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The Surplus
14/10/2004

By this point there is nothing surprising about a Liberal government announcing that they have a surplus much larger than forecast.

The pattern here is so clear that Paul Martin's excuses are almost insulting in their obvious falseness. This overestimation is not like a random event nor an unavoidable consequence of unpredictability. These misestimations are always in the same direction, and that's no coincidence. What's disappointing in the Prime Minister's remarks is that the truth would probably be the more palatable explanation. That is, that there is a larger surplus because this government tends to make very conservative and cautious estimates that minimize the risk of any shortfall.

Or, at least, that's what I think the truth is. And, while I recognize the problems with this pattern, it sure could be a lot worse. Like very many Canadians who went through the deficit days of the late 1980s and early 1990s, I prefer prudence to risk-taking.

On the other hand, I think that the problems caused at election time by the lack of independent budget forecasting is serious. In Ontario, the last provincial election was marred by misleading statements about the province's finances. And federally, who knows if we would have had a different outcome if voters knew what the federal income statement really looked like?

In the end, I'm happy about paying down the debt aggressively. Might as well do it while those that benefited from the borrowing are still in the workforce. At the same time, it concerns me that elections can be debated without a clear and accurate fiscal picture.


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