Budget Fixing

I was taken back, like everyone else this week, when our local PC gang announced the projected deficit for 2013-14 had dropped from $1.6 billion to around $500 million. Just how was that possible in two months? Sure, they terminated 100's of civil servants, actually about 1200 in elimination of positions and layoffs of actual workers, but that would represent a mere drop in a large bucket when it came to a $1.6 billion deficit. So I had a good look.

And when I looked I was astonished. Going back to 2010, and moving forward each year til the present 2013 budget, I discovered fixing - budget fixing. I have attached copies of my analysis below so you can see year-by-year budget-to-actual comparisons. You can see where the government came in high on projections and where they came in low (the low has a negative sign in red). Going through this process a definite pattern evolved. A cynical pattern. One the government has not admitted to publicly, but would rather take a heap of abuse for. Another pattern for these folks. The more abuse they are willing to take publicly over something they could easily explain the more you should be concerned - such is the case here.

Below are the Budget vs Actual spread sheets for you to see, 2010 - 2013. Pay attention to the patterns you see, then move to my analysis below them.

So there you have it. The obvious, deliberate tool used is overstating ministerial budget, and then not using them fully. A good example is the $645 million that was scheduled to be transferred to the Department of Natural Resources, but ended up being $404 million dollars light. You will notice that revenue is almost never overestimated, while government budgets are almost always overestimated - especially in 2011, 2012, and looks to be the same for 2013.

As you can see, "austerity" started early as in 2012 $790 million that was budgeted to be spent by departments was not.In the same year total revenue was only $148 million over. Add the two together and expenditures were actually under budget by about $650 million. In that year every single government entity other than Executive Council came in under budget.

Then there was 2011. That was the year when we got the big oil return we weren't expecting - $531 million to be exact. However, the untold story is that every government entity also came in under budget except Government Services and Human Resources, Labour, and Employment. See the trend. The obvious trend is overstate transfers from the consolidated fund (the government's bank account) to government department's and agencies; understate revenues from all sources; and combine the two to keep "miracle" surpluses happening - which brings me to another point. A strategy such as this, keeping in mind how the government is not advertising the fact it is not spending the money it has allocated to programs like roads etc, is being used by the government to achieve several goals. The first and most important is it allows them to skim from departmental budgets to add increasing dollars to their cash and investment portfolio - more on this in a minute. The second is it allows them to seem like economic miracle makers, and fine "stewards" of the economy and public purse. And of course, it keeps the public away from demanding money for those programs that always seem to get big announcements, but few things change. The obvious reason for that being of course the full budgeted money is not spent on the programs, so relatively few things do change. As many people, especially outside the overpass say, "where has all the money gone?"

Well, here is what the government is doing with it. They are building a war chest of sorts. It's called CASH ON HAND/TEMPORARY INVESTMENTS. It means money they have put away by clawing it from programs it was originally budgeted to meet the needs of. Here is how that fund has grown:
2002 - $ 509,520,000
2003 - $ 185,404,000
2004 - $ 688,960,000
2005 - $ 833,802,000
2006 - $ 600,264,000
2007 - $ 1,316,660,000
2008 - $ 2,267,497,000
2009 - $ 1,921,837,000
2010 - $ 2,212,774,000
2011 - $ 2,442,963,000
2012 - estimated $2.6 - 2.7 billion.

So, the government has a huge bank account that they've been skimming money from department/program budgets for. They've invested it in mostly very low interest bearing accounts, but it's there. The infuriating part of this, beyond the lies and manipulation of this government to their own people is the damage we are now seeing inflicted for absolutely no reason on the civil service of the province. The people who make up 25% of the entire work force of the province. You can argue that it's overdue. You can argue that government is too big, etc. That is all ideological whether it be from a pure economic or political point of view. The reality is 1200 people, representing 1200 families will now lose that security that allowed them to buy that over priced home, buy that new car, etc. It is a double betrayal - one of the facts, and two of the duty to be responsible not just with money, but also with people's lives. It is the ugliest of politics. It is very much like the poll fixing fiasco - government orchestrated manipulation of opinion to suit their own ends. This one involves budgets and people's lives. This one is budget fixing.