Can We Take Christy Clark’s Budget Seriously?

(Gabriel Yiu) The budget is always big news -- getting front pages, inside pages, graphs and charts, stakeholders’ responses, political commentaries etc. etc.. I have only one question: can we take Christy Clark’s budget seriously?

The answer is yes and no. Yes, the budget matters because it is the spending plan of the provincial government and it affects pretty much all aspects of our life: health, education, senior care, social service, public safety, justice, economic development, transportation, the environment and so on. When the government does not provide funding increase according to inflation or population growth, then there will be a cutback of services.

On the other hand, I have serious doubts about the credibility of the Liberals’ financial plan. Remember, in 2009, when they said again and again that the budget deficit was $495 million, it turned out to be several times more. How about the last budget? It was announced to have a deficit of $925 million but that figure was later revised to $3.1 billion. So does it really matter when the Liberals told us that the deficit is $968 million this year and they will balance the budget on election year?

In addition, the BC Liberal government has been reprimanded by the auditor general for their deceptive accounting practices. Last year, the auditor general released two critical reports condemning the Liberal government for allowing BC Hydro to improperly defer billions of dollars of expenses to future years. The practice turned the crown corporation’s finance from deficit into surplus. The “surplus” allowed the government to collect revenue from BC Hydro while its executives could collect their performance bonuses. If such a practice occurred in a business corporation, it’s known as fraud.

The second report was released in November. The auditor general concluded that the Liberal government was not in compliance with the general accepted accounting principles (GAAP) and issued an audit opinion “with reservation.” Probably knowing the public wouldn’t realize how serious the matter is, the auditor general explained in his report that in BC, “if a [publicly-traded] corporation were given an audit opinion with a reservation, the British Columbia Securities Commission would normally place a ‘cease trade’ order against the corporation. The public corporation then runs the risk of being delisted by the stock exchange on which it is traded.”

So we’re told that the Liberals are going to balance the budget by means of selling public assets and freezing government expenditures and this is called “fiscal prudence”? Then why is there a big jump in debt? The 30% jump of “traditional” debt (excluding the P3 debt ledger, i.e. another $80 billion) in three years is staggering, from $50.9 billion (2011/12) to $66.3 billion (2014/15), that is, an increase of $15.4 billion.

Finance Minister Kelvin Falcon said, "The tax, spend and borrow approach is not just wrong — it is potentially catastrophic.” Those words were meant to be an attack on the NDP, but given the Liberal record of massive debt increase for this province, how can he condemn anyone other than themselves?

The Liberals are going to increase personal income tax, MSP, carbon tax, BC Hydro, ICBC, plus the HST, but government spending would be frozen. Small businesses are going to pay higher tax. Yet, big corporations can continue to enjoy their tax cuts and the HST tax rebate. Do you really believe that the Liberals would raise the corporate income tax for their big-business friends after the next election? By raising small business tax now and deferring the corporate tax increase after the next election, you can clearly see whom this government serves.

That the Liberals plan to privatize liquor distribution is indeed disturbing, especially when you see that it was the same lobbyists who helped privatize BC Rail and the administration of BC Hydro, i.e. the same people who helped put Gordon Campbell and Christy Clark on the premier’s chair.

According to the news report of Business in Vancouver, the Progressive Strategies (the Progressive Group) has been lobbying the BC government “to develop a new liquor distribution system” on behalf of their client. Patrick Kinsella, chair of the Progressive Group, was involved in two of the biggest privatization schemes of the former premier Gordon Campbell’s administration. In addition, Kinsella was also the political strategist behind Christy Clark’s successful leadership race.

The service plan released this week shows that the BC Liquor Distribution Branch is forecasting $2.9 billion in sales in 2012-13 and $906.1 million in net income. To British Columbians, the operation is indeed like a duck that lays golden eggs, generating the much needed revenue to support public services.

What is disturbing is that according to the media report, the Liberal government wants to raise $700 million by privatizing liquor warehouses and selling other properties. To sell off for $700 million an operation that could generate an annual income of $900 million? No wonder the mastermind behind the BC Rail sell-out is involved.

It’s interesting to note that not long ago, Premier Clark was painting a rosy picture of the province under her leadership with her job plan advertising campaign (which costs taxpayer $15 million) and all the feel-good announcements. All of a sudden, the tone is reversed and her finance minister is now telling us that the government has to freeze spending for three years because the economic outlook is grim.

I guess that’s another credibility issue that the public should pay attention to.