BACK TO TABLE OF CONTENTS

THE LIBERAL GOVERNMENT'S FINANCIAL JOCKEYING

During the past eight years, the Liberal government has been raking in huge billion dollar surpluses, well over its own projections. For this, the Liberals have taken a surprising shellacking from the media. Apparently, even the latter is offended by the Liberal's unbridled passion for hording the taxpayers' cash for its own use.

The fiscal year 2004 - 2005 was shaping up to be yet another stellar year with another huge surplus. The government correctly anticipated that this would lead to even more unfavourable criticism from the media.

In order to prevent this - a potentially dangerous situation with an election expected in a few months - the government decided it would quickly decrease the surplus. It did this by ordering a massive increase in spending for the fiscal year 2004 - 2005 by more than $20 billion over the previous year.

This increase in spending included a new health accord with the provinces, increased equalization payments to the provinces, and also one time expenditures such as $6 billion in payments as follows:

• More than $2.7 billion paid in an off-shore petroleum revenue agreement with Newfoundland and Labrador. This generous pay-out was scheduled to be spread over several years, but was paid off in one shot;
• $2.3 million to Atomic Energy of Canada Ltd. for its environmental liabilities; and
• $1 billion to cattle producers and other aid to farmers.

This increased funding amounted to a 15.1% increase in expenditures over the previous fiscal year and is the biggest increase in government funding since the days of Pierre Trudeau. In 1974 Mr. Trudeau authorized a massive increase in expenditures to fight an economic crisis and to win an imminent election - which he did. Mr. Martin is apparently hopeful that history will repeat itself and that the manipulation of the government's expenditures this year will also lead to his re-election in the next federal election.

Despite all its efforts to lower its 2004 - 2005 surplus however, the government has been embarrassed by the fact that it was still swimming in money. According to the National Post (November 4, 2005) the surplus this year is expected to be $12 billion.

As a result, with an election imminent, on November 14, 2005, Finance Minister, Ralph Goodale announced a plan for broad based tax cuts amounting to approximately $3 billion, another $3 billion is to go to debt relief and new spending and a further $3 billion is to be set aside for a "rainy day" contingency fund.

The Liberals have been concerned that they may lose the middle class vote unless it delivered this broad based tax relief. This is especially the case since taxpayers will receive heating bills this winter that are likely to rise by up to 50%.

The fact is, however, that much of the money now at the disposal of the Liberal government was taken away from Canadian families. Personal income taxes collected in 2004 - 2005 increased 5.8% to $4.9 billion while corporate taxes swelled 9.2% to $2.5 billion. In addition the government also receives income from royalties on our oil and gas resources, the GST, customs and excise taxes etc. This has all provided a nice comfy pillow for the Liberals to bestow their largesse on the taxpayer just in time for the election. There is lots of money rolling into the government these days, but still, Canadian families suffer.

BACK TO TABLE OF CONTENTS