Treating BC like their own private hedge fund

Knock me over with a feather.  There’s a line in the BC Liberal press release accompanying the 2nd quarterly financial statement that isn’t true.  Yes.  Not true.

According to the press release, “B.C. will maintain a forecast allowance of $100 million as a buffer against future economic and fiscal risks”.  But the quarterly itself shows that the government isn’t maintaining the forecast allowance.  They’re cutting it, in order to show better numbers overall.

DeJong and minions have shuffled the numbers and reduced the forecast allowance for the second time this year, from $200 million to $100 million.  The result is that the real projected deficit has grown even more than stated.

The forecast allowance is an amount of money the government sets aside in case things get worse.  It’s in addition to contingencies – stuff that comes up that you just have to spend money on or people’s lives go to hell.  Stuff like election ads.

At budget time the actual deficit – prior to the forecast allowance – was expected to be $768 million.  Now, it’s projected to be $1,369, million which means the actual projected deficit has grown by $601 million since Christy Clark’s first real budget.

That’s over a $100 million more than the BC Liberals told the media yesterday.

Now, given their usual strategy, the whole budget is probably a pile of malarkey with an overstated deficit that will miraculously shrink just prior to the election to show us what great stewards the BC Libs are.

Charlie Brown, kick that ball again.

PS  David Schreck has another excellent column on these and other fiscal matters

This entry was posted in BC Liberals, BC Politics, Christy Clark and tagged , , . Bookmark the permalink.

One Response to Treating BC like their own private hedge fund

  1. John Twigg says:

    Well done Ian. I sent a similar screed to Bill Good with copies to others regarding BC debt to GDP ratio which I believe the BC Liberals also are misrepresenting.
    It’s hard to believe anyone would do such a thing as misrepresent the public finances but alas in this case they have done the same thing before, notably when Campbell lied about the size of the deficit in the 2009 election campaign and then foisty the HST on us to try to hide his lies. Here’s a copy:

    “Good show today Bill, hitting on several key issues.
    One clarification you need to know, and your listeners to know too, is re B.C.’s debt as per cent of GDP. That is the key measure as several of your guests confirmed, but there is more than one measure inside that category.
    The 17% you like to refer to relates I believe to only the B.C. government’s central operations, and that reflects I believe a cynical ploy by Gordon Campbell to make B.C.’s finances look artificially far better than they really are or were, so he drove down the relative size of the centyral public service and cut central spending, etc.
    Plus he pulled scams like foisting the HST onto us without due process, which he did to hide the size of his lies during the election about what the deficit would be, which you more or less correctly noted.
    The normal and historic level of this debt to GDP measure for B.C. has been 20% and it has stayed more or less around that level for decades in B.C. even during NDP terms in office, and that level is far below what is carried by other provinces, which is partly why B.C. has historically carried one of the top credit ratings among the Canadian provinces.
    However another measure of debt to GDP includes the off-budget stuff such as schools and hospitals and local governments and Crown corporations and more recently IPPs and P3s and there the debts have been soaring, such as Campbell trying to hide Hydro’s huge future obligations to IPPs until the auditor general called him out on it.
    I am not sure what figure that debt is at now but I believe one of your callers was close to the mark when he said the correct figure is 30%, but I also believe other measures of types of debt to GDP could be up into the 60% per cent range – which even so would still be far below debt levels in other jurisdictions, which is mainly because B.C. entered the latest recession with relatively little old debt and relatively low debt-servicing costs.
    One person who knows this stuff better than I is Will McMartin, who wrote about it for The Tyee and who now may still be reachable through the BC Conservative party.
    Another source is David Schreck, who has a pretty good grasp of economic numbers these days, and perhaps Rob Shaw and/or Robyn Allan too, and of course Vaughn and Keith can quickly get themselves up to par on it if they’re not there already.
    And of course the Auditor General John Doyle probably knows best of all, which is why the Campbell hoods always try to cut his budget.
    Best wishes for explaining the above to your listeners!
    John ”

    Ironically I learned moments afterward that the Auditor-G will be releasing a report tomorrow on B.C.’s financial reporting. Could be timely!!

Leave a Reply

Your email address will not be published. Required fields are marked *