Parliamentary Budget Officer Kevin Page's new analysis says normal accounting processes suggest the governing Conservatives are painting a bleaker picture of the government's finances than the data would warrant.
Two weeks ago, Mr. Flaherty issued a mid-year economic update revising downward the country's nominal gross domestic product output – real GDP plus inflation – on which revenues are based by about $22 billion annually over five years.
But Mr. Page says using the Finance Department's usual rule-of-thumb for how that translates into revenue, the federal government is overestimating the hit to its treasury by about $4.7 billion a year.
The PBO says he does not know how Finance has arrived at the new projections and is seeking information.
Since the release of the update, both Mr. Flaherty and Prime Minister Stephen Harper have stated publicly they still believe they will balance the budget one year earlier than their release suggests, but the explanation for that is that the federal government has put in a $3 billion cushion for risk.
If the economy behaves as expected – without surprise downside shocks – the Harper government would be able to table a balanced budget document before the October 2015 election campaign.
Mr. Page's analysis suggests the government may have built in an even bigger "cushion," or margin for error, than the official budget documents indicate.