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March 2, 2010

Budget 2010

Premier Campbell and his government took a major dive in public opinion polls when British Columbians learned in July about the HST, not mentioned during the election, and about the true size of the deficit, misrepresented during the election. Is there any reason to think the Campbell government is more credible now than it was during last year's election? Evidence from the March 2nd budget suggests they've learned nothing.

The March budget gave lip service to returning to balanced budgets, but except for some tricky accounting and downloading of costs, the deficit grew. The tricky accounting is in how the Campbell government distributes the $1.6 billion HST bribe it will receive from the Harper government. In September it said it would take $750 million in 2009-10, $374 million this year and $475 million next year. In today's budget it said it took $250 million in 2009-10 and that it will take $769 million this year, and $580 million next year. While that shift disguises the depth of the challenges, it shows that with the flick of the Premier's pen, deficits can be spread out over several years, with the government choosing when the deficits are disclosed. That proves the NDP's point that rather than manipulating the figures so as to make it look like the budget is balanced in time for the next election, the government could spread the deficits over the period of recovery so as to protect services.

Don't think for a minute that the Campbell government is protecting services. In February 2009 it tabled a budget on the eve of the election. It is useful to compare what it said then with what it said in its post-election budget update and with what it says now. In February 2009 it said the 2010-2011 budget for the Ministry of Health Services would be $14.901 billion; in September that was reduced to $14.817 billion and now it is reduced to $14.760 billion - a drop of $141 million from pre-election to now.

In February 2009 the Campbell government said it would provide a 2010-2011 budget of $1.414 billion to the Ministry of Children and Family Development. Today that budget was reduced to $1.334 billion, a drop of $80 million.

In February 2009 the Campbell government said it would provide a 2010-2011 budget of $2.651 billion to the Ministry of Housing and Social Development. Today that budget was announced as $2.730 billion, but look at the details before you think that's an increase of $79 million. Last year the budget for income assistance was $1.443 billion; this year it is $1.581 billion. Welfare caseloads have been growing at double digit rates; the $138 million increase that is required for welfare (if that is enough), means that everything else in the Ministry is taking a $59 million cut compared to what was promised before the election.

Budget documents prepared by the Ministry of Finance include a table that explains major differences since the last budget (Table 1.2, page 9 of today's budget). The table indicates that "spending funded by third party recoveries" increased by $343 million for 2010-2011 compared to what the September budget projected for this year. "Third party recoveries" aren't Santa Claus; they are your other pockets - hidden tax shifts and user fees. Another table (page 35) shows that the biggest part of those recoveries is more money from the federal government, in the form of local government grants. Local government grants shown as a recovery for the province suggest that the province will claw back money it otherwise would have spent. Higher interest rates for "fiscal agency loan and other interest cost recoveries" account for $23 million of the increased recoveries; that's another way of saying that municipalities, school boards, health authorities and universities will have to pay the province more in interest payments. That's a cost shift.

Those who are familiar with the history of health funding and taxation in BC have to chuckle at the desperate attempt of the Campbell government to try to hide its betrayal on the HST behind health care. The budget announced that revenue from the HST, MSP, tobacco taxes, lottery revenues dedicated to the health special account and federal transfers will be dedicated to heath care. If lottery revenues dedicated to the heath special account weren't previously being spent on health care, how were they being spent? Likewise for federal health transfers! The sales tax was introduced in BC in the 1950s to pay for hospital insurance; saying that HST revenue will be used that way is nothing new. Until Campbell increased MSP premiums by 50%, compounded by annual increases announced last year, that flat tax was dedicated to funding payments to physicians. There are only two things that are new in the announcement about the five taxes and health care. First, the government will say anything to justify its flip-flop on the HST, and second, future funding for heath care is at risk as natural resource revenues are separated from the list of revenues that fund health.

It didn't take long after the May 2009 election for British Columbians to learn that they can't trust what the Campbell government says. Today's budget reinforced that painful lesson.