(Vancouver) Gary Collins tabled his first balanced budget as Finance Minister today, but his projections for 2004/05 leave little room to move.
"This budget is balanced, but on a razor's edge," says Marc Lee, an economist with the Canadian Centre for Policy Alternatives. "If there are any economic shocks -- such as a repeat of last year's forest fires, or if planned changes to federal equalization payments go ahead -- we'll be back in the red."
"Besides the government's balancing act, this budget introduces $350 million in spending cuts -- bringing the total spending cut outside of health and education to $1.9 billion since 2001/02," says Lee. "When it come to health and education, however, the government is clearly looking towards the 2005 election. The Finance Minister has pointed to spending increases in these areas -- but most new expenditures don't come on-line until 2006/07. In post-secondary education, the government is using $30 million in savings from the elimination of student grants to fund the increase in spaces promised in the Throne Speech."
"There is really little to celebrate here," says Lee. "The real bottom line for British Columbians is that we're entering a third year of painful spending cuts, with no economic boom for BC on the horizon. The government's tax cuts have failed as an economic strategy. Economic forecasts for the next three years are not spectacular, and even in 2006/07, personal and corporate income tax revenues will still be lower than before the 2001 tax cuts. This has been an incredibly painful three years for British Columbia, especially for the province's most vulnerable citizens."
The government has balanced its budget due to a combination of:
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$347 million in new health care funding from the federal government;
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An accounting change worth $124 million;
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A significant reduction in the usual forecasting allowance;
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One-time revenues from the sale of BC Rail;
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Increased revenues from higher BC Hydro rates;
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$100 million hike in alcohol and tobacco taxes;
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$125 million anticipated new revenues from lotteries.
On the spending side, cuts to be implemented in 2004/05 include:
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$117 million from Human Resources;
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$70 million from Children and Family Development;
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$96 million from Community, Aboriginal and Women's Services;
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$39 million from Transportation;
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$34 million from Public Safety and Solicitor General;
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$34 million from Small Business and Economic Development;
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$19 million from the Attorney General.
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To arrange an interview, call Shannon Daub at 604-801-5121 ext 226.