You won’t hear the new NDP provincial government say much nice about the former Liberal administration leaving it a $2.7-billion budget surplus, although perhaps that’s for the best.
First, it’s not like the NDP can use the cash for any of the expensive goodies it promised voters. Under the Budget Transparency and Accountability Act, the surplus must be used to pay down the provincial debt, which is expected to hit $69.8 billion by the end of this fiscal year. That’s more than double the $33.8-billion debt the Liberals inherited when they came to power in 2001.
Second, while the Clark government bragged about the large surplus, even offering it as evidence of its financial acumen during the campaign compared to the allegedly wastrel NDP, large surpluses as much as large deficits can indicate that a government does not a have an accurate understanding of its revenues and expenses.
Half of B.C.’s surplus was generated by unexpected and unsustainable increases in taxation — $853 million more than expected from a one-time federal income-tax adjustment and $493 million more than expected in taxes linked to property sales in the hot housing market. The Liberals can take no credit for the first boost in revenue and only a little for the second. It’s fair to link some of the booming property market to B.C.’s robust economy under the former government which, with GDP growth of 3.7 per cent last year, topped all provinces.
All this means the NDP can take no comfort in the surplus which, given her public comments, Finance Minister Carole James understands as she and her staff prepare the NDP’s first interim budget for Sept. 11.
But the long list of expensive NDP spending promises and simultaneous opposition to so many large, wealth-, job- and tax-generating resource projects that are worrying B.C. business leaders and investors are a concern. Both risk slowing B.C.’s economy.
Among its plans, the NDP is eliminating bridge tolls and promised to scrap MSP premiums, freeze Hydro and ferry fares on the main routes and cut them on shorter ones, increase welfare rates, create $10-a-day child care, help post-secondary students and increase the pace of seismic upgrades to schools. They also face financial problems with ICBC, the need to hire hundreds of extra court-ordered teachers and high forest-fire costs.
It’s hard to imagine how the NDP can do all that without tax hikes, which would be a brake on the economy.
James has noted that many British Columbians have been struggling with lack of government support, despite the surplus, or have not been feeling the benefits of B.C.’s growing economy. But she and her colleagues need to consider that hiking taxes also hurts people and policies that harm the economy ultimately are more damaging to our combined prosperity.
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