Baldrey: Why the budget surplus might be good news for the NDP

The B.C. Liberals have been hesitant, for years now, to dramatically increase the annual budget of pretty well anything.
The B.C. Liberals have been hesitant, for years now, to dramatically increase the annual budget of pretty well anything. THE CANADIAN PRESS/Chad Hipolito

The rosy state of the B.C. government’s financial books is good news for the B.C. Liberals as they seek election, but it’s potentially even better news for the New Democratic Party.

That’s because there is enough financial elbow room for either party to make big spending promises, without having to raise taxes or tip the provincial budget into deficit.

The B.C. Liberals have been hesitant, for years now, to dramatically increase the annual budget of pretty well anything. The health care system routinely gets an additional half-billion dollars a year – which is a huge amount of money – but that basically funds the status quo.

The education system gets minor funding increases, as do social service ministries. In fact, the government’s own three-year fiscal plan shows any budget increase in those areas are projected to be less than five per cent, which again maintains the status quo.

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But the latest quarterly financial update shows the government is now awash in money, and while the next two years may not be quite as robust as the current year, they will still be strong performers and will deliver a lot of additional revenue into government coffers.

How much? Well, quite a lot actually.

This year’s surplus is expected to hover around $2 billion (a whopping $1.6 billion higher than forecast), plus there’s another $350 million for a forecast allowance, and a $450 contingency fund that may not have to be tapped into to significant degree.

But it’s the government’s forecast for the next two years that will play a factor in how parties put together their election platforms.

The total budget surplus for the next two years is forecast to be (for now anyways) about $1.8 billion, plus another $1 billion for the forecast allowances that won’t be used if those surpluses are indeed so huge.

This sets the stage for the NDP to make the kind of spending promises that were essentially off-limits in the last election campaign, when government finances were much tighter.

The party can now promise significant relief for, say, the K-12 education system, perhaps in the order of hundreds of millions of dollars a year. It can also promise to raise various social assistance rates, lower post-secondary tuition costs, and put even more money into health care – all things they have been demanding of the B.C. Liberal government for years.

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And this can all be done without running a deficit, based on the B.C. Liberals’ own numbers.

Of course, the B.C. Liberals can promise to do these things as well (and I suspect they will when it comes to financial assistance for the disabled, based on how they botched that issue in this year’s budget), but I suspect they will argue such action would be foolish over the long-term because there is no guarantee the state of the provincial economy could fund these increases once they are embedded in the system.

That may be a valid argument, but will enough voters buy it to keep that party in power?

Then there is the whole capital spending side of the equation. The B.C. Liberals have been quick to condemn recent NDP promises to get rid of school portables altogether, and to increase spending on transit infrastructure.

The ruling side argues that such spending could only occur with tax increases, but that’s utter nonsense. The government is projecting to spend $4.5 billion this year, and about $8.5 billion over the next two years on building schools, roads, bridges, hospitals and other forms of infrastructure with nary a tax increase to pay for them. It’s all borrowed money, whether it’s spent by the NDP or the B.C. Liberals.

The New Democrats, with their announcements about school portables and transit, have signaled they are prepared to open the spending floodgates to a significant degree, which may be their best hope of attaining power come May 9th.

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The NDP needs to find a way to separate itself, spending-wise, from the existing government to boost its appeal to voters. Ironically, it may be their chief political opponent’s economic record that could carve a clear path to that goal.

Keith Baldrey is chief political reporter for Global BC

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