Campbell, thankfully, flip-flops on deficits

Heave a sigh of relief that Gordon Campbell has decided deficits aren't the ultimate horror after all.
Campbell has been an anti-deficit zealot for every one of the 16 years he's been in provincial politics. He brought in a law that made deficits illegal and denounced them as the folly of the weak and morally bankrupt.
Even in late October, when the premier went on television to announce his responses to the economic meltdown, he stuck to the claim that deficits are the tools of the devil.
"Let me be very clear, we are not going to run a deficit in the province of B.C.," he said at a press conference after the talk. "When anyone talks about a deficit, they're talking about turning their back on the next generation and sending our problems forward to them."
Less than four months later, Campbell has changed his mind. He and Finance Minister Colin Hansen called a dramatic press conference this week to confirm government revenues have plunged. Without deficits for the next two years, the government would have to cut spending on health and education. That would be worse than a deficit, Campbell said grimly.
Hallelujah.
The fact that Campbell and Hansen could only be persuaded now, two weeks before budget day, means disaster was dangerously near.
Hansen said if was only in the last couple of weeks that he accepted the impossibility of a balanced budget next year. That means the government was on the brink of a desperate gutting of spending to meet its ideological commitment to balanced budgets. Government officials have spent months looking for programs and spending to cut to bring expense in line with revenues.
The result would have been predictably terrible, with deep and damaging cuts to vital programs.
Hansen said this week that government revenue for the next three years is now forecast to be about $6 billion below the projections used in last year's fiscal plans.
Not surprising, as the resource industries struggle, tax revenues slump and home sales - and property transfer taxes - drop. But huge.
Consider the impact of building a balanced budget with that kind of revenue shortfall.
Assume a two-year freeze on health and education spending, which would mean growing waits and other problems as health authorities cut back to cover salary increases and critical needs.
The government would still have to cut 10 per cent from the rest of its spending to have a hope of delivering a balanced budget. That would mean deep cuts to services and programs, from policing to child protection to retraining.
The fact that Campbell was willing to cling to the idea that could be managed is alarming.
Deficits are, in most circumstances, to be avoided. Spending more than you take in - as an individual or a government - means racking up debt that must be repaid and interest costs. It's an easy way to put off hard decisions and leave the consequences for someone else.
But sometimes it makes sense to borrow to get over a brief period of lower income. That's especially true in a recession, when cuts would further weaken the economy and deprive people of services just when they are most needed.
It's still not clear whether Campbell accepts that reality. He said at the press conference that he only abandoned the idea of balancing the budget when it became clear that health and education cuts would be required. That raises, again, the suggestion that other government functions - children and families, forestry management - are expendable.
And he pledged to still try for a balanced budget, promising cuts to contracts with service providers, grants, contributions and government operations. Service providers - the agencies that actually do much of the work on behalf of the government - are already struggling. Cuts could be disastrous.
Still, count the flip-flop as a sign that Campbell found some common sense, in the nick of time.
Footnote: There was more encouraging news. Hansen said the panel of independent economists the government consults had knocked their growth forecast for this year down to zero. But in 2010, their average prediction is for 2.8-per-cent growth. That would point to a relatively quick emergence from the worst of the slump for the province.