government spending

When Canada’s premiers met recently in Halifax, talks of a possible pipeline to move oil from Alberta to eastern Canada dominated national headlines. There was also mention of talks about trade, immigration, skills training, and infrastructure. One issue that didn’t receive nearly as much attention is the management of public finances and growing government debt.

When Canada’s premiers recently met in Halifax, talks of a possible pipeline to move oil from Alberta to eastern Canada dominated national headlines. There was also mention of talks about trade, immigration, skills training, and infrastructure. One issue that didn’t receive nearly as much attention is the management of public finances and growing government debt.

Most people wait until December 25th for Christmas presents. Apparently, the exception is Canada’s aerospace sector, recently the recipient of an early-season gift from former federal cabinet minister David Emerson. Emerson chaired a federally-commissioned review of the aerospace sector. The resulting report ostensibly challenges “companies, academic and research institutions, unions and governments” to “understand and adapt to changing realities.”

While some economists take great satisfaction when their forecasts come true, I am not in that camp.

As Terence Corcoran noted on this page Wednesday (On track for more deficits), for the past several years my colleagues and I have warned that the federal government's plan to balance the budget has been based on risky projections - optimistic forecasts of revenue growth (averaging 5.6% per year) and unrealistic plans for spending restraint (average increases of just 2.0% per year).