Sunday, July 04, 2004

Liberals get to the 'exciting part' - spending

VICTORIA - So it's on to the "exciting part," says Finance Minister Gary Collins, when the government can stop talking about cuts and start talking about spending.
Mr. Collins unveiled this week the financial report on the past fiscal year, and along with it offered a preview of the Liberals' election platform.
The tough part is over, they will say. The budget is balanced. Now, how shall we spend the surpluses?
Not a bad campaign theme. The current plan calls for a $275-million surplus in next February's budget.
But the cautious Mr. Collins has beat his targets by an average of $800 million a year so far, and the economy is strengthening. The pre-election budget can likely handle $500 million in new spending without putting the surplus at any risk.
But the campaign strategy's success depends on several factors.
One is how voters decide to judge the past three years.
The overhaul of government finances is significant. If government revenues had kept up with inflation over the past three years, they would be about $25.4 billion. Instead -- thanks to Liberal government tax cuts and changes in the economy -- they're about $2 billion lower.
Income tax revenues are down 23 per cent from a status quo projection, corporate tax revenues 30 per cent -- about $1.8 billion in total. MSP and sales tax revenues are higher by about $600 million, but that still leaves considerably more money in taxpayers' pockets.
The campaign debate will focus on what role the tax cuts played in the improved economy, and who benefitted.
The Liberals won't be helped by the budget revelation that the total provincial tax bite is increasing this year for low and middle-income earners, while high-income earners -- a single person earning $80,000, a family with an income of $90,000 -- will pay less.
But their arguments that the tax changes worked will get a boost from an improving economy and increasing business and consumer confidence over the next 10 months.
Voters' judgments on the spending changes are tougher to assess. Spending under the Liberals has risen about 12 per cent over their first three years, outpacing inflation.
Even removing one-time factors, like pension adjustments and last year's natural disasters, the increase is about 10.5 per cent.
Much of the increase has been in health spending, up 19 per cent. Remove that from the equation, and overall spending is up only about five per cent over three years, and down in many areas.
Welfare has taken the biggest hit, a 26-per-cent reduction, with labour and environment ministries also taking significant cuts.
How will voters react to the four-year freeze on funding to universities and colleges, which has forced large tuition increases and limited access?
Will they care that the attorney-general's ministry has cut spending by 14 per cent, largely by closing courthouses and spending what critics say is too little money for treaty negotiations?
One major potential problem for the Liberals is that the cuts are still under way. About a dozen ministries are cutting spending this year.
If the results are visible, and important to enough people, that will undermine the message of new opportunity.
Still, it's a compelling campaign theme that the Liberals will roll out in September when pre-budget consultations start around the province.
For three years, those consultations have always been governed by one hard rule -- no recommendations that involved increased spending.
Now, as Mr. Collins has made clear, it's time to dream big dreams. (Still the cautious finance minister, however, he quickly amended that to "or medium dreams.")
The Liberals plan to talk -- belatedly -- about the reasons for going through the past three years of record deficits and spending restraint.
"Now is the point where we get to dream as a province," Mr. Collins said, musing about more money for K-to-12 education, or early childhood development.
All in all, that's not a bad starting point for an election campaign.
- From the Vancouver Sun

1 comment:

Life in Victorola said...

The fiberals will not forestall their comeuppance with a recent death bed conversion where "consultation" will help them refocus their latent tax largesse.

Collins prophesies that BC can now dream the "dream" and presumably wakeup from its current Frasier Institute nightmare.

To contend that the tax "changes", (a euphemism for the upward redistribution of wealth, a draconian, regressive rollback that will take years to recover from and to pay for in social costs) had anything to do with the economic 'recovery' is simply risible. Credit the NDP for previous balanced budgets and a flexible oil and gas tax structure.

Like Alberta, there's lots of new jobs in BC, you just need three of them to get by. The long shadow of Gordo cast a pall on federal Conservative fortunes in BC and the Gordo and his true believers are the NDP's best weapon in the upcoming provincial election showdown.