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Pinocchio doll. (roberto adrian/iStockphoto)
Pinocchio doll. (roberto adrian/iStockphoto)

Economy Lab

How governments overspent (and one underspent): The ‘Pinocchio index’ Add to ...

With Canada’s federal and provincial government budget season just around the corner, the C.D. Howe Institute has given us an advance glimpse of its latest “Pinocchio index”.

The index - derived from the economic and policy think-tank’s upcoming annual fiscal accountability ranking, slated for release Feb. 21 - measures how well or poorly our governments’ actual annual spending has stayed in line with their budget forecasts.

As the research shows - see the accompanying infographic - some do considerably better than others.

The research illustrates how much provinces and the federal government have overspent their budget plans over the past decade, as a percentage of their budgeted spending.

We can see that the Prairie provinces have been a hotbed of overspending, with those three showing the biggest overruns. Ottawa, on the other hand, has one of the best records of hitting its budget spending targets. (Well done, Mr. Flaherty.)

But the government that has done the best job of living within its budget is Newfoundland and Labrador, which has actually underspent relative to its budgets over the past 10 years.

(However, it’s worth noting that Newfoundland and Labrador’s finance minister, Jerome Kennedy, projected Thursday that the province would run up budget deficits in the $1.6-billion range in each of the next two years, on top of 2012’s estimated $725-million shortfall – so maybe hitting your spending target isn’t all it’s cracked up to be.)

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