VICTORIA – Finance Minister Mike de Jong is set to deliver what he’s calling a pre-election balanced budget Tuesday _ complete with a seal of approval from a noted economist _ but the Opposition New Democrats say British Columbians won’t buy it.
The delivery of what de Jong is calling a balanced budget makes good on the Liberal government’s promise to get British Columbia out of the red after four consecutive deficit budgets in time for the fast-approaching May 14 provincial election.
But de Jong said it wasn’t easy balancing the books, which means the budget won’t be bursting with election goodies to entice voters.
“To reconfirm, the budget will be balanced,” he said last week. “Getting there is not easy. This will not be a traditional pre-election budget where governments are doling out promises in the billions of dollars. The money simply isn’t there.”
A Liberal government source who spoke on condition of anonymity said the government will go to great lengths to show exactly how Tuesday’s budget is balanced.
The source said the budget includes economic forecasts of modest surpluses over the next three years.
The source said former Bank of Montreal chief economist Tim O’Neill has examined the government’s revenue projections in the budget and will confirm the numbers are on track.
The Liberals are expected to release O’Neill’s report on Monday.
Opposition finance critic Bruce Ralston said the findings of a hired hand and the government’s tabling of what it says is a balanced budget likely won’t be enough to convince British Columbians.
He said most British Columbians have yet to forget former premier Gordon Campbell’s promise during the 2009 election campaign that the budget’s deficit was a maximum of $495 million, but ended up near $2 billion after the campaign in which the Liberals won their third consecutive mandate.
“They face intense public skepticism on their record that they deceived the public in 2009, so I think people will approach whatever the finance minister says with a real lack of confidence,” said Ralston.
He said the New Democrats will be scouring the budget documents to watch if the government continues its previous practice of placing hundreds of millions of dollars in dividend earnings from BC Hydro into general revenue.
Recent Hydro budget numbers included in the Crown corporation’s environmental impact statement for Hydro’s proposed Site C dam project suggest losses of about $1 billion over the next four years, Ralston said.
The New Democrats will also be looking for more details on the government’s proposed sale of asset properties that were highlighted in last year’s budget, he said.
The Liberals said they had targeted sales of up to $700 million in asset properties, but have provided few details on the properties except for the Vancouver area Little Mountain property worth about $290 million.
“On asset sales, you have to be cautious to not count your chickens before they hatch,” Ralston said.
The government source said the budget will not raise the corporate capital tax, bank tax or the carbon tax. The agriculture sector will get a carbon tax break, but the source would not elaborate.
The source did not discuss comments made last year by former finance minister Kevin Falcon that the government would consider raising corporate income taxes to 11 per cent from 10 per cent in 2014 if the financial situation doesn’t improve.
The New Democrats say they will raise corporate income taxes to 12 per cent if elected in May.
De Jong said one of the major reasons he’s able to table a balanced budget on Tuesday is because of the contract settlements the government reached with its public service workers.
Pay increases were held to bare minimums under the government’s negotiating mandates of net zero and co-operative gains.
“If, for example, in those years where the settlements had been for zero, it had been very modest settlements of two and two per cent, we’d be billions of dollars under water now,” said de Jong. “We wouldn’t be having any kind of conversation about a balanced budget.”
Last week’s throne speech highlighted the Liberal government’s proposed B.C. Prosperity Fund, which proposes to eliminate the debt and provincial sales tax with revenues and royalties from the province’s expected lucrative returns from the export of liquefied natural gas to Asia.
But so far, none of the proposed LNG plants, which the province forecasts could earn up to $1 trillion over the next 30 years, are in operation.
Premier Christy Clark said the Prosperity Fund could accumulate between $130 billion and $260 billion for the government, but it won’t start earning money until the LNG plants start operating.
The Liberal government’s jobs plan forecasts one LNG plant in northwest B.C. in operation by 2015 and two others running by 2020. The government has recently said interest in LNG has increased and there’s a possibility of five plants in operation by the end of the decade.
Exporting LNG involves extracting natural gas from northeast B.C., shipping it in pipelines to Kitimat and the Prince Rupert area, where the gas is cooled and placed on tankers headed for Asia.