The current federal Tory government is making the same budget mistakes the government of Brian Mulroney made in the late 1980s and early 1990s.

It is making them on a smaller scale. Still, its approach of trying to slow spending increases while praying for robust new revenues is doomed.

Unless Stephen Harper and his cabinet make significant spending cuts in the coming budget, it is highly unlikely Ottawa will return to budget balance by 2015-16 as promised by Finance Minister Jim Flaherty.

Budget cuts are unavoidable -now or in the future -because the current Tory budget plan is a mirage. The federal budget will return to balance within the next five years under the Conservatives only if the Harper government manages to hold its spending increases to 1.8 per cent annually and find revenue increases of 5.6 per cent a year.

Almost no one in the real world expects that to happen. Prior to the start of the recession in the fall of 2008, the supposedly fiscally responsible Tories were increasing federal spending by an average of 5.5 per cent a year.

That is well above the rate of inflation and population growth, and that was before the Tories started buying car companies and throwing billions at dubious stimulus projects.

In the years since the Tories replaced the Liberals in February 2006, program spending has risen 40 per cent.

During the last two budget years, the federal treasury has posted backto-back deficits of $50-billion or more. Where Ottawa once consumed 13 per cent of Canada's gross domestic product, it now consumes 16 per cent.

The Liberals weren't doing much better before they were defeated in 2006. While they rightly earned a reputation as budget-cutters and deficit-fighters in the mid-1990s, during their final five years in office they returned to their traditional taxand-spend ways.

Whenever you hear Liberals attack the spending habits of the Tories, feel free to nod in agreement. The Tories have been horrendously wasteful. But then remind any sanctimonious Liberal that in the 2004-05 budget year alone, they increased program spending by $17 billion, a stunning rise of 12 per cent, unprecedented in a time of peace and prosperity.

Liberals made things worse

By 2004, Ottawa under the Liberals was spending more than it had been under Mulroney, even after adjusting for inflation and population growth. According to a 2007 Treasury Board study, by 2004, too, the ranks of the federal civil service had recovered fully from the mid-1990s cuts.

Contrary to the myths still being spun by federal workers that they are still reeling under the cuts made 16 years ago, Treasury Board figures clearly show that the federal workforce (not including members of the Armed Forces, Mounties, employees of arm's-length agencies, political staffers and Crown corporation workers) was at 245,000 in 1994, before the cuts.

That fell to 195,000 by 1999 -the bottom of the post-cut trough. But by 2004 it was back up to 235,000, almost exactly the same level as before the layoffs.

Moreover, the 2004 civil service was costing taxpayers 50 per cent more than the lean civil service of 1999. While the number of civil servants had grown by 20 per cent in five years, its pay and benefits had mushroomed by half because among the new hires were far more administrators and professionals and fewer blue-collar workers than before the cuts.

Under the Liberals after 2004, and under the Tories since 2006, civil service expansion has continued apace. It is estimated there are currently 295,000 direct federal employees -again, not counting the military, police and Crown personnel. During the recession, as private-sector employment has fallen, the public sector has been on a hiring binge. And where private wages have stalled or fallen, public service compensation has risen so much and so fast that according to the Canadian Federation of Independent Business, federal workers enjoy 42-per-cent higher compensation than their privatesector counterparts, when pay, benefits, pensions and hours worked are factored in.

Therefore, it is not merely enough for the federal Tories to try to hold the line on spending increases. They simply cannot keep spending more each year -even if only a tiny bit more -and ever hope to eliminate the federal deficit.

According to a new pre-budget proposal from Vancouver's Fraser Institute, the Tories should "follow Chrétien." When Jean Chrétien came to office in 1993, with Paul Martin as his finance minister, the federal budget was in such bad shape that Chrétien appointed a junior finance minister -a respected former bank economist -whose job it was to travel to the world's financial capitals and plead with Canada's lenders not to downgrade our debt or -worse -call in our loans.

Things are not that bad now, but they could get there if the Tories don't make real budget cuts this year and next.

The Fraser Institute estimates that nearly $16 billion could be cut from unneeded stimulus funds. At least that much is available.

lgunter@shaw.ca