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Vaughn Palmer: Leaders promise to spend your money to sway votes

VICTORIA — On the eve of the last provincial election, the B.C. Liberals tabled a budget “balanced on a razor’s edge,” in a widely cited characterization of the day.

After four years where revenues from taxes and other sources fell short of the full cost of providing health care, education and other programs, the Liberals struggled to bring the books into the black on the operating side.

They made it back into balanced budget territory through a “temporary” increase in personal and corporate income taxes and the sale of “surplus” government assets, mostly developable land in Metro Vancouver and Victoria.

Both moves were controversial. The tax increases undermined Liberal efforts to frame themselves as the party of tax cutters. The asset sale brought accusations of balancing the budget by “selling the silverware.”

But the precarious financial position also constrained the Opposition New Democratic Party in preparing an election platform that was fully-costed.

The B.C. NDP platform proposed a further $2 billion worth of tax increases above and beyond those contained in the three-year budget and fiscal plan from the Liberals. It also indicated an NDP government would run $2 billion worth of deficits over the three years before bringing the operating statements into balance.

Still, then-party leader Adrian Dix had to disappoint advocates calling for universal, $10-a-day child care. The estimated $1.5 billion price tag was not affordable within the fiscal plan, according to Dix, whose platform proposed only a comparatively meagre $100 million increase for child care and early learning over three years.

Fast forward four years and the province’s financial picture is greatly improved. Despite all the doubts voiced about the 2013 Liberal budget, the independent auditor general would eventually certify it as balanced and in surplus.

Others followed, with the result that in the run-up to this election, the Liberals faced a challenge of a different kind than last time out, namely what to do with an embarrassment of fiscal riches.

Take credit for it, to be sure. But they could no longer plead “poverty” in holding the line on program funding or claim “need” to justify the year after year increases in medical service plan premiums.

The better financial picture, combined with the approaching election, gave freer rein to the “liberal” side of the governing coalition over the “conservative” impulses that dominated the 2013 budget and fiscal plan.

The big spending got underway last fall with a $1 billion top-up to finance rental housing development, drawing on the windfall proceeds from the property transfer tax and the new levy on foreign buyers of real estate.

The February budget boosted program spending by more than $2 billion over the previous year, including $900 million for the ministry of health alone. There were also significant increases for the social service ministries and education, the latter necessitated by the need to settle with the B.C. Teachers’ Federation after last year’s landmark defeat at the Supreme Court of Canada.

The Liberals also cut taxes, most notably by initiating a $1 billion phase out of medical service plan premiums, another concession to critics left and right who had been denouncing the MSP levy as an unfair tax for years.

For all the spending increases and tax cuts, the Liberal budget and fiscal plan nevertheless includes significant surpluses, contingency funds and allowances against a downturn in the economy.

Together, those total $2.6 billion over three years, leaving some room to move on additional spending or revenue measures going forward.

While the improved financial situation generated more leeway for the Christy Clark-led B.C. Liberals to increase spending and cut taxes, it has also provided openings for B.C. NDP Leader John Horgan.

He can top-up the already hefty spending increases on social programs and accelerate the phase out of medical service plan premiums without going into deficit. 

Though $10-a-day child care did make the platform this time, New Democrats have already signalled that it will be phased in over a decade, thus the upfront charge will be nothing like $1.5 billion.

If, as expected, Horgan restores the higher income tax bracket the Clark government phased out two years ago, that will bring in a further $1 billion over four years. He could rustle up another $1 billion by reviving the taxes on corporations and financial institutions proposed in the 2013 NDP platform.

Plus there’s the promise-making room created by the B.C. Liberal propensity to go big in building roads, bridges, transit lines, schools, hospitals, dams and other publicly funded capital projects.

Those are not part of operating spending, rather financed with long-term borrowing in the billions of dollars. Horgan could readily tinker with the list of capital projects, delaying some, cancelling others, without changing the long-term debt profile by one dollar.

To mention the most obvious target, the Liberals have budgeted $2.4 billion over three years to replace the Massey tunnel with a 10-lane toll bridge. Putting that big-ticket controversy on hold would free up hundreds of millions to build schools, housing or what have you.

As ironies go, the net effect of the recent freer-spending ways by the governing party is especially delicious.

After years of branding the B.C. NDP as “unaffordable,” the Liberals may have created the fiscal circumstances where voters conclude that the Opposition platform is as affordable, no more no less, than that of the government.

Vpalmer@postmedia.com

Twitter.com/VaughnPalmer

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http://vancouversun.com/opinion/columnists/vaughn-palmer-leaders-promise-to-spend-your-money-to-sway-votes