B.C.'s financial future not the stuff of ads

THE B.C. Liberals keep using your money to tell you what a great job they're doing managing the economy and creating jobs, but evidence keeps mounting that their claim to being financial wizards is questionable at best.

First the B.C. government admitted its annual budget would have a much greater deficit than originally forecast. Then the latest job figures from Statistics Canada showed the province actually lost more than 4,000 jobs last month.

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Last week came two financial downgrades by Moody's Investor Services. While the financial firm kept intact the triple A credit ratings for both the provincial government and B.C. Hydro, it dropped its outlook rating for both from "stable" to "negative."

Both downgrades came because of concerns about the rising debt for both the province and the Crown corporation, combined with a sluggish economic performance that results partly from slumping revenues.

Under the B.C. Liberals' watch, the provincial debt has grown from $34 billion to a forecast of nearly $63 billion next year. Meanwhile, BC Hydro's debt has climbed from just more than $6 billion to more than $15 billion.

Much of this debt accumulation is the result of an aggressive and ambitious capital spending program. Everything from new schools and hospitals to such big ticket items as the Sea-to-Sky Highway, the Port Mann Bridge, the Canada Line and the Vancouver Convention centre have all helped balloon our provincial debt. BC Hydro has had to spend billions of dollars upgrading and maintaining its vast network of dams, transmission lines and generating stations.

Few would quibble with much of this capital spending. Everyone wants a new or upgraded school for their kids, new hospital expansions are greeted enthusiastically by local communities, and a reliable power supply needs ongoing maintenance.

But also adding to our debt has been the cost of accumulated annual budget deficits, as the B.C. Liberals have chalked up a half dozen of them while in power.

It wasn't supposed to be like this, of course. When the B.C.

Liberals were in Opposition and the NDP was in power, they passed themselves off as economic-masters-in-waiting, while casting the New Democrats in the role of incompetent money managers.

The truth is neither party has much to boast about when it comes to balancing the budget. Both parties routinely racked up annual deficits while in office, and each struggled when the economy took any kind of nosedive. My own view is that governments get too much credit when times are good, and receive too much blame when things go bad.

So Moody's has now called out the B.C. Liberals on two fronts. Combined with that spotty track record when it comes to balancing the budget, it's hard to see how that party can turn the next election campaign into being about which party is more competent at managing the economy.

There's no doubt the B.C. Liberals will continue to beat their favourite drum about the so-called "dismal decade" of the NDP-ruled 1990s, but various economic statistics do not support the notion that one party is so much better than the other.

It was amusing to see the government trying to spin its way out of the bloody nose it got from Moody's. There was lots of focus on the credit rating remaining intact, and virtually no mention of that downgrade of what the firm thinks the future holds for B.C.

And the future does not look particularly promising. The economy will slowly grow, the provincial debt will continue to climb, the government will likely run budget deficits for at least two more years despite what it will claim in next year's budget, and natural resource revenues are unlikely to spring back to the levels they were at a few years ago. It's hard to see Moody's upgrading its outlook for B.C. back to stable anytime soon.

But in the meantime, that taxpayer-funded ad campaign will continue to pat the government on the back about its economic wizardry.

I have to wonder whether the voters will buy into any of that magic.


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