OTTAWA - Finance Minister Jim Flaherty is calling the parliamentary budget officer "too pessimistic about Canada's economic prospects and the government's deficit picture. "
The finance minister questioned Kevin Page's methodology in projecting that Ottawa will accumulate $156 billion in debt over the next five years and has created a $12-billion structural deficit that will remain even after the economy has recovered.
"He's on the pessimistic side and that does not reflect what we're seeing in the more positive view expressed by some of the international organizations like the IMF (International Monetary Fund)," he said in a conference call from Brasilia, Brazil.
Page said Thursday that his office has been very transparent with the assumptions underlying our fiscal forecasts including changes in incomes shares and effective tax rates.
"We have provided economic numbers based on the average forecasts and we have also provided numbers based on low and high growth estimates," Page wrote in a email.
The IMF forecast this week that Canada would lead most of the industrialized world in its recovery, but still put growth next year at a modest 1.6 per cent.
Page's forecast using an average of economists surveyed called for a more robust 2.2 per cent gain in gross domestic product.
But while Flaherty said he won't issue his update on future budgets until the fall, he suggested that he does not believe the government has a structural deficit.
He said the budget office uses only about two-thirds of the private sector forecasters, and that Page's latest analysis relied on some forecasts "that were up to three months old."
The budget office, which answers to Parliament, and the government have crossed swords in the past over Page's reports, which have tended to paint budget estimates as overly optimistic.
Page has complained that the government cut his budget, making it more difficult to fulfil his duties, and Wednesday openly joked about losing his job.
Flaherty said he agreed with Page on one matter, that job losses in Canada will continue to mount. Page said he expects another 100,000 will vanish this summer.
"I think Mr. Page is correct, or he agrees with me, that we are going to have some continuing increases in unemployment, regretfully," Flaherty said. "We are going to have continuing unemployment increases for some time until the economic recovery has a firm foothold," which he added would be later this year and in 2010.
