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Posts Tagged ‘BC Budget response’

It has been a big week from a political standpoint; Parliament reconvened with a Speech from the Throne on Wednesday and Federal Finance Minister Jim Flaherty tabled his governments latest federal budget on Thursday. Before taking a look through the federal budget, I would like to take some time to examine the BC Provincial Budget that was unveiled by Provincial Finance Minister Colin Hansen on Tuesday.

The first thing to always remind oneself of when paying any heed to a budget, whether it is a provincial or federal one, is that it is a hybrid of a policy document and a political one. A good example of this fact can be found by reading through the 2010 Budget Highlights. Only once in that document does the word ‘deficit’ appear, and that is as an axis label in this graphic:

BC Provincial Budget: 2001-2009, with 2010-2014 forecasts

Well, at least they used the word once! This graphic does get to the crux of any budget; is there a surplus or a deficit and how big is it? For the fiscal year of 2010/11 a deficit of $1.715 billion dollars is projected.  This is a figure that is 38% lower than last years deficit of $2.775 billion and represents about 1% of provincial GDP*. The budget forecast sees that deficit dropping to $945 million the next year (45% less than the projection for this year) $145 million in 2012 and turning to a surplus of $410 million by 2013. Considering the depth and breadth of the just now turning around recession, especially in the US housing market (the primary destination of much of BC’s forestry products) I’d say these numbers look rather good on balance. My very limited economics sense tells me that with interest rates as low as they are now and no strong signs pointing towards a spike in inflation an even higher short term deficit could be in order. All and all though, these forecasts seem reasonable to me.

Next, let’s take a look over the goodies contained within the budget. ‘Goodies’ are new spending announcements or reallocations for very specific programs. These specific allocations will serve as the basis for a whole years worth of generic talking points: “Our Government believes in X, that’s why we created the Y program in this years budget, funding it with Z dollars over the next year(s).” Every single one of these expenditures may be warranted, and perhaps many deserve more funding,  and none of this suggests that these programs should be cut. I just feel it is important to remember the political aspect to them. So what are the goodies? By far the largest share of funding increases comes in the form of a $2 billion dollar increase from the 2009/10 budget levels for healthcare over the next three years, with over half of that number going directly to health authorities for front line expenditures. Pivoting off of the just finished Olympic Games, $30 million in new funding was announced for youth participation in sports, and another $30 million for provincial art investments. The LiveSmartBC program, designed to assist homeowners in improving energy efficiency, returns with $35 million in funding. A big item in the budget, for homeowners with kids at least, is the new ability to defer payment on property taxes until one sells their home. It’s hard to put a price tag on this item, but I imagine it will prove to be extremely popular. The last ‘goody’ I can pick out easily is a grant of up to $200 for homeowners outside of the Lower Mainland and the Victoria area.

• Fun With The Olympic Budget [/caption] This past Monday, the local 24 Hours newspaper featured an article entitled "Let the Bailout Games begin". While the piece,  by 24 Hours staff writer Bob Mackin does contain many good pieces of factual...
• US Affordable Care Act: What's In It For Me? (Canadian Edition) Last week I noted some ways that healthcare reform in the States could adversely effect Canada. While that possibility is there, the potential to benefit Canada, indirectly, is there as well. Reform in the US...

• Taleb: Everyone Should Short US Treasuries One of my favorite investors, Nassim Nicholas Taleb, founder of Empirica investment management funds and author of Fooled by Randomness: The Hidden Role of Chance...
• Updating the Government's Vision into our Economic Future The Congressional Budget Office this week issued its Summer Update of projections for our national economy. Although the White House has seized on one piece of...