By Joe Johnson (The Cascade) – Email
Print Edition: February 29, 2012
Last week saw the first budget from Christy Clark’s Liberals come forward, delivered by the Minister of Finance, Kevin Falcon. But for a first budget, it was certainly one to forget. Or maybe that should read “it was certainly one that forgot.” The government forgot about making a difference for students, families, new home builders, and businesses.
However, it really has to be mentioned that the Liberal government is making its way in a world that has a fractured economic confidence, so there are reasons why spending was down. Premier Clark has been playing up BC’s “shaky economy” lately, certainly to make it easier to present the case for why the Liberals crafted the budget the way they did. In retrospect, she should’ve gone into acting instead of politics. And then there’s Falcon, who has been out to make sure that people knew that the government was aiming to retain its triple-A rating.
So, sure, the cause of prudent fiscal planning is noble. Overspending without accountability can lead to a weak province, something we can’t afford. But when many of the problems with the deficit come at your own hands, all proclamations and statements wear pretty thin.
One ugly problem in particular that stands out like the white lids on Tim Horton’s new extra-large are the missteps taken while transitioning to the HST. Because of the payback, we’re now facing roughly 10 per cent of the total $3 billion deficit as debt owing to the feds. The payback calls for $300 million over five years. Of course, that’s only direct costs and doesn’t factor in the indirect losses, such as the decline in expenditures stemming from those choosing to wait for the PST system to resume.
Jumping into the budget to discuss a few of the key points, let’s start with students. Institutions similar to UFV which are operating at near or over 100 per cent will not be seeing any help. That means as inflationary factors set in, we will be hit with what could be constituted as a real cut in funding. As our places of education bear witness to this, you can expect to see programs and departments hit hard or even eliminated. An educated workforce is going to be critical in the coming years, so you’d think hurting the very places that foster knowledge is a bad idea.
And since BC has the highest interest rate on student loans across the provinces, no money went to bring it down. With the discrepancy between the government’s borrowing and lending rates, they’re making a profit on the interest. The economic policy on that is questionable. The revenue stream may be going to servicing the provincial debt or paying for services, but if loans were actually given interest free, or simply just lowered from what they are now, then any extra money in the pocket of graduates would find its way into the economy – instead of those government coffers.
Families—which Premier Clark campaigned so heavily on and even based a new provincial holiday on— are also going to be hurt. The Medical Services Plan (MSP) premiums are going up again. The government keeps tapping these premiums as a source of revenue, and this time it’s a four per cent increase. Technically there is no new tax that families will be facing, but the premiums may as well be one. Generating $2 billion for the government over the next year, it’s going to cost a family of three $128; a single person will see a rise of $64.
If you’re in the market for a new home, and it will be your first home, then you can apply for a new tax credit for up to $10,000. The purpose for the rebate is to kick-start the sluggish new home market. But nobody in their right mind would buy a new home when they can wait a year for the PST to come back, where they would save on the taxes. Jobs for home builders have slowed down, houses are sitting vacant, and money is not going into the economy, so something needed to be done during this time. But to be able to claim that $10,000, a new home has to be your first home. I feel it’s not too likely that people are looking for a brand new home their first time in the market. It’s mostly for politics and show.
Finally, small businesses also received no love. It was expected that the small business corporate tax rate would be lowered to zero. Instead, it’s staying right where it was at 2.5 per cent.
On top everything else, the Liberals are also selling off Crown corporations such as the liquor distribution board. This is short-sighted plan; it’s essentially the sale of our future revenue streams in order to raise quick service for the deficit. Once a Crown entity is gone, it’s very unlikely ever to return to the fold.
Now, as I take my hands off the budget, some of you may argue that it’s unfair to criticize the government over spending cuts and raising rates. Perhaps it is; we’re in a deficit and we have to deal with it. But their plan is not the only way to go about it. I don’t have the answers, but then again, I’m only a writer and am not the one sitting in the premier’s chair.
