Liberals leave financial mess for James
B.C. Finance Minister Carole James has been out east selling our province and its fiscal posture to the finance gnomes in Toronto, Montreal and New York. Included in the gaggle of “experts” are leaders of the credit rating agencies, which have an uneven record of rating debt instruments. She has her work cut out for her.
Mike de Jong, her predecessor, demonstrated incredible chutzpah when he said that NDP spending plans will undo all his years of careful fiscal stewardship that resulted in surpluses, substantial economic growth and that treasured AAA credit rating.
In recent years, my annual comment on the provincial budgets have been that de Jong should have been awarded the Governor Generalís literary prize for fiction, most especially when he claimed his budgets were ìbalanced.”
In particular, BC Hydro paid into the government coffers “profits” which, in fact, were funds borrowed to pay a dividend to the shareholder (the province). Something similar was done with respect to ICBC where the government stripped it of reserves essential for the operation of any insurance firm.
And if the Liberals delivered a series of balanced budgets, one needs to ask why it is that tax-supported provincial debt increased by leaps and bounds under de Jongís leadership.
That the BC Liberals ran a regime of less-than-prudent fiscal management is now becoming evident. Consider the cost overruns on the Port Mann Bridge prior to the 2011 election. Or the slowmotion legal disaster that unfolded after they ripped up the governmentís contract with the BC Teachers Federation leading eventually to an explosion of costs. Then there’s the unwillingness to come clean about the likely real costs of the Site C dam.
The Liberal government’s unwillingness to raise taxes (on either income or consumption) resulted in underinvestment in human capital through the education system and inadequate mentalhealth facilities. Decline in the maintenance of the transportation infrastructure, and lack of support for mass transit in both the Lower Mainland and the Capital Region have left a legacy of snarled traffic and urgent improvements. What can only be termed a disastrous human resource policy pursued over many years has left the provincial civil service decimated and woefully unable to tackle the challenges we face.
These challenges, which the NDP government must endeavour to meet, are significant and are made even more daunting by the attitude of the financial sector.
They frown on any increase in expenditures and any increase in taxation.So if the government is to bail out both ICBC and BC Hydro either by substantially raising fees (a favoured Liberal alternative to raising taxes) or incurring a deficit, if it is going to meet the requirements of the Supreme Court decision regarding class size, and if it is going to invest in infrastructure and mass transit, these moves will undoubtedly invite criticism.
The NDP could consider the normal recommended alternative to increasing taxes or fees: cutting expenditures elsewhere. But the Liberals already did that with an aggressive series of actions leaving little room for their successors to manoeuver.
A few examples. The Liberals years ago stopped providing meaningful regulation of the annual allowable cut for the forestry sector when the government sold off the test plots in the different forest areas and reduced the staff by over 40 per cent.
It pursued the same cost-reduction strategy with mining inspectors to the detriment of the safety of holding ponds. It brought in a policy of having natural resource companies hire their own experts to evaluate the environmental impact of their operations. That this might constitute a conflict of interest appears never to have crossed their minds.
The Liberals should concentrate on electing a new leader and on developing a unified and forward-looking policy agenda — rather than belabouring their record of supposed prudent fiscal management. They should also be grateful it’s someone else’s responsibility to solve the problems they left behind.