Finance, including public finance, can be a pretty dry and abstract subject.
But, for any enterprise, its financial picture is a very real, tangible and vitally important matter.
While the phrase “bottom line” has become a tough-talking colloquialism, devoid of precise meaning, in the world of accounting it refers, literally, to the tell-all bottom line of a balance sheet that indicates profit, loss or break-even.
Government does not operate on a profit/loss basis, but it has a bottom line.
For government finances, the key issues are sustainability and effectiveness.
The key questions for government are:
Will the government be able to continue taxing, borrowing and spending as it plans to into the future? And are the government’s fiscal (financial) measures achieving their goals in the lowest cost way possible and without unintended consequences?
Kevin Page has a clear mandate
Those are the questions Kevin Page, the Parliamentary Budget Officer (the PBO) is mandated to ask.
One part of his job is to tell Parliament whether the government’s current fiscal course is sustainable in the short, medium and long term.
On September 27, Page did that when he published his Fiscal Sustainability Report for 2012, in which he said that the federal government’s debt position is sustainable over the long term, but when you factor in the higher level of provincial, territorial and local debt, Canada’s overall debt position is not sustainable.
The report looks at such issues as the impact of an ageing population, and includes careful caveats. It emphasizes, for instance, that its projections “are best viewed as illustrative ‘what if’ scenarios that attempt to quantify the implications of leaving a government’s current fiscal structure unchanged…”
And so, that is one part — and a big part — of Kevin Page’s job.
Then, there is that other part, the part that requires his office to analyze the government’s fiscal choices and tells Parliament and Canadians what their real life impact will be.
This is where the rubber hits the road, where abstract financial questions acquire real life meaning.
Just in case there was any doubt about the mandate Parliament has bestowed on his office, the PBO puts that mandate, front and centre, on the web site:
“…to provide independent analysis to Parliament on the state of the nation’s finances, the government’s estimates and trends in the Canadian economy; and upon request from a committee or parliamentarian, to estimate the financial cost of any proposal for matters over which Parliament has jurisdiction.”
Page believes his mandate covers the tangible impacts of spending cuts, and so does Opposition leader Tom Mulcair, who requested that the PBO provide him with that impact information.
The PBO’s office would need fairly precise information from the government to do a serious analysis of real-world impacts of budget cuts; information which includes which jobs and which services will be cut.
Since April, Page has been trying to get those facts and figures, which, after all, should not be state secrets.
The PBO reports that he has received responses from over 90 per cent of organizations cut in Budget 2012, which, on the face of it, looks like a pretty good response rate.
When you look closer, however, you discover that Page has only received extremely partial information.
As the PBO puts it:
“The information received is a small subset of what was requested. While PBO requested individual savings ‘measures,’ categorized by ‘efficiency’ or ‘program reduction,’ PBO primarily received high-level program activity information.”
On the key pieces that relate to job cuts and service reductions the PBO has only received information that covers a meagre three per cent of the total reduction package.
Page is blunt about what that means for his ability to do his job:
“The lack of disclosure will prevent the PBO from providing Parliament and parliamentarians with independent analysis on the state of the nation’s finances and the estimates of the government.”
Despite being so hobbled by the Government’s non-cooperation, Page’s office has made a brave effort to do the analysis, with the limited information available.
It has concluded that 85 per cent of Budget 2012 cutbacks will come out of services to Canadians, while only 15 per cent will come from operational and overhead reductions.
The government vigorously refutes this analysis, but refuses to provide information to support its claim.
The Prime Minister and Finance Minister Jim Flaherty have been arguing, all along, that the Budget Officer’s mandate is only to analyze what the Government actually plans to spend and not what it plans not to spend.
The PBO should stick to his knitting, they say, and stop being such a nag.
Page — and Opposition MPs — have indicated that they think the government’s argument is hair-splitting sophistry.
How can the PBO analyze the impact of a budget focused on fiscal austerity without detailed information on planned cutbacks?
Here comes the judge!
For months Page has been threatening to take non-cooperating departments and agencies of government to court to get the information he has requested. He sent letters to scores of Deputy Ministers and heads of agencies warning them that they could be personally named in court actions.
Now, Page has chosen a somewhat different tactic.
He is going to court, but he is not suing anyone. Rather he is seeking the Federal Court’s “guidance.”
The PBO is asking the Court to tell him if it is within his office’s jurisdiction to analyze whether the 2012 Budget’s fiscal savings can be achieved, and determine the extent to which those savings would have long-term consequences.
In addition — and this one is key — the PBO wants the Court to tell him whether he can request that federal departments tell him their planned savings based on staff reductions.
Early in this dispute, the Government claimed that it was being solicitous of workers’ tender feelings in withholding job cut information from the PBO. The public service unions shut down that argument when they said it would be okay with them.
Let the PBO have the information, the unions said. We are interested in his analysis.
Now, it will be up to a judge. Well, sort of…
The PBO is not asking the Federal Court to compel the Government to do anything. He is only asking the court to advise on the extent and nature of his own mandate.
The prevailing view in Ottawa is that, politically the Government could not buck a Federal Court decision that supported the PBO.
But that is not a given.
The Harper government has been nothing if not tenacious in its resistance to anyone that stands in its way. These are the folks who prorogued Parliament mere weeks after a federal election, and then applied unspeakable political pressure on a Governor General to rubber-stamp their request.
How will they react to a mere piece of advice from the Federal Court?
We’ll see, but Kevin Page should not hold his breath.