11 January 2008

FY 2008 budget set already: annual charade becomes accountability farce

Any organization looking to influence provincial government spending in the budget for Fiscal Year 2008 can cancel their plans.

The budget is set.

An announcement Thursday by two cabinet ministers of capital spending for the fiscal year starting in April is proof the spending program is already done and likely has been done since well before Christmas, if not before the last general election in October 2007.

The announcement included a little jocular disingenuousness on the part of one minister:
Included in the money is $73 million for the 2008-09 provincial roads improvement program. That's a 10 per cent increase over the $66.5 million the program got last year.
"I hope I don't give Finance Minister (Tom) Marshall a heart attack today because I'm going to be looking for another 10 per cent over and above my $66.5 million," [transportation minister Diane] Whalen joked.
Tom knows all about it. So does everyone else in cabinet, most likely.

Otherwise, Diane wouldn't have been able to make the announcement.

And the pre-budget "consultations" usually organized by the finance minister?

No sign of those yet, but when they do come they will have returned to what they were when Brian Tobin's crew started them in 1997: a charade.

You see, in the old days, the budget-setting cycle for the new year began around mid-way through the old fiscal year. Everyone got their plans in place and allocated spending based on forecast income. After Christmas, ministers would troop in front of cabinet's treasury board committee to argue, beg and cajole their colleagues for every nickel they could or forestall program cuts. It was a brutal process and for some a time of high stress.

Once Tobin arrived, cabinet managed to refine the process such that the budget was pretty much done long before Christmas. Some years, the thing was done by September or October and that was in years when cash was tight. The only thing that was left was some last minute tinkering based on actual revenue performance and the federal budget which set the better part of half total provincial spending.

That's when they hit on the idea of 'consultations'. More than anything else, that gave cabinet a set of major themes they could use to explain the spending they'd already decided on before the sessions or, when there was some lose cash, allocate to relative minor items.

There were more than a few people who thought they could genuinely influence government spending by showing up at a local hotel and delivering a little speech in front of a bunch of people who also had their hand stuck out. The smarter ones realised how the system worked and had their meetings and delivered their briefs in private, at the right time.

When this new crowd took over in 2003, they carried on the annual spring charade. For example, Loyola Sullivan started his budget consultations for FY 2007 in November 2006 (note the date).
But his successor? Not a peep so far on if there will be a game of charades for 2008.

Seems like Tom Marshall has decided to move to a new model, one in which government's fiscal program is announced not when the budget is tabled in the House but upwards of three months in advance. That's what happened last year, even as the last of the pre-budget "consultations" were going on.

And the sort of information people need to keep track of actual government spending, like the audited public accounts? Well, in the old days those things were timed for public release well before the budget discussions started or while there was still time for people to have some influence over government's fiscal agenda for the coming year.

The Public Accounts for 2006 haven't been released yet. The Financial Administration Act - the main piece of government fiscal control and accountability legislation - requires they be released no later than February of the following fiscal year, a practice that fit with what happened in the old days of government administration. That's when we can expect them this year, long after they could be of any real value in helping set spending priorities for 2008 and beyond.

Instead, there was an unaudited 'report' on the performance of the government's consolidated revenue fund issued last July. The report is based on a modified cash basis of accounting and not on the accrual method introduced in the latter days of the Grimes administration. As the introduction to the report notes, anyone wanting to review government finances on an accrual basis would have to wait for the Public Accounts, due to be released "at a later date".

That later date still hasn't arrived.

When the provincial government didn't have a lot of spare cash to fling around, the pre-budget consultations served as a way of managing demands and expectations. People could feel like they were having an input even if, in practice they didn't have any real impact.

It may go against what you'd expect - or even what the provincial government might say - but as the provincial government coffers start to overflow, the need to manage demand seems to have grown. And as that need has grown, real information on government spending seems to be harder to find; having meaningful input is harder, instead of easier.

There should be a wide public debate on spending priorities for next year and for several years into the future. That debate should be founded on a clear understanding of what is happening and what is likely to happen in the provincial economy.

Instead, we seem to moving from a budget charade into what is - essentially - an accountability farce. People like municipal leaders who are looking for cash to pave roads and build water and sewer based on the record government revenues reported before Christmas don't seem to realise the cash was spoken for long before Tom Marshall spoke to reporters.

And the few millions announced in road work by two beaming cabinet ministers?

It might be a record in a province that has typically been strapped for cash, and where capital works meant borrowing more, but in a province with over $2.0 billion coming from non-renewable resource royalties, it's not even 10% of the cash coming this year, let alone what will likely flow next year.

Makes you wonder where the rest of the cash is going.

We may never know.

And that's pretty much the whole idea of what has gone from being a charade to a full-on budget accountability farce.