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.
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