Thursday, March 23, 2006

Corcoran On Budgets

Terence Corcoran, of the Financial Post, has a must-read column today on what he calls the balanced budget “hoax” provincial governments are pulling on taxpayers.

Writes Corcoran:

“If we needed conclusive evidence that the national fixation on balanced budgets and debt reduction has served no purpose except to lead Canadians into a government-spending free-for-all, this year's budget season should do the trick. Canadians have been hoodwinked by empty economic and political slogans about balanced budgets into a national spending extravaganza”.

Corcoran’s point is that governments across the country are awash in tax revenues and that makes it pretty easy for them to look fiscally responsible. In fact, they have so much money it takes some doing for them not to balance their budget. See Ontario for example.

And the problem is that all this news about balanced budgets and surpluses masks one important point: government are going on massive spending sprees.

Or as Corcoran puts it, “Fiscal responsibility acts and balanced-budget legislation are all the rage in political circles, a sort of joke on voters. Behind the facade of responsibility are spending rampages funded by rapidly rising government revenues.”

Sooner or later we are all going to have to pay for today’s reckless spending.


Monkey Loves to Fight said...

I support fiscal responsibility and therefore believe balanced budgets are more desirable over running deficits. That being said, government spending is probably higher than it needs to be and so are taxes, so I think a tax cut as well as a minor spending cut would not be a bad idea. Although I believe debt repayment should be the first priority before tax cuts or any new spending. In the case of Alberta where they are debt free, they can afford to spend lavishly and have the lowest taxes in the country. However, it probably wouldn't be a bad idea to put some of the money aside for a rainy day in the heritage fund.

Anonymous said...

If the Ontario gov't can run year after year of deficits, why shouldn't hospitals and school boards follow suit?

Monkey Loves to Fight said...

Anonymous - the Ontario government shouldn't be running deficits year after year and neither should hospitals and school boards. The Ontario government needs to show some guts and make the necessary spending cuts.