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Facing a troubled economy, Clark hedges on balanced-budget law

Premier Christy Clark talks about her first year in office and her plans for 2012 in a year-end interview with The Globe and Mail in her office at the B.C. Legislature.

Chad Hipolito For The Globe and Mail/chad hipolito The Globe and Mail

B.C. Premier Christy Clark says she'll have to make a "game-day call" next month on whether to pull the plug on her government's balanced-budget legislation before her next fiscal plan is unveiled.

In a year-end interview, Ms. Clark appeared to be laying the groundwork for a bad-news budget where her government may, for a third time, have to reverse course on its vaunted balanced-budget legislation.

"If the Finance Minister has to stand up in the spring and say, we've been forced by circumstances and we're not going to be able to balance, none of us are going to feel good about that," Ms. Clark said Thursday. "We are living within our fiscal plan now, but the way things are going it's hard to know what January will bring. … The direction that the world economy is taking gives us all reason to worry."

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Ms. Clark said she is not considering tax hikes to absorb declining revenues, although she did not rule out spending cuts.

"My goal remains to make sure we are not burdening our children with debt and that we are keeping taxes low for families so they can feel like they are getting a little bit further ahead," she said.

She said she expects British Columbians will understand if her government has to amend its balanced-budget law, which calls for B.C. to return to black by the fiscal year 2013-14.

"They are talking about the sovereign debt crisis in [the village of]Telkwa," she said. "People know the gravity of the problems we are facing."

Ms. Clark won the B.C. Liberal leadership in February, at a time when the government was looking at relatively rosy economic forecasts. Since then, with the international financial maelstrom as a backdrop, Ms. Clark's first year in office has been tumultuous. She eked out a narrow by-election victory, lost a critical referendum on the harmonized sales tax, and abandoned plans for an early election.

And 2012 doesn't seem to offer smooth sailing as Ms. Clark readies for an election she must call early in 2013. Aside from the budget challenge, Ms. Clark's jobs agenda, launched in the fall, appears to be on a collision course with her government's climate-change commitments.

Her jobs plan calls for massive industrial development in the north with a string of new mines and at least three liquefied natural gas plants. That expansion will require more energy than BC Hydro can currently provide, meaning industry may have to rely on burning natural gas instead.

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By law, British Columbia must reduce its greenhouse-gas emissions in the year 2020 by at least 33 per cent below 2007 levels. It means total emissions are to be reduced to 45 million tonnes in the year 2020. A single LNG terminal and pipeline using fossil fuel for energy could put 3.4 million tonnes of carbon dioxide into the atmosphere annually, according to a recent Pembina Institute study.

Ms. Clark would not say if she is prepared to amend the legislated GHG targets to create jobs.

"We are working through those issues now so I don't have a definite answer for you. We do have enough [electricity]to do the first [LNG plant] and we're working our way through how we can make the second, third, maybe fourth or fifth ones happen while maintaining our leadership on climate change."

She said she is seeking the right balance between job creation and the government's environmental goals.

"Governments around the world don't have a blemish-less record on meeting targets with these things – they often turn out to be a lot harder than you think," she added. "There are always competing interests and part of government's job is trying to reconcile those interests. So we want to enable the creation of jobs across the province, but we don't want to do it at any cost."

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About the Author
B.C. politics reporter

Based in the press gallery of the B.C. Legislature in Victoria, Justine has followed the ups and downs of B.C. premiers since 1988. She has also worked as a business reporter and on Parliament Hill covering national politics. More

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