THE B.C. Liberal government has hired an economic consultant to lend credence to its upcoming budget, but I'm not sure that's going to be enough to make British Columbians believers again.
Finance Minister Mike de Jong insists he will deliver a budget on Feb. 19 that is not only balanced but which actually projects a surplus.
The budget, of course, is made up of anticipated revenues and projected spending costs. To assess the revenue side of the equation the government has hired former Bank of Montreal economist Tim O'Neill to vet the numbers.
But de Jong is likely fooling himself if he thinks the appointment of the well-respected O'Neill will magically solve his government's serious credibility problems attached to a budget that will be delivered less than two months from the start of the election campaign.
The voters in this province are still suffering from the hangover resulting from the pre-election budget in 2009 that turned out to be fiction, something which seemed apparent during the campaign itself but was only owned up to by the B.C. Liberals after the votes were tallied.
Compounding the credibility problem was the introduction of the HST so quickly after the election, which seemed underhanded.
Since then, the government has tabled three consecutive budgets that came home with large deficits. With time running out in their mandate, the B.C. Liberals are now asking the public to believe that they've suddenly got their fiscal house in order.
According to the government's own books, revenues must grow by an eye-popping $2 billion next year to balance things, assuming there is no change in the government's spending plans.
A tricky task for O'Neill will be to assess the government's projections for revenues flowing to it from natural resources, particularly the natural gas sector. On paper, the government expects to bring in an additional $500 million in natural gas royalties in the coming year, at a time when there is a glut of gas in the market.
Another area that may be challenging for O'Neill is the anticipated move by the government to sell off a bunch of assets and to book the money from those sales as a one-time revenue grab to help balance the budget.
This will be one of the more controversial parts of the budget and it will be interesting if O'Neill sides with the government's arguments in this area. The New Democrats are sure to condemn the asset sales as a phony and misleading way to balance the books.
Apparently O'Neill will not be asked to look at the spending side. But with an election on the horizon, there isn't much flexibility on this side of the equation anyways because big spending cuts would be politically dangerous.
The one area to watch is health-care spending, because its huge budget means it can be tempting for a government to play games with it. For example, the B.C. Liberals' three-year fiscal plan projects a $600-million increase in health-care spending next year. Will the budget stick to that figure, or will it shave a couple of hundred million off that increase to make a balanced budget that much more possible?
Any big reduction in healthcare spending from what was planned would be looked at dubiously at best and would simply add to the government's credibility problem with election-year budgets.
In any event, I wish O'Neill luck. He's been brought into a budget process that has bruised many people in the past and he has to hope he emerges unscathed himself.
. . .
The saga of B.C. auditor-general John Doyle took a couple of twists in recent days. Australian media were the first to report Doyle was the leading candidate to replace the auditor-general in the state of Victoria. Then the chief clerk of the B.C. legislature blasted Doyle in front of clerks and speakers from other provinces gathered at the legislature for a conference (his comments were inadvertently sent out over the in-house speaker phone system, and therefore were piped right into the press gallery for reporters to hear).
Doyle had also publicly ridiculed the all-party committee that offered him a two-year extension, and demanded one of the members be removed from the committee - an extraordinary statement by an officer of the legislature under any circumstance. Perhaps Doyle's outburst signalled he'd already had it with B.C. and was indeed ready to return home Down Under.
