BC’s underwhelming economic plan
BC Premier Gordon Campbell made a live address last night about the impact of the financial and economic crisis on the province, and what his government is going to do about it. I was keen to see what creative projects Campbell had in mind to take the edge of a recession that has already hit in Interior and Coastal communities but is only just starting its decent in Vancouver and Victoria.
I was greatly underwhelmed at Campbell’s ten-point plan, and in hindsight it looks like political opportunism. Having seen Harper play the economy card so effectively in the federal campaign, I think Campbell is trying to get out ahead of this one, and brand himself as the defender of the economy. Campbell has done a great job of taking credit for the boom, and would prefer to dodge blame for the bust. And he has also been down in the polls, in part due to an unpopular carbon tax, another one Harper distorted to his advantage, and from which the provincial NDP have benefited locally.
In the past week we have heard noises from Victoria that public infrastructure spending would be ramped up to maintain employment. This I like, although there are some highly dubious projects on the docket like massive highway expansion and a doubling of the Port Mann bridge in the Metro Vancouver area. I’d prefer if Campbell stuck to projects that would reinforce his Climate Action Plan, not subvert it. Alas, infrastructure is one of the ten points, but we got not a single detail on what those projects would be. With that door still open, I suggest a massive build-out of public transit infrastructure in Vancouver, and high-speed rail connections through the Fraser Valley, perhaps into the Interior (too bad they privatized BC Rail in their first mandate)
The rest of the plan is basically tax cuts â€“ the right answer to every problem, it seems. In this case, a faster introduction of already announced tax cuts. The tax cuts are being financed out of the current year’s surplus, which at last count was officially $1.8 billion but probably more, although the second half of the year is looking grimmer on a number of revenue fronts. The accelerated income tax cuts are the tax cuts that were part of the revenue recycling of the carbon tax, and as the carbon tax was not mentioned in the speech, I’m not sure what to make of that.
In any event, even in their own terms the tax cuts are small potatoes (did I spell that right, or is it just my inner Dan Quayle?). According to this report:
The measures will cost the government roughly $271 million this year, and $485 million over three years.
BC’s economy is closing in on $200 billion, so we are talking about just over 0.1% of GDP as a stimulus package. Given that I think that tax cuts are not the preferred instrument for dealing with the looming crisis, perhaps I should count my blessings that they are so teeny.
The government is avoiding the d-word, and has promised to balance the budget, so another announcement was to rein in spending, which is not what we want to be doing at this time. If revenues fall dramatically, current surpluses will be depleted and then we will have to worry about spending cuts. Hopefully by then deficits will be de rigeur and we will go there if needed (as the Liberals did in the early years of their first mandate having received two balanced budgets in a row from the NDP). Which reminds me that Campbell is starting to replay the “NDP causes cancer” card, in the speech and the campaign to come up to May’s election.
There were no additional measures announced to assist low-income people deal with the crisis. If you have more than $100,000 socked away at the credit union, you get some extra protection. But if you are a mill worker and your EI runs out, social assistance is pretty thin gruel. Tax cuts may help a bit if you have income, but the problem is quickly turning into a major lack of income for some people.
A few other smaller tidbits came in the announcement: a temporary reduction in ferry fares (more irony here: the goverment in its first mandate made the Crown BC Ferries into a private, but publicly-owned agency so it could make such decisions); some vague new public pension option for British Columbians who do not have private plans, which sounds interesting but has little impact on addressing the current crisis). And to implement these changes, action number ten is to recall the Fall legislative session that the government had cancelled because they did not feel like answering questions from the opposition.
Earlier in the day, Campbell made a few other announcements, in addition to the ten-point plan. There will also be some summit meetings, a new advisory panel of folks who completely missed the downturn coming. And get this: faster implementation of TILMA. Given that TILMA is at best a gimmick and has largely been implemented, so any minor gains have already been got, this one is just another sop to those who have convinced themselves of massive barriers to trade in spite of much evidence to the contrary.