TERRAZZANO: Creative accounting for Mark Carney in five easy steps

WARNING: This advice for creative government accounting is both satirical and based on real-world events.  

DISCLAIMER: See fine print regarding side effects.   

Step one: Balance half the budget  

Cutting $78 billion from the budget is hard. And caucus gets whiny about cuts to pet projects.   

So, here’s a simple solution: Split the budget and only balance one side.   

Key step: Don’t tell Canadians you aren’t balancing the other side of the budget because their kids and grandkids will have to pay interest on all that extra borrowing.  

The key ingredient is confusion. Use jargon about a “fiscal anchor” that’s based on something vague like “balancing day-to-day operating spending” by 2028.   

With luck, Canadians won’t notice the operating budget could be balanced next year just by freezing spending.   

DISCLAIMER: Taking this advice will not actually diminish the billions in interest charges by a single cent.   

Step two: Come up with a snappy slogan  

Now let’s pen a slogan to explain the borrowing in the other half of the budget.    

“Taking on more debt to spend more on capital.”  

Scratch that, it’s too clunky and honest.   

Try this: “Spend less to invest more.”   

DISCLAIMER: Slogans don’t change the math. As another Liberal prime minister once said, “The quicksand of compound interest is real.”  

Step three: Re-label spending  

Pay close attention: Don’t cut spending, just re-label it as “capital investment.”   

How many people know that operating subsidies for businesses shouldn’t count as capital spending for governments?   

How much can you re-label? A lot.   

Try taking $94 billion of operating spending and re-labelling it as capital investment.   

It’s a win-win. It looks like a cut to “operating” spending, but you just crammed it in under “capital.”   

DISCLAIMER: The parliamentary budget officer may call you out for using an “overly expansive” definition of capital that goes “beyond the current treatment in the Public Accounts and international practice.”  

Step four: Cut spending … tomorrow   

Canadians despise wasteful government spending.   

So, make sure your budget has “$60 billion in savings over five years,” written in big bold letters.   

Of course, you don’t actually spend less.  

Vaguely highlight how you’ll save money in the future. Then bury the government’s overall spending and debt numbers in the annex, 239 pages into the budget.   

You can even increase spending by $100 billion over five years.  

Just keep promising to save money — tomorrow.  

DISCLAIMER: Eventually, soaring interest charges force actual spending cuts. Just ask Saskatchewan’s New Democrats, who made “dramatic cuts” and closed dozens of hospitals.   

Step five: Change the guardrails   

Use sleight of hand to switch the .  

Switch the anchor from reducing the debt-to-gross domestic product (GDP) ratio to reducing the deficit to-GDP-ratio.   

Deficit and debt sound the same and you can baffle the few who notice the difference.  

Tell Canadians the government has “the lowest net debt-to-GDP ratio of the G7” and this “strong fiscal position” gives the government the “fiscal space” to borrow billions.   

Happily, those stats obscure the facts of Canada’s debt. For example, net debt treats the money in the Canada Pension Plan as an asset that politicians can raid when in a pinch.  

DISCLAIMER: Eventually, credit rating agencies will release a statement like this: “Persistent fiscal expansion and a rising debt burden have weakened (Canada’s) credit profile and could increase rating pressure over the medium term … Federal finances run a high risk of further deterioration.”  

Bonus step: Muzzle the watchdog  

Independent budget watchdogs are the worst. They always publish reports on the true state of your finances. The standard procedure is trotting out competing talking heads to muddy the water.   

If that doesn’t work, put up a job posting for a new budget officer, calling for “tact and discretion.” That should send a chill. You want a budget lapdog, not a watchdog.   

Conclusion  

Creative accounting is so easy that even a rookie politician like Prime Minister Mark Carney can implement this five-step plan.   

DISCLAIMER: All of this assumes Canadians are ignorant and won’t notice the soaring debt and interest charges — that is a significant risk for this strategy.  

Franco Terrazzano is the federal director of the Canadian Taxpayers Federation