September 1, 2009

Budget Deficit and Deceit

The Campbell government plans to balance its budget by 2013-2014. That plan calls for tabling a budget in February 2013, holding an election in May 2013 and having a new replacement budget in September 2013. It looks like the B.C. Liberals think voters will fall for the 2009 trick again and again. Between now and the next election, all of the budgets that will be tested by audited financial statements, Public Accounts, will show deficits, beginning with a deficit of $2.8 billion this year.

You won't find it in the government's budget highlights, but Finance Minister Colin Hansen's September budget update announced an 18% increase in MSP premiums. BC has set several Canadian records: the highest child poverty, the lowest minimum wage and the only province to use regressive premiums to fund health care. The increase is phased in at 6% per year starting January 1, 2010. When fully implemented on January 1, 2012, the premium increase will cost families an additional $216 per year.

Effective January 1, 2010, taxpayers will see the basic personal income tax credit increase to $11,000 from $9,373,but since Provincial income tax is 5.06% on taxable income less than or equal to $35,716, the maximum savings from the increased deduction is only $82.33. With two incomes in a family, that savings falls $51.34 sort of paying for the increase in MSP premiums.

For those waiting for HST relief the wait continues. Hansen said the HST will not apply to residential heating fuels, but he failed to mention that Table A1.1 in the pre-election budget showed that residential fuels were already exempt from the PST so there is nothing new in excluding them from the HST. The $211 million that would be raised by applying the PST or HST is matched by applying the carbon tax which will continue to increase on July 1st for at least the next two years, doubling from $15 per tonne of associated carbon dioxide equivalent emissions, effective July 1, 2009, to $30 per tonne effective July 1, 2012.

This post-election budget update provides the government's first estimates on expected revenues from the HST. This year the PST is expected to raise just over $4.8 billion. The transition year is 2010 with the PST in effect for three months, raising an estimated $1.3 billion, and the HST in effect for 9 months, raising an estimated $4.2 billion. In 2011 the HST is expected to raise $5.9 billion. The government will keep a PST for the sale of used vehicles, raising an expected $101 million in 2011.

The government didn't provide a list of cuts. Last Friday hundreds of organizations received letters saying that despite three year funding commitments, they would not receive their promised gaming grants. We are learning which community groups have been hit as the publicly express dismay. The government didn't provide a list.

The budget boasted of 6% per year increases in funding for health care over the next three years. It didn't mention that it has already agreed to contracts that increase the cost of health care for health authorities. For example, the 3% per year contract extension for nurses or the agreement with the doctors, little room is left to take care of increased cost pressures due to the aging of the population. That is why health authorities have plans to reduce the number of surgeries performed and cancel some mental health services. Many of those who can't get the care they need will have trouble believing what the government says about protecting health care.

There is a simple rule that applies to most of the budget: show me! After the misleading pre-election budget, no one should take anything the Campbell government says seriously. It is necessary to wait until proof is in hand in the form of reports from independent authorities like the Auditor General or leaked documents that reveal the truth within government. There will be no excuse to be fooled a second time after the experience of the February 2009 pre-election budget compared to this post-election story.