Report from Victoria
Gary Collins’ fiscal report for the first quarter (period April 1, 2004 through June 30, 2004) estimates that this year's budget surplus may total $865 million. If a $300 million contingency allowance is not required, the surplus could be as high as $1.165 billion for the 12 months ending March 31, 2005.
This is significantly greater than the razor-thin $100 million surplus projected for fiscal ’04-’05 in the original budget presented last February. In all, Gary has presented us with a wonderful fiscal platform in the run-up to the May 2005 election.
The Finance Minister’s success is directly attributable to continued strict spending discipline across all ministries (quite unlike the dismal nineties), a favourable external economic environment (notably higher resource and energy prices), and made-in-B.C. policies which have restored confidence, reversed population outflow, and created a broad-based recovery exemplified by the best job growth in Canada, a booming construction industry and stronger retail sales.
In the years ahead, budget surpluses can provide British Columbians with more choices: debt reduction, or further tax cuts, or increased program spending, or combinations of the above, making B.C. a better place to live and do business.
Input from British Columbians will help chart the future course. Citizens are encouraged to provide input on this issue to the currently traveling legislative roadshow, via website http://www.fin.gov.bc.ca/tbs/consult05.pdf or by emailing
Consolidated B.C. government debt is now forecast to fall to $37.2 billion by the end of the fiscal year, a decline of $603 million from last year.
The government’s Budget Consultation Paper (see website above) estimates the surplus may rise to $905 million in fiscal ’05-‘06 and fiscal ’06-‘07, and also suggests it could, on the present trajectory, reach $1.8 billion by fiscal ’07-’08. Higher spending or an economic downturn could, of course, change that picture.
Most notable has been Gary’s accomplishment in holding individual Ministries’ spending to below budget. This remarkable achievement holds true once again, despite the $175 million unanticipated cost of fighting forest fires. Of assistance on the spending side are lower-than-projected interest costs on the provincial debt.
Obstacles overcome also include an estimated reduction of $363 million in equalization payments from the Federal Government and a projected reduction of $112 million from BC Hydro due to lower water levels (that is, prior to the unusually drenching rainfalls of September.)
Opposition parties and media pundits are once more looking for the facile explanations. It is true that much of the growth in government revenue is coming from energy and forestry. What has not been sufficiently acknowledged is one of the largest increases on record from corporate income tax (projected tax increase of $173 million this year, and projected growth of almost $600 million over the next 3 years). Business profitability has returned, and the B.C. government purse is a prominent beneficiary.
Will B.C. continue to be in the uncomfortable company of the troubled economies of Atlantic Canada, as a legacy of previous government mismanagement? We hope not. The federal transfer funding formula is capricious and arbitrary, but no doubt Ottawa boffins would love to kick B.C. off the welfare rolls. We concur with their sentiments. Thanks to good policies and good fortune, B.C. is very close to escaping the welfare trap, becoming once again one of the "have" provinces. Happy news indeed.
Now there is this economist guy Dr. Bond, who hightailed it out of here about three years ago to find his future in Alberta, delivering some scathing comments on Mr. Collins’ flight instructor background. Maybe Dr. Bond will now reconsider.
PS: While we are spreading praise around, let us not forget the hard work of Deputy Finance Minister Paul Taylor and his tireless hard-nosed staff.
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