Ottawa Sun
Published: Thursday, February 24, 2005

We're still living on borrowed cash

While the Liberals have tinkered in the right directions, Ralph Goodale's budget still falls far short of what it should be

Federal Finance Minister Ralph Goodale tabled the 2005 budget yesterday and my Sun colleagues have already dissected the budget six ways to Sunday in the preceding pages.

They've also captured the reaction from the talking heads, interest group lobbyists (yes, my former calling), opposition critics and folks like you who are just trying to get by.

For six federal budgets I did the lockup thing and basked in the media spotlight as the most quoted figure in the country for fiscal analysis, a quick TV clip or radio debate in the 48-hour pre- and post-budget media fishbowl. Usually my reactions were negative -- except for both budgets in 2000 which were outstanding -- toward the government. And last year as a Conservative candidate, I was no better as a pithy partisan.

So this year I decided a change was as good as rest. I ignored all media coverage and instead went straight to the Finance Department website to see if I could be spun by the government. While the whiz-bang multi-media and visually appealing display -- replete with Goodale video clips, budget links up the Yazoo and a self-executing PowerPoint deck -- is impressive, I'm still as bitter as ever.

The budget is entitled Delivering on Commitments, and to be fair, the feds are making down-payments on many of their 2004 election promises. Then again, when you overtax Canadians by $10 billion annually with no end in sight, any proverbial sailor on leave could spend like Paul Martin and crew.

We already know the feds are dropping $41 billion more into health care transfers to the provinces over the next ten years. But when it comes to so-called good news, there's nothing like announcing old money in a new document. (The modern version of this cynical political ploy was perfected by the Harris Conservatives in Ontario and has since been mimicked by politicos of all stripes.)

However, unless health care is managed and allowed to flourish through an innovation prism as opposed to the provincial forensic accounting approach presently employed, Granny's wait for that hip replacement will get longer and that new wonder drug you read about for cancer patients in Europe and the States will remain just that, only something you read about.

The budget also contains $5 billion more in environmental measures to once again try to meet our Kyoto commitments. Good luck! When I start collecting my feeble CPP monthly cheque in 2031, Canada will still not have met its 2010 Kyoto targets.

During Mr. Goodale's budget speech, the whipped and docile Liberal backbench applauded on cue for things like a new EI rate setting process, an increased basic personal exemption (BPE) by 2010, and "mammoth" government savings, to name just a few. These measures are all well and good, but two questions immediately spring to mind: What took you so long? And two, what do these billions really mean?

For example, the government has committed to a new EI rate setting process. Great, except it only took two parliamentary committees, a decade of complaints from all quarters not to mention the accumulation of an immoral and job-killing notional surplus of $42 billion in the EI account along with repeated scolding from the auditor general to force the government's hand.

Ditto for the plan to increase the BPE to $10,000 by 2009, up from $8,000 and change today. Great, Mr. Goodale, but my original CTF recommendation to your predecessors was to go to $15,000 by 2008. And let's put this in context; right now the average minimum wage job pays between $15,000 and $16,000 a year. By 2010, given various provincial minimum wage hike schedules, this amount will be close to $20,000. So the poor low-wage worker will be no better in 2009 than they are today -- the BPE will still only cover 50% of their income. In other words, raising the BPE to $10,000 over the next four years is a fiscal illusion of David Copperfield proportions.

Then there is the much ballyhooed $11 billion found in government efficiencies which will be reallocated to higher priorities. Let's read the fine print. It's $11 billion over five years, or $2.2 billion per year. For this year it represents less than 1.4% of the $158.1 billion program spending envelope. Instead of sharp pencils finding savings it appears as though dull heads counted on their big toes and didn't carry the one.

The bottom line on Budget 2005: Program spending has and will increase by almost 60% from Fiscal 2000 to Fiscal 2009. This is double the known and projected rates of inflation and population growth for this decade. It is unsustainable in the long run and Canada's national debt interest burden -- where the Liberals have made progress -- still sucks 20% out of every federal tax dollar that comes off your paycheque.

We continue to live on borrowed time and borrowed dimes, funny though, I didn't find this phrase on the Finance website.