Suddenly, B.C. can pay for everything

Clark’s tactics are reckless and may put her in a difficult position in the future

As Premier Christy Clark tells it, the B.C. Liberals were able this week to match the NDP and Green parties dollar for dollar on some big ticket spending programs because of a windfall in provincial revenues.

“We have more money than we thought we did,” declared Clark by way of justifying a throne speech with two dozen significant policy reversals costing in the hundreds of millions of dollars. “The surplus is way bigger than we had predicted going into the election.”

Clark was referring to the bottom line for 201617. Before the books closed March 31, the B.C. Liberals were forecasting an operating surplus in the $1.5-billion range.

In the weeks since, the financial statements — prepared under the scrutiny of the independent auditorgeneral — are now showing a much larger surplus according to Clark.

“That year’s end is going to be a lot rosier than we thought,” she told The Vancouver Sun Wednesday. “The economy has grown a lot faster than anybody, including the pessimists in the Ministry of Finance, predicted.”

Clark then cited the unexpected flow of dollars as “a reason to consider moving our fixed election date to the fall to ensure British Columbians are fully informed of our province’s fiscal position before a general election.”

Another steal there from the New Democrats and Greens, whose recent powersharing accord commits to switching the fixed date for the next election from spring 2021 to the fall of that year.

But how did that windfall from the past financial year translate into the ability to fund programs in the future? Were the Liberals transferring some of last year’s dollars to the financial year that began April 1?

“No, we’re not,” replied Clark. Last year’s larger surplus will, as noted in the throne speech, be used to help retire the accumulated operating debt, making it possible to wipe it out altogether by 2020.

Yet the Liberals are building last year’s improved revenue picture into the current budget as well as those for future years.

“I am now saying to our finance guys: Look for three years we’ve had billion-dollar and some years multi-billion dollar surpluses,” said the premier. “It is not one-time money if you keep getting it multi-years in a row because your population is growing and because consumer confidence is high and because you are creating jobs.”

The actual size of the surplus awaits release of the audited financial statements — a.k.a. the public accounts — currently in the final stages of scrutiny by the auditorgeneral.

Finance Minister Mike de Jong is hoping to expedite the release for next week or the week after. He’d like independent documentation of the operating surplus before the anticipated handover of power to the New Democrats in mid-July.

The Liberals hope that an improved bottom line would undermine NDP complaints that they are leaving the province in a financial mess.

An operating surplus, even if certified by the auditorgeneral, would only meet criticisms part way. The Opposition has also raised alarms about hefty borrowing for capital projects and dubious accounting at Crown corporations, particularly B.C. Hydro.

One thing the Liberals have done this week is provide advance justification for the spending plans of the NDPGreen partnership.

The surplus used by Clark to fund her newly articulated ambitions would also be available to pay for the promises and programs of the next government.

Once in Opposition, the Liberals will scarcely be in a position to attack the New Democrats and Greens for spending what was endorsed in this week’s throne speech.

The New Democrats promised a big ticket child care plan. So, now, do the Liberals.

The Liberals said a boost in welfare rates was unaffordable. Now they would do it as well.

And so on.

One of the most dramatic reversals was on tolling the Port Mann Bridge. When the New Democrats promised to phase out tolls in the election campaign, de Jong explained at length how that alone would undercut the province’s vaunted triple-A credit rating.

The tolls underwrite a selfsupporting debt totalling $4 billion. Eliminate the tolls, and rating agencies would no longer classify the debt as self-supporting. It would be lumped into taxpayersupported debt, pushing the latter to a risk threshold that would likely warrant a credit downgrade.

The throne speech scrubbed that line of argument along with many others. But that’s not the only problem with Thursday’s too-clever-by-half effort from Clark and the crew in her soon-to-be-vacated premier’s office.

The modern-day financial history of this province flatly contradicts the notion that a surplus — or even a series of surpluses — can be safely rolled into program spending year after year.

In a small open economy like B.C., revenues are dependent on commodity prices, exports and other factors beyond the control of the provincial government — hence volatile.

To cite only the most recent example, when the global credit crisis unfolded in 2007, B.C. went from a $2.7 billion budget surplus to a $1.8 billion deficit — a $4.5 billion reversal of fortunes — in just two years.

But to hear Clark tell it, the province is now free to budget as if it will never again face such an economic downturn.

All in the service of a reckless effort to score a few points off Greens and New Democrats, before she and the Liberals are relegated to the Opposition benches where — for a time at least — they belong.

The economy has grown a lot faster than anybody including the pessimists in the Ministry of Finance predicted.

CHRISTY CLARK, Premier