ 47.4

$ 47.4

Transfers to Governments

$ 50.1

$ 50.9


Direct Programs




Debt Charges

$ 29.5

$ 29.2



$ 33.7

$ 50.2



Until now, all we knew was that this year’s deficit would exceed the Budget 2009 projection by more than $16 billion. We could guess why, but now we know.

Projected revenue is down by $4.7 billion, which is not surprising given that the economy is in even worse shape than projected in Budget 2009.

Employment Insurance (EI) benefits are costing $2.8 billion more than projected. As Andrew argued before today, EI should not be blamed for Canada’s rising deficit. Indeed, it accounts for just 17% of the additional shortfall (2.8 / 16.5 = 0.17).

Transfers to provincial and territorial governments are up by $0.8 billion, mostly to top up the Canada Health Transfer.

Direct program spending is up by $8.5 billion, almost entirely to account for the auto bailout. The document explains (page 220):

In accordance with the Government’s accounting policies, the value of loans, investments and advances are adjusted in the financial statements to approximate their estimated net realizable value. This will be done when the 2009-10 financial statements are prepared in the summer of 2010, based on information available at the time. To be prudent, the Government is setting aside an additional $8 billion in 2009-10 to account for these adjustments.

In other words, the government does not have an estimate of what its equity in GM and Chrysler may be worth, so it just decided to add $8 billion to this year’s deficit. Coincidentally, this amount is precisely enough to push the total deficit past the $50-billion mark.

The fact that half of the deficit increase results from an arbitrary accounting decision, rather than from concrete economic developments, supports my previous suspicion. In announcing a $50-billion deficit – even before today’s “Report to Canadians” – the government was pulling out a rhetorical club with which to beat back opposition proposals for more stimulus spending and EI improvements.

Finally, the government will pay $0.3 billion less than budgeted in interest charges on the debt. Lower interest rates are the silver lining on the economic crisis.

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