Sunday, January 18, 2015

What He Says They Mean

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Watching the Harper government serve up a pre-election budget has become a drama in the Theatre of the Absurd. That's because -- as Tim Harper wrote last week in the Toronto Star -- for Stephen Harper, politics trumps math:

The new Conservative math is political math.

There’s another name for it. It’s a shell game.

Finance Minister Joe Oliver appears ready to arbitrarily set a future oil price — one that neither he nor Prime Minister Stephen Harper can predict — that will allow him to proceed with voter-friendly promises in an election year.
Even as he pushed the budget date into April, he told a Calgary audience Thursday that he will balance this budget, then run surpluses in the years to come, rising to over $13 billion by 2019-20.

The Harperites find themselves in this predicament because they predicted a surplus based on $81a barrel oil. And they spent the surplus before it materialised. Moreover, they've based their whole re-election strategy on a balanced budget and tax cuts from their non-existent surplus:

They have to balance the budget so they can make good on a promise Harper made on a chilly early April day in Vaughan almost four years ago — the doubling of the limit for Tax Free Savings Account contributions to $10,000, a vote-friendly initiative that was contingent on the deficit being eliminated.

In the short term, there is a cost. The finance department has estimated that the existing TFSA program, introduced in 2009, cost the government more than $400 million in foregone revenue in 2013.

But that figure will be in the tens of billions when accounts are drawn on in the years to come.
Similarly, an adult tax fitness credit is tied to the balanced budget.
Then there is the matter of other pre-election spending, such as money that should go to veterans and the ongoing costs of an air mission against Islamic State in northern Iraq.

There is an old adage about not counting your chickens before they hatch. The same rule applies to surpluses.

When former MP Bill Casey went to Mr. Harper to complain that he had altered the Atlantic Accord, the prime minister told him that the words in the accord "mean what I say they mean." The same rule seems to apply to budget numbers.


6 comments:

Rural said...

And of course the fact that the TFSA is aimed at those who can afford to put $5,000 or $10,000 into savings a year and whose income is such that the tax deduction of the interest earned would make any real difference to their income is a coincidence. In my world the tax paid on the interest of savings is so miniscule as to be negligible, another tax shelter for the rich and affluent IMHO.
As for the projected 'surplus' they will use 'creative accounting' to ensure that the numbers LOOK good.

Owen Gray said...

If the Great Recession taught us anything, Rural, it was that "creative accounting" means taking embarrassing numbers off the books.

Anonymous said...

Correction, Owen. The $81 per barrel price of oil was what Oliver had used only in October after they had reluctantly reduced their projected surplus to around $1.6B (or it could even have been $1.2B, these people make up their numbers as they go along) from $5-6B previously.

Before that, you recall they had used a figure of $98 per barrel in their budget in Spring last year when they had forecasted a surplus of around $5-6B for this year.

As the Confucian saying goes: man who put eggs in one basket end up getting egg on face.

But I am already reading that Prentice has been saying that it was not his fault as he had only been in charge for 120 days. Never mind that his PC Party had been in charge for over 40 years.

I am sure Dear Leader will somehow find a way to blame this on Pierre Trudeau and his son and throw in the Provincial Ontario Liberal Party for good measure.

Remember being Tory means never having to say you are sorry, eh?

Owen Gray said...

Harper has got a lot of mileage from blaming others, Anon. But, after you've been around for ten years, that excuse simply doesn't hold water -- or oil.

mogs moglio said...

Yes Owen and now oil has slumped to just under $48.00 per barrel.

http://www.bbc.com/news/business-30707638

Joe Steve and the whole con gang are nothing but shameless liars they will sell you a resort in the middle of nowhere. No tourists no real buildings in the middle of the Atlantic ocean. Its apparently on an oil platform that does not exist but is projected to be built by 2050 or so maybe. Good luck con clowns...

Owen Gray said...

What's remarkable, Mogs, is that this strategy has worked for them for the last nine years.