the deficit years

In a previous blog I talked about the surplus predicted by the department of Finance but the correction by the Minister several weeks later.The final deficit was $69 billion greater than first predicted by the department.At the same time there was little noise from the "finance watchdogs".This is not a prediction error;this is merely the Minister asking for more money for his projects.This addition is on top of the ordinary program increase built in from last year.

It must be remembered that the deficit amounts are not tremenduously sensitive to the economic growth rate.The economy was in recession in 2009 but not by such a tremenduous amount.And in fact, the economy turned up in 2010 yet Mr.Flaherty still called for a deficit.The newspapers are not clear on the amount;I believe it changed at mid-year.But it was between $40 and $46 billion.The growth rate was fairly robust in 2011 and again Mr.Flaherty called for a deficit.This time it looked to be about $20 billion but these figures are not easy to find.There will likely be a deficit  until 2015.Then we can expect a balanced budget.

So here we have a slightly decreasing deficit while there is an increasing economic growth rate.At the same time the revenues from the G.ST. tax continue to grow by 1.5 to 3% each year.The point easily seen here is that the deficit doesn't seem to be connected to the positive growth rate.It  was still very large as the economy picked up.Secondly the additional discretionary revenue from the budget  deficits total about $130 to$140 billion.Added to the $660 billion from collected G.S.T. revenue not applied to the deficit this totals about $880 billion.Probably the department has a better idea what this "discretionary government revenue" was used for than I do.