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"So, what is going on?"

Your analysis makes sense but the answer is pure politics. In 2011 Harper promised a lot of tax reductions once the budget was balanced. The closer 2015 gets the less margin for error.

Classic starve-the-beast tactic.

Harper and Co. are anti everything, so any excuse to cut is good enough - we'll probably see some tax cuts for the rich and corporate welfare programs to 'stimulate the economy' too.

Brace yourselves: the Euro Disease is coming.

Welcome to the austerity bandwagon.

"So what is the anticipated revenue shortfall that is prompting this action? Apparently, the federal government is going to have an estimated 2.1 billion dollars less in revenue to work with."

It's also somewhat mysterious since the montly financial monitor reports seem to have the government ahead of its budget targets (as of November 2012, they were forecasting a $26B deficit. At the end of December, with three months left in the fiscal year, the actual deficit was just under $13B. Sure, there's a couple of month lag, and there are always year-end adjustements, but still...

Probably just a way to dampen down expectations

Bob:
The monthly reports are definitely another reason why I have been scratching my head on this one. Just recently, the Finance Minister was in the news saying that he expected revenues to take a "significant hit" but 2.1 billion dollars on revenues of over 260 billion is more like a margin of error rather than a significant hit.

What a difference just a few months can make in the world of federal government finance. Apparently, weak commodity prices and a slowing economy are playing such havoc with government finances that Thursday’s federal budget will show a downward revision of economic growth forecasts as well as a shortfall in revenue that will be addressed by extra savings that will come from limiting the growth of federal discretionary spending – direct spending on programs and services as opposed to transfers.

Bob is right, this exercise is just to dampen expectations. People forget that the Budget isn't all its cracked up to be. In order to understand the budget, you have to understand the government spending process.

First, the Budget is not about spending, it's about revenue and politics. Spending is contained the Main Estimates, which are tabled in the House a month before the Budget, this year's Estimates have been tabled. Estimates are the government's expenditure plans and the Main Estimates contain all routine expenditure. The Estimates turn into Appropriate Acts which authorize a Department to draw money from the Consolidated Revenue Fund.

The Budget is about revenue. Since the Estimates are already known, and thus spending is known, the remaining issue is how we are going to pay for it. The Budget is about setting tax rates and debt levels, that is Supply. It's also about announcing a few supplementary items that weren't in the Estimates, usually the political items the government wants credit for since the Budget Speech is broadcast nationally and covered in depth in the media. These get turned into Supplementary Estimates. The budget is somewhat about spending and mostly about theatre. But theatre, that is making people want to watch politics, is a central part of politics.

The Government's fiscal paradigm is about defining spending first and then paying for it. This is because taxation is mandatory, so we have to know how much we are going to take before we take it. Government isn't a retail store that takes any additional revenue from a customer that walks in through sales. Government defines what it is going to do (in Estimates), does it, and doesn't do any more until next year.

Besides, the Government Spending Process is a year-long affair. All of the plans are known to those who need to know them, they just aren't official until the Budget is unveiled in the House. The ship of state does not turn on a dime.

It's the same game that Paul Martin used to play (and the opposition - Jim Flaherty included - used to bitch about). Plead poverty and when you beat your deficit goal by a year or by a few billion dollars, emphasize your wise fiscal stewardship. Conveniently, at this rate, Flaherty and company will be in a position to emphasize their "wise fiscal stewartship" about 6 months before the next election. Funny how that works out.

I'm sympathetic to the complaint that this isn't a particularly good practice (if the CEO of a public company engaged in these sorts of shenanigans, they'l likely be up on securities charges, or at least lawsuits - "Oooh, looks like it's going to be a bad year. Surprise, record profits! To bad you suckers sold all your shares"). Still, that sort of fiscal conservatism (in the non-ideological sense of the term), if not fiscal pessimism, has an intuitive appeal to me. Maybe it's the Scottish in me.

I've been after federal government jobs for a while (long story, but I predict a funding boost for the Canada Food Inspection Agency).

I have a friend who was a career Public Servant. I was in a job process when the budget got postponed because the government fell in 2011. I thought that might have an impact. No, he said, it did not, and gently explained to me how the Estimates work and they they are the figures that really matter. Once the Estimates are tabled, the Government can draw against them using Special Warrants, essentially its amounts to the Government begging the Governor General for its allowance when Parliament isn't sitting.

I then learned to pay attention to the Estimates to learn about the fate of Departments and programmes I was interested in or had interviews with.

Determinant,

I currently work for the Federal Government (and I'm here to help!). You're right about the Main Estimates being important, particularly w.r.t special warrants and the continuance of supply during election cycles, but you're wrong about the relationship between the Estimates and the Budget, particularly with regards to whose hand is on the tiller. The Budget dictates changes to the Estimates and completely overrides them. The Main Estimates are, indeed, the planned spending for the following fiscal year, they are, indeed drafted by the departments, they do, indeed, get turned into the 'interim' and 'supplementary' and 'final' supply bills, and they do, indeed, contain details from previous years' budgets. However, in the past, the Budget process was essentially closed to the public, and so TBS in confidence would have been able to incorporate the Budget factors in the same fiscal years' Estimates. Then the Budget was tabled in the HOC BEFORE the Estimates for that year were released (say, in Feb, with the estimates in March), since the budget was the first time the public would have seen anything. So there, the Estimates were a good proxy for next year's spending.

The Chretien/Martin governments opened the process up, and the internet made it more transparent, but the fact that the Budget is now presented AFTER the Estimates has greatly devalued their ability to predict future FY spending, since the current Estimates do not incorporate any of the Budget details, and the 'Interim Supply' bill (based on the currently released Main Estimates) will only cover 1/4 of this FY. The remaining funding will not be allocated until 'Full Supply' is passed in June. By then the new Budget changes are usually incorporated into the Estimates. So when the house is sitting, any new spending, cuts or revenue in the Budget will be incorporated into the Estimates at that time, if it has been so specified. Therefore, what the budget contains will be very important, since it will contain NEW proposals that affect the both the Estimates for FY and going forward.

As an example, the current Estimates (FY13-14) show DND getting a reduction from 19.7 to 17.9B, but this is from previous years' budgets. If the upcoming Budget calls for additional reductions to DND, then they will be incorporated, and the current 'estimate' for DND to draw 17.9B from the CRF this FY will not stand. For this reason, you'll see that Estimates now incorporate an 'estimates to date' column, which shows how much the department / agency / program has consumed in the previous FY. When comparing them, you'll note how much of a difference there is. This is because of things that were passed in the 2012 Budget, and were incorporated following the Main Estimates.

Examples: P. II-232 shows that the NRC FY 2012-2013 Estimates to Date were 91.2M above the Main Estimates because of "An increase of $91.4 million ($91.6 million including $0.2 million for employee benefit plans) for the Industrial Research Assistance Program from Budget 2012". The current Estimates incorporate the governments' reductions as laid out in Annex 1 of Budget 2012. For example the reduction in DFAIT's budget was shown to be $115.7M on P.267 of Budget 2012, and is incorporated in this year's estimates as:"a decrease of $118 million in accordance with savings identified as part of the Budget 2012 Spending Review". (P.II-151)

So, you can't really rely on the Estimates to give you an idea about upcoming changes, since everything listed in the Estimates you see is subject to change in the upcoming Budget. Will the government close entire departments? No. Will they do something that drastically changes the Estimates? Maybe. They did last year. In any event, as a kind hearted Public Servant, I'd appreciate it if the public weren't mis-informed about how the government conducts it's budgetary process. The buck actually does stop at the HOC.

For more info, please consult:
http://www.budget.gc.ca/2012/plan/pdf/Plan2012-eng.pdf (Budget 2012)
http://www.tbs-sct.gc.ca/est-pre/20132014/me-bpd/me-bpd-eng.pdf (Main Estimates FY2013-2014)
http://www.parl.gc.ca/About/House/compendium/web-content/c_d_financialcycle-e.htm
http://en.wikipedia.org/wiki/Canadian_federal_budget

BPS:

What you define as "drastic" may be drastic for a department, but not for the Estimates as a whole.

I am well aware of the role of supplementary estimates. The budget speech is reserved for political items the government wishes to take credit for. The Main Estimates are the routine items. As I said, I strongly doubt the Minister of Finance is going to revisit his entire spending plans at this late date because of a poor forecast.

As an example, in January the CFIA opened up a very large staffing process for food inspectors. All points of Canada were advertised and delightfully it had "various language profiles". I have B-level results and have taken individual French training, I can fill a BBB French position. This process is so large it has started its own discussion thread on redflagdeals.ca, there are candidates in every province. Indications there are that this is a national process being run centrally from Ottawa, not a regional one meant to staff five replacements. This is big. All the people who need to know do know, but until the Budget Speech nothing is official.

Now, I have had all tests up to the background check, I am awaiting the final test result which is interview-level. The next step according to the Statement of Merit is a Reliability Status check and then you go into the pool, and hopefully language testing.

Now the Main Estimates did not provide a funding boost for the CFIA. But food inspection has been a thorn in the government's side, and this big a process requires money to pay for the new heads. So I expect to see a funding boost for the CFIA on Thursday, after which the staffing e-mails will start coming at me. First on the list would be a Reliability Status form.

As your your help, I am unsure what help you can provide. You are speaking to a man who has hauled a Department before the Public Service Commission and a handful of people owe me for getting them reinstated into a staffing process due to irregularities I pointed out for which Corrective Action was taken.

Resume, check. French Results, check. Did all the testing, check. Boring background, check. Just waiting for the blessed e-mail. Really, I do have it all covered.

What, no budget discussion?

what did u say

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