In preparation for June’s G20 Summit in Toronto, Prime Minister Stephen Harper recently urged member countries to begin focusing on reducing government deficits, saying: “We must quickly turn our attention to the next major issue facing our countries and the G20 as a whole, that is, the issue of restoring our public finances.”

Unfortunately for Canadians, the Prime Minister has not followed his own advice. By 2014/15, federal spending will be $30.6 billion (11.4%) higher than it is today. To finance this ever-expanding federal budget, his government plans to run deficits for the next five years totalling $104.6 billion.

And it’s not just the federal government. Most provincial governments have also refused to cut spending to eliminate budget deficits and restore balance.

It’s time Mr. Harper and his provincial counterparts lead by example, reined in government spending and balanced their budgets.

Last year (2009/10), the federal government and all 10 provincial governments recorded budget deficits totalling $87.8 billion. The trend is expected to continue this year (2010/11) with Canadian governments running another $80.9 billion in deficits. Over the course of two years, Canadian governments have put us $168.7 billion further in the hole.

While not all Canadian governments provide projections beyond 2010/11, those that do are expecting further deficits. For example, the federal government is expecting to be in the red until 2014/15. Ontarians can expect provincial deficits out to 2016/17. Manitoba and New Brunswick are planning deficits out to 2013/14, while Quebec, BC, Newfoundland, and Nova Scotia are projecting deficits to 2012/13.

Of course temporary deficits can be expected during a recession when revenues decline and spending on certain social programs such as Employment Insurance automatically increase.

But that is not what’s driving government deficits in Canada.

The Canadian economy is no longer in recession and is well on the road to recovery.  In the third quarter of 2009, the economy grew by 0.2 percent and by another 1.2 percent in the fourth quarter. The Bank of Canada and major private sector banks are forecasting positive economic growth for Canada and all the provinces during 2010.

This positive economic news is reflected in the revenue projections contained in the federal and provincial budgets. All Canadian governments, with the exception of Saskatchewan, are expecting an increase in government revenue this year (2010/11). In addition, most Canadian governments are expecting 2010/11 revenues to either meet or exceed their 2008/09 level.

In fact, only provinces that rely heavily on natural resource royalties (Newfoundland, Saskatchewan, and Alberta) are expecting 2010/11 revenues to be significantly below 2008/09 levels. Even in these provinces, the situation could improve substantially as a better than forecasted economic outlook boosts revenues.

But if the economy and government revenues are rebounding, why are deficits continuing?

The reality is that Canadian governments have failed to rein in spending.

For example, if the Ontario government delivers on its budget for 2010/11, spending will have increased by an astonishing 21.8% in just two years (2008/09 to 2010/11). During the same period, federal spending will have increased by 17.5%.

Of course some governments have shown much more restraint than others.

In particular the Western provinces have led the way in terms of spending restraint. Saskatchewan is budgeted to decrease spending between 2008/09 and 2010/11 by 2.2 percent while Alberta will expects modest spending growth of 5.6 percent and British Columbia plans for increased spending of 6.1 percent. It seems that Western provinces have not relied on disproven Keynesian theories that government spending can help boast an economy

With revenues rebounding, it should be no surprise that big spending governments are also those that expect the largest deficits. The Ontario government, which has enacted the largest spending increase, expects the largest deficit as a percentage of GDP (3.3%) in 2010/11. Not far behind is the federal government (second to Ontario in spending increases) with a deficit of 3.1% of GDP. On the other hand, the Saskatchewan government, which has reduced spending, is also expecting the smallest deficit at 0.3% of GDP in 2010/11.

The solution to the quick elimination of deficits is therefore simple. Government spending should be cut. Waiting five or more years to eliminate deficits will burden Canadians with more wasteful government spending, higher government debt, and increased interest payments.

The sooner governments get their fiscal houses in order, the sooner the fiscal room can be created to refocus on improving Canada’s ability to attract investment and create jobs. And that should be done by reducing taxes, not increasing government spending.

Prime Minister Harper might believe he has the moral authority to advise others to cut their deficits, but his government has shown an unwillingness to address its overspending -- the real culprit behind the $105 billion in deficits over the next five years.

Rather than preach to leaders of the G20 countries to address their deficits, Mr. Harper and his provincial counterparts should show them the way.