Friday, July 25, 2008

The Flaherty Magic Returns

Nobody in Ontario will be surprised, but the rest of the country is starting to get their first glimpses of the Jim Flaherty finance minister magic. Poof:
OTTAWA — The federal government says it began the new fiscal year with a $500-million deficit as new tax cuts introduced in January and a slumping economy cut into revenues and public spending rose.

The government said Friday that revenues fell by 4.1 per cent in April and May of this year, compared with the same period last year, while spending increased seven per cent.

Revenues from the GST tax plunged 20.9 per cent from last year, the Finance Department said, and revenues from corporate taxes fell 16.6 per cent. Many companies, especially manufacturers and forestry operators, have been reporting lower profits because of the slumping economy.

The small deficit to start off the year is in sharp contrast to the $2.8-billion surplus the department reported last year for April and May.

And, let's keep the chronology in tact. People will remember those warning Flaherty after his goodie filled mini-budget last October, signs of a looming slowdown the talk of the prudent. Potential vote grab trumped sound fiscal management.

At least Flaherty is consistent, but for the people of Ontario, it is starting to feel like groundhog day.

24 comments:

Bailey said...

Yes, but in June and July of this year they should have a surplus from the wireless auction. So that's definitely something to keep an eye one if they do or not.

Steve V said...

Good point, but that wasn't part of the government's surplus projections.

I was wondering why Harper was waiting until Friday to announce the by-elections. Now, I think I've found my answer.

bigcitylib said...

Flaherty's Ontario surplus went kerflooey went the economy went the slightest bit soft. That's why we've had two terms of Dalton. Harris and Flaherty gaves Ontario 10 years of turmoil and nothing to show for it at the end.

JimmE said...

bigcitylib:
"Harris and Flaherty gaves Ontario 10 years of turmoil and nothing to show for it at the end."

Don't you have a Subway that goes nowhere?

knb said...

Groundhog day is right!

About the auction proceeds, if memory serves they only expected 1/2 of what it came to.

Gee, they can't run on the environment, the economy or crime with any credibility. What's left?

northwestern_lad said...

ummm... not to be a pain or anything, but who exactly allowed those bad tax cuts and such pass which allowed this government to slip into deficit??? Just saying.

Flaherty is just as bad at this job as he was in Ontario, but letting him continue to do knowing his past doesn't look so good on the Liberals either.

Steve V said...

knb

So, was that auction factored into the budget calculations? And, it would seem to me, the Cons just blew that on the infastructure announcement, which I think is new money.

Steve V said...

cam

Wow. Amazing how everything the government does leads back to the Liberals. Consistent anyways ;)

northwestern_lad said...

Steve...

Amazing how I expected that answer from you. Consistency for sure ;)

Seriously though, i'm not laying all the blame at the Liberals feet because, as the saying goes, it takes two to tango, but i'm not willing to give the Liberals a pass for their hand in this just because Flaherty is an incompetant boob.

knb said...

I'm not sure Steve, I can't remember.

Is the infrastructure money new? I thought it had been accounted for but the details not worked out until now.

Geesh, now I'm confused.

Bailey said...

No, the auction money was double what the original estimates were or as some people write it, the estimates were half of what the final total was.

A quick glance here makes it look like it wasn't in the original budget calculations.

Steve V said...

knb

Whatever the specifics, I'm sure the Cons will do everything in their power to present a manufactured surplus ultimately, even if one doesn't exist. Flaherty is a master at this :)

Steve V said...

bailey

That link doesn't work. So, this is new revenue, outside of the budget projections? Another point, isn't the government currently receiving more money from oil prices then they assumed at the time?

knb said...

Indeed Steve. I'm surprised that Flaherty hasn't been before a mic yet.

Joseph said...

How does the sell off a government assets, i.e. buildings play into this.

You know, those peachy deals that turn the government into renters by selling off some of their most valuable assets.

Are those sales factored into this budget deficit? If so, then even the smoke and mirror accounting is catching up to them.

Bailey said...

I'm not sure why that link didn't work before but here's the location not hyperlinked.

http://www.budget.gc.ca/2008/plan/chap5-eng.asp

Steve V said...

Thanks.

Well this forecast for GST revenues doesn't resemble reality:

GST revenues are projected to decline further, by 10.2 per cent in 2008–09, the first full fiscal year under the lower 5-per-cent rate.

They've already declined at double the projected rate, so even if we see a rebound, Flaherty will likely miss this target, and he didn't leave much fiscal room to begin with.

Flaherty is already out front today saying everything is according to plan, which means he might have to do what joseph suggests to keep out of deficit.

Blues Clair said...

I'm going to repost what I wrote somewhere else because i'm lazy and it is a beautiful day out there.

I guess this deficit is what PM Harper was musing about when he pledged to place limits on the federal spending power. Promise made, promise kept, I suppose.

That's how them crazy Cons make smaller governments... increase spending, cut taxes, and then claim Canada is in a finincial crisis and that they must cut spending on our social programs to balance the budget.

Anonymous said...

From what I read yesterday the Ontario spending anouncements were their share of the gas tax rebate to the provences the Liberals started and Harper reworked. Nothing new unless they failed to put it in the last budget.

ottlib said...

In all fairness, to claim the government is destined to run a deficit based on part of one quarter is jumping the gun a bit.

However, the fact that we are even talking about the possibility is still pretty significant. Just two years ago the Canadian government was awash in cash.

The federal budget is being kept afloat by tax money from the energy sector. If it begins to suffer a decline, even a mild one, then the federal budget will inevitably go into deficit.

The recent auction of bandwidth will allow the government to make up any shortfall this year but not next year. Which is fine with the Conservatives because they only need to show a balanced budget until after the next election.

knb said...

You have a point ottlib, but doesn't this preclude them from spending the rest of the summer making funding announcements?

That seemed to be their counter to Dion's Green Shift tour.

ottlib said...

With this crew no.

None of their funding announcements have been new money anyways. They are only re-announcing old announcements.

As well, they have Jim Flaherty as Finance Minister. He was able to hiding a deficit in Ontario so until after an election so he has plenty of practice to do the same thing federally.

knb said...

ottlib, too bad they don't have a highway to sell.

oldschool, you've now shown us that you don't have a grip on what is really happening. On second thought I guess you do and you just see the destruction as a gas, to use old school language.

Gawd, I hope this isn't a neighbor, but he could be yours!

liberazzi said...

Are the stars starting to align for the Libs? I am starting to get optimistic, or am I putting on the jinx?

Funny thing about cutting taxes (and basically doing nothing else...oh i forgot, the Cons are getting tough on crime) in order to bribe voters, its hard to bring in any revenue to like pay for things you know:P

I do not care what political stripe you are this government has been an absolute disaster for this country. How do you manage to squander a 13 billion dollar surplus in two years! It's shameful! Giving Flaherty the finance job, is like giving an unlimited credit card to a teenager.