February 7, 2009

Shell Games, Elections and Budgets

"We are weathering a tremendous world economic storm in a ship that is riding fairly smoothly on troubled seas."
Kevin Krueger, opening debate on Bill 45, November 24, 2008

"We can deliver the programs that British Columbians count on, and we can do it without putting this province into deficit, because of the careful management of the budget."
Minister of Finance Colin Hansen, concluding debate on Bill 45, November 26, 2008

On February 6, 2009 Statistics Canada reported that B.C. lost 35,100 jobs in January; 68,100 full-time jobs were lost.

There won't be any further Labour Force Surveys released before the provincial budget is tabled in the legislature on February 17th, but there will be three more releases before the provincial election on May 12th , one on May 8, just 4 days before British Columbians vote. That has to be a big worry for the Campbell government since what it says in its budget may be ridiculed by the time of the vote. If we can go from "riding smoothly on troubled seas" and "without putting this province into deficit" in November, to two years of deficits and near record job losses just three months later, just think of what shocks will be revealed in the three months between the February budget and the May election.

The government's website has a special link titled "positive economic indicators". Who are they trying to kid? Real estate sales have tanked, job losses are accelerating, retail sales are down and bankruptcies will soon follow, commodity prices are depressed and the forest industry has never seen such hard times. Smile and be happy is the motto of the Campbell government as they claim that B.C. is in better shape than most of North America. Try to reconcile B.C.'s loss of 38,100 jobs with Saskatchewan or Alberta where employment increased in January.

The Campbell government has taken the unprecedented step of launching a webpage to boast of the "reliability of budget forecasts". What nonsense! They've done a 180 in 3 months and now they are trying to claim that they are credible. Everyone who follows provincial finance knows that the budget can't be believed. We won't see the audited statements (Public Accounts) for the fiscal year that ends on March 31, 2009 until sometime in late June or early July. The legislature won't be allowed to sit and debate the budget and "estimates". "Interim supply", authority for the government to spend what it wants, will go through (by closure if necessary) and the legislature will be adjourned until after the election. A more realistic budget will be introduced in a fall sitting of the legislature after the election; that's when some British Columbians will discover that little that was said during the election campaign can be relied on because everything will have changed.

You may have read about the disaster facing some condo buyers who are losing their deposits and are being sued for the difference between the current value of the unit they were going to buy and what they thought it was worth a few months ago. The provincial government makes a lot of money on those sales, courtesy of the property transfer tax. For most of the time since Campbell came to power in 2001, the Ministry of Finance has recorded "unexpected" windfalls from the property transfer tax. It was estimated to bring in $1.02 billion this year, rising from $262 million in 2000-2001. Guess what happens when housing sales go bust!

You might remember Campbell's promise not to expand gambling. In 2000-2001 the government's take from gambling was $414 million; in that fiscal year its income from MSP premiums was $895 million. This year the Campbell government expected to receive $1.1 billion from gambling (up 265%) and $1.57 billion from MSP premiums (up 75%). Campbell forgot to tell you about his plans for gambling and MSP before the vote in 2001.

The same shell game will be played in the 2009 election as was played in 2001. One thing will be said during the campaign and something completely different will be said the day after.