Post by Hussar on Nov 17, 2004 7:01:30 GMT -5
Now I know that economics is more an art than a science. I do understand that. It's a very complicated subject where ballpark figures are to be expected. But, taking a look at the Canadian papers today, I stumbled across this little gem. 10% I can understand, heck even 20%, but to be off by HALF? What kind of monkeys do they use to calculate these numbers?
From Here
From Here
Goodale announces $8.9-billion surplus
Critics assail Ottawa for poor forecasting, leaving tax cuts on back burner
By STEVEN CHASE AND SIMON TUCK
With reports from Jeff Sallot and Murray Campbell
Wednesday, November 17, 2004 - Page A4
OTTAWA -- The federal Liberal government revealed yesterday that it is once again swimming in cash -- headed for an $8.9-billion budget surplus that's more than double original estimates -- and promptly came under attack for sloppy forecasting and its lack of enthusiasm for rebating the windfall as tax cuts.
Opposition Conservatives and a chorus of business groups said repeated budget surpluses suggest Canadians and companies are overtaxed and deserve a break.
But Prime Minister Paul Martin cautioned that tax reductions will take a back seat to health and social spending priorities when the Liberals decide where to deploy more dollars.
Finance Minister Ralph Goodale, who divulged the surplus in his annual economic and fiscal update yesterday, also angrily dismissed charges from opposition MPs that the Liberal government had deliberately kept news of the soaring surplus from Canadians for months.
"I will not accept the allegation that I on any occasion have lied to anybody," a frustrated Mr. Goodale told the House of Commons finance committee after questions on whether Ottawa kept news under wraps that a surplus originally forecast to be $4-billion was swelling to $8.9-billion.
The hefty projected surplus is only a few hundred million short of the unexpected $9.1-billion windfall Ottawa racked up last fiscal year after projecting it would only end up $1.9-billion ahead in 2003-2004.
Mr. Goodale attributed the jump in excess government revenue this year to "remarkably strong Canadian economic growth" that Ottawa had not foreseen. Mr. Goodale also warned of potential trouble ahead and the need to stay conservative in forecasting, saying the impact of the rising Canadian dollar, high oil prices and the ballooning U.S. government deficit could hurt economic growth.
"Government spending plans must be based on money we know we have, not on money we just hope to have," Mr. Goodale said. "Wishful thinking causes deficits."
Critics charge that the Liberals repeatedly play down surplus projections until late in the fiscal year in order to build up a cache of money they can quietly tap for end-of-year spending or to funnel to federal debt repayment.
But Finance officials say that $5.9-billion of this year's disclosed $8.9-billion surplus is now available for spending on Liberal priorities. (Ottawa automatically sets aside $3-billion of excess cash as a so-called rainy-day "contingency reserve" that goes to debt repayment at the end of the fiscal year.)
Conservative finance critic Monte Solberg said he doesn't believe Mr. Goodale was in the dark about this surplus and suggested the Liberals knew months ago about the pending windfall.
"The government has access to the most economic data of anyone . . . but the minister persists in insisting this was a huge revelation to him," Mr. Solberg said.
Mr. Solberg said it's time for Ottawa to give Canadians a tax break. "There's been money going to health care, money going to equalization and there's still a tremendous amount of money unallocated . . . the government has an obligation to give that money back to Canadians."
Business groups were disappointed with Mr. Goodale's fiscal update, saying the document gave no hints that the government will do anything to improve Canada's competitiveness or business climate.
"It's all about spending," said Garth Whyte, executive vice-president of the Canadian Federation of Independent Business. "We're really disappointed."
Many groups said there's clearly room for the government to cut taxes.
Nancy Hughes Anthony, president of the Canadian Chamber of Commerce, said the government is also intentionally showing small surpluses in the subsequent years to reduce the pressure to cut taxes. "They're just spending all the money upfront -- of course the surpluses look small."
David Stewart-Patterson, executive vice-president of the Canadian Council of Chief Executives, said his group is disappointed that the government found no room for measures to stimulate economic growth.
"There's nothing there that even hints at using tax policy to reinforce Canada's competitiveness."
Mr. Goodale said more detail on the Liberals' plan to improve Canada's competitiveness would be unveiled in the 2005 budget.
But Mr. Martin warned those angling for tax cuts that his government has other big priorities.
He said the Liberals ran their 2004 election campaign on more resources for health care, equalization, child care, cities and aboriginal people. "All of these are the issues that we campaigned on. We all understand the importance of reducing taxes. But we are going to accomplish our program first. And to the extent that tax cuts can be brought within that after those priorities have been met, clearly we will do so," he said.
Mr. Martin is no stranger to tax cuts. When he was finance minister in 2000 the Liberals unveiled a $100-billion tax-cut package that was phased in over five years.
Chief economist Dale Orr of Global Insight (Canada) in Toronto doesn't think there's room in Ottawa's fiscal balance sheet for new tax cuts given what the Liberals have already committed this fall for health care and equalization.
The Martin government has announced $74.7-billion in new health-care and equalization spending over 10 years. "They are not in a position to make any tax cuts that are sustainable," he said.
This year's unexpectedly big surplus adds to the Liberal government's long record of missing the mark on estimates.
Between 1994 and 2004, the budgets either low-balled surpluses or exaggerated deficits by a total of nearly $85-billion, Canadian Auto Workers union economist Jim Stanford estimated.
Mr. Goodale has recently addressed widespread criticism of Ottawa's forecasting process by asking Bank of Montreal chief economist Tim O'Neill to review the way estimates are made.
Critics assail Ottawa for poor forecasting, leaving tax cuts on back burner
By STEVEN CHASE AND SIMON TUCK
With reports from Jeff Sallot and Murray Campbell
Wednesday, November 17, 2004 - Page A4
OTTAWA -- The federal Liberal government revealed yesterday that it is once again swimming in cash -- headed for an $8.9-billion budget surplus that's more than double original estimates -- and promptly came under attack for sloppy forecasting and its lack of enthusiasm for rebating the windfall as tax cuts.
Opposition Conservatives and a chorus of business groups said repeated budget surpluses suggest Canadians and companies are overtaxed and deserve a break.
But Prime Minister Paul Martin cautioned that tax reductions will take a back seat to health and social spending priorities when the Liberals decide where to deploy more dollars.
Finance Minister Ralph Goodale, who divulged the surplus in his annual economic and fiscal update yesterday, also angrily dismissed charges from opposition MPs that the Liberal government had deliberately kept news of the soaring surplus from Canadians for months.
"I will not accept the allegation that I on any occasion have lied to anybody," a frustrated Mr. Goodale told the House of Commons finance committee after questions on whether Ottawa kept news under wraps that a surplus originally forecast to be $4-billion was swelling to $8.9-billion.
The hefty projected surplus is only a few hundred million short of the unexpected $9.1-billion windfall Ottawa racked up last fiscal year after projecting it would only end up $1.9-billion ahead in 2003-2004.
Mr. Goodale attributed the jump in excess government revenue this year to "remarkably strong Canadian economic growth" that Ottawa had not foreseen. Mr. Goodale also warned of potential trouble ahead and the need to stay conservative in forecasting, saying the impact of the rising Canadian dollar, high oil prices and the ballooning U.S. government deficit could hurt economic growth.
"Government spending plans must be based on money we know we have, not on money we just hope to have," Mr. Goodale said. "Wishful thinking causes deficits."
Critics charge that the Liberals repeatedly play down surplus projections until late in the fiscal year in order to build up a cache of money they can quietly tap for end-of-year spending or to funnel to federal debt repayment.
But Finance officials say that $5.9-billion of this year's disclosed $8.9-billion surplus is now available for spending on Liberal priorities. (Ottawa automatically sets aside $3-billion of excess cash as a so-called rainy-day "contingency reserve" that goes to debt repayment at the end of the fiscal year.)
Conservative finance critic Monte Solberg said he doesn't believe Mr. Goodale was in the dark about this surplus and suggested the Liberals knew months ago about the pending windfall.
"The government has access to the most economic data of anyone . . . but the minister persists in insisting this was a huge revelation to him," Mr. Solberg said.
Mr. Solberg said it's time for Ottawa to give Canadians a tax break. "There's been money going to health care, money going to equalization and there's still a tremendous amount of money unallocated . . . the government has an obligation to give that money back to Canadians."
Business groups were disappointed with Mr. Goodale's fiscal update, saying the document gave no hints that the government will do anything to improve Canada's competitiveness or business climate.
"It's all about spending," said Garth Whyte, executive vice-president of the Canadian Federation of Independent Business. "We're really disappointed."
Many groups said there's clearly room for the government to cut taxes.
Nancy Hughes Anthony, president of the Canadian Chamber of Commerce, said the government is also intentionally showing small surpluses in the subsequent years to reduce the pressure to cut taxes. "They're just spending all the money upfront -- of course the surpluses look small."
David Stewart-Patterson, executive vice-president of the Canadian Council of Chief Executives, said his group is disappointed that the government found no room for measures to stimulate economic growth.
"There's nothing there that even hints at using tax policy to reinforce Canada's competitiveness."
Mr. Goodale said more detail on the Liberals' plan to improve Canada's competitiveness would be unveiled in the 2005 budget.
But Mr. Martin warned those angling for tax cuts that his government has other big priorities.
He said the Liberals ran their 2004 election campaign on more resources for health care, equalization, child care, cities and aboriginal people. "All of these are the issues that we campaigned on. We all understand the importance of reducing taxes. But we are going to accomplish our program first. And to the extent that tax cuts can be brought within that after those priorities have been met, clearly we will do so," he said.
Mr. Martin is no stranger to tax cuts. When he was finance minister in 2000 the Liberals unveiled a $100-billion tax-cut package that was phased in over five years.
Chief economist Dale Orr of Global Insight (Canada) in Toronto doesn't think there's room in Ottawa's fiscal balance sheet for new tax cuts given what the Liberals have already committed this fall for health care and equalization.
The Martin government has announced $74.7-billion in new health-care and equalization spending over 10 years. "They are not in a position to make any tax cuts that are sustainable," he said.
This year's unexpectedly big surplus adds to the Liberal government's long record of missing the mark on estimates.
Between 1994 and 2004, the budgets either low-balled surpluses or exaggerated deficits by a total of nearly $85-billion, Canadian Auto Workers union economist Jim Stanford estimated.
Mr. Goodale has recently addressed widespread criticism of Ottawa's forecasting process by asking Bank of Montreal chief economist Tim O'Neill to review the way estimates are made.
