* Budget officer says deficits appear overstated
* Sees less impact on revenue, expenses from new growth
* Urges more transparency from Ottawa on budget assumptions
* Government says budget officer pulling numbers "out of the
By Louise Egan
OTTAWA, Nov 29 Canada's budget watchdog said the
Conservative government appears to have overstated its budget
deficit by an average of C$4.7 billion ($4.74 billion) a year
for the current and next three fiscal years, a finding the
finance ministry disputed.
A report by the parliamentary budget officer (PBO) on
Thursday assessed Finance Minister Jim Flaherty's revised budget
outlook on Nov. 13, which projected federal budget deficits for
this year and the following three years that were on average
C$5.8 billion bigger than the government estimated in its March
Flaherty said then the federal government would wipe out a
small deficit in 2016-17, a year later than previously forecast.
But both Flaherty and Prime Minister Stephen
Harper have since contradicted their own report, pledging to
balance the books before the next election in 2015.
The finance minister has said the difference is due to a C$3
billion cushion in its latest forecasts that won't be used if
the economy performs well.
The PBO said on Thursday the picture painted by the
government is more pessimistic than is warranted.
The watchdog's calculations - based on the same forecasts
the government uses - showed higher revenue and lower program
expenses than the government estimated.
The report said the federal Department of Finance did not
provide the PBO with enough information about its underlying
assumptions and methods to properly explain the difference.
"Given the changes to the government's economic assumptions,
and excluding the impact of policy decisions, the changes to
Finance Canada's fiscal outlook since Budget 2012 are somewhat
larger than what its sensitivities would suggest," the report
The "sensitivities" refer to the estimated impact on revenue
and expenses of downward revisions to nominal gross domestic
product and interest rates.
The PBO said that according to its calculations, the budget
balance would be lowered by C$1.1 billion this year and by a
similar amount over the next three years, compared with
Flaherty's report showing an average $5.8 billion downward
The PBO, whose chief economist Kevin Page has frequently
clashed with Flaherty, is simply ignoring the government's
explanation for its revised fiscal outlook, said Flaherty's
spokesman Chisholm Pothier.
"I cannot explain what Kevin Page is thinking today - one
day he's saying our deficit is higher, the next day he's saying
it's lower," said Pothier. "I do know he seems to enjoy the
attention he generates based on whatever numbers he pulls out of
the air that day."
He said the PBO's analysis failed to take into account
lower-than-expected tax revenues from 2011-12 which Ottawa
believes will be repeated in subsequent years.
The PBO assumed there was a one-time blip in tax revenues
that wouldn't carry forward into future years, which it says is
the standard budgeting practice.
The government also sees program expenses rising, rather
than falling as the PBO predicts, because of the impact of lower
interest rates on government employee pensions and benefits. It
also said the PBO misjudged the change in public debt charges
for the year 2012-13.
Some pundits have speculated that Harper wants to deliver a
good news "surprise" on the budget by 2015, which might help the
Conservatives get re-elected that year.
"Finance Canada does not provide sufficient information and
data related to its assumptions and methods ... which would be
required to conduct a thorough assessment," the PBO said.
"PBO believes that providing this information and data would
significantly improve budget transparency."
Kevin Page has complained for months that the government
refuses to hand over certain information that he says he needs
to fulfill his mandate to advise lawmakers on budget matters.
The government says the information he wants is confidential
and that Page is overstepping his bounds.
Last week Page and Thomas Mulcair, leader of the New
Democratic Party - the main opposition - asked the federal court
to settle the dispute by clarifying the PBO's mandate.