February 24, 2009

B.C.'s Funny Books

When Finance Minister Colin Hansen presented his budget last week, he must have known that retail sales fell through the floor in December. It took until today for Statistics Canada to report that retail sales in B.C. fell by 10.4% in December 2008 compared to December 2007, but the Ministry of Finance knows on a daily basis how its receipt of sales tax revenue compares to previous periods.

It is hard to find good economic news these days unless one reads the unsubstantiated optimism coming from those whose job it is to pump-up consumer confidence. That's fine; just don't bet on those opinions.

In only took 2 days after the budget for the 2010 security costs to be revealed, although they weren't included in the 2009-2010 budget. What is amazing is the shell game the province is playing with its $229 million share of the $900 million security bill. According to the government news release, the province will pay the federal government $63.7 million by March 31, 2009. In other words, it will hide the money in the fiscal year just ending even though the expenses won't actually be incurred by the federal government until next year. The province will also: "…increase its share of joint federal-provincial major infrastructure costs by up to $165 million over the next three years". That means the province is doing a swap with the federal government; B.C. will pay for its share of security operating costs by foregoing some federal sharing on capital spending over three years. That puts the operating costs on the balance sheet as debt and avoids showing it as an expense in the year the dollars flow to pay for security.

It is hard to believe that the Auditor General will approve of this slight-of-hand, but it appears that the Campbell government doesn't care if it gets yet another qualification in the Auditor's report.

Whatever happened to the Gordon Campbell who once boasted about a clean audit report and meeting generally accepted accounting standards?