Tuesday, July 17, 2007

Taylor's big surplus cost the public services

Finance Minister Carole Taylor was trying too hard, I'd say. The big-time spin on this year's public accounts suggested the government is getting worried about what you think about the recurring mega-surpluses.
Sure, big surpluses are better than big deficits. But I've been a corporate guy, responsible for a few businesses.
And if a manager who reported to me kept smashing his budget numbers year after year, I'd start to wonder if he was being dishonest when he submitted his plan.
The government smashed its budget again this year. Taylor has released the public accounts for the fiscal year ending March 31 - the final accounting - and revealed that the government had a $4.1-billion surplus.
The plan at the beginning of the year called for a $600-million surplus. But the plan underestimated revenues by about $3.1 billion. Spending was $1 billion lower than the worst case forecast.
That's no surprise. Since the Liberals were elected, the government has posted very large surpluses at year-end, consistently low-balling revenue forecasts.
Here's the problem. If the government had prepared an accurate forecast - within a conservative but reasonable margin of error - than there would have been a chance for the public and the MLAs who represent them to talk about priorities.
Good news, the government could have said. It looks like, given the best forecasts, we'll finish the year having taken in $4.1 billion more than we'll spend. What should we do with the money?
That's enough for a $1,000 cut in the taxes each British Columbians pays. Or to eliminate the wait for surgery in the province, or increase welfare rates or improve home care for seniors. Or to pay down the province's already modest debt.
The government's inaccurate forecasts steal the chance for that kind of debate. By the time the surplus is revealed, the only option legally left is to plunk it down on the debt.
So far, the government has been mostly upfront about the whole business.
But not this year. Taylor said the surplus was used to pay for hospitals, schools and roads. "Fortunately, we were able to use the larger-than-forecast surplus to both pay for these projects and pay down debt by $1 billion," she said in a press release.
That's a major tweak to reality. None of those projects was started because of the surplus. None of them is directly paid for with the extra money the government collected.
And they were planned and would have gone ahead without the surplus. (Sorry kids, we budgeted too well. No school for you.)
There is just no $3.1 billion allocated to infrastructure and $1 billion to pay down the debt.
The whole $4.1 billion is going to pay down debt.
Anytime the government communications' types ramp up the spin cycle that much - and enlist Taylor to front the effort - you should be warned something is going on.
There isn't anything dramatically wrong with paying down debt. I hate debt; it always seems to take away your freedom. That's another column.
But B.C. doesn't have a debt problem. Next to debt-free Alberta, B.C. has the lowest debt per capita. That, and prudent government, is why the province has such a good credit rating.
That means there was a real choice - tax cuts, or help for people or paying down the debt.
Spending decisions would of course have to be made carefully. It would be foolish to launch programs that require long-term commitments based on a large surplus one year. (Although big surpluses are the norm for this government.)
But even the most cautious approach would have allowed major improvements in the lives of British Columbians or significant tax cuts for individuals or businesses.
When the legislature finance committee consulted British Columbians on the budget, they said improving services should be the priority.
The government's bad forecasting allowed it to ignore the priorities of British Columbians.
Footnote: The legislative committee hearings are a legally mandated part of the budget process. The committee received 8,000 submissions which overwhelmingly called for improved services - faster access to health care, efforts to deal with mental-health and addiction issues, more affordable housing, enhanced education and so on. Instead, the government plunked $4.1 billion down on the debt.

10 comments:

Anonymous said...

How much of that surplus came from the province's contingency fund? The budget could've looked different if BC had experienced a spate of floods or forest fires. I also disagree with your notion that the money should've been spent on services instead - services are notoriously difficult to cut when revenues go down, and seem to do best when provided with a stable level of funding. If we're to spend surpluses instead of paying down debt, far better to invest it in neglected infrastructure than fund modest increases to services for a single year.

Anonymous said...

Gosh, I'm so thrilled to know that with all the cuts to services in hospital's including staff shortages that I can sit here in pain for at least another year before seeing a surgeon for a follow up vist.

The minister likes to brag about money being spent in the medical service yet a lot of things don't seem to be getting any better. Mind you I'm the one hurting not the minister nor anyone who takes out their crdit card to pay for services supposedly covered by the medical public system. anyone can draw up a budget by lowballing it then alors we have more money. surpirse surprise, big drum roll. What a groupf of liars..dl

Anonymous said...

Alberta Debt Free? Then someone please explain how Alberta Government guaranteed 'debt' for borrowed money by cities, towns and villages can possibly mean they are debt free? Creative BS by whom?

wstander said...

A truly excellent column. Too bad the first three commenters appear not to have understood it, but merely used it as the springboard to write their own agenda driven remarks.

Speaking of agenda driven comments, it is a shame that I have not seen such a clear analysis as that by Willcoks in the MSM.

Anonymous said...

"When the legislature finance committee consulted British Columbians on the budget, they said improving services should be the priority."

What services were cut on March 31, 2007?

BC Liberals Suck said...

You know, the Liberals have filled their coffers on the backs and blood of the poor. They couldn't manage their way out of wet paper bags. When cutting welfare & disqualifying thousands wasn't enough, they started going after those on disability income assistance. Hmm, numbers down.
Ooops, a few thousand more homeless around the province, mothers having to engage in survival sex while their kids starve, but I bet Claude Richmond got his performance bonus.

Community Living BC's up & running, thousands of developmentally disabled children, youth & families on the waitlist for ANY type of services. Regions that have spent their entire budgets & have another 8 months before they get any more funding. I guess none of those Liberal MLA's have to provide around the clock care for non-verbal, violent adult children in diapers with no respite, or help. Oh well, more $$$ in government coffers so Gordie & his minions can vote themselve tasty raises while kids who've been raped & sodomized are out of luck for sexual abuse counselling.

Or how about the thousands of public service jobs sit empty, while workers crash & burn. Little pots of money that look like surplus. These fools are spending thousands on recruiting & retaining staff, since no-one in their right mind wants to work for the BC government anymore, they can't even hire people from other provinces. Unless they're one of those managers that gets to use the government credit card to shop for donuts & massages.

No food, no housing, no safety, no respect, no dignity and no human rights. That is what the BC Liberals have given a large majority of citizens in BC.
I hope that surplus is worth it.

Anonymous said...

Surpluses prudent, wisely used: minister
Times Colonist, Thursday, July 19, 2007

Your editorial (Massive surpluses show bad planning - Times Colonist, Friday, July 13, 2007) gives the impression that a surplus is not used to fund the budget priorities of British Columbians. In fact, the budget consultations and budget identified the need to invest in our hospitals, schools and roads.

The surplus last year was used to fund a record $3.4-billion investment in infrastructure and reduce B.C.'s debt by $1 billion. We are building health-care facilities, upgrading our transportation networks and expanding post-secondary spaces for our youth.

A prudent approach to budgeting gives us protection from the vagaries of the world. If revenues come in higher than predicted, we are able to put the surplus dollars toward building the future for our children.

Carole Taylor, Minister of Finance.

Anonymous said...

I know it’s the summer and all, but seriously this article contains basically no research, no real facts, and as such does a disservice to taxpayers, here are a just a few things that come to mind.

Welfare rates were increased. Home owner’s grants for seniors were also increased. The new rental assistance program is new money that does help families on lower incomes. Do some research and check the amount of surgeries being done in BC; more are being performed.

Improved home care for seniors? Many colleges were given funding to offer residential care aide program for students because there is a shortage of care aides. Seriously you article implies that none of these things occurred and all the money went to pay down the debt. This is patently untrue and I am deeply disappointed as a columnist you clearly spent so little time on this article.

If you need a summer vacation, take one, but don’t put out poorly researched articles simply to collect a pay cheque. Your readers demand better.

Anonymous said...

I know it’s the summer and all, but seriously this article contains basically no research, no real facts, and as such does a disservice to taxpayers, here are a just a few things that come to mind.

Welfare rates were increased. Home owner’s grants for seniors were also increased. The new rental assistance program is new money that does help families on lower incomes. Do some research and check the amount of surgeries being done in BC; more are being performed.

Improved home care for seniors? Many colleges were given funding to offer residential care aide program for students because there is a shortage of care aides. Seriously you article implies that none of these things occurred and all the money went to pay down the debt. This is patently untrue and I am deeply disappointed as a columnist you clearly spent so little time on this article.

If you need a summer vacation, take one, but don’t put out poorly researched articles simply to collect a pay cheque. Your readers demand better.

Anonymous said...

8:01 AM & 8:02 AM, Anonymous wrote: "Seriously you article implies that none of these things occurred and all the money went to pay down the debt."

Perhaps you should have taken the time to read WP's article - he basically stated ("That's a major tweak to reality.") that the Minister of Finance is perpetuating a fraud on the people of BC.

"By the time the surplus is revealed, the only option legally left is to plunk it down on the debt.

The whole $4.1 billion is going to pay down debt.
"

For more of Taylor's pranking the public you should read: 'P3s just put the bill in another pocket' - Craig McInnes, Vancouver Sun, Thursday, July 19, 2007.
http://www.canada.com/components/print.aspx?id=be4c05c2-444b-4624-afbb-fb98ac8b799e