Strategic Thoughts

bannerspacerAbout Me | Mail Me | My Stuffbannerspacer2

July 19, 2004

No Time Machine

NDP leader Carole James takes every opportunity to say that the clock cannot be rolled back. Some make the same point by saying that you cannot unscramble eggs. Apologists for the government, including CKNW's Bill Good, suggest that means James has approved much of what Campbell has done. Nothing could be further from the truth.

The next government will take power in early June 2005 following the May 17th election. The budget that will be tabled in February 2005 will provide a reasonably accurate picture of what resources the government has to work with over the next three years. James has said that after she sees that budget she will present a fully costed platform. You can get some idea of the room to maneuver by looking at this year's budget and its projections for the next two years. Excluding the "forecast allowance", it projects a surplus of $200 million, which is less than 1.0% of expected revenue. It forecasts surpluses of $275 million in fiscal 2005-06 and $300 million in fiscal 2006-07, again less than 1.0% of revenue. When total government revenue fails to grow as fast as population plus inflation, government faces big challenges.

If economic growth improves by 1%, it will add no more than $250 million to government revenue, turning the 2006-07 surplus to $550 million. That is a lot of money, but the health system alone consumes that much in less than three weeks. This year's budget from the Campbell government assumes that health spending will increase by 2.1% next year and by 4.4% the following year. If that was increased to 5.0% in each of the next two years (a figure many can support), it would require $306 million more next year and $370 million more the following year; there goes most of the surplus. Of course, increased federal contribution might create more fiscal room, but they also might be offset by corresponding reductions in equalization payments.

The health example illustrates how little room there is to rearrange spending priorities as long as the budget is balanced, revenue growth is modest and no substantial cuts are made to any program. James has said that she would balance the budget, not just over an undefined business cycle, but over each and every fiscal year, just like the NDP government does in Manitoba. Even with an improving economy, revenue growth will be modest. The only thing that could change that is windfall profits from energy or tax changes. It is not responsible to plan on the basis of hoped for windfalls, and James has ruled out major tax changes. It has to be kept in mind that Campbell has already clawed back almost half of his tax cuts through increases in MSP, the sales tax and assorted fee and license increases. Minor changes to the tax system may be necessary to achieve fairness, but any changes are constrained by the need to remain competitive with adjacent jurisdictions. Finally, no one believes that after three years of substantial cuts there is any area of government that could be further cut in order to pay for new spending priorities.

When James says that she cannot roll the clock back, she is simply acknowledging that it would cost billions to undo some of the changes and those billions are not painlessly available. NDP supporters need to hear that and adjust their expectations accordingly. A new government led by Carole James would deliver a more consultative approach where all segments of society are heard. It would yield a government that sincerely cares about what is happening to all people, not just those who contribute to the Liberal party. It would not make the choices painless or easy. Look at Manitoba to see the steady, reasonable approach that a James government is likely to follow. New Democrats and their supporters should be happy to stop the damage being wrought by Campbell; they should not expect a miracle worker with a time machine.

 

About Me | Mail Me | Navigation | Top
© 2004 David D. Schreck. All Rights Reserved.