October 23, 2008
Carole James responds to Campbell's Economic Statement
Last night, Gordon Campbell made a number of economic announcements after weeks of silence about the global financial situation. Here is how Carole James responded:
Families across BC are worried tonight.
They have been watching the economic collapse come closer and closer for almost a year.
First the American housing market collapsed and the lay-offs began in our forest communities.
Gordon Campbell did nothing.
Then as the economic news got worse across North America…
Gordon Campbell decided it would be a good time to hit families and businesses with a new gas tax.
Then banks and lenders started to falter
And Gordon Campbell said everything is fine…
The stock market collapsed and the Premier was on vacation.
Major projects like the Golden Ears bridge and the Olympic village ran into problems…
The Premier said don’t worry
He’s out of touch
BC families are worried…
They are worried about their retirement. They are worried about their jobs. And they are worried about their kids’ future and balancing the family budget.
After tonight, they will continue to worry…
British Columbians deserve a substantial plan. They got ten points scribbled on the back of a napkin.
Gordon Campbell finally woke up to the economic crisis, but he delivered very little to show that he really gets it.
Tonight’s address wasn’t about you and what you need to get through this difficult time.
The Premier’s address was – unfortunately- more about his political fortunes in the two up coming by-elections and in the provincial election next May than it was about helping working families facing tough times.
Here’s what the Premier didn’t do tonight…
He didn’t get rid of his pet tax, the gas tax.
The gas tax is a bad tax. It hurts average families’ far more than wealthy ones.
It hurts workers trying to keep their jobs.
The gas tax – and the finance committee have heard this across the province – hurts businesses big and small in every corner of BC.
You’ve told him… It’s wrong to bring in a new tax when the economy is hurting.
But the Premier’s not interested in what you think… He refuses to budge and axe the gas tax…
The Premier is also not listening to rural British Columbians…
As mill after mill goes down…
As forest workers lose their jobs…
As forest communities struggle to survive…
The Premier and his government continue to sit on their hands…
Tonight he turned his back on rural BC once again.
British Columbians want leadership.
Tonight, the Premier abdicated leadership…
A real leader leads by example…
Here’s the example Gordon Campbell should have offered tonight…
Two months ago he gave his top executives a 43% pay increase. This follows his own $65,000 pay increase.
If Gordon Campbell was serious, he would roll back those obscene pay raises and he’d get serious about government waste.
Contracts for his friends and party members…
Government ads that eat millions of dollars a year.
Expensive travel for his ministers and their staff…
Dinners and parties and things we can get by without…
Tonight he said nothing about waste. The big paycheques for government favourites will continue.
The full page ads telling how great the Premier and government will still show up every weekend in your paper and on your tv.
The Premier isn’t willing to show any leadership and that’s wrong
Because every dime that’s spent on his pet projects is a dime that doesn’t go for health care…
That isn’t going to senior’s care…
That doesn’t go to a forest community in crisis.
That doesn’t help our economy grow…
For the last few years, the commodity and construction boom has put a lot of money into government coffers.
But Gordon Campbell wasted the chance to help the middle class.
Wages are stagnant. Costs are rising. And many people are falling behind. The gap between rich and poor is growing faster in BC than anywhere in Canada.
Tonight Gordon Campbell showed that he still is not focussed on the fundamentals. He has other priorities. Cost overruns on pet projects. A gas tax that hits families and businesses. A pay raise for his top aides.
British Columbians are fed up with his arrogance, and tonight he didn’t do anything to show that he’s really changed.
October 23, 2008
Campbell's weak response to economic crisis neglects rural and Northern B.C.
TERRACE – Gordon Campbell’s weak response to the economic crisis neglects the pressing needs of rural and northern B.C., say the New Democrats.
Premier Campbell made his economic statement Wednesday, but the economic meltdown started years ago for small-town B.C., says NDP MLA Robin Austin.
“The forest industry, which is unquestionably the economic driver in most of rural British Columbia, has been in freefall for the past two years, and the Premier looked the other way,” said Austin, the NDP critic for rural issues.
“Cutting industry’s school taxes won’t do anything to help workers whose mills have already shut down,” said Austin. “Premier Campbell is out of touch if he thinks this will have any impact on rural B.C.”
Nearly 14,000 direct jobs have been lost from the forest industry since the beginning of 2007. Most of those jobs were well-paying, family-supporting jobs in communities which depend primarily on forestry.
Austin said the timing of Campbell’s address has more to do with the upcoming Vancouver by-elections than meaningful action on the economy.
“If Campbell were listening to British Columbians, he would cancel the gas tax, take action to revitalize our forest industry, and get back to work right away in the Legislature instead of delaying for a month,
” he said.
Between Lines of Campbell's Speech: A New 'Fudge-It Budget'
He'll have to jigger the books to not show a deficit.
View full article and comments here http:///Views/2008/10/23/FudgeItTwo/
By Will McMartin
Published: October 23, 2008
Clip this column. Or, at least, remember this key point: Gordon Campbell's BC Liberal government is going to foist a "Fudge-It Budget" on British Columbians next February, just before it faces voters in a May provincial general election.
Simply, B.C.'s 2009-10 fiscal plan is going to have a deficit because the government's expenditures will exceed revenues. The Campbell government, however, will say otherwise, claiming instead that their budget is "balanced." That means they are going to have to "fudge" the books to show that revenues exceed expenditures, rather than the other way around.
Preparing to sail the red ink sea
B.C. will not be alone in this sea of red ink. A fiscal contagion is now engulfing governments across North America, hot on the heels of widespread economic dislocation following the global credit crunch.
In the United States, where sizeable deficits have wracked the federal government for most of the past decade, experts believe that a newly-elected president Barack Obama will inherit an annual shortfall of $1 trillion.
State governments also are suffering. Consider California, where governor Arnold Schwarzenegger has recalled the state legislature for an emergency session next month to combat a possible $17 billion deficit.
In Canada, TD Economics last week issued a special report under the headline, "Canada's federal government facing significant deficits." While our country is expected to stay in the black for the remainder of the current fiscal year (2008-09*), it's a much different story over the next two fiscal periods. According to the TD economists, expenditures could exceed revenues by $10.4 billion in 2009-10, and then $9.9 billion in 2010-11.
And just hours before Campbell's televised address to British Columbians, the Ontario finance minister admitted that despite cutting some expenditures and delaying others, his government anticipates the current year will end with a $500 million deficit -- this just months after the legislature passed a balanced budget. He refused to make any forecast for next year.
Premier changes his tune
Let's go back to last night when Campbell made his televised address to the province and admitted that British Columbia is not immune to the financial and economic turmoil now gripping the industrialized world. "World stock markets are reeling, commodity prices are plunging and the world's financial system is under attack," he began, a little breathlessly.
Readers who tend toward the churlish might suggest that this observation shows the premier has made a 180-degree about-face, now accepting that global forces have had, and are having, a significant impact on B.C.'s economic health.
For the last half-decade or so, the BC Liberals have strenuously denied that soaring, world-wide commodity prices, skyrocketing international demand for our natural resources, historically low interest rates and an explosion in federal transfers to provincial governments, had anything at all to do with B.C.'s improved economic circumstances, and succession of budgetary surpluses.
Rather, they crowed that British Columbia's economic and fiscal successes were due exclusively to BC Liberal policies, the courage and foresight of the premier, and the commitment of his dedicated caucus. External forces, whatever they were, were irrelevant.
Well, times have changed, and so too has Campbell's tune.
Ten plus five equals...
To meet this grave situation, which Campbell said was the "worst crisis in over 75 years," the premier outlined a 10-point plan -- which was on top of a five-point program he unveiled earlier in the day in Nanaimo (which proposes meetings with experts, business leaders and other governments).
To start, the legislature will be recalled for a short session to begin on Nov. 20. Six weeks ago, of course, the government cancelled the legislative assembly's scheduled fall sitting because it had nothing to do.
Well, now there is. Legislative approval is needed for tax cuts promised by Campbell, including relief for industry (a school property tax rebate), small business (a reduction in the small-business income tax rate to 2.5 per cent) and individuals (a retroactive cut in personal income tax).
As well, the provincial government will remove limits on deposit-insurance protection for individuals with credit union accounts, and set up a private-sector pension plan for those British Columbians who do not have a group pension scheme.
A technical measure that will be applauded by the private sector is a doubling of the commission Victoria pays to businesses for collecting the sales and hotel taxes. It's a gift estimated to cost the provincial treasury $60 million over a three-year period.
That's seven of the proposals unveiled by Campbell. Another is a gimmick, pure and simple -- Victoria will give the BC Ferry Services $20 million to cover a 33 per cent reduction in fares for December and January.
Why those two months? Well, the premier explained, it will help families get together over the holidays. Then again, the BC Liberals hold only four* of 14 seats on Vancouver Island, and there's this election in May.
One more proposal put forth by Campbell is a pledge to accelerate capital expenditures for infrastructure. This is a neat trick insofar as British Columbia's GAAP accounting allows the cost of capital spending to be spread over many, many years. So, while the BC Liberals get the benefit of having construction jobs created and projects fast-tracked, just a fraction of those expenditures will be counted in the current or subsequent fiscal years.
Finally -- and this is proof that B.C. will be facing a fiscal shortfall very soon -- Campbell said that his government would re-evaluate spending priorities and reduce "avoidable" government expenditures.
The intent of this measure, the premier said, was to "not start digging ourselves into that hole that we worked so hard to get out of in 2001."
That comment echoed what Campbell told CBC News earlier in the week following an economic summit he and Canada's other premiers attended with the prime minister in Montreal. "It's taken us more than a decade to get out of the deficit holes that were dug," he said.
"And I think we should be building on that because that's the foundation of that financial prudence into the future, not starting to dig another hole. So I am not in favour of deficit financing."
It's possible to detect in Campbell's remarks the sentiment that while he blames the current economic and fiscal uncertainty on "the world," he still credits British Columbia's economic prosperity and fiscal strength to his own government's actions.
But as students of fiscal history know all too well, it is seldom that public finances fall seriously into deficit -- digging a hole, as the premier put it -- because of government over-spending. And that's because government expenditures (absent a war), are generally relatively stable.
On the other hand, government revenues fluctuate considerably. And this is especially true in countries such as Canada, and provinces like British Columbia, which depend to a great extent on the extraction and export of natural resources. Inadvertently, Gordon Campbell himself provided evidence of this in his televised address.
"Today the world's financial system is in the grips of its worst crisis in over 75 years," he said. That takes us back to 1933, the nadir of the Great Depression, which began in 1929 and persisted through the early years of the Second World War.
Did governments around the world face horrendous deficits in the Great Depression because all of them were engaged in out-of-control spending? Hardly.
In the late 1920s and early 1930s, global commodity demand and prices fell off a cliff. Around the world, government revenues dropped off a cliff. Those deficits were caused because, while government expenditures stayed steady -- and, actually, most decreased significantly, to the consternation of John Maynard Keynes -- the monies flowing into public coffers slowed to a trickle.
It was very nearly the same in British Columbia in the early 1980s, as commodity prices plunged and government deficits quickly appeared. The condition persisted in B.C. through to the late 1990s, until the most-recent global commodity boom got underway.
It's revenues, not spending
To appreciate that Victoria's spending is not responsible for B.C.'s worsening fiscal situation, the premier should consult the 2008 edition of the British Columbia Financial and Economic Review, an annual publication published by the finance ministry.
Table A3.6 on page 93 shows historical expenditures by the Consolidated Revenue Fund for every fiscal period from 1984/85 to last year, 2007/08. And for every year but the last four, government expenditures were between 17.1 per cent and 19.7 per cent of the province's GDP.
Then, in 2004/05, the figure fell to 16.6 per cent, and over the next three years was 16.2 per cent, 15.6 per cent and 15.9 per cent.
How, one is tempted to ask, is it possible that Victoria faces fiscal uncertainty when government spending is in decline, and at its lowest point in a quarter-century?
The answer, of course, is on the other side of the fiscal equation -- government revenues.
The monies flowing into the provincial treasury will slow -- and probably have already begun to slow -- as people lose their jobs and businesses see their sales weaken, as commodity prices fall and companies lay off their workers, and as Ottawa tries to get its finances under control by freezing or even slashing federal transfers.
Running in the red?
Still, as was stated earlier, the situation is grave and the premier should be commended for taking action to mitigate the potential impact on British Columbia. But he also is facing an election in six months, and woe be the B.C. premier who seeks a mandate from the voters as red ink drenches the province's books.
Next February, the Campbell government will introduce the fiscal plan for 2009-10. By law, its revenues must exceed its expenditures, but as governments of every political stripe across North America wrestle with gargantuan shortfalls, what is the likelihood that it will be?
Almost impossible, and so let us begin to prepare for a B.C. budget packed with that good, old fudge. But here's something else to consider: what should we do about it?
Is that really it? Premier Gordon Campbell's free-time political broadcast shows lack of common sense in lame approach to fiscal crisis
By Bill Tieleman
Is that really it? That's all Premier Gordon Campbell had to offer British Columbians facing the biggest economic crisis in decades?
Hopefully voters will be able to cut through the guff and see the Mcguffin in Campbell's freetime political broadcast.
Accelerated timing for previously announced tax cuts as we head into recession? Does anyone really believe that cutting government revenue will produce anything but a lot of red ink on the balance sheet?
Fortunately some commentators have crunched the numbers and seen the reality behind the TV address - most notably Will McMartin in the Tyee and David Schreck.
Interfering in the operations of the allegedly independent BC Ferries? Wasn't that made completely improper by the BC Liberals? Ooops, not if there's an election of the horizon.
I expect to see BC Ferries CEO David Hahn's resignation on Campbell's desk shortly to protect his independence.
Recalling the Legislature? You mean to have the scheduled sitting you previously cancelled?
Increased deposit insurance for credit unions? Was there a run on VanCity last week that we didn't know about?
Doubling the commission for businesses collecting GST and PST? Wall Street is responding favourably to that huge economic stimulus.
I suspect the Premier's new pension plan - can I have his MLA pension instead please? - is written on the back of a napkin like his post-secondary education grant of $1000 per baby a few years ago, as Sean Holman exposed.
Let's see the details - and I might even support it.
Meanwhile, I'm just waiting for the second TV address Campbell will give around July 2009 if he's re-elected: "The fiscal situation has turned very grim indeed - we'll have to severely cut government programs. Who knew?"
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