Sep 28, 2012

Dix right to scrap balanced budget legislation


Yesterday, Opposition leader Adrian Dix indicated that, if he wins government, he would scrap BC’s balanced budget legislation (BBL). His announcement has drawn some fire from predictable sources. Some media reports indicate that Dix appeared uncomfortable sharing this news. He shouldn’t have. Scrapping BBL is good public policy.

CCPA researchers have long been critics of BBL across Canada, and for good reason. Indeed, I wrote a critique of BBL when the BC NDP introduced it in 2000, which you can find here.  And we similarly critiqued the legislation brought in by the Liberals. Simply put, any legislation that has to be amended any time the economy sours is just bad legislation.

As we warned (and as the current BC government has demonstrated on many occasions now, running deficit budgets since 2009), BBL simply does not work. It is nothing more than a political gimmick. That’s because when economic times are good, balancing the budget is relatively easy (rising revenues make balancing the budget quite realizable and thus BBL is unnecessary); but when economic times are bad and revenues decline, trying to balance the budget would only compound an economic downturn — it’s bad policy that would bind the hands of government and prevent it from taking needed action to combat a recession, forcing it instead to pile onto the economic bad news with more spending cuts.

So if a future government wants to scrap this silly policy, I say good on them.

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