Vaughn Palmer: B.C. NDP plan to spend their way through coming economic storms

VICTORIA — The New Democrats are expecting a year of “economic storms,” just as they are also recognizing that the current multi-billion-dollar budget surplus “won’t be there” much longer.

So said this week’s speech from the throne, adding a cautionary note to the otherwise upbeat tone of the David Eby government’s messaging.

The storm warning was telegraphed by the government’s own economic forecast council, a panel of a dozen or so private-sector forecasters who provide the province with an independent outlook on the economy.

Late last year, the council reduced its growth projection for 2022 to 2.9 per cent, down from 4.2 per cent at the beginning of the year.

The revised outlook for this year was even more discouraging — a mere 0.4 per cent, down from an earlier projection of 2.9 per cent for 2023.

Then-Finance Minister Selina Robinson tried to put the best face on the downward revision after meeting with the council on Dec. 5.

“We’re entering this period of slower growth and challenging global economic times in a strong position to continue supporting people, because B.C.’s economy grew more than most last year,” said Robinson.

More than most other provinces, yes, but significantly less than the B.C. government itself projected in its budget for the year.

On the bright side, Robinson was sitting atop an unprecedented pile of cash in the form of a record budget surplus.

On Nov. 25, she delivered an update on provincial finances that indicated B.C. was headed for a budget surplus of almost $5.7 billion for the financial year ending March 31, 2023.

But just as Robinson’s time was running out as minister of finance — Premier David Eby replaced her on Dec. 7 — so were the days numbered for the budget surplus she left behind.

About $5 billion of the windfall that generated the surplus was a result of one-time federal government adjustments to the provincial share of personal income and corporate tax revenues from prior years.

As Robinson herself conceded, the increased revenues were the result of a “soft rebound, and whether they’re going to hold over the long term remains to be seen.”

Not likely, not this year anyway. I gather most members of the economic forecast council are sticking by their low growth expectations.

Since the finance ministry makes it a practice to peg its own growth forecast a bit lower than that of the council, there is every reason to expect that it will predict zero growth or close to it for 2023.

All of which suggests that when new Finance Minister Katrine Conroy introduces her first budget on Feb. 28, the province will be heading back into deficit.

As for the surplus, more than $1 billion of the $5.7 billion is already committed.

The New Democrats give every indication of planning to dispose of much of the rest before the March 31 end of the financial year. Anything left over would go to pay down the debt.

The throne speech rattled off a long list of proposed “investments” — the preferred shorthand for plain old spending.

“The government will put this year’s surplus to work for people by reducing costs for families and helping businesses attract the talent they need.

“By growing our health-care workforce to cut wait times and give more people access to a family doctor.

“By building more homes that people who live and work in our communities can afford.

“By giving record support to cities and regions, rural and urban, that have grown quickly.”

Once the surplus is exhausted, “Budget 2023 will make record new investments to improve public health care and deliver more housing for middle-class families.

“It will ensure we build the hospitals, schools, childcare centres, roads, and public transit that make us stronger. It will introduce new measures to address the cost of living, especially for those most vulnerable.”

The New Democrats insinuate that all this spending flies in the face of more conventional political wisdom.

“Some say we should respond to a downturn by pulling back, reducing services, or by making people pay out of pocket for health care,” said the throne speech. “But that would make many of our most serious challenges worse and pass down costs at a time when people can least afford it.”

You don’t actually hear much budget-cutting talk from the Opposition these days. The B.C. Liberals went along with most of the government’s pandemic spending increases.

Just last week, Opposition leader Kevin Falcon called for a $1.5-billion increase in spending on treatment for mental health and addiction.

Public attitudes about debt, deficits and spending have moderated over the past decade or so.

There’s not much sign that voters are alarmed by the current level of spending in B.C., or the likelihood of more borrowing.

Perhaps that will change if the law of compound interest catches up with some of the country’s bigger-spending governments.

But for now, the New Democrats would appear to be in step with the public mood with their plan to liquidate the surplus and spend their way through the coming economic storms.

vpalmer@postmedia.com

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