On November 2nd, Bill Robson, President of the C.D. Howe Institute, an independent economic think tank, brought the roof down in Gzowski 115. He delivered a high-octane lecture about the benefits of sensible budgeting to a room of over a couple dozen people. This wasn’t a patronizing lecture about why students should buy off-brand marble cheese to achieve the best of both worlds in a single block. This was a roller coaster ride about federal, provincial, and municipal budgets.
Bill Robson graced Trent University with his presence as part of the 9th annual Harry Kitchen Lecture Series. Professor Kitchen himself made an appearance and spoke briefly with bombast about the importance of teaching students the right skills to succeed as economists of the future.
The professor was with Trent University from 1968 until 9 years ago, when this lecture series was named in his honour.
The lecturer of the hour brought an energy that is linked, no doubt, to his 15 years of working with an economic think tank. In 2000 Bill Robson was the Director of Research at the C.D. Howe Institute, Senior Vice President at 2003, and President by 2006. During this time Robson has published 200 monographs, making him a prolific performer in economics. Robson is also a regular presence on the CBC, having clocked numerous appearances on The Big Picture panel, providing hot takes for the world.
Robson came to Trent University to talk about the bad budgeting practices that his institute has helped to combat at the federal and provincial levels. He refers to a practice of under-reporting revenue and spending in budgets that are published at the beginning of parliamentary sessions. This practice, according to Robson, began with the Chretien government in the early 90’s, while Paul Martin was Minister of Finance. It was used to gloss over a large budgetary deficit that the Liberal government had promised to erase during the 1993 federal campaign that won them a parliamentary majority. This practice of over-stating projected costs was credited with “erasing” the deficit and came to be common-place.
This allowed the Liberal government of the early 90’s to curb spending which was used to service the deficit. Critics point out that this underreporting of revenue also allowed deep cuts to social welfare spending.
Robson’s objections to this practice fall in line with the mission statement of the C.D. Howe Institute, which is to “raise living standards by fostering economically sound public policies”. He also stated that in times of crisis, governments must spend to alleviate the effects of economic shocks to citizens, but in times of prosperity, that governments should focus on frugal fiscal policy to ensure that there is money to spend during those aforementioned crises.
He believes that when this practice is used in times of prosperity it lends itself to bad policy. He pontificated that politicians who discover a large sum of money at the end of a budget cycle are prone to spend the money hastily on projects. He believes that such ventures that are wedged into the final hours of a parliamentary session are prone to failing to meet their stated goals, or have unintended consequences.
When asked about why governments do this, Bill Robson cited risk aversion as being a prime factor. In a matter-of-fact tone, Bill discussed how governments always want to end a year with a surplus, which communicates to constituents that they are fiscally responsible, which restores people’s faith in a party’s ability to govern.
It was because of these concerns that the C.D. Howe Institute decided to comb through budgetary reports of federal and provincial governments and lobby for them to change this practice. Since 2014 the under-predicting of revenue has been on the decline amongst both provincial and federal governments, although municipalities still received dismal grades according to their metric.
When asked about why young people should care about budgetary reporting, Robson responded, “What’s happening now is that governments are pushing and hiding costs into the future, so what we are trying to do is to shine a light on this practice and let the people decide if this practice is appropriate.”