The five-year forecasts were abandoned because of the inability of the government to accurately project that far into the future. The results frequently proved to be so inaccurate that the entire process of longer-term projections lost all credibility. On the other hand, two-year rolling targets are sufficiently immediate that the economic data upon which they are based is much more accurate, so only extraordinary events would excuse any failure to meet them. This practice also prevents the government from delaying required action until later in the planning period. As the Minister of Finance has stated on numerous occasions, these targets help to provide a standard to which the public can hold the government accountable.
Recent events demonstrate clearly the benefit of a two-year planning horizon.
Over the course of nine months, private sector forecasters have revised downwards by 60 and 70 basis points respectively, their growth estimates for 1998 and 1999. As a result of the Minister's prudence, he is proving to be a more accurate economic forecaster than the private sector. The Committee believes this practice has served Canadians well and should be continued. The government has done more than make budgetary projections over a two-year period. However, it set targets to which it was committed and these targets became the benchmark against which the government's fiscal policy was judged.