British Columbia's Speech from the Throne this week provides every politician in Canada with a quick look at what the future holds. It may not be pleasant or popular, but it is certainly necessary. And Premier Gordon Campbell deserves credit for going first.
Mr. Campbell has been criticized in many quarters for playing down the effect of the global recession on his province's economy. A promise to avoid deficits at all costs eventually gave way to a $495-million deficit projection in his budget of February, 2009. After his success in the provincial election in May, Mr. Campbell then acknowledged the deficit was likely to be much bigger - perhaps $3-billion bigger.
Hubris of this sort has haunted nearly every leader in the country. But though they should be reproached for delaying bad news, the larger issue is what they should do next. In Tuesday's Throne Speech, Mr. Campbell provides a welcome renewal of his commitment to fiscal and economic prudence.
The speech begins by restating Mr. Campbell's plan to harmonize the provincial sales tax with the federal GST, calling it "the most significant economic development initiative that B.C. can undertake in preparation for the economic turnaround."
This is a brave move in the face of considerable, if ill-informed, opposition and at a difficult time. But B.C.'s shift to a harmonized sales tax will confer clear benefits on the provincial economy, as well as the country at large. In following Ontario's lead on this matter, B.C. has set the stage for a truly national consumption tax that avoids penalizing business inputs.
Beyond the commitment to the HST, the Throne Speech also signals the start of what might be called phase two of Canada's recovery from recession. Phase one involved unprecedented economic-stimulus measures that, along with precipitous drops in revenues, created massive deficits across the country. Phase two will require the equally sticky process of digging out from under all that new debt.
The province proposes clear measures to return its finances to balance in four years. Significant among these is a four-year wage freeze for public employees as well as a rigorous review of administrative costs in government entities, including Crown corporations, health authorities and school boards. As one example, the Crown agency Tourism BC was recently subsumed into a provincial department. All of which suggests Mr. Campbell is prepared to wield a hefty axe, in much the same way he did in 2001 when he first took office, to pare away less essential services.
With the Throne Speech, as well as next week's expected budget update, B.C. becomes the first Canadian government to lay out the concrete steps it intends to take to get its finances back in order. Everyone else ought to pay attention. And follow suit.Report Typo/Error
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