The B.C. government has vowed to hit its target of slaying the deficit this year even as the economy softens.
With a surprise and decisive election victory behind her, Premier Christy Clark presented her vision Thursday for leaner government, low personal taxes and job growth fuelled by natural resource development.
Economic growth projections have been trimmed, to 1.4 per cent from 1.6, meaning $30-million in budget cuts are on the way over the next nine months. Even then, the surplus target of $153-million sits on a knife’s edge.
Compared with the pre-election budget plan tabled in February, this week’s version offers a decidedly less rosy picture of the province’s fiscal state.
With Ms. Clark sitting with other guests in the House – she has yet to win a seat – Finance Minister Mike de Jong delivered the budget in an unconventional presentation that featured key data displayed on large flat screens temporarily mounted on the marble walls.
He warned the government will have to be vigilant to deliver a surplus in the face of sluggish job growth, slowing retail sales, and sputtering housing starts.
But the B.C. Liberal government, which owes its fourth consecutive majority win in May in part to a campaign that promised fiscal restraint, had to present a budget in the black.
“British Columbians had a choice,” Mr. de Jong told the legislature. “They said ‘yes’ to balanced budgets. They said ‘yes’ to disciplined spending.”
It is the debt picture that is most troubling for Ms. Clark’s government. After a campaign in which she promised to slay the debt, the province’s obligations are growing faster than the expansion of the economy.
Compared with the February blueprint, the new plan adds another $630-million to the debt over the next three years. Just one Crown corporation alone, BC Hydro, accounts for an additional $440-million in spending on capital projects for this fiscal year due to cost overruns and new developments.
“It’s time this government began to fret our debt, both within the legislature and at the Crown corporations,” said Jordan Bateman, B.C. director of the Canadian Taxpayers Federation.
Mike Farnworth, the NDP finance critic, insisted the budget is not credibly balanced, resting as it does on substantial asset sales. And he said the declining employment growth forecasts are an embarrassment for a government that has made job creation its top priority.
“People are leaving B.C. for Alberta and other places with stronger economies,” Mr. Farnworth told the House. “Repeating slogans over and over doesn’t make it so … The government jobs plan is failing.”
The February budget wasn’t passed into law, because the legislature was dissolved for the May 14 election. The new budget is based on the same framework, and is key to setting the tone for government now that Ms. Clark has secured her first mandate from B.C. voters, after winning her party’s leadership two years ago. The Premier lost her seat in the election, and is now running in a by-election in a safe Liberal seat in the Interior.
The bottom line of the fiscal plan – which mirrors Ms. Clark’s campaign mantra – is to wipe out the deficit and wrestle down the ever-expanding costs for health-care spending. The plan is to take B.C. from a $1.1-billion deficit in the past fiscal year to a surplus. That requires a growing economy, spending restraint, higher taxes for business and high-income earners, and asset sales.
However the “debt-free B.C.” plan can’t be found in the budget – it is based on the creation of a liquefied natural gas sector that is still years away from reality.
Speaking to reporters, Mr. de Jong said he was troubled to learn of the cost overruns that have emerged on several BC Hydro projects – something the Crown corporation’s board only learned a few weeks ago. But he could shed no light on how that will be managed. Nor could he say where additional savings in government will be found.
“No argument from me that what we are talking about is a balancing act that requires attention to detail,” Mr. de Jong said. “Finding efficiencies in government is an ongoing process.”
B.C. budget by the numbers
$153-million: Projected surplus in 2013-14 (down from $197-million in February budget)
$62.5-billion: Total province debt in 2013-14
$9,121: Taxpayer-supported debt per capita
18.5%: Taxpayer-supported debt-to-GDP ratio in 2014-15 (from 18.3 per cent in 2013/14)