What's the point?

The Federal Government has been under pressure from the opposition parties and the media to provide an update on the state of Canada's finances. It now appears that Finance Minister Bill Morneau, who postponed the budget that had been due in March, will table such an update on July 8. In principle it's always a good thing for governments to keep the electorate informed about what's going on, especially when it concerns money.  In this case, however, anything that Morneau chooses to say will amount to little more than a guess.

The Government's budget watchdog has already projected the deficit for this fiscal year (April to March) at more than C$ 250 billion, about ten times larger than seemed likely before the pandemic hit. Can Morneau meaningfully update that estimate? The Government has just announced the extension of some of its emergency benefit programs, which will presumably cost money.  At the same time, there are signs both in Canada and the US that the reopening of economies is producing a surprisingly sharp rebound which should translate into somewhat higher revenues, and lower takeup of emergency assistance, than seemed possible just a few weeks ago.

Remember back a couple of weeks, when experts on both sides of the border were completely wrong about the employment situation in May?  That can't even be called a forecasting error, given that the data related to a time period that had already passed. How much harder will it be for anyone to provide a meaningful forecast for the next nine months?  Think of the uncertainties -- will there be a second wave of the pandemic?  Will there be a vaccine by year end, as Donald Trump and even Dr Anthony Fauci seem to be suggesting? How much of the job shedding we have seen in the last three months will be reversed as to demand recovers, and how much will turn out to be permanent?

Morneau will no doubt spell out his Department's assumptions on all of these issues, but the range of possible outcomes is so wide that anything he says can hardly be taken as a forecast in any traditional sense. And given that opposition politicians and media types have trouble interpreting forecasts at the best of times, it's not apparent that we will be any the wiser. One sure prediction though: the deficit figure, whatever it may be, will prompt all manner of hand-wringing from the Tories about the inevitability of massive tax hikes once the crisis abates.  In fact, they've already started.

Update, 18 June: the official budget watchdog has now updated his estimate of this year's deficit to C$ 256 billion. Since that's the only number the Tories and the media really care about, Morneau's presentation in July seems entirely superfluous.