Canada federal budget surplus -- no, really!

The Department of Finance in Ottawa reported today that for the first eleven months of the current fiscal year (i.e. April 2018 to February 2019), the Federal Government ran a budget surplus of  C$3.1 billion, compared to a deficit of $6 billion in the same period of the prior year.  Revenues are growing apace, up more than 8 percent from a year earlier, while program spending has risen less than 5 percent.  It seems that reports suggesting that the government was having trouble spending all the money it had budgeted, particularly on infrastructure, were at least partly correct. 

At first glance it would seem that the full-year results will be far better than the deficit of $14.9 billion expected on budget day just a few weeks ago.  However, the Department of Finance notes that the budget included over $4 billion in one-time measures that will be booked to the current year once the needed legislation has been approved.  Further, the usual "year end adjustments" -- Ottawa's notorious "thirteen month" which allows all kinds of accounting tricks to produce the result the government wants to portray -- are expected to result in a final deficit figure that is broadly in line with the budgeted number.

Two conclusions can be drawn here.  First, fiscal policy, far from being stimulative, as the government intended it to be, has actually been a modest restraining influence on growth over the past year. Given the hand-wringing at the Bank of Canada and elsewhere over the economy's loss of momentum, this is, to put it mildly, embarrassing. Second, any "adjustments" put in place to boost the year-end deficit figure for this year will almost certainly lead to a direct reduction in the deficit for the year that's just begun, unless the government suddenly and miraculously becomes better at actually spending money. 

It will be interesting to see how the Trudeaucrats spin their fiscal achievements when the election campaign heats up. Up till now they've been bragging about how they're investing in economic growth, but it turns out that's not really true.  Given the populist turn in electoral sentiment, as seen in elections in Ontario and Alberta, it would seem there might be more votes to be had from promising fiscal rectitude -- something which today's data, bizarrely enough, would allow the Liberals to claim!