Tomorrow's Economic Update from the Finance Minister should shed some light on a variety of questions that the CTF has been asking for several months now. However, the statement will fall well short of providing a full and clear picture of the government's finances.

With respect to the surplus, Finance has hinted for several weeks that they will probably run a surplus of at least $15 billion (read: $15 billion of over-taxation) for fiscal 2000-2001. Indeed, the Fiscal Monitor reported a $20.4 billion surplus for the 11 months ending in February.

However given the ins and outs of government finances including provincial transfers, EI payments, etc., the final figure will be closer to $16 or $17 billion.

This is why the PM scooped the Mr. Martin yesterday and blurted out the $15 billion figure during question period. But Paul Martin is the master of managing expectations, he'll hold out $15 billion for debt repayment as a likely scenario tomorrow, but will probably announce $16 billion or more this fall during his economic update. (Note: we still believe it will be turned into a full-fledged October or November budget).

What a coup for the G-liberals this will be! There messaging will be partisan and clear. While the Canadian Alliance continues its amusing if not pathetic version of "reality TV on Parliament Hill - can 66 men and women survive with the wetsuit guy " the grits will gloat about prudently managing the nation's finances.

But this good news on debt should not overshadow some other important and pressing questions. The most pressing question is one of medium-term forecasts. In his 1999 (November 2nd) and 2000 (October 18th) economic updates, the Minister clearly laid out five-year revenue and spending projections. All indications point to a mere two-year time frame for this forthcoming statement. Why the break from tradition Why can't we see a five-year projection

One can only be left to assume the fears (held by economists not to mention one prominent Liberal backbencher) that Ottawa will slip back into a planning deficit may indeed be well founded.

Given the spending orgy (some $3.5 billion in the last few months alone) the government has embarked on since the election, many are starting to wonder if a deficit is indeed a foregone conclusion. To be fair, the government left $1.9 billion on the table last October as uncommitted for, presumably, spending purposes.

Along with this $1.9 billion, Finance projected program spending for 2000-2001 to max out at $119.7 billion. So total program expenditures for the last fiscal year should not exceed $121.6 billion. Furthermore, given the climate of economic uncertainty, program spending should not exceed the rate of inflation plus population growth.
The question remains, will the Minister be able to control spending within these parameters

Finally, the Minister should be forced to give a clear reason why he will not commit to a legislated, multi-year debt reduction schedule. And one other thing, Minister Martin will continue to crow about his historic $100.5 billion tax cut announced last October.

Taxpayers should keep in mind that $3.2 billion of this amount is really spending in the form of an enhanced child tax benefit, another $20.7 billion is foregone revenues to the restoration of full indexation to the tax system, and yet another $29.5 billion off CPP tax increases are not factored into this calculation.

When you do the math, the tax cut is really only $47.1 billion. While it is welcome indeed, only in Ottawa would a Finance Minister try and tell you that 100.5 equals 47.1. No wonder our national debt still stands at $565 billion. Thirty years of bad math will do that to a country.