On Feb. 27 of this year federal finance Minister
Bill Morneau will introduce the federal government’s latest budget. The previous
budget, presented on March 22, 2017, projected total revenue of $304.7 billion
and expenditures of $330.2 billion, leaving a deficit of $28.5 billion.
The release will no doubt be accompanied by
extensive analysis. Much of this scrutiny
will try to examine the political consequences of the spending the minister
outlines in his most recent budget. There are however a number of ways in which
documents like this can be evaluated.
Revealed Preference Theory, pioneered by American economist
Paul Samuelson, is a method of analyzing choices made by individuals and
groups. It is a technique commonly used when comparing the influence of
policies on consumer behavior.
Revealed preference theory makes the assumption that
the preferences of consumers can be revealed by their purchasing habits.
Previous theories of consumer demand were based on
concepts which assumed consumers would make consumption decisions to maximize
their utility. This seems self-evident but it became apparent that not only
could utility not always be measured accurately but that consumer decisions
could not always be reconciled with stated intentions.
In other words, people may say one thing but in some
cases their real preferences are better shown by their actions. Preferences
revealed by this theory can sometimes show more accurately how consumers
measure utility. In other words, we can
determine more accurately what people really value.
One of the stated goals of a modern government is to
provide security, in all its many forms. To do this they must acquire and
manage the resources they deem necessary to create and maintain security. In
other words, governments could be described as consumers of security.
It follows then that analyzing the choices, the
purchasing habits if you will, made by the government should reveal their
actual preferences as opposed to their stated priorities and help us to
determine the values of that organization.
According to the Annual Financial Report of the Government of Canada
government spending in Fiscal Year
2016–2017 broke down as follows:
Major transfers to persons in millions
Elderly benefits $48,162
Employment Insurance $20,711
Children’s benefits $22,065
Total $90,938
Major transfers to other levels of government
Support for health
and other social programs $49,405
Fiscal arrangements $17,145
Gas Tax Fund $2,102
Total $68,652
Direct program expenses
Other transfer payments $41,580
Consolidated Crown corporations $8,436
National Defence $25,576
All other departments and agencies $51,974
Total other expenses $85,986
Total $127,566
Total program expenses $287,156
Public debt charges $24,109
Total expenses
$311,265
Based on these figures it can be inferred that the
Government of Canada believes that, regardless of rhetoric to the contrary, the national defence of Canada ranks at
about 8 percent on their list of priorities.
It will be interesting to see if the new budget reveals any greater
interest in this most basic of societal functions by the government or people of this country.
Annual Financial Report of
the Government of Canada
