Kevin Page Gives A Lesson on Transparency

The more I read about the Parliamentary Budget Officer Kevin Page, the more respect I have for him. He has proven to be an excellent choice for his position, much to the dismay of the Conservative government who created his job in the first place, back in the days when open government was on the agenda.

Apparently, Mr. Page has decided to release three big reports before the Budget gets tabled in March, despite the fact that Parliament has been prorogued. In a recent Globe article, Bill Curry explains:

The fact that Mr. Page is able to release such reports is due to the unique structure of his office. The Parliamentary Budget Office operates as a division of the Library of Parliament. Mr. Page has expressed concern about this arrangement, arguing that he should be an independent Officer of Parliament. There are currently eight such officers – including the Auditor-General, the Privacy Commissioner and the Conflict of Interest and Ethics Commissioner.

However, these officers must table their reports in Parliament before commenting on them. Since Parliament does not sit during a prorogation, they are effectively silenced. Mr. Page, on the other hand, can simply post his reports online.

Through a quirk in the rules, Mr. Page is able to put the notions of transparency and accountability in practice. Something he’s already done on a number of occasions, earning himself the reputation among journalists for having “a strong independent streak.”

While I don’t necessarily agree with Mr. Page’s analysis of the current deficit being structural in nature, one thing Mr. Page has certainly got right is that recent large tax cuts are coming to haunt us.

Mr. Page says that government has yet to come to grips with the revenue loss created by these [GST reduction from 7% to 5%] and other tax cuts, leaving a future gap that has so far not been addressed.

These and the effects of population aging on government revenues will be discussed in his next report, which is expected “as early as next week” according to the Globe article. I know I’m looking forward to reading it.

4 comments

  • I admire his tenacity. And agree there is a structural deficit due to the GST and other tax cuts. Less agreed on the PBO orthodox assumption on the need for a fairly quick return to budget balance.

  • I am not sure of his role anymore- now that he has been cut in terms of budget and hence effectiveness.

    Also why is he going on about budget cuts anyway?

    Did anybody read Krugman’s article in the NY times yesterday called- Its looking like 1937 again.

    Apparently Mr. Page did not! I must say it is a weird space we are going through economically.

    The qualitative is so slippery and the quantitative is just for the dizzy right now. Leaves one queasy as it is hard to get any traction in either towards making any firm conclusions.

    I still go back to what is driving us forward and nobody has an answer- except stimulus.

    So I think Mr. Page should try and stick to his transparency guns and not go so far out on limbs, especially when he is carrying such a spotlight. The structural deficit comment was definitely obtuse of transparency.

    pt

  • It is definitely a good thing that we know where federal government spending is going and who is paying taxes so in that sense the PBO plays a positive role. However the PBO Economic and Fiscal Assessment Update for last November was very much based in the sound finance school of thought – the hypothesis being that a balanced budget and surpluses are good, and that government spending must be “sustainable“. I’d like to see a definition and discussion of sustainable. Perhaps there is one somewhere that I have not seen.

    Many unstated assumptions are made which bear open discussion. Due to its fixation on budget balances “sound finance“ reasoning unnecessarily constrains the economic role of the federal government and results in lower employment levels and greater hardship for low income people than would otherwise occur.

    One major problem is its inappropriate application of microeconomic reasoning to the macroeconomy. In some of their odder moments sound finance adherents typically wind up with the contradictory position of calling simultaneously for balanced budgets or surpluses AND for more non-government sector financial saving. By accounting identity, this is impossible (assuming balanced current account). In fact a budget surplus is only possible if non-government financial assets diminish and/or the non-government sector increases its level of debt (assuming balanced current account). Why would that be a positive?

  • The first report was released on January 13 and can be downloaded at the PBO website.

    It’s essentially a technical paper outlining (in great detail) their methodology for concluding that Canada’s facing a substantial structural deficit over the next few years.

    They’ve got an interesting methodological approach to estimating potential GDP, although I have some questions about their assumptions that labour force participation rates or work intensity (average number of hours worked) will remain “on trend” despite significant changes in the age composition of the workforce and the resulting reduction of the quantity of labour.

    You may also want to have a look at the short brief that accompanied this release. It features a nifty table with estimates of the revenue impacts that federal tax changes will have on the treasury. http://www2.parl.gc.ca/Sites/PBO-DPB/documents/Reference_Sheet_Tax_Adjustments_EN.pdf

    Perhaps raising taxes will soon not be a dirty word?

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