Friday, July 10, 2009

Well surprise, surprise, surprise! BC's deficit will be way more than the $495 million Gordon Campbell promised in the election!

Well what do you know - I'm a better judge of BC's failing economy and ballooning deficit than either BC Liberal Premier Gordon Campbell or Finance Minister Colin Hansen!

Not that it's much to brag about - practically the entire province could say the same!

But it's Campbell and Hansen that have to answer for their inexplicable and repeated statements during the election and afterward that BC would only have a $495 million deficit.

Were they just stupid or were they lying? You be the judge.

Hansen now says that the first time he learned that the $495 million was unachievable was June 24.

My 24 hours/Tyee column from June 2 - three weeks before - is below, with loads of evidence that there was simply no way for BC to make the deficit projection - and that there had been no way for months before that.

Here's what Hansen told the Canadian Press yesterday however:

"Hansen said he was confident up until the middle of June the province could still meet its $495 million deficit target, but that changed on June 24 when Ottawa provided updated income and corporate tax numbers.

He said Ottawa reported that British Columbia can expect personal income tax revenues that are "significantly lower. But the biggest impact, and the one that sort of took my breath away, was what was happening on the corporate income tax revenues."

The public accounts documents revealed a sharp revenue decline of $1.5 billion, amounting to an $863 million drop in personal income tax, $212 million in corporate tax and $114 million in social services tax.

"I can no longer say that I'm that optimistic," Hansen said. There are still some big challenges. We still see lots of volatility. We will have no shortages in challenges in locking down (budget) numbers."

So there you have it - the Finance Minister and the Premier of our province were gobsmacked just late last month, while the rest of us have known for months that we were in deep financial trouble.

Or is that BC Liberal fudge?

Here's my column from June 2 - you can find the links by going to the original posting on my blog or at The Tyee version.

Bill Tieleman’s 24 Hours & The Tyee Column

Tuesday June 2, 2009

B.C. financial fudge capital of the world

View Tyee article and comments here

By Bill Tieleman

Published: June 2, 2009

I can tell you this: the deficit for 2009-2010 will be $495 million maximum.

-- Premier Gordon Campbell, April 23, 2009

The BC Liberals have a new plan to stimulate the provincial economy -- make British Columbia the "Financial Fudge Budget" capital of the world.

Finance ministers from around the globe will travel to Victoria to learn at the feet of the masters -- Premier Gordon Campbell and Finance Minister Colin Hansen -- about how to craft the slipperiest, most expensive fudge ever seen.

That's the only conclusion one can draw from the most astonishing, outrageous and massive fudging of the B.C. budget in provincial history -- and all done during an election campaign.

So while Campbell said that if re-elected, the 2009-10 budget tabled in February with a $495 million projected deficit will be "pretty much the budget that’s reintroduced", not even the premier's closest corporate allies believe him.
Trust issues

Jock Finlayson, the B.C. Business Council executive vice-president, says he would not be surprised by a $2 billion deficit -- and Finlayson sits on the province's own council of economic forecasters.

Bank of Montreal Deputy Chief Economist Douglas Porter agrees with Finlayson, saying he could "easily foresee a deficit of that magnitude."

And last year's so-called balanced budget for 2008-09 could also have a deficit, says Helmut Pastrick, chief economist for Central 1 Credit union.

Pastrick has said consistently from February on that B.C.'s deficit would be much larger than projected and most recently predicted it would be about $1.5 billion.

Bitter fudge

What all this BC Liberal fudge means for ordinary and particularly lower income British Columbians is not a sweet treat but a bitter pill to swallow as the government begins dramatically slashing public services.

For even if Campbell decides to temporarily run a much bigger deficit than he promised to deliver, it will still require massive spending cuts and/or a significant tax increase to keep the red ink from staining the BC Liberals permanently pink.

And given that Campbell introduced a 25 per cent tax reduction when he came to power in 2001 and has steadfastly maintained that such reckless cuts stimulate the economy, don't expect him to hike taxes on business or high income earners.

When previously in a jam, facing an impending shortfall in 2002, Campbell stuck to his tax cutting rhetoric even as he was forced to claw back hundreds of millions of dollars in revenue from ordinary British Columbians.

How? By increasing their B.C. Medical Services Premiums by 50 per cent, eliminating several medical services and imposing a host of onerous user fees that are still in place today.

The BC Liberals have already promised to cut $2 billion in spending over three financial years through "administrative and other savings" and "efficiencies" -- want to bet that number goes way up along with the deficit?

Downsizing battles loom

There's another big factor -- almost all public sector union contracts expire shortly after the February 2010 Olympic Games – and with B.C.'s economic disaster status at that point, expect a nasty round of bargaining as the government tries to downsize employees faster than a bobsled on pure ice.

That's one reason Campbell and Hansen hope to delay tabling a new budget in the Legislature for as long as possible -- to give themselves more "wriggle room" and more time to blame the world-wide economic crisis instead of their own inability and unwillingness to acknowledge the situation long before the election.

But will we see business groups up in arms like they were when the 1996 NDP government brought in a $355 million deficit when it had projected a balanced budget in that year's election?

Will the National Citizens Coalition again finance court challenges against government fraud?

Not a chance -- but these hypocrites should be embarrassed when their own business-funded BC Liberals' fudge make the NDP's past mistakes look like penny candy.


Anonymous said...

welfare upswing deferred.?
budget deficit deferred.?
and what occured in may 2009.?
stats can says bc 2.1 billion.?
that 495m about covers new convention center cost overun.

Angela said...

Were they stupid or lying ? No!!

They were lying AND stupid.... to think that we didn't know they were lying.

So what's the surprise? That there is a way out of this situation? Can we hold Campbell (and all Liberal candidates) accountable for their campaign guarantee? No? Helluva system we've got isn't it.

Let's stop blaming the Liberals though. They're only doing what we ask them to do. Every 4 years we invite them to rape us. Every time I read about government lies and corruption, or political posturing, I feel violated. And obviously it's what we like because we refuse to change our ways.

Oh, well. Maybe if I get drugged up enough the next 46 months won't be as painful. I read something about free heroin yesterday. Anyone got a better solution?

Anonymous said...

Gee wilakurs paw,weez bin sayin dat fo monts!Idiots get out and vote next time not that there's a better choice they just steal a little slower !

Anonymous said...

What good will any of this bitching do since the idiots of BC have elected "The Howe Street Hitler" to another 46 months of dictatorial rule.

And at the rate the NDP and its brain-dead leader are currently going in 2013 Kevin Falcon will be calling the shots.


Anonymous said...

Holy cripes great satan that guy's uglier than el gordo 'geez him and his falconator glasses ,I can't stand the thought,I wanna puke every time I hear or see that sorry excuse of a man ,he's just getting even with all the guy's that beat on him in high school!Parish the thought of falconator getting in, he's one big time puke!

Anonymous said...

good thing Carole James is staying on. This way they get away with it all over again.

Bob Cratchet said...

My little son Tim wants to know if we can please have some more.

DPL said...

The reaside cartoon for Sunday is worth checking out Captain Hanson is explaining what happened to the good ship BC

Anonymous said...

DPL said...

Thanks anon for pointing folks to the place I neglected to send them. Google works well. Reaside's stuff gets pretty good as he scewers politicians quite well. a good site to put on a favourite list for sure

Rod Smelser said...

Will 2009 be a re-run of 1983, with the role of Hugh Curtis taken by Hansen, that of Bill Bennett by Campbell? The odds are improving that it will.

The basic policy choice open to a provincial government in a recessionary period is whether to follow a counter-cyclical, neutral, or pro-cyclical fiscal policy.

Statements made by Hansen months ago indicate that the choice will be for the latter, a pro-cyclical policy of expenditure cuts and possibly tax increases as well designed to minimize the deficit. These actions will have the effect of further reducing activity in the market economy, as government demands for output and employment follow private industry's downward trend, and as government withdrawals from disposable income rise in the case of any tax hikes.

In the 1980s one could count on many of the economists at BC universities to issue critical report cards on the Bennett-Curtis Restraint policies and their impact on the length and depth of the recession. But this time it seems that almost every BC university economist is a dedicated supporter of the Premier's carbon tax and will refuse to say anything critical about his performance on other issues for fear it might eventually cause some loss of Liberal support and therefore a re-examination of BC's carbon pricing policies.

Furthermore, academic economists like many other professors were very, very worried that if Carole James became Premier and re-introduced Glen Clark's tuition freeze that this development would have a restraining impact on academic salary increases.