Governments fare poorly on ‘Pinocchio Index’

Canada’s governments have regularly missed budget spending and revenue targets during the last decade, according to a report released today by the C.D. Howe Institute.

Click here for the think tank’s ‘Pinocchio Index.’

In Canada’s 2012 Fiscal Accountability Rankings, authors Colin Busby and William B.P. Robson find the combined spending overruns of federal, provincial and territorial governments have surpassed $53 billion in the last 10 years. If budget targets were met more accurately, they point out, current taxes, deficits and debt loads would be lower and more manageable.

Read: Ottawa misses fiscal target by $1.3 billion

The authors show some jurisdictions present budget and public accounts figures clearly, making key figures in both documents easily comparable. Further, some governments table their public accounts in a timely way, with clean audits and updates on changes to budget plans during the fiscal year.

The federal government and the governments of Ontario and New Brunswick lead the way in presenting clear public accounts documents and making an effort to compare and explain deviations from budgeted and year-end revenue and spending figures. Other governments do less well. Quebec, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, and the Northwest Territory and Nunavut do not present straightforward and comparable figures in their budgets or public accounts.

Read: Flaherty announces record deficit

As for reliability in hitting spending targets, the study shows Ottawa having the lowest tendency to overshoot, with Ontario and Nova Scotia not far behind. Newfoundland and Labrador, uniquely, showed an average undershoot. As for accuracy, Quebec, New Brunswick, Ontario and Nova Scotia show respectable scores, while resource-dependent jurisdictions, notably Saskatchewan and Alberta, did poorly, with a tendency to badly overshoot budget targets.

“The past decade’s overshoots, and growing awareness that lack of fiscal transparency undermines good management of public money, should inspire Canadian governments to improve their financial reporting and their adherence to targets — and for legislators and voters to hold them more closely to account,” Robson says.

Read: Ottawa stuck with a massive structural deficit

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.