Watch out for that train
Is it too early to start talking about what happens now the election is over? Because that light at the end of the tunnel really is a train.
In their February Budget the Liberals said they were going to have a $500 million deficit this year. Nobody believed them then. Marc Lee called the Budget figures fiction. Writing for the Tyee Will McMartin said:
Another fudge-it budget, you say? It’s worse than that. This fictional fairy-tale might better be described as Toxic Fudge.
BC’s Credit Union Central pooh poohed the Budget projections as wildly optimistic and said the deficit would probably be two or three times higher than the government was admitting.
Today even the Globe and Mail said:
It would seem a given now that the projected budget deficit of $495-million is wholly unrealistic. It could reach $1-billion.
None of this should be wildly surprising. The Budget projected a $200 million increase in income tax revenues, for example, at a time when incomes and the number of people working were falling. It predicted a minimal increase in welfare spending at a time when it is growing so quickly the government stalled release of information about it until after the election.
I’m no economist, but if I can figure this out on the back of an envelope, I’m pretty sure the smart guys in the Finance Ministry have figured it out as well. And I’m pretty sure they wouldn’t have kept it a secret from the Premier and from the Minister of Finance.
So we can expect a financial statement in June expressing surprise, amazement and horror about how badly the financial situation has deteriorated since February.
What happens then? In an April 24 Vaughn Palmer column Premier Campbell said bluntly he would not let the deficit rise. He said:
“I can tell you this: the deficit for 2009-10 will be $495 million maximum.”
That gives him three options. First, he could cut services. Second, he could sell assets. Third, he could intervene legislatively to cut the cost of contracts for public employees. If this sounds familiar, it is because he did all three in his first term of office after manufacturing a huge deficit by the largest tax cut in BC history.
Now he doesn’t need to manufacture a deficit. He can use his promise to keep the deficit to $500 million to drive an ideological agenda. So here’s my prediction. More tax cuts which Campbell will say are necessary to boost the economy. And more cuts to government services for low and middle income people to reduce the deficit.
After all, as Public Eye Online reported:
The premier’s deputy minister Jessica McDonald has stated provincial civil service layoffs, if they do occur, will be under five percent of the workforce. But the Campbell administration is projecting demographic forces will reduce the number of bureaucrats by 30 to 57 percent over the next ten years.
How do you make cuts like that to the public service? Service cuts and privatization.
In the good times, under the Liberals BC became a bad place to be poor. In the bad times it is going to get worse.
Topics: Economy, Provincial budget & finance