Finance Minister Colin Hansen said today he is "not optimistic at all" that it is "anywhere near possible" to meet the government's $495 million deficit target for fiscal 2009/10. Minister Hansen said he reached that conclusion following after his government received personal income and corporate tax revenue estimates from the federal finance department on June 24. He said those estimates show personal income tax "is going to be significantly lower than they had anticipated." But the "biggest impact - and the one that sort of took my breathe away - was what was happening on corporate income tax revenues for 2008."
Minister Hansen declined to given further specifics. He also denied being Pollyanish for standing by the government's budget deficit target over the past four months in the face of worsening financial news and forecasts.
"I think in terms of individuals who were speculating on what the size of deficits could be or should be or might be, they were basing that on speculation. What we do is base our forecasts on real numbers and real data. And we will amend and alter that as we get more hard information. So, as I say, as of the third week of January - given what we knew at the time, I still felt a $495 million deficit was still doable."
But didn't the government base its budget forecasts on speculation at that time? "No. We base our budget on hard data. And we build our model in a pretty deliberate and calculating way. And some of it is subjective. But that subjectivity comes in the way of the forecasts of the Economic Forecast Council, for example."
"If you look at things like - let's take natural gas revenues. So we don't go out and sort of ask somebody's opinion as to what they think the price of natural gas is going to be. We actually look for the hard number that's been used in the private sector for future contracts, for example. And then we plug those hard numbers in."