To hear Finance Minister Doug Horner tell it at yesterdays 3rd Quarter Fiscal Update, Alberta is really on track to finally emerge from years of deficits and post a $1.2 billion “operating surplus” in fiscal year 2013-14.
That smell wreaking from the Department of Finance is BS. Here’s why.
Horner’s $1.2 billion “operating surplus” claim is a silly little trick for the government to take $5.3 billion in capital spending off the books. The “operating balance” is the revenues of the government, less only its day-to-day-expenses.
What then is the consolidated balance of total spending versus total revenues?
Stick with me for two minutes. I promise it won’t be too painful.
Table 1: Consolidated Fiscal Statement ($ millions)
Revenue |
41,320 |
Less |
|
Revenue received for capital purposes |
(512) |
Retained income of funds and agencies |
(297) |
Total Cash Revenue |
40,511 |
Expenses |
|
Operating expenses |
37,439 |
Disaster / emergency assistance |
674 |
Debt Servicing Costs |
580 |
Capital Plan Spending |
5,268 |
Total Cash Expenses |
43,961 |
|
|
Cash Balance |
(3,450) |
While the government no longer provides year-end estimates of revenues and expenditures in its quarterly updates (since it repealed the Government Accountability Act), we can still make approximations based on comparisons of its ‘actuals’ to ‘estimates.’ That is, take the change from the estimated number at 3rd Quarter and add it to the budgeted number.
This gives us revenue of $41.3 billion. From this, things like revenue received for capital purposes ($512 million) and retained income from funds and agencies ($297 million) need to be subtracted to ensure that we are not double-counting latter on.
This leaves us with $40.5 billion in cash revenue.
The next step is to add the updated operating expenses ($37.4 billion), disaster spending ($674 million), debt servicing costs ($580 million), and capital spending ($5.3 billion). This leaves us with total cash expenditures of $43.9 billion.
Now the easy part:
Table 2: Fiscal Summary ($ billions)
Revenue |
40,511 |
Expenditures |
43,961 |
Balance |
(3,450) |
Well, easy for those of us interested in getting a clear and accountable view of our province’s finances.
The crux of the disagreement between the Canadian Taxpayers Federation and Doug Horner is that he doesn’t feel it is necessary for the government to balance its entire budget, only the day-to-day (operating) expenses.
This is akin to a family paying the bills for its groceries, dinning and electricity out of its regular earnings, but putting its car payments, furniture and home renovations on the credit card – because the family is getting a tangible asset in return. This might work for a year or two, but in the long term, the bill always comes due.
Unfortunately, too many politicians are happy to let that bill fall to future generations to pick up while they smile for the photo-op.
Is Canada Off Track?
Canada has problems. You see them at gas station. You see them at the grocery store. You see them on your taxes.
Is anyone listening to you to find out where you think Canada’s off track and what you think we could do to make things better?
You can tell us what you think by filling out the survey