As the Liberal leadership race gets down to its final days, and the new premier of B.C. is selected by party members, B.C. residents should take some time to contemplate the provincial budget, which was released a week ago to a collective yawn.
As expected, it contained virtually no new initiatives, as there is no active government in place right now.
Despite the lacklustre budget, there are a few noteworthy points. One is that government debt is rising at a breathtaking rate, with very little of that debt actually due to the current deficit. Most of it, in fact, is for capital projects, with much of that for B.C. Hydro.
The debt could be close to $60 billion by 2013. When the B.C. Liberals were first elected in 2001, the debt was around $34 billion, and it didn’t move much past that figure until 2007, when the government started throwing a lot of money around – perhaps encouraged by the booming economy of the day.
Finance Minister Colin Hansen took pains to point out expected growing revenue from the HST – $4.2 billion in 2010-11 (including PST revenue) rising to $6.5 billion by 2013-14.
But there is no guarantee the HST will survive a referendum scheduled for September, but that could be moved up to June. The old PST, if reinstated, would not bring in as much revenue because it does not apply to as many items.
One leadership candidate, Kevin Falcon, has proposed cutting the HST rate to 10 per cent. And if the referendum gets rid of the HST, the province has to pay $1.6 billion back to Ottawa.
In other words, this budget has a great deal of uncertainty and despite all the political song and dance, B.C. has many major fiscal challenges ahead of it.
