Provincial budget will face skepticism
When Finance Minister Mike de Jong stands to deliver his pre-election budget on Tuesday, he’ll face more than the usual skepticism over his financial figures. It’s hard to fault B.C. voters for being deeply distrustful of pre-election finances. Many have suffered through the province’s long history of so-called “fudge-it budgets” – where implausibly rosy financial forecasts vanish shortly after the victorious party takes office, to be replaced by deep cuts and surprise deficits.
“I think it’s natural,” de Jong said of voter mistrust of election-year forecasts.
“The only way I can think of to address that cynicism and skepticism is through actions to demonstrate, over time, that your forecasts are not manipulated, they are based on the best possible advice you can receive – which isn’t always spot on, but it’s not being manipulated – and proceed from there.”
There is widespread agreement, even from critics, that it’s much harder to “fudge” the province’s financial figures today than in the past.
The deputy finance minister – the ministry’s top non-partisan civil servant – signs off on the estimates at the front of every budget, and government aligns its forecasts with a 13-member independent forecast council, which provides public advice to the ministry throughout the year. Estimates of lucrative, but volatile, revenue sources – such as the tax windfall from Metro Vancouver’s real estate market – are flagged with the appropriate indication of risk.
That’s supposed to prevent politicians from misleading voters with unrealistic “revenue optimism” as was done before the 1996 election, when the NDP government promised a two-year surplus of $201 million that turned into a two-year $703 million deficit after getting back into office.
“I’m not sure many people fully appreciate the degree to which the forecasting process has been depoliticized,” said de Jong.
The “fudge” on modern budgets is mainly on the spending side. Which programs and services are promised extra cash, and does the money ever materialize? How does a last-minute funding rush before an election compare to previous years of underfunding or neglect?
It’s here that opponents have signalled they’ll attack de Jong and the governing Liberals. The Opposition NDP hasn’t disputed that B.C.’s economic forecasts remain strong. Instead, it plans to argue that the pre-election multi-billion-dollar surpluses are essentially fake, because they’re an accumulation of years of starving key services like child welfare and education.
“I think you will see huge spending, and you will see a government that will commit to fixing all the ills of the last 16 years,” said NDP critic Carole James.
“The public understands that and know what a terrible way to run government, to starve services and programs all those years, and when it comes to an election, make a promise and commitment you are going to fix it. You spend more taking apart a system and having to put it together again.”
De Jong said his 2013 pre-election budget has proven his record for credibility. The Liberals promised a razor-thin balance that few believed was achievable. After the election, they delivered a $347-million surplus.
Yet the Liberals also relied on the onetime sale of surplus government property that year. And instead of eliminating B.C.’s debt with billions in liquefied natural gas revenue – as boldly promised by Premier Christy Clark during the election campaign – the government has since sharply increased the provincial debt. The NDP also accuses government of designing a stealth tax, in which the government relies on annual dividends from B.C. Hydro and ICBC, forcing the cash-strapped Crown corporations to hike their rates.
Duelling budget figures and election rhetoric can be confusing for voters. The key is to look at a government’s spending priorities, particularly where it allocates new dollars, said veteran political scientist Norman Ruff. “Public policy is about making choices for programs for people,” said Ruff. “The balanced budget is what you arrive at after you’ve made the real decisions … the real question is: How are you spending the money and what are you spending it on?”
“All budgets fudge it, particularly in election years,” added Ruff.
“People look at a budget, and its figures and accounting and there’s a kind of neutrality associated with it. But all budgets are political documents and they express the policy priorities.”
A pre-election budget is a difficult balancing act, said former finance minister Kevin Falcon.
“Election budgets are always the most challenging for a finance minister,” said Falcon. “The reason is, there’s that perennial struggle to continue to try and do what’s right from a policy point of view, and, of course, the struggle between what is politically expedient.
“That is typically not a battle but a conversation that rages between the premier’s office and finance minister’s office.”
Despite all modern budgetary reforms, a lot still hinges on the honesty of the politicians involved.
In 2009, then-premier Gordon Campbell stubbornly refused to tell the public that his “$495 million maximum” deficit budget was off by as much as $300 million during the election campaign as a result of the unexpectedly severe global recession.
The only way I can think of to address that cynicism and skepticism is through actions to demonstrate, over time, that your forecasts are not manipulated, they are based on the best possible advice you can receive...