Thursday, February 19, 2009

A little belt tightening while we wait for the times to get better

Two years of tough times is the prognosis from the Finance Minister of British Columbia, as Colin Hansen delivered the Liberal government’s economic blue print in the Legislature this week.

With the economies of the world suffering trying economic times, perhaps the most trying since the 1930’s, BC too it seems will have to learn to make do with a little less and find a way to make what it has go a little more.

While there is the promise of economic stimulus, all be it at a cost of some 700 million dollars in deficit financing for the next two years, the message still is that these next years will be trying ones for British Columbians and their families.

Wednesday’s Daily News featured a wire service recap as the front page headline story, which reviewed the contents of Mr. Hansen’s budget and what the future may hold for the province.

Short-term outlook is gloomy but province expecting to rebound after two tough years
By Dirk Meissner
The Canadian Press
Wednesday, February
18, 2009
Pages one and two

VICTORIA - The B.C. Liberal government tabled a sparse budget Tuesday with few pre-election promises, except to say that things will get better.

Finance Minister Colin Hansen said British Columbians can expect two years of tough economic times that include a $495-million deficit for the fiscal year 2009 and $245 million for 2010. Then the westernmost province is hoping to win a little Olympic gold itself.

Hansen's budget forecasts a return to good times in three years, propelled primarily by a $10-billion economic impact from hosting the 2010 Winter Games.

Hansen wasn't making excuses for the lack of election goodies in the budget. Years past have seen governments show up on budget day with rebates and income tax cuts for voters.

"It's incumbent upon the government to tighten its belt in difficult economic times," Hansen told reporters in a briefing prior to the official release of his budget. "What British Columbia families are looking for today is a sense of responsibility from a provincial government, one that says, 'yes, we are going to provide stability in the vital programs such as health care, education and social service sector.'''

The Liberal government is seeking a third consecutive term in the May 12 election.

Hansen said his budget forecasts a recession with negative economic growth of -0.9 per cent this year.

He said the government projects its revenues to decline by $6.6 billion over the next three years.

"Compared to what we were forecasting as recently as September, we have seen more than $6 billion of revenue expected over three years vanish," he said.

The biggest ticket item in the budget was health care, which the liberals say will increase by $4.8 billion over three years.

Across the country, Ontario, Quebec, Nova Scotia, New Brunswick, and Newfoundland and Labrador have all signalled they will also bring in deficit budgets this fiscal year.

The federal government expects deficits totalling $86 billion over the next five years as it deals with a worldwide economic downturn.

Only Saskatchewan, Alberta and Manitoba have indicated they can deliver balanced spending.

Most business groups welcomed the no-frills financial plan in these volatile economic times.

"It's not an exciting budget," said Jock Finlayson, B.C. Business Council president. "We're calling it a realistic budget for the times. It sort of stays the course. In the environment we're in, I think that's understandable."

But the Association for Mineral Exploration British Columbia expressed disappointment at the lack of measures to stimulate the industry.

"We were hoping to see more of this reflected in the budget," president Gavin Dirom said in a statement. "The reality is that people are losing jobs today."

Nor were labour groups thrilled.

The Hospital Employees' Union said the budget lacked bold, decisive direction on health care, and the B.C. Federation of Labour said it indicates public sector layoffs and does nothing to help working class families struggling in a recession.

"I am underwhelmed by the meekness of the government's approach at a time when British Columbians are facing the most serious threats to their economic security in a generation," said HEU spokeswoman Judy Darcy.

Opposition New Democrat Leader Carole James called it an outright failure.

"It was a failure on behalf of the government to recognize the difficult economy," she said.

Hansen said the budget includes cuts across most ministries but protects vital health, education and social programs.

He said the government is saving almost $2 billion cutting advertising, travel. and contracting out costs money that will go toward health and education funding. There are, however, still $250 million in cost savings yet to be identified.

The government said it will rely on attrition and restructuring to revamp the civil service, although Premier Gordon Campbell, who did not comment on his government's budget Tuesday, earlier did not rule out layoffs.

There was no money promised for wage increases for government workers whose contracts that expire next year.

The budget also outlines $14 billion in infrastructure spending projected to create 88,000 jobs over three years. Most of the projects have been announced previously.

Hansen said British Columbia dug itself out of a financial mess created by the previous New Democratic government of the 1990s with surplus budgets and record job creation. Spurred by the Olympics, he said B.C. will return to financial stability by 2011.

However, the B.C. finance minister said he still couldn't provide figures for Olympic security costs.

Hansen said the federal government still has not completed its calculations but B.C is responsible for only 50 per cent of a portion of those costs, which have been estimated to have climbed as high as $1 billion.

No comments: