January 2, 2003

Predictions for 2003

Predictions for the New Year are as much a part of the season as eggnog, New Year's resolutions, and year in review articles. While pundits may be slightly embarrassed if their predictions are played back a year later, think of the plight suffered by BC's Minister of Finance. British Columbia law requires that the Minister of Finance table a budget containing a three year plan. It also requires all cabinet ministers to lay out three year plans and table those plans on budget day, February 18, 2003.

Since requirements of the Budget Transparency and Accountability Act applied to the budget that was tabled in February 2002, the next set of predictions by the Campbell government will be measured against the previous ones plus whatever is added for fiscal 2005/06. The deficit may end up being a billion dollars lower in 2002/03 than originally forecast primarily due to the inclusion of a $750 million forecast allowance plus more rapid cuts to welfare spending than originally forecast. That good news will still leave 2002/03 with the biggest deficit in BC's history, and it will have little or no impact on the forecast deficits for 2003/04 and 2004/05 because the last set of forecasts did not include a forecast allowance for those years. The items to watch will be the assumptions of 5.1% revenue growth for the next two years combined with $1.4 billion in spending cuts. A realistic forecast is that the plan will be far off course by the end of 2003. On February 18th we will see whether a stubborn Premier alters his course.

New Year's predictions should involve far more than the fiscal bottom line. One of the most important ministries to watch in 2003 is the Ministry of Children and Family Development. The service plan presented in February 2002 called for that ministry to reduce its spending by 25% over the next two years, after making relatively few cuts in 2002. Government eliminated the independent monitoring agencies, and then went on to turn responsibility for dependent adults and children at risk over to families and community agencies. Over the next two years government will blame any adverse consequences on those to whom it has offloaded its responsibilities. Watch for a lot of hardship and potential tragedies for children and families in 2003.

Frozen budgets for health and education mean that cost increases will result in service cuts. "Cost pressures" resulting from higher prices and wages, aging and population growth will mean a shortfall in healthcare of at least $500 million. Expect to hear more rhetoric from the government about "sustainability" when they really mean cuts to make up for not funding those cost pressures.

In education expect to hear government rhetoric about decreasing enrollment when they really mean population shifts out of resource dependent communities because they have been abandoned by the Campbell government. If the projected change in the number of school age children is evenly spread over all of the province's schools, it would amount to a reduction of less than two students per school - hardly noticeable (In 2001/02 public school enrollment decreased 2,531; there then were 1,794 public schools in BC). Of course, the reality is that schools in resource dependent communities are suffering substantial loses while schools in areas like Surrey are experiencing growth.

The Task Force on Rural Education is supposed to report to the Minister by January 15, 2003 but the September 5, 2002, news release that announced the Task Force claimed that funding is adequate when it said "The funding allocation system introduced last spring already includes fixed supplements for school districts with rural and remote populations, including those serving small communities with widely dispersed schools, and low enrollment."

The Premier may attempt to focus attention on the 2010 Olympic bid since that seems to be the sole economic development plan in the New Era. Should Salzburg be chosen as the successful bidder, expect Premier Campbell to blame BC's continued slow economic performance on everyone but his government. It is useful to note that the most optimistic predictions for economic growth due to a successful Olympic bid tallies the benefits over the next twenty to thirty years. An additional $10 billion in economic growth sounds impressive but over a 30 year period BC's GDP will total more than $4,000 billion ($130.1 billion times 30 plus growth). The most optimistic benefits become a lost decimal point over that time period. Don't count on government releasing a forecast of benefits on a per year basis for fear that it would have to compare the enormous up front costs with the greatly diminished initial benefits. It is probably a safe prediction that there will continue to be a lot of finger pointing unhindered by the introduction of any hard facts, on this and most other BC public policy issues.