On Feb. 19, Finance Minister De Jong tables his first provincial budget. He recently announced that it will be a balanced budget and warned there isn't a lot of room for extravagant spending promises and proposals. It sounds straightforward enough, but look again.
He doesn't actually promise there won't be any extravagance but only that there isn't a lot of room for it. In other words, he's given himself some wiggle room to overspend somewhere in the budget. So it's not out of the question that a goody or two to entice voters in the upcoming election will be included. Or, perhaps more likely, there will be a bit more corporate welfare to boost the so-called Jobs Plan. Or maybe a little of both. After all, it's an election year.
The thrust of the minister's announcement is that the budget will be "balanced."
However, his understanding of that term is not necessarily the same as ours. For those of us responsible for household spending, a budget is a means to ensure our expenditures don't exceed our income. Moreover, we know the wisdom of allowing for the unexpected, such as income interruption or unforeseen cost items, and accordingly set aside money for these contingencies. In other words, we balance our budget by apportioning our income to see us through life's rough patches as well as to meet our day-to-day needs.
The B.C. Liberal government implies it does much the same, but it doesn't. Indeed, although described as balanced, for the last half dozen years, each annual budget has ended the year with a deficit; that is, provincial expenditures have exceeded provincial income. The deficit for the current fiscal year 2012/2013, for example, will be about $389 million
Deficits are usually the result of overspending during the budget period due to unforeseen circumstances. But B.C.'s budgets in recent years have had an added and more telling element right at the outset: that is, despite evidence to the contrary, successive finance ministers have included in their budgets forecasted resource revenues that never materialized. The result has been that the touted balanced budget offered in February ends up in financial disarray by December.
The Liberal government tends to blame this outcome on circumstances beyond its control. But the culprit is actually the misreading or misrepresentation of market trends. For example, the government collects royalties on the sale of natural gas, and the higher the sales volume, the more it is paid. For the last number of years the unit price of gas has been depressed due to a market glut in North America, but the government nevertheless repeatedly based annual provincial revenue calculations on an anticipated recovered and rising price. According to two previous finance ministers, the natural gas price increase projection included in each of their budgets was based on the advice of industry experts. . It either didn't occur to them to go elsewhere for advice after the first deficit outcome, or they deliberately adopted an inflated calculation in order to "balance" their budgets.
Bill Brassington, Burnaby