Home Random Page


CATEGORIES:

BiologyChemistryConstructionCultureEcologyEconomyElectronicsFinanceGeographyHistoryInformaticsLawMathematicsMechanicsMedicineOtherPedagogyPhilosophyPhysicsPolicyPsychologySociologySportTourism






Balanced Budget Rules in Canada

Contrary to the U.S., where 49 out of 50 states have some form of balanced budget legislation, Canadian Provinces vary in the degree of fiscal stringency they impose. In a Bank of Canada working paper entitled “The Effects of Budget Rules on Fiscal Performance and Macroeconomic Stabilization”, Jonathan Millar lays out the variations in Balanced Budget legislations across Canada: three out of ten provinces (Ontario, Newfoundland and Prince Edward island) have no balanced budget legislation, whereas the remaining seven provinces have enacted some form of balanced budget legislation. British Columbia is an interesting case; it has actually enacted and repealed Balanced Budget Legislation three times, and in 2009, the liberal government announced it would be running deficits for two years before restoring a balanced budget in 2011.[40]As the article points out, the degree of stringency in the balanced budget legislation varies among the remaining six provinces with balanced budget legislation. For example, the restrictions enacted by Nova Scotia and Saskatchewan apply to forecasted (rather than realized) balanced budgets. Moreover, the balanced-budget requirements in both Saskatchewan and New Brunswick apply to multi-year periods, implying that each could legally sustain deficits in any given year.[41] The article concludes that, among the provinces, Manitoba and Alberta’s anti-deficit legislation appear to be the most stringent considering these criteria, given that: (1) in both cases the restrictions apply to realized balances and single-year budget periods; (2) Manitoba’s act contains explicit penalties for not achieving a budgetary surplus; and, (3) Alberta’s legislation clearly states debt-reduction targets that must be achieved by their government.[42] A table from the report that summarizes each province’s restrictions can be found in the appendix (see table A-3). Finally, it must be emphasized that all of the provinces’ budget legislation have escape clauses and mechanisms for enforcement are not well defined for any province either. Indeed, governments could amend, or even repeal this anti-deficit legislation if compliance becomes particularly costly, as has been the case in British Columbia.

 

2.1.4 Budget Shortfalls: US-Canada Comparison

Table 2.1 in the section below, which ranks the Canadian provinces on their change in unemployment rate as well as their budget deficits as a percentage of total budgets, shows that Canadian Provinces have been relatively better able to balance their budgets than their American counterparts in the economic crisis, despite the generally more stringent balanced budget regulations in the US. In 2009, only two Canadian provinces experienced large budget shortfalls, Ontario and Alberta, at 3.6 and 7.6 percent, respectively. Three other provinces experienced shortfalls of less that 1% of predicted revenues, British Columbia, Prince Edward Island and Quebec. In contrast, budget shortfalls ran from 0 to up to 36.8% in the US in 2009, averaging at about 11.3% across the states. In 2010, four provinces experienced budget shortfalls, Saskatchewan (5.9%), British Columbia (4.5%), Manitoba (1.8%) and PEI (0.7%) and the other six provinces experienced greater than predicted revenues. In contrast, in the US 46 states expect budget shortfalls in 2010, averaging at about 17% of the total budget and ranging up to 58.2% in the case of California.



 


Date: 2016-04-22; view: 720


<== previous page | next page ==>
Regression results for fiscally conservative behaviour | Changes in Spending
doclecture.net - lectures - 2014-2024 year. Copyright infringement or personal data (0.017 sec.)