Economist Tim O’Neill will touch down in Victoria next Tuesday to delve into the secrets of the coming provincial budget. By Friday, he expects to know whether the Feb. 19 fiscal plan is built on concrete, or on sand.
“My focus is not on what people want to hear, but what they need to hear,” Mr. O’Neill said in an interview following his appointment as the province’s pre-election budget watchdog.
Finance Minister Mike de Jong already has the benefit of plenty of outside advice – his 14-member economic forecast council recently pegged economic growth for 2013 at a modest 2.1 per cent. The chief economist for the Bank of Montreal – a post Mr. O’Neill once held – is part of the advisory council.
But Mr. O’Neill brings something else the B.C. Liberal government needs – independent validation of the budget document that is a key plank in the Liberals’ re-election strategy. He’ll review the economic forecasts that underpin the budget, plus the major revenue assumptions that flow from those projections. It is there, in the revenue numbers, where past budgets have gone astray.
His contract – expected to cost around $25,000 – gives him two weeks to review and draft his budget assessment. His findings will be made public on budget day.
“It will be a public document,” he said. “So I feel very comfortable with that. As I said to them, I will be honest in my assessment and I will be quite clear in my evaluation. If there is a disagreement, I will tell you what it is and I’ll put it in the report.”
He was approached earlier this month, not by the Finance Ministry but by a senior official in the Premier’s office, underscoring the importance of a credible budget to the B.C. Liberals’ election strategy.
Mr. de Jong is seeking to bring in a surplus, after a series of four deficit budgets. But his government’s inability to meet past balanced budget targets means he faces a distrustful audience before he even stands up to deliver this year’s fiscal plan.
“Those of us who are watching the budget are skeptical enough,” said Jordan Bateman, B.C. director of the Canadian Taxpayers Federation. “I’m not sure this appointment will change that. They have independent economists and experts, I don’t know why having one singled out would have more credibility than the rest of them.”
Jock Finlayson, chief economist for the Business Council of B.C., said Mr. O’Neill’s credentials are impeccable, but this exercise is all about winning over the public, not other economists. Mr. Finlayson expects Mr. de Jong to bring in a surplus that is so close to the edge that it requires an unusual level of assurances.
“It is going to be balanced on a knife edge,” he predicted. That will invite a high level of scrutiny of spending – is the health budget realistic, for example – and of the projected revenues. “People are going to look at those things with a critical eye. The Liberals’ hope here is that having Tim O’Neill vouch for the soundness is going to give it that added credibility.”
Mr. O’Neill has his own reputation to guard. He is a consultant who has done similar work for the governments of Ontario and Nova Scotia. Before that, he was chief economist for the Bank of Montreal, providing analysis on 11 federal budgets.
He will look at the work of the economic forecast council and other sources “and then use my own judgment on what the relevant risks are. Because of the importance of natural gas, for example, I’d probably want to set aside a section on the upsides and downsides on this volatile area of revenue.”
NDP finance critic Bruce Ralston doesn’t argue Mr. O’Neill’s credentials, but says the appointment underscores the erosion of the Liberals’ claim to be the best managers of the public purse. “Clearly they are recognizing what a huge vulnerability they have. And I don’t think this will change public perception.”