What happened to transparency? Parliament's budget office wants to know
It's a new government, but PBO is engaged in an old game — fighting for data
Wait, wait. This can't be. There must be some sort of mistake.
The Parliamentary Budget Office, the tenacious group of fiscal watchdogs who tangled repeatedly with the secretive regime of Stephen Harper, is now saying that the Trudeau government, which rode into office proudly flying the banner of transparency, is suppressing financial data and twisting and exaggerating the information it did provide in the recent federal budget.
In fact, in a document abruptly posted on its website this morning, the PBO effectively accuses the government of misleading taxpayers.
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The budget office seems to be suggesting that the entire budget rests on utterly unrealistic assumptions, and contains conclusions that rest on missing data — data the government has, but is refusing to hand over to its own watchdogs.
The PBO analysts are the people who, after the initial spin and headlines of budget day die down, take the supporting documents apart, get out their adding machines and do some independent calculating.
But this year, they found that some serious calculations were impossible.
Take, for example, the most crucial forecast of all: the rate of growth of the Canadian economy for the next several years.
This year, the government said that in order to "introduce an element of independence" and therefore greater credibility, it would be using an amalgam of private-sector fiscal forecasts.
"However," says Wednesday's PBO statement, "the government judged it appropriate to lower the private sector forecast of nominal gross domestic product — the broadest single measure of the tax base — by $40 billion per year over 2016 to 2020."
In other words, this budget operates on the pretense of much lower tax revenues than will likely appear, distorting everything flowing from that basic assumption.
The PBO called the deliberate underplaying of economic growth "excessive."
Sweeping assumptions, reassuring predictions
Now, the PBO is not the first group to notice this. Almost as soon as the budget was revealed, experts pointed derisively to the government's forecast that the economy would only grow by 0.4 per cent this year. (Most private sector economists are predicting something between 1.8 and 2.4 per cent).
Most assumed this was just classic, old-style politics: lower expectations, then beat them and reveal happily that you've done much better at some point down the road.
But the data miners at PBO didn't stop there. They quickly determined that earlier updates and statements by Finance Minister Bill Morneau, late last year and in February, couldn't be squared with what appeared in the final budget document.
They also noticed that while some parts of the budget made sweeping year-over-year assumptions looking forward all the way to 2020-21, including reassuring predictions of debt relative to the size of the economy, vital data had been deliberately left out of supporting documentation.
On a whole range of broadly themed spending in this budget, including things like "help for the middle class" (a mix of tax cuts and direct payments), "a better future for indigenous peoples" (mostly direct spending), "a clean growth economy," "an inclusive and fair Canada," and, somewhat ironically, "open and transparent government," funding projections went out only two years and stopped.
"It stands to reason they must have something to go on," says Mostafa Askari, one of the PBO staff involved in compiling today's report. "But they haven't provided those numbers."
Jack Aubry, a Finance spokesman, said in an email Wednesday that the department "is working diligently to respond to the Parliamentary Budgetary Officer's request."
Of course, if you don't provide such breakdowns, how credible are the total spending figures, or debt-to-GDP ratio figures, going out to 2020-21?
The answer: Not very credible at all.
Tussle over numbers
In fact, previous governments have provided exactly those figures. In the past 12 budgets, under Stephen Harper and before him Paul Martin, exact estimates were disclosed.
So, on April 1, the PBO wrote Paul Rochon, the deputy minister of finance, asking for detailed breakdowns of all major budget themes, and their impact on revenue, expense and the public debt in the department's forecasting.
The PBO set a deadline of April 5, yesterday, noting the department's response would be posted, in the spirit of transparency, on the PBO website, "and therefore, it should not be marked 'confidential.'"
Government officials say a meeting between PBO and Finance Department officials ensued. It became clear that the department did indeed have the data, but for some reason was demanding that it be suppressed by the PBO if the government agreed to divulge it. (The PBO isn't in the business of suppressing data.)
A subsequent "informal" response from the Finance Department, said one official familiar with the file, was actually non-responsive.
The official, who spoke on condition of anonymity, said the bureaucrats are almost certainly operating under political instruction.
"My guess is the numbers they have probably show that funding for some of these new programs will have to fall off after the first two years, and that would upset stakeholders (such as indigenous people), and the government would rather not acknowledge it, and is hoping the money will eventually come from somewhere."
Which is fine as a political strategy, but hardly any way to write a national budget.
The Liberals, of course, criticized the Harper government during the election for refusing to provide the PBO with data about the so-called "tax gap" — the difference between what the government should be taking in and what it ends up with after experts in "tax avoidance" do their work, creating things like offshore shell companies for the rich. (As in "Panama Papers.")
Now, months after the Liberals took over, the Canada Revenue Agency is still refusing to provide the PBO with the data. As for the drain on taxpayers such avoidance imposes, the finance minister now says "we don't have any particular concerns around the Canadian system at this time."
The PBO cannot in the end compel the government to provide data. It can only report to parliamentary oversight committees that data is missing or flawed.
Committees that, of course, are now controlled by the Liberals.
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