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To put Finance Minister Joe Oliver's latest fiscal update in context, it's best to think of federal-provincial finances in Dickensian terms. It's the best of times in Ottawa and the worst of times in most provincial capitals. The twist on Dickens is that this Oliver shoos away waifish premiers pleading for some more, sir.

That's one reason the fiscal update Mr. Oliver released Wednesday makes Ottawa's finances look somewhat less stellar than they really are. All the better to manage down expectations and discredit the march of the poverty-pleading penguins seeking a slice of Mr. Oliver's surplus pie.

If it seems out of character for a politician to play down his achievements, rather than play them up, it may just be a case of delayed gratification. Ottawa has much more fiscal flexibility than the update lets on, leaving plenty of room for even more pre-election goodies than the $27-billion worth of recently announced family-oriented benefits over the next five years.

If the recent past is prologue, Ottawa has understated its revenue projections and overstated future spending expectations. The $16-billion deficit for 2013-14 forecast by Mr. Oliver's predecessor, Jim Flaherty, came in almost $11-billion lower. Mr. Oliver is still projecting a $2.9-billion deficit for the current fiscal year, but that's after adjusting for $3.2-billion in tax cuts rolled out in in recent weeks.

Lower oil prices won't dramatically affect Ottawa's bottom line, either. Along with a weaker loonie, they could even be a blessing in disguise. To the extent they're reflected at the pump, they'll leave more money in the pockets of consumers and stimulate U.S. demand for Canadian exports.

All that heralds smooth sailing in Ottawa for years to come. On a business-as-usual basis, the federal debt is projected to plunge from an already enviable 30 per cent of gross domestic product this year to 17 per cent in 2025. Economic events could always conspire to throw Ottawa off course, but as it is, Mr. Oliver will have to cut taxes or increase spending further just to stabilize the debt at Ottawa's stated goal of 25 per cent of GDP.

Guess which option the Conservative Finance Minister prefers?

"There is still too much money in the hands of the bureaucracy and not enough in the pockets of Canadian families," Mr. Oliver told a business audience in Toronto on Wednesday. "We trust Canadians to save and spend their hard-earned money better than all-knowing bureaucrats or social engineers. Granted, there are some people who don't agree, but that is what elections are all about."

Indeed, they are. As a share of the overall economy, the federal tax burden is already at its lowest level in 50 years. Does it need to come down further? Mr. Oliver argues that keeping taxes low and budgets balanced is critical to instilling confidence among investors and consumers, freeing up tax revenue for programs rather than interest payments and enabling Ottawa to respond to sudden economic shocks.

Still, the federal government is the only one with the ability to address regional disparities in wealth. Those disparities are growing. The Maritimes are effectively in a state of near-permanent recession. Ontario and Quebec have grown at barely half the national average in recent years. In 2003, the two central provinces accounted for 62 per cent of Canada's economy; now, their share is about 55 per cent.

Quebec and Ontario have virtually no fiscal room to manoeuvre. They could occupy the tax space Mr. Oliver frees up by raising provincial taxes, but only at the cost of rendering their economies less competitive vis-à-vis other provinces and the United States. Or they can continue to pile on debt. It's a nightmare either way.

It's not up to Mr. Oliver to save provinces from nightmares that are largely of their own making. But it's worth asking whether our national government is making the best use of its fiscal flexibility. The federal government can run large deficits without compromising its long-term fiscal health. Almost no province can do that.

But such is the economic orthodoxy that has taken hold in Ottawa that even the Liberals and New Democrats dare not challenge the received wisdom of balanced budgets. As a result, they have boxed themselves into an impossible corner, trying to best the Tories at their own game.

That's Mr. Oliver's twist.