NEWS RELEASE · 17th February 2011
Andersen: Three year projections based on increasing revenues and low interest rates while inflation and interest rates already starting to rise
Finance Minister Colin Hansen’s 3 year budget projection is not a “status quo” document as he has described it, but is more like an irresponsible high stakes poker game that will add massively to the overall BC debt says BC First spokesperson, Chris Delaney.
Delaney says Hansen’s Budget 2011 is based on total revenue growth during the next three years of 10.5%, with projected growth in expenditures of 6% and a whopping 27% increase in overall debt to 2014, “For even this bleak scenario to unfold it will require interest rates to remain at current levels and revenues to rise at 2.5% per year.”
“With inflation already moving up around the world, any fluctuation in those projections could result in even larger deficits and debt, cuts to social programs, increases in the HST and other taxes, or a combination of all three,” said Delaney.
BC First Economist Erik Andersen says Europe is already experiencing significant inflation in the 5% range, giving rise to comments by the Bank of England that interest rates may need to go up to counteract inflation.
“Even a slight increase in interest rates could add billions in debt servicing costs to our already mushrooming debt. Now is not the time to be taking risks with the taxpayer of BC in a game of high stakes poker. Now is the time to build a sustainable economic model that can benefit from improved revenues and weather an increase in interest rates so that government has room and the economy can grow,” said Andersen.
Delaney says Hansen’s comment that returning the $1.6 billion “gift” from the federal government for implementing the HST will hurt British Columbia is irresponsible fear mongering and does not stand up under scrutiny.
“He says on the one hand he has a ‘slush fund’ for the next premier of nearly a billion dollars, and that there is all kinds of ‘fat’ in government spending that can be trimmed, but that repaying the HST bribe money is not possible. This is voodoo economics.
Whoever heard of a government running massive deficits while at the same time saying they have lots of fat and $1 billion in political slush funds? It is sheer nonsense,” said Delaney.
“The cost of accepting the $1.6B from the federal government to ‘transition’ to the HST is that BC taxpayers will have to fork out an additional $2 billion dollars every year directly to corporations, since not a dime of that goes to government.”
Delaney says that means that over the five year term of the HST deal it will cost BC taxpayers a total of $10 billion. “That’s a pretty poor return for our money. The best thing we could ever do for BC would be to give them back their $1.6 billion, return to the PST, and save ourselves $10 billion over the next 5 years. It’s a no brainer.”
Andersen says the BC Liberals have doubled the overall debt that they inherited from the NDP (who more than doubled it during their term from approximately $14B to $32B). He says it is now expected to reach $60 billion under the BC Liberals by the end of their third term in office.
“This was the government that said the debt was a mortgage on our children’s future. Well, they’ve just doubled that mortgage and are now charging those ‘children’ for their mismanagement with new taxes like the HST, the carbon tax, increases to service fees, increases in Ferry fees, increases in hydro rates, increases to MSP premiums, as well as cuts to key government services,” said Andersen.
Delaney says it is like taking your family on a trip to Disneyland only to return home and tell them the bank is repossessing the family car to pay for it. “Had they known that in advance, they would not have taken the trip. It is totally irresponsible and makes the NDP look like prudent money managers. And that’s not an easy thing to do,” concluded Delaney.
BC First believes the continuing deficits and mounting BC debt must be stopped and that government must live within the capacity of taxpayers to pay.