Liberal’s plan looks shaky

By on February 26, 2003

VICTORIA – Staggering stunned out of the budget lock-up – no cruel jokes please – lugging a thousand pages of graphs and reports, I start to try and figure out what it all means.
I like budget days. We swear secrecy, hand over our cell phones, and then head into a room to study the documents and listen to the finance minister. The sandwiches are good, and lots of highly competent government staffers are around to answer questions. Behind sliding doors a gang of “stakeholders” – union heads, business types, interest groups – are doing the same things. Around 1 p.m. the doors slide back so we can all listen to Gary Collins. Once he’s done reporters and spokespeople surge towards each other.
But finally, I have to figure out what it all means.
Give the Liberals pretty good marks for managing. All the ministries came in on or under budget. They almost hit their revenue target for the year, and the deficit – while a record at $3.5 billion – is below the forecast. Those are all laudable achievements.
But it’s not enough to manage according to your plan. The plan itself also has to be correct, and the Liberals’ blueprint for the province is starting to look suspect. Remember those 25-per-cent tax cuts back in 2001 that were supposed to pay for themselves? The argument that tax reductions wouldn’t force spending cuts was central to the Liberals’ plan. But the budget reveals that even by 2005/6, income tax revenue will still be down by $600 million, money that won’t be available for health care or education.
Remember the argument that the tax cuts, along with other Liberal policies, would bring an economic boom? The Liberals are now projecting that the B.C. economy will do merely OK, matching average Canadian growth over the next three years.
And remember the argument that tax cuts were fair? Since then the Liberals have clawed back about half the tax cuts through things like the MSP fee increase or the gas tax hike. The result has been that while the affluent are still well ahead, middle-income earners have seen a big chunk heading back into government coffers.
It does not instill confidence. It’s hard to offer a definitive judgment on this budget, because so much information is still to come.
The government has set aside $275 million to cover the cost of restructuring the forest industry, a project that’s about a year behind schedule. But until the deal is done, it’s impossible to assess the risks and benefits.
The health spending plan in the budget is also fuzzy. The Liberals tabled a status quo budget, which includes cuts to Pharmacare and a spending freeze. But that was done before Ottawa came through with health care money. That provides room for a lot of improvements to health care. Stay tuned.
The Liberals are working their plan, as people like to say, and meeting most of their targets. But the bigger question, whether the plan will work for British Columbians, that still hasn’t been answered.

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