Beware of finance ministry predictions - Canada Notes - Brief Article

Catholic New Times, Dec 1, 2002

OTTAWA -- Contrary to Finance Minister John Manley's warnings of a shrinking surplus, the "Economic Update" issued recently by the Canadian Centre for Policy Alternatives forecasts a combined surplus of $27 billion for this year and the next.

The update pointed to its record of accurately forecasting federal surpluses over the last three years: $40 billion compared to the actual cumulative surplus of $39 billion.

This also compares with the grossly inaccurate government estimate of $7.6 billion over the same three years.

"The federal government fiscal situation is much more positive than what has been suggested by federal officials," says the CCPA update.

Finance officials, backed by most private sector forecasters, are predictably downplaying the possibility of such large surpluses. "The credibility of their prediction is doubtful, however, given past efforts to deliberately understate the true budget balance," the Centre said.

It also pointed out that federal revenues fell steeply as a share of the Gross Domestic Product last year, thanks to personal and corporate income tax cuts.

"This decline in federal taxation will need to be reversed given the expected investments in medicare, infrastructure and environmental protection."

For more information visit www.policyalternatives.ca.