# Government spending & accounting (split fm split)



## Edward Campbell (5 Jul 2015)

A useful _infographic_ (sourced from the Public Accounts Committee of the House of Commons, David Christopherson is chair) that shows how much of our national expenditures goes towards defence:


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## George Wallace (5 Jul 2015)

The pie shows $87 Billion is spent on "Other" government expenses in three different categories; four times what National Defence receives.


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## jollyjacktar (5 Jul 2015)

E.R. Campbell said:
			
		

> I agree with you, _but_ nothing sickened me more than a general, the CDS in fact, going on TV to _lie_ and blame his own people for the fact that the prime minister of the day didn't want to interrupt a vacation with his grandchildren to attend the funeral of a respected international leader ... that was in 1999.



For those of us, like myself, that need some refreshing of the brain cells here is some comment by Arthur Winreb of the Canada Free Press on the excuses made by the PM of the Day as to why he couldn't attend King Husain's funeral.  Politically Incorrect, You can't get there from here


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## The Bread Guy (5 Jul 2015)

E.R. Campbell said:
			
		

> I know I'm repeating myself, but a major _political_ (highly partisan political) component has been a feature of our defence production/procurement system for nearly 500 years.


It's one thing to know that there is political civilian oversight/control of the military, but you & OGBD have hit the nail on the head re:  using the military in _PARTISAN_ political ways - no matter what colour the gov't of the day is.


			
				Oldgateboatdriver said:
			
		

> Had I been the senior officer there, I would have halted the thing before it starts - reminded the minister that we are not his toys and these people have work to do; told the minister to hire actors at his own cost if he wanted background, but that they better not put a uniform on or else I'll have them arrested for impersonating.


And the Minister's "child soldiers" would have over-ruled you by making your boss, or your boss's boss, or your boss's boss's boss overrule you, I'm afraid ....


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## Brad Sallows (5 Jul 2015)

The Conservatives need to stop their chickensh!t posing.  If they have nothing serious they want to discuss until closer to election day, they should shut up and enjoy summer while they ponder (before they leap) over what the LPC and NDP are proposing.

That said, it's still a long way to go before reaching $478 million in re-election props, and at least the money on the grocery list is being put to good purpose.


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## Old Sweat (5 Jul 2015)

E.R. Campbell said:
			
		

> And that, as much, perhaps more than anything else, opened to the door to be CF being made into a partisan political prop. As is so often the case we have only ourselves to blame for all this.



It was rumoured/speculated at the time that the CDS was told if he covered for the PM, the CF would be rewarded in the next Federal budget. Whether or not that was the case, the taps did not open and the defence budget only received a tiny boost.


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## X Royal (7 Jul 2015)

E.R. Campbell said:
			
		

> A useful _infographic_ (sourced from the Public Accounts Committee of the House of Commons, David Christopherson is chair) that shows how much of our national expenditures goes towards defence:


That pie chart is a piece of crap created by the government.
The Employment Insurance Benefits account for 6% of your taxes?
I call complete BS on this figure.
The fund for this is funded by contributions from both the employees and employers. In fact the federal government has been siphoning off of this fund for years. Tax dollars don't pay for this.
If they have misrepresented 6% what other figures are incorrect.


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## Edward Campbell (7 Jul 2015)

Although the government is no longer _responsible_ for funding the EI, it is still on the hook for any deficits (and can take any surpluses as revenue). I don't have immediate access to the number post 2008 (too lazy to look, to be honest) but I would be surprised if contributions (from employers and employees) have been sufficient to cover payouts since the _Great Depression_ began. But,  :dunno:


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## The Bread Guy (7 Jul 2015)

E.R. Campbell said:
			
		

> Although the government is no longer _responsible_ for funding the EI, it is still on the hook for any deficits (and can take any surpluses as revenue). I don't have immediate access to the number post 2008 (too lazy to look, to be honest) but I would be surprised if contributions (from employers and employees) have been sufficient to cover payouts since the _Great Depression_ began. But,  :dunno:


In fact, it appears the EI kitty's helped lead to the government's current numbers.

Is taking money out of a pot filled by workers & companies a "cost" to the government in the same way as transfer payments & the CAF are "costs"?  Discuss.


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## Fishbone Jones (7 Jul 2015)

milnews.ca said:
			
		

> In fact, it appears the EI kitty's helped lead to the government's current numbers.
> 
> Is taking money out of a pot filled by workers & companies a "cost" to the government in the same way as transfer payments & the CAF are "costs"?  Discuss.



That's friggin' rich. :facepalm:

The liebrals complaining? Martin and his ilk raided the fund on a regular basis to ensure their socialist programs were funded and the budgets balanced.

It was, as quoted, their party's personal slush fund.

IMHO, money collected for a program, should only be used for that program (to pay out to contributors and fund the administration of it).

If there becomes a surplus, outside a buffer amount, contributions should be lowered or cancelled until required.


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## X Royal (7 Jul 2015)

recceguy said:
			
		

> IMHO, money collected for a program, should only be used for that program (to pay out to contributors and fund the administration of it).
> 
> If there becomes a surplus, outside a buffer amount, contributions should be lowered or cancelled until required.


I agree completely with this statement.
The problem with the EI fund is the government has been cutting down the benefits paid out to create a larger surplus they can raid.
E.R. Campbell the EI system has not been a drag on the taxpayers as you tend to believe. Actually it been the opposite.
That pie chart only goes to show how the government manipulates figures to their benefit as it suits them.


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## Edward Campbell (7 Jul 2015)

X Royal said:
			
		

> I agree completely with this statement.
> The problem with the EI fund is the government has been cutting down the benefits paid out to create a larger surplus they can raid.
> E.R. Campbell the EI system has not been a drag on the taxpayers as you tend to believe. Actually it been the opposite.
> That pie chart only goes to show how the government manipulates figures to their benefit as it suits them.





Please don't put words in my mouth. I'm agnostic on EI. _I believe_ some such _insurance_ is necessary and _I also believe_ it should be paid by the employee, in the main. I am not unhappy with the government being on the hook for deficits in the EI funding, when times are tough, but that also means, _it seems to me,_ that governments should be able to tap surpluses when they are over some predetermined level.


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## X Royal (7 Jul 2015)

E.R. Campbell said:
			
		

> Please don't put words in my mouth.


I think you put them there your self.


			
				E.R. Campbell said:
			
		

> (too lazy to look, to be honest) but I would be surprised if contributions (from employers and employees) have been sufficient to cover payouts since the _Great Depression_ began. But,  :dunno:


Yes you implied that in your belief the tax payers have been funding the IE system.


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## X Royal (7 Jul 2015)

E.R. Campbell as a further to your statement the Great Depression ran from 1929/30 until the start of WW2 in 1939.
The Unemployment Insurance Act was first proclaimed in 1940.
So by your guess it never funded itself. :


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## Fishbone Jones (7 Jul 2015)

E.R. Campbell said:
			
		

> I am not unhappy with the government being on the hook for deficits in the EI funding, when times are tough, but that also means, _it seems to me,_ that governments should be able to tap surpluses when they are over some predetermined level.



I disagree. The only surplus that should be in EI is a buffer for when things go pear shaped and then only enough until they can increase contributions to fund everyone entitled.

Letting massive surpluses build up to where they can be 'borrowed'  : (Let's be realistic. That money will never be put back in the EI fund) equates to no more than another tax on corporations and hard working Canadian workers. Letting that money be used, for perhaps social programs, is a slap in the face for the people that have to work and contribute, so those same monies can be given to those that won't work and live off the largesse of government.


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## PuckChaser (7 Jul 2015)

recceguy said:
			
		

> I disagree. The only surplus that should be in EI is a buffer for when things go pear shaped and then only enough until they can increase contributions to fund everyone entitled.



You'd then have to be constantly changing the EI rates every month, creating a huge burden on both CRA and the corporations trying to keep their payroll straight.


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## Edward Campbell (8 Jul 2015)

X Royal said:
			
		

> E.R. Campbell as a further to your statement the Great Depression ran from 1929/30 until the start of WW2 in 1939.
> The Unemployment Insurance Act was first proclaimed in 1940.
> So by your guess it never funded itself. :




Sorry, I meant to say _Great Recession_ of 2008 to whenever ... ~ I apologize for the confusion that typo created.

The financing system which appeals to me is the one that was in force from 1940 to 1972:

    "The program was managed apart from other government operations by the Unemployment Insurance Commission, a tripartite body with representation from employers and from labour, its chairperson representing the government. UI revenues
      were deposited into the UI Fund to pay for unemployment benefits, the Bank of Canada acting as fiscal agent. Any positive balance in the UI Fund was invested in interest-bearing special-issue government bonds, under the guidance of an
      Investment Committee that included the Governor of the Bank of Canada; any negative balance would be covered by interest-bearing loans."
                                                                                                                                                 Source: _Canadian Institute of Actuaries_ (2007)

That was, apparently, too 'arms length" for politicians in 1972 and in the 1990s, although, in fairness, the 1996 changes tried _“to the extent possible: a) ensure that there will be enough revenue over a business cycle to pay the amounts authorized to be charged to the Employment Insurance Account; and b) maintain relatively stable rate levels throughout the business cycle.”_ (Section 66 of the 1996 EI Act)

_I think I_ *might* _understand_ what politicians and bureaucrats _hope_ they can accomplish with a UI/EI programme; I'm far less sure that I or the politicians and bureaucrats _understand _what Canadians, broadly, expect from EI. What _I am certain_ about is that the very existence of EI, in its present form, _*distorts*_ the national labour market, making it harder for business (and governments) to make rational decisions. That being said, I remain supportive of some form of _insurance_ against unemployment.


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## Edward Campbell (8 Jul 2015)

X Royal said:
			
		

> That pie chart is a piece of crap created by the government.
> The Employment Insurance Benefits account for 6% of your taxes?
> I call complete BS on this figure.
> The fund for this is funded by contributions from both the employees and employers. In fact the federal government has been siphoning off of this fund for years. Tax dollars don't pay for this.
> If they have misrepresented 6% what other figures are incorrect.




I think we all need to understand how the government _accounts_ for money.

Prior to 1972 UI, as it was then, was "off the books," _managed_ as a totally separate fund, not part of the _Public Accounts of Canada_. Now it is accounted for, within the national accounts, as both a revenue and an expenditure ... it doesn't take for 6% of your income taxes, it takes for 6% of the money the government spends, all of which must come for three sources: fees (including your and your employer's EI payments) tariffs, etc, taxes and bonds, all of which the author of the _infographic_ summarized as "Your Tax Dollar." _I'm fairly sure_ that accountants (I'm not one) would agree that this, having EI "in" the public accounts, is better for transparency. _My guess_ ~ I'm still too lazy to go search ~ is that on an equivalent revenue diagram or statement there is an equivalent (probably higher) "income" percentage for EI.

(Go to the web address on the bottom of the _infographic_, if you like, I'm fairly sure it will confirm what I said above.)


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## Oldgateboatdriver (8 Jul 2015)

E.R. Campbell said:
			
		

> _I'm fairly sure_[/color] that accountants (I'm not one) would agree that this, having EI "in" the public accounts, is better for transparency.



Not quite sure here if you mean you are not an accountant or if you mean you are not one of the people that think this is better transparency.

Well, I for one am not an accountant, but an economist, and one that thinks this type of accounting is in great part what led to a lot of government bloat. Let me explain with an example (amongst dozens).

In the sixties and seventies, before these "transparent accounting principles" came on line, if the RCMP or DoF (Fisheries - it was its own dept. then) had a problem that required divers, they would call on the Navy, and it would graciously send some of its divers to do the job, then come back to base after. Enter the accountants: "But you don't really know how much running the RCMP or Fisheries cost then because you are not including the value of Navy services". So now, the accountants force the Navy to bill the other departments for the services and those department have to pay the Navy for it. 

You say fine, its just accounting, one department bills another so in the navy, you have the full cost of having divers, against which you have a revenue generated in the amount you billed the other Depts so their overall cost of operating a Navy is reduced by those amounts. In the RCMP or other depts, it is the other way around: They have an expense for diving but no extra revenue so their overall budget is now greater. Overall, the Canadian government budget remains the same - or so you would think.

But then, you start putting pressure on the various managers to cut costs and they start looking at their budget. Now, for its own reasons, training Navy divers and keeping them at a high level of readiness is a lot more expensive than civilian divers, so the billing per hour for those services is quite high. So the RCMP Commissioner looks at his budget and has a heart attack when he realizes that for half the price the Navy charges him, he can have his own three regional diving teams year round (whether that have anything to do or not) to cover his needs. So she goes for it. Now, the RCMP has reduced its budget but overall, the cost to government has increased, because the Navy still has to have divers and spend the money to train them.

These types of inter-departmental collaboration whither as a result and the government gets bigger, not to mention that it creates, in itself, a mentality in all departments of doing everything themselves because "it's coming out of our budget" so we need to own it and control it at all time.

This "transparency accounting" creates bloat in government. Period. and that is my not so humble opinion. So, like Recceguy, I would much rather that special programs supposed to be financed by "fees" remain accounted for separately. If that means that, in the "main" government accounts there is then a need to provision for the risk that the program would have to be bailed out at some point in any given year (i.e. the government has to  "reserve" one hundred millions because that is the value of the risk that it may have to loan it to support self financing program XYZ), that would be a good transparency measure: You could look at the reserve needs evolution over time to judge whether a self financing program is doing well or not in its management, and it would force the government to evaluate the risks associated with those programs every year.


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## SeaKingTacco (8 Jul 2015)

I would have to support OGBDs observation. That tracks with my observation on accounting and billing.

It would be simpler (much) if parts of the Federal Government did not bill each other for work or services.

If a provincial or municipal government needs a service, then that is another matter and the cost factors manual should apply.


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## The Bread Guy (8 Jul 2015)

E.R. Campbell said:
			
		

> I think we all need to understand how the government _accounts_ for money.


Ah, but the infographic refers to "where your tax dollar goes" - different pot than "tax" dollars (even though there is only one "pocket").

Good discussion, although not related to using troops in photo ops, so I'm splitting to let you all carry on.


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## Fishbone Jones (8 Jul 2015)

PuckChaser said:
			
		

> You'd then have to be constantly changing the EI rates every month, creating a huge burden on both CRA and the corporations trying to keep their payroll straight.



Not really. It could be adjusted once a year. I'm not talking about holding an absolute zero line (impossible) but something within a few million +\-.

As far as being a burden, it could only take something as simple as changing the percentage in the accounting program.

And while we're talking about EI, the rules have to be equally applied across the country. No regional favouratism or special rules.


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## Edward Campbell (8 Jul 2015)

Oldgateboatdriver said:
			
		

> Not quite sure here if you mean you are not an accountant or if you mean you are not one of the people that think this is better transparency.
> 
> Well, I for one am not an accountant, but an economist, and one that thinks this type of accounting is in great part what led to a lot of government bloat. Let me explain with an example (amongst dozens).
> 
> ...




Sorry, OGBD, I've been distracted for a few days and I am, obviously, being far less than clear.

First, I'm not an accountant.

Second, I agree that there is a price, often a high one, for transparency in government.

If I can use a political analogy, there are two "parties" in Ottawa where the _national accounts_ are concerned:

     1. One, which has many senior bureaucrats as members, so let's call it the Clerk's Party, favours _segregation_ of accounts ~ the way the UI was in 1940. The Clerk's Party does not believe that most bureaucrats are either crooks or mindless
         nincompoops who cannot be trusted to manage public money;

     2. The other wants transparency and I'll call it the Auditor's Party. They want programmes like EI brought into the _public accounts_ that they are subject to full, public audit.

There are good, valid, _Constitutional_ and 'machinery of government' reasons for keeping some accounts _segregated_; the questions are: how many? and which ones? Back in 1972 it was decided, by the government of the day, that transparency in the UI accounts, even at a price, would yield more political control, too.

I'm on the fence: my instinct is to be in the Clerk's Party, but I understand that transparency has both a social and a political value that is impossible to quantify in dollars.


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## quadrapiper (8 Jul 2015)

Not too sure how much of what the public considers "transparency" would affect the back-end management of funds, especially on the departmental service-sharing front. Betting what the public considers transparency has far more to do with a readily-followed, easily accessible, and straightforward paper trail, and a much more communicative Civil Service, than variations on accounting approaches.


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## Colin Parkinson (8 Jul 2015)

Oldgateboatdriver said:
			
		

> Not quite sure here if you mean you are not an accountant or if you mean you are not one of the people that think this is better transparency.
> 
> Well, I for one am not an accountant, but an economist, and one that thinks this type of accounting is in great part what led to a lot of government bloat. Let me explain with an example (amongst dozens).
> 
> ...



Or when you request a vessel to assist in a Site Inspection. CCG says: "We are going to bill you the entire cost of the 150' vessel and crew", We said we will pay OT and extra fuel. They say no, in the end we went with a 22' boat and did the site inspection for about $600. Meanwhile the ship we asked for sits at the dock about 20 km away with the full crew earning their wage.  :

Happier notes, DFO has a RHIB boat and crew, but no money for fuel. I bought the fuel for the boat from my budget, they get to do a patrol and their stuff and I get to do my stuff at a fraction of renting a boat. No MOU or departmental policies needed, we know the guys and our local managers support such stuff. That's how most of the cost effectiveness in government happens, people knowing people outside their program and finding ways to work together, generally in spite of their departments.


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