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November 10, 2021

Bottom Line: Canadian Governments’ Budget Overshoots Mean Higher Spending and Taxes

  • Over the course of 20 fiscal years, Canada’s federal, provincial and territorial governments routinely overshot their annual budget targets, says a new report from the C.D. Howe Institute.
  • Authors William B.P. Robson and Miles Wu find that since 2000/01, Canada’s senior governments have overshot budgeted expenses by a cumulative $119 billion and overshot budgeted revenue by $143 billion. They went into the COVID-19 crisis spending $3,100 more per Canadian, and taxing $3,800 more, than they would have if they had met their past budget commitments.
  • The authors note that annual revenue and spending overshoots tend to coincide. That would not happen if governments responded to booms and busts with normal stabilization policies. It suggests that governments reacted to accidental or engineered revenue overshoots with in-year spending, or otherwise manipulated their reported numbers to achieve a predetermined bottom line.

Cumulative Spending Overshoots

William Robson

Bill Robson took office as CEO of the C.D. Howe Institute in July 2006, after serving as the Institute’s Senior Vice President since 2003 and Director of Research from 2000 to 2003. He has written more than 270 monographs, articles, chapters and books on such subjects as government budgets, pensions, healthcare financing, inflation and currency issues.

Miles Wu

Miles Wu is a former Research Assistant at the C.D. Howe Institute. In his role, he provided research support, literature review, and analysis for various projects and presentations. Prior to the C.D. Howe Institute, Miles had worked at the Information Technology Association of Canada, Queen’s Park and Toronto City Hall in both internship and full-time positions.