Tuesday, February 15, 2005

Trust me, says Campbell, things will be different

VICTORIA - The budget should be a pretty good launch into the next stage of this long election campaign.
Lots more spending, money to pay down the debt, a quarter-billion-dollar fund to tap for goodies between now and the start of the official campaign - it's all the stuff that voters should like.
But there's a problem. For many voters,Gordon Campbell is going to look like one of those panicky guys in the final days of a dying relationship, swearing that he can change. Just give him another chance and this time he'll pay more attention, bring home flowers every now and then, and take care of the kids more often.
It comes down to trust, like so many things in life.
The Liberals, like all desperate suitors, are doing a lot of things right. Spending across government ministries is going up by more than seven per cent, giving lots of opportunity to win friends. There are tax cuts and reductions in MSP premiums for people with low incomes, an extension of the break for small businesses and new provisions that make it cheaper to buy one of those new non-polluting cars. Health care gets a one-time 6.6-per-cent budget increase, and economic development funding goes from a paltry $18 million to $237 million in one jump. (That’s an election slush fund, as the money disappears again next year. But it’s still a lot to toss towards communities in the next few months.)
The Liberals say look, this is what we wanted to do all along. But to get here, we had to make tough decisions. That's why we kept a tight lid on school spending, and cut funding to the ministry of children and families, made more seniors pay for their prescriptions and didn't deliver those 5,000 promised long-term care beds.
Those were all necessary, unhappy sacrifices, the Liberals say sadly, but they're paying off. Things will be different from now on.
Whether that flies will depend partly on whether people buy the argument that those sacrifices were necessary. The Liberals chopped personal and corporate taxes on their first day in office, before they had even seen the government's books. Those cuts, which knocked $2 billion off revenues, forced the deep cuts to services and prevented the government from coming up with the money needed to deliver on promises like adding 5,000 long-term care beds.
People who believe the tax cuts helped create today's improved economy will likely forgive the Liberals the hard times. Those who think more targeted cuts would have achieved the same goals without turning government upside-down won't.
The Liberals' success will also depend on their ability to convince people that they really have changed. It's easy to play the devoted suitor in a bid to get a relationship back on track, and just as easy to revert to type once the crisis is past.
The Liberals hope this budget will be the political equivalent of a truckload of roses.
But some voters are going to look hard at the details over the next three months. The decision to pay down at least $1.7 billion on the debt - the final number will be closer to $2.2 billion - will get an especially close look.
B.C. already has the second lowest debt in Canada, and there is no urgency to repayment. 
And all the pre-budget consultation indicated that improved services, not debt repayment, was British Columbians’ priority. More of that money could have gone for one-time expenditures, from health care to infrastructure. (Or, boldly, to set up a major legacy fund to help communities cope with the long-term effects of the pine beetle infestation.)
Campbell is already hitting the road to woo voters, launching a tour of chambers of commerce (not really the people who need persuading).
The Liberals' fortunes in the election will depend much on his success in convincing voters that he’s a changed man.
Footnote: The spending jump slows after this year, with education, for example, forecast to rise about one per cent a year after a 2.8-per-cent jump in this budget. That number doesn't include more money for salary increases; that money is in a  separate budget category until the government decides on its new wage mandate to replace the current freeze. That’s a welcome budgeting change.


Life in Victorola said...

Mr. Campbell engineered a fiscal train wreck by recklessly awarding tax subsidies to the privileged few during a economic downturn. Since taxation is a zero sum game, breaks to the privileged meant shifting costs and cutbacks to those less privileged. Now that the cupboard was made bare, more 'belt tightening' was required for single moms on welfare as they were advised to eat tax cut cake. This crony largesse did nothing for the BC economy which is only now climbing back to pre-liberal levels. Gordo's new budget, lipstick on a pitbull, can only be trotted out to 'true believers' since it doesn't pass the smell test for lower and middle class bc denizens. Does the bc middle have the appetite for yet another illiberal bait and switch term?

Campbell might yet succumb to his Frasier Institute hubris should the bc electoral middle finally call his bluff and unmask him as the snake oil montebank that he currently plays on tv and in our legislative assembly.

Anonymous said...

Great analysis, Paul, thank you. The two questions you've highlighted are pivotal: 1) Were the tax cuts worth it? and 2) Do we trust Mr. Campbell to be more compassionate if given a second chance?

1) Has anyone convincingly demonstrated that the tax cuts created marked economic improvement, thereby growing the tax base & contributing to the current surplus? We know commodity prices, low interest rates and federal transfer payments have helped, but I haven't seen a convincing case yet to show whether or not the precipitous first round of tax cuts were worth the pain. Other examples, like the MCFD mess, also bring into question their much-vaunted management skills and judgement.

2. Trust is crucial & much easier to lose than to regain. An errant politician must work much harder to regain trust than a wayward lover, however. Love may tempt us to overlook self-interest, but political choice is far more objective. People will decide to forgive or not forgive, based on self-interest and alteratives.

A third issue, related to trust, is transparency. I think many people are offended by the relentlessly PR-gilded approach to "transparency". Anyone who lives in consistently rosy New Eras and Golden Decades and is never wrong is just not credible, especially for those of us on the outside scratching our heads.