Tuesday, June 02, 2009


In a stunning report, TD bank concludes Jim Flaherty can't add. Suffice it to say, the revelation is simply shocking:
TD questions Ottawa's surplus forecast‏

The federal government will miss its projected return to surplus by a whopping margin, economists at Toronto-Dominion Bank wrote Tuesday.

OTTAWA -- The federal government will run a cumulative deficit of roughly $162-billion over five years, or nearly double what Ottawa projected in its most recent budget, economists at Toronto-Dominion Bank said Tuesday. As a result, the government will be nowhere near a return to surplus in 2013-14, as Finance Minister Jim Flaherty said in his January budget. According to the TD forecast, Ottawa will record a $19-billion deficit that fiscal year, as opposed to an anticipated $700-million surplus. The only way the budget gets back to balance in 2013-14 is if Ottawa freezes program spending growth after fiscal 2012-13, at which time TD expects the economy to fully rebound from the current downturn.

Deficits are to continue up to 2013-14, with a $19.4-billion shortfall, which is expected to amount to 1.1% of nominal GDP. That means $162-billion of deficits for a five-year period ending March 31, 2014, compared to the $83-billion anticipated during the same timeframe in the budget.

What's another 80 billion, especially when you won't own up to it, until FORCED by the calendar.

These type of numbers, and TD argues this fact, mean the government either has to map out a massive cost cutting exercise and/or raise the spectre of TAX INCREASES. I would argue that the party that comes to grip with simple realities and formulates mature policies, will be best placed come the next election. These are sobering numbers, and one can't expect to be seen as credible if people hold onto unrealistic recovery scenarios.


Michael Harkov said...

"Can't add?" "Shocking?" Hmmm, lets see......

In Ontario -

March 2008 Ontario Budget forecast- '08-'09 $1.8 Billion Dollar surplus

October 2008 fall economic update forecast- '08-'09 $500 million deficit

March 2009 Ontario budget actual- '08'-09 $3.9 Billion deficit

March 2009 Ontario budget forecast- '09'-'10 forecast- $14.1 billion deficit

June 1st 2009, Deficit update- 2009-2010- $18.5 Billion deficit.

All in all, a $20.3 billion change in Ontario's finances for the worse. Where is the Liberal clarion call for Duncan's resignation?

In Quebec -

March 2008 Quebec Budget- budget balanced for 2008-09 and 2009-10.
surplus of $717 million, $517 million reserve, total reserve $1.8 billion

November Budget Update- No deficit next two years,
February 2009- $1.8 billion reserve wiped out.

February 2009- deficit of more than $1 billion in 2009-10.

March 2009- $3.9-billion deficit in 2009-10

March 2009- Quebec to run budget deficits for next four years

So Quebec's deficit quadrupled in one month using the finance minister's figures. Where is the clarion call for Jérôme-Forget's resignation?

Buellar? Buellar?

Well Steve, we both know why we won't see Liberal supporters calling for the resignation of either Ontario or Quebec's finance ministers. What party would they be members of again? Oh yeahhhhh.......:D

Patrick said...

This report definitely made my stomach churn. Those numbers are staggering. I'm really hoping that the hypothesis in the previous post is true because this kind of debt would be devastating!

Gene Rayburn said...

Michael Harkov, really add up those numbers you cited. They are peanuts compared to what TD is projecting.

Now come back when you have a compelling argument and not some hot headed cut and pasting and grade 6 english skills.

Steve V said...


You mean on the stimulus spending?

Patrick said...



Steve V said...

I admit, I'm having second thoughts on this stimulus, particularly when it's clearly going to miss the crucial period.

Steve V said...

The ouch headline from G and M:

"Tories digging a $172-billion hole: TD"

Ben said...

Despite Mr. Rayburn's very clever retort, Michael Harkov does have a point.

The TD report's projections are based largely on their own revamped predictions about slowing GDP. They note that the deficits presented in the budget are similar to their own projections at the time. If their was a similar provincial report, you would see similar disagreement with both Ontario's and Quebec's Ministry of Finance projections.

There's a reason why one week after Flaherty's deficit jumped $16billion, Duncan's jumped $4.4 billion: Ministry officials use the same numbers and sources.

I find fault with both Ottawa's and the provinces' attempts to hide these numbers until they are forced to reveal them. But to suggest that Finance officials should somehow make better predictions than the private banks' economists is wishful thinking.

Steve V said...


It's really an apples and oranges comparison. First of all, the entire recalculation in Ontario is based on GM, not over stating revenues or social needs. Second, if Ontario continually misses the mark, then it's noteworthy. I agree, all government's have revised their figures, but NO government has had its head in the sand like the feds. The fiscal update was the most laughable presentation by a FM in Canadian history, and it's been the same story ever since. When the government released their budget deficit, it was IMMEDIATELY seized on as unrealistic, fairy tale projections. I don't recall the same response when Ontario came out, as a matter of fact the private forecasters agreed?

On a superficial level, you can play with numbers to make everyone look equally culpable. I would counter, the pattern with the Cons is its own animal.

Amanda said...

"one can't expect to be seen as credible if people hold onto unrealistic recovery scenarios."

I think all hope of establishing credibility for the Harper government went out the window about a month after they were first elected.

Ben said...

"I don't recall the same response when Ontario came out"

Certainly not, it was a great budget. Their best.
I'll give it to you that feds take the cake when it comes to trickery. How Finance officials let that Fall Statement go out without a full bureaucratic revolt escapes me.
But the McG Libs are far from innocent.

They reveal fiscal truths strategically and have fun with numbers, just not with such a blatant lack of grace and dignity.

Off topic I suppose, but I can't resist a good dig at Dalton. ;)

Steve V said...

"Off topic I suppose, but I can't resist a good dig at Dalton. ;)"

I'm not necessarily defending the Ontario Liberals, but at the moment, the Conservatives are unique, in terms of magnitude.

JimmE said...

This whopping deficit plays to the present PM's long game of dismantling the Federal Government outside of the Armed Forces. We are spending BILLIONS on unnecessary Toys of War, mostly from US companies in US plants. Once the economy picks up the slashing will start like never before. Already we are seeing the signs of the fire sale of Crown Assets. There's a great idea, sell off Crown Assets in a depression. Hope the Dippers take note of the chance they are about to blow by keeping confidence in this bunch.

A reader said...

JimmE, you guys are only losing confidence in the Conservatives NOW??? Where were you before the budget was passed?? Back then there was actually a chance to do something about it.

Jerry Prager said...

Mr. Harkov,
Your finance Minister was also the guy who left the province of Ontario with a concealed debt of 5 billion, the whole Lack of Common Sense Revolution is was and ever more shall be based on lies and faulty economics.

Mark McLaughlin said...

I'll await your post on Scotiabank revising their forecast UP. They seem to think the economy is going to start moving in the other direction by the end of the year.

. . .

Right. You guys can't have anyone talking about a potentially rebounding economy. Wouldn't want the benefit of Canadians to get in the way of the benefit of the Liberal party.

The doomsday cheerleading from a national party is sickening, regardless of ideology.