Liquor distribution sell- off among surprises

On the eve of budget 2012, Finance Minister Kevin Falcon advised reporters that the speech and accompanying documentation might contain a surprise or two.

Sure enough. One of the biggest was tucked away near the end of a discussion of the prospects for “generating much needed revenue for the province” via the sale of parking lots, building sites and other “surplus” assets.

“Additionally,” it concluded, “government has recently announced its intention to sell its liquor distribution warehousing facilities and associated distribution services to the private sector.” Really? On reading that, I wondered if old Mr. Palmer had been caught napping again. But none of my colleagues could recall any such announcement either.

Turns out the B. C. Liberals intended to break the news before budget day that liquor distribution was going on the auction block, then changed their minds. By which time the budget documents were already printed.

So surprises all around. The prospective asset sale was projected to bring in $ 700 million, helping the Liberals to meet their target of balancing the budget.

The decision also hearkened back to the Liberals’ early years in government, when they put the entire liquor distribution branch — warehouses, stores, and services — up for sale.

They backed off after a public outcry, well orchestrated by the B. C. Government and Service Employees’ Union. The two sides then negotiated a compromise. The union agreed to a twoyear contract extension with no wage increases. The Liberals protected about 200 unionized liquor stores and cancelled plans to privatize distribution.

There matters stood until this week. But I gather that Finance Minister Falcon figures government has no need to be in the liquor distribution business.

He doubtless calculated the political potential as well. For the last time the Liberals set out to privatize liquor distribution, Adrian Dix, then a political pundit, denounced the move as “union busting” and an attempt by government at “weakening a union opposed to its agenda.”

As Falcon knows very well, few matters are calculated to divide the B. C. Liberals from their NDP Opposition more effectively than the interests of the public sector unions.

So along with the revival of privatization, you had the repeat vow that government will not fund overall increases in compensation, offering improvements in wages and benefits only if “fully offset by identified savings in existing public sector budgets.”

Funding for most ministries and programs was frozen for three years. Health, education and social services got increases, but not enough to keep pace with the usual rate of growth in prices, population and program utilization.

Even with that tough stance on spending, Falcon resorted to a few tax increases. Most notably, another boost in medicare premiums, the fourth since the 2009 election, for a compounded total of almost 24 per cent.

There were also a large number of tax changes associated with the move from the harmonized sales tax back to the provincial sales tax.

British Columbians who voted to return to the PST as it stood on June 30, 2010, may be surprised to discover what they will be losing in terms of credits, breaks and other forms of tax relief that were brought in by the Liberals to ease the burden of the HST. Expect much squawking from the usual suspects.

Though Falcon did restrain program budgets, he continued the Liberal practice of massive outlays for capital projects, including new schools, hospitals, roads and bridges. The three- year tab approaches $ 20 billion, most of it borrowed.

Overall the intended political message was evident. This is the party for holding the line on most program spending, some taxes and all public sector wages. Those wanting increases in any one of those or all three should look to the other guys.

Not to say any of the targets laid out in the three- year budget and fiscal plan will be easy to hit. Government struggles to contain spending for even one year. Three years is unprecedented. Health has been growing two to three times as much as the two- per- cent- a- year specified in the plan.

Then again these numbers don’t need to stand for three full years, but only until the next election in 2013. And along with a stringent approach to spending, Falcon also made some conservative assumptions about growth and revenues.

Presuming the economy outperforms expectations, he’d be in a position to free up some dollars to meet the most pressing needs or the loudest protests.

The latter were growing already Tuesday as interest groups and advocates alike digested the news that funding for most programs will be falling behind the rate of inflation.

More than one observer called this the toughest budget in years and Falcon didn’t disagree. For it was his budget all the way, a refutation of the notion that his small and large “c” Conservative views were being marginalized in the government.

As for Premier Christy Clark, at heart she may still be a “liberal” Liberal. But you’d be hard pressed to prove it with this budget.