Friday, September 04, 2009

Campbell, Hansen fail the smell test

My first budget lockup was in March 1998, when the NDP government forecast a $95-million deficit.
Why didn't you cut a little more and deliver a balanced budget, then finance minister Joy MacPhail was asked?
"Because you wouldn't believe us," she replied.
She was right. And the Liberals might be heading toward that sad state.
In 1998, few believed the NDP. The New Democrats had won the 1996 election in part because of a pre-vote budget that showed a surplus for the current year and another balanced budget in the year ahead.
Neither claim was true. Eventually, the auditor general reported revenues were inflated by hundreds of millions dollars based on political direction.
The NDP government messed up in other ways before getting booted out in 2001, but the phony election budget put a stink on it from day one.
Now, the Campbell government is smelly. More than 70 per cent of British Columbians believe the Liberals "intentionally misled" voters about the province's finances during the election campaign, according to an Ipsos Reid poll.
Gordon Campbell promised right up to election day that the deficit this year would be $495 million and that the February budget was realistic.
But this week Finance Minister Colin Hansen presented a budget with a $2.8-billion deficit.
Campbell and Hansen said everything went wrong after the election. Up until May 12, the budget was a safe bet.
But within a week of the February budget, economists said it was wildly optimistic. The campaign didn't start until two months later.
Last week, Hansen said he knew nothing of any budget problems before the election. "Ministers do not seek advice from deputy ministers and ministry staff during an election period," he told the legislature.
In the lockup Tuesday, Hansen noted that the finance deputy minister did mention that revenues might be $200 million to $300 million less than forecast during the campaign. It was a "casual conversation," Hansen said.
Later that afternoon, he acknowledged more than one conversation.
He didn't ask questions about the shortfall, whether it was likely to get worse or better. Hansen said he believed a $300 million revenue shortfall was easily managed by cutting expenses.
Campbell then said he too he had been told the revenue budget looked suspect during the campaign. He couldn't remember when - May 7, maybe. His deputy minister told him spending could be cut to make up for the shortfall so he thought everything would be fine.
Boy, were they wrong. That's not surprising. When a budget is far off track just weeks into the year, big problems are coming.
Flash forward. On June 10, when cabinet was sworn in, Hansen still said the deficit would be $495 million.
But this week he revealed that he had been briefed by the ministry days after the May 12 election and told revenue was now off by more than $1 billion.
Hansen told the legislature that he still said the deficit target would be met on June 10 because by then he was confident B.C. would be getting $1.6 billion from the federal government for imposing the new harmonized sales tax.
Which raises more questions. The Liberals promised in writing during the campaign that they would not introduce the HST.
But Hansen said by "late May" - two weeks, at most, after the election, the province started negotiations with Ottawa on introducing the tax.
By June 10, after two weeks of discussions with the federal government, Hansen said he considered it a done deal. He was counting on the $1.6 billion from the federal government to cover the revenue shortfall.
So after rejecting the HST as bad for B.C. during the campaign, within four weeks the Liberals had committed to a deal with the federal government to introduce the new tax. No one outside of a handful of insiders was involved in the decision. No analysis or public or business consultation.
And a huge political interest in taking one-time cash for a budget bailout.
Even looked at in the best light, the explanations paint those involved as incurious bunglers, making policy on the fly based on short-term political interests.
Most British Columbians, the poll suggests, also believe they were dishonest.

5 comments:

Norman Farrell said...

The statements made by Liberals during the campaign about HST not being "on the radar" were untrue. Their policy trend since assuming office has shifted tax burdens away the progressive income tax system to emphasize broad user and license fees and consumption tax.

The poorest of the poor have been protected to some degree and the richest of the rich have been rewarded unconditionally, except for the need to fund the Liberals.

Tax policy under Campbell has been consistent: Reduce progressivity, increase regressivity.

A typical example is the driver's license fee. Gone from $5 to $75. No big deal by itself but the policy is repeated through government.

Anonymous said...

It just shows that when the government wants to lie it is better to lie bigger and better. You disgust so many people that we are turning into a banan republic. The people have no power. Sell everything. Chisel the little guy with Campbells imitation of lyin Brian( only he's surpassed him).Now we get royaly dumped on with HST( His Shit Tax) as it smells something horrible.

DPL said...

People are such fools. Since first elected Campbell has been breaking contracts, reducing services to the people who badly need them yet gets elected. His tristing of the truth makes one wonder just how he ends up in government and not unemployed? Hansen will say and do anyhting Gordo wants becuase he likes the power and the wages. They don't care about the old, sick, poor or anyhting that doesn't suit themselves. What a way to go through life. MOst of us just couldn't be that bad

Anonymous said...

Majority of British Columbians oppose another Campbell term

Vancouver Sun article by Graeme Wood

Summary of Angus Reid poll results,
Full Report, Detailed Tables and Methodology
[.PDF]

Anonymous said...

Lemme get this straight. Big business receives a big boost from the feds. This is good. trickle down... They pay us our salaries.

And then... what. We pay it back to them???

Naaa.