March 5, 2002
Kamloops Daily News



With the popularity of the B.C. Liberals dropping like a
stone, I wonder if this government will ever be re-elected. 
That question would have been unthinkable 11 months ago with
their historical sweep to power.

One problem is that the B.C. Liberals find themselves caught
between ideology and an hard place.

The ideology says that if you put money in the hands of the
rich, wealth will trickle down to the less deserving masses.  
The theory is that if the rich get richer, so will the poor,
and governments revenues will rise.    

The hard place is called the Budget Transparency and
Accountability Act.   The Act was originally introduced by
former Premier Ujjal Dosanjh as the Balanced Budget Act but
it was repealed by the B.C. Liberals.  Dosanjh proposed a 20
per cent cut in pay for 12 months for the premier and all
cabinet ministers if the budget was not balanced by 2004.

The B.C. Liberals said that they would go further with their
version of the Act.  "We promised to introduce real
balanced-budget legislation in our first 90 days in office,
and we've delivered," said Minister of Finance Gary Collins. 
The B.C. Liberals must now deliver on their bravado.

To his humiliation, Campbell is now forced to use NDP
tactics to avoid being punished by an Act originating with
the NDP.  The predicted economic stimulus from tax cuts to
the rich didn't work and now he must increase taxes.

The B.C. Liberals are struggling to blame the current mess
they find themselves in on the NDP.  The slogan "ten years
of NDP mismanagement" swept them to power but it's wearing
thin.

It turns out that the last decade was not mismanaged.   The
Auditor General shows that the Liberals came into power with
a $1.5 billion surplus.  British Columbians have the highest
average income in Canada according to the Canadian Centre
for Policy Alternatives.  Government expenditures dropped 4
per cent in the last decade compared to Gross Domestic
Product.

Campbell has come up with a new slogan, "structural
deficit," as another way of saying that the current deficit
is not their fault.  But unlike "ten years of NDP
mismanagement," which can mean just about anything,
"structural deficit" has a specific meaning. 

A structural deficit exists when government expenditures and
revenues are such that, no matter where we are in the
business cycle, the budget cannot be balanced.

There is no structural deficit.   B.C. had a balanced its
budget in 1999/2000 and ran a $1.5 billion surplus in
2000/01.   The reasons for the current deficit are fairly
straightforward and not all the B.C. Liberals' fault.

1) Premier Campbell spent the surplus on tax cuts that
benefited mainly the rich.  Those earning more than $100,000
received a tax break of $2,857 (a 3 per cent cut).  Those
earning less than $20,000 received a tax break of $236 (a
1.2 per cent cut).

2) The  Softwood Lumber Dispute with the U.S. has reduced
revenues to the province.  This is not the fault of the B.C.
Liberals.  If anyone is to blame, it is the federal Liberals
who naively think that Americans will abide by the North
American Free Trade Agreement when it doesn't suit them. 

3) The downturn in the American economy has reduced the sale
of our hydroelectricity to (mostly) California.   Once
things pick up, that market for our hydro will exist again. 
And even if the U.S. builds electrical generators, those
generators will be fuelled by Canadian natural gas from
Alberta and B.C.

When we emerge from the downturn, revenues will increase and
the cyclical deficit will disappear.   When it does, it will
not be because of any B.C. Liberal voodoo economics.  Those
economics didn't work for ex-president Reagan and they won't
work here.

The economic picture for B.C. will improve from the sale of
resources belonging to all British Columbians: wood, natural
gas, electricity.  At least, the last time I looked they
hadn't been sold to private corporations  at fire-sale
prices.

Things aren't all gloomy for the neophyte B.C. Liberals. 
The timing of economic recovery and the next provincial
election could be fortuitous for them.  They can then claim
that their bad medicine worked and they deserve another try. 
An economic recovery can make any government look good.

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