Friday, April 24, 2015

A Tale Of Two Budgets.


The title of this particular missive is, as astute readers (as which of you are not) will immediately recognize, honours Charles Dickens A Tale of Two Cities. The 'two' mentioned here, however, involve the recent budgetary announcements on the part of the Canadian Federal government and the Province of Ontario.

(An aside. In this discussion, I have avoided the use of specific figures and their justifications. Were I to do so, this would turn this weekly report into an extensive tome which would take an inordinate time on my part to write, and inordinate time on your part to read. Given newspapers and the Internet, all such information is readily available.)

Now I turn to Dickens again, who is proving to be a rather sturdy prop in these writings. This from his novel, David Copperfield, the speaker being the economically sound Wilkins Micawber:

"Annual income, twenty pounds; annual expenditure, nineteen pounds and six, result happiness. Annual income, twenty pounds; annual expenditure, twenty pounds nought and six, result misery."

The Federal government appears to have recognized this principle, and have put forward a balanced budget. It must be admitted that this took time, given the fiscal hole that opened up when the 'too big to fail' institutions fell apart, sending governments worldwide into a tailspin. But achieve balance they did, and no doubt Mr. Micawber would roundly approve.

Moreover, the Federal budget seeks to return to taxpayers excess monies it does not need, in terms of higher TFSA* contributions and a relaxation of RIF* rules with respect to withdrawal amounts. It is almost as if the Feds recognize that it is not "their" money, but ours.

There is no such recognition of this in the just tabled provincial budget. Indeed, the announcement makes it all too clear that Ontario will continue for some time to live beyond its means and spend beyond its capacity. A balanced budget is a thing of the future.

And keeping Mr. Micawber's words in mind, I find that the past and present initiatives of the current Liberal government do not exactly lend confidence to the proposed balanced budget in 2017-18. Think of such wonders as the e-health fiasco, the purchase of too small Medevac helicopters, the sleazy gas plant issue, the horror story that is Ontario Hydro, well, you get the picture, along with the loss some 2.3 billion taxpayer dollars.

As another Dickensian character might put it: "Bah. Humbug."

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* These explanations are given just in case a reader has been out of the country for a goodly time, or away from the planet on the good ship Oxycontin. TFSA is a tax free savings account and a RIF is a guaranteed registered income fund. A phone call to the Canadian Revenue Agency can explain their use, as can any reasonably educated banker. -- Ed.



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