Federal Finance Minister Joe Oliver got an underwhelming response this week when he announced the Conservative government was finally going to table long-promised balanced-budget legislation.
Criticism quickly dismissed it as an economically unnecessary political ploy intended to burnish the Conservative Party’s claim to be a careful manager of the public purse heading into the October federal election. Which, of course, is true. Lost in the spin is whether balanced-budget laws actually are useful tools to impose fiscal discipline on governments.
Balanced budgets have become holy writ for governments in the last 30 years following decades of chronic overspending that added relentlessly to the national debt. Government expenditures consistently exceeded revenues, creating a structural deficit.
The backlash began in the United States, where a conservative political wave in the 1980s led states (49 today), but not the federal government, to pass legislation requiring that budgets beRead More »from Balanced-budget law more political posturing than firm commitment