Friday, May 01, 2009

Where, and how much, will NDP, Liberals cut

We're sliding toward a fraudulent provincial election. And both the main political parties and their candidates are playing along.
Their plan appears to seek election with a bogus mandate and then do whatever they want.
Here's the nub. The Liberal budget in February called for two years of deficits. The New Democrats built their platform based on the budget projections. They project three years of deficits, due to some additional spending.
But the budget was way off and neither of the two main parties wants to admit it. So you're being asked to choose based on misinformation.
This is a big deal. The budget calls for a $495 million deficit this year and $245 million shortall next year before a return to balanced budgets.
It's a fantasy.
The budget is based on projections of 0.9 per cent reduction in the GDP in 2009 and 2.4 per cent growth in 2010. It assumed growth of one per cent last year.
But StatsCan just reported the B.C. economy shrank last year.
And two leading economists, both on the province's forecast council, said they now expect a sharper decline this year - perhaps 2.7 per cent.
The Finance Ministry reports on risks to the budget. Each one-point drop in economic growth chops $150 million to $250 million off the bottom line. So the new GDP forecast alone suggests the deficit will be some $320 million more than the budget projects.
That's conservative; the slowing economy hurts revenues in other areas and increases demand for services like welfare. Natural gas prices, for example, are far below the level the government projected in the budget, meaning a shortfall of of some $600 million.
Gordon Campbell says he won't allow the deficit to rise above the projected level. Meeting that target already required spending cuts in eight of 19 ministries. Most cuts are still being identified, though park and campground closures have already been announced.
The worsening economic results mean another $320 million in cuts from a new Liberal government.
Campbell hasn't specified how or where the cuts will come. Voters need to hear that, so they can make an informed choice. The Liberal plan already calls for 10 of 19 ministries to spend less in 2011 than they did in 2008, despite inflation and population increases.
If you believe that's realistic and won't hurt services you or family members rely on, no worries.
But it has been eight years since the Liberals promised to root out waste and unnecessary programs. You would think the services that have survived make a difference in peoples' lives.
Still, you know where Campbell stands.
That's not yet true for Carole James and the New Democrats. The NDP platform includes a fiscal plan and costs for its promises, though some numbers are questionable.
But it's still based on the Liberals' February budget and three-year-plan.
Since those numbers are wrong, James has three choices. Like Campbell, she could pledge to make whatever cuts are necessary to meet her budget targets - to manage by the numbers. She could raise taxes to come up with more revenue. Or the NDP could decide a couple of extra years of bigger deficits would be reasonable. The Harper Conservatives have, after all, decided that four years of deficits are needed.
With barely a week left in the campaign, voters aren't getting straight talk on what should be one of the must fundamental issues in the election campaign.
The deficit is certainly going to be much greater than the budget projected. The way in which the new government deals with it will have an impact on the lives of almost everyone.
Campbell has said he would cut, but not where.
James hasn't offered any clear idea how an NDP government would deal with a projected deficit greater than the one forecast in its platform.
Voters need answers, fast.
Footnote: The fiscal plan also abandoned the Liberals' past practice of including a healthy "forecast allowance" as a cushion against the unexpected. A post-election budget crisis is almost certain. The unknown is how the parties would respond.


Anonymous said...

Maybe Campbell could start by cutting his $23 million PR staff that monitors the news and blogs. It is a 'political staff' and should be paid for by his party AND NOT public funds. Of course the BS is 'to get the message out" but that is not happening when these flacks are using their office to make 'annon' comments on blogs. But then the downsizing of MSM jobs where better to use ones skills but as..........................

Dawn Steele said...

Thank you Paul - It's a fraud, pure and simple, so please don't let this one drop!

Anonymous said...

Great article Paul. I hope that people are paying attention because these numbers are way out of whack - just look at Alberta's deficit of over $4Billion!

It troubles me that other media types are not reporting on this reality and asking our leaders what will they do if the budget numbers drop.

Anonymous said...