In separate sit-down interviews this week, two utterly sincere leaders delivered emphatic guarantees about the next provincial budget.
The only problem is that they conflict.
NDP Leader Adrian Dix said there’s no way it will be balanced. Premier Christy Clark said it most certainly will.
Dix started disengaging from the whole concept of mandatory balanced budgets two months ago and continued the theme this week.
Stressing the long-term view, he said governments run deficits in some years and surpluses in others. “The key is to make sure you’re running a balanced, disciplined government…. That’s what we intend to do.”
As for next February’s budget, which will kick off the election campaign, he said: “This isn’t going to be a balanced budget. It’s going to be a budget they say is balanced, but isn’t balanced.”
Although privatizing liquor distribution was abandoned, the government is quietly continuing the asset sale that was announced in the last budget.
Dix sees it as a desperate scramble to raise cash, which shows how close the margins will be next February.
“People understand if you’re selling off public assets … in one year in order to balance the budget, that’s not a way to run a peanut stand or a government.”
Also raising his skepticism is the freezing of federal health transfer payments starting in the next year, he said, which will further tighten the screws.
He’s also dubious about booking $575 million in dividend payments from B.C. Hydro, an amount created by borrowing money through deferral accounts.
He took last week’s episode as further confirmation.
Even while continuing the advertising blitz, the government announced it is currently a half-billion dollars off its budget target, because of what Dix called “a catastrophic set of mistakes.
“Can you imagine the response if the NDP had a press conference … and said: ‘;Oh, we’re the balanced-budget party but we missed our deficit target by $500 million?’ ”
He said he’s well aware the NDP is held to a higher standard on fiscal matters. It’s because of the historic skepticism about the party’s economic management and the searing experience of the fudged budgets from the mid-1990s.
Which probably explains his enthusiasm for repealing the balanced-budget law. Why continue holding to a problematic standard which even the party that set it has trouble meeting?
Over in the premier’s office, Clark made this observation about Dix’s analysis:
“He would certainly know the precise mechanics of how to fake a balanced budget.
“But I can tell you we are going to balance the budget. Part of their narrative is that … this is just like 2008, when the government didn’t meet its financial targets.”
The government then projected a small deficit that jumped to many times the estimated amount when revenue collapsed during the economic meltdown.
Clark said it’s a more predictable environment now, with job and economic growth. “We are in a completely different fiscal situation.”
Although the running tally for the current year’s deficit is higher than expected, the plan is to erase it in a new budget next February.
The problem for voters is that the final proof of which leader is right won’t be delivered until long after the election. The final accounting on the 2013-14 budget won’t arrive until the summer of 2014, when there will likely be many more pressing arguments under way.
Just So You Know: Surplus or deficit aside, the one issue they both agree on is that there is no room or appetite for tax increases.
Clark said: “We are going to make sure we are the lowest tax jurisdiction in the country for personal income taxes…. That is the most important way government keeps life affordable for people.”
Dix recalled how the NDP inherited a big deficit in 1991 and responded with a sweeping round of tax increases. (He was an aide to then-finance minister Glen Clark at the time.)
“That option is not available to us,” he said.
Governments now have much less fiscal capacity, since they’re limited by trade agreements and competition to keep taxes low.
But Clark said: “It’s possible to predict future behaviour based on your previous record.”
The two of them will duke it out on that basis next year.
Said Clark: “They’ll talk about my record, I’m sure quite unfavourably, and that’s legitimate. We’ll do the same about them. That’s the basis on which people will make a decision.”
