Instead of a few weeks, as a few of us predicted, it took several months for B.C. Premier Gordon Campbell to play the oldest game in politics.
With a mixture of mock horror and strained solemnity, Mr. Campbell described his shock when apprised of the "true" state -- or so he says -- of the province's finances bequeathed by the previous NDP government. They, not we Liberals, are responsible for the deterioration in B.C.'s fiscal position.
Instead of the NDP's tidy surplus forecast in the March pre-election budget, B.C. will face a $1.5-billion deficit this year, and that number would be worse but for some creative Liberal accounting. It's the NDP's fault, cries Mr. Campbell.
Rubbish. Mr. Campbell's own government is the major culprit for the fiscal deterioration, as any careful study of Finance Minister Gary Collins's budget makes clear. The Liberal government is slashing personal and corporate taxes -- largely in ways not promised during the campaign -- and these cuts, coupled with a U.S. economy softer than anyone could have predicted six months ago, are driving up the deficit. Only the gullible will buy the blame-the-NDP campaign.
But, then, British Columbians so desperately wanted done with the NDP that they closed their eyes and ears to sensible critiques of the Liberal promises, including the fact that they did not add up. And they still don't.
The Liberal campaign was premised on two false but interrelated assertions. The first was that sharply lower taxes axiomatically lead to more revenue and a lower deficit. The evidence for this assertion was scant to non-existent. The miracle of supply-side economics never worked in the United States under Ronald Reagan because, during his administration, the U.S. amassed the largest peacetime deficits in history. That comparison was therefore unavailable, so the B.C. Liberals hit upon Mike Harris's Ontario, but the comparison was -- and is -- almost entirely wrong.
Mr. Harris phased in tax cuts; Mr. Campbell cut provincial taxes by 25 per cent on his first day in office. Mr. Harris did not slice taxes for the rich as deeply as for other Ontarians because his government imposed a Fair Share Health Levy on better-off citizens. Mr. Campbell's 25 per cent tax cut disproportionately benefits the well-off. The tax rate for those earning less than $30,484 falls from 8.4 per cent to 6.05 per cent, and for those over $85,000 from 19.7 per cent to 14.7 per cent. (He's also slashed corporate taxes, which, when combined with the cuts for better-off citizens, reveal that the campaign promise about tax cuts for the poor were little more than a smokescreen.)
Mr. Harris dramatically cut spending on everything but health. The university, environment, welfare, social services, community services and education budgets were all cut in real or absolute terms. Mr. Campbell promised nothing of the sort.
The Liberals' second false assertion was just that -- deficits could be avoided without major spending cuts. Instead, they danced around the obvious in the campaign and, judging by Mr. Collins's economic statement, they are still dancing, by talking about eliminating "waste," cutting NDP extravagance, better management and implementing gimmicky ideas such as a "waste buster" Web site.
The Liberals now promise a core services review from which the spending cuts will emerge, starting in next spring's budget. These are both necessary and inevitable, since tax cuts will puncture government revenues. Similarly, Mr. Collins has predicted a 3.8 per cent growth rate for next year that would arguably be the highest in the Western world, and is thus improbable.
All governments serious about slashing spending establish some kind of powerful central review committee such as the core services review; all parties campaigning to be elected never mention that this will be their intention. So it is in B.C.
All this -- the burgeoning deficits and the inevitable spending cuts -- were known by smart people in the B.C. business community. But they were so scared of doing anything to hurt the Liberals' electoral chances that they clammed up in a sad example of group-think. Or maybe they knew that the Liberals' real agenda was to help business and the better-off as part of their understandable ambition to restore the province's competitive position.
One man who did forecast big spending cuts -- economist David Bond -- had his consulting contract ended by the HSBC Bank, which cowardly worried about irritating the incoming Liberals. Of course Mr. Bond was right, as British Columbians will be discovering now that they have entered the brave, shaky world of Liberal economics. email@example.com