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Vaughn Palmer: Liberals made books bloom before party wilted in B.C. election

VICTORIA — Finance Minister Mike de Jong could see the writing on the wall last week when he met with reporters for a final update on provincial finances.

“It occurred to me that this may well be the last full day I spend as finance minister and who better to kick it off with than you lot,” began de Jong in the familiar setting of the press theatre in the basement of the legislature.

Not quite his last full day, but close enough. Next day the B.C. Liberals would lose a confidence motion in the house, setting the stage for the imminent handover of power to the NDP.

“Not to be too nostalgic,” de Jong continued, “but it also occurred to me that over the last five years we have gathered about every three months and I’ve provided a fiscal update. I thought it would be appropriate to provide an update on where we think we ended up in 2016-17.”

He then proceeded to deliver the most positive financial update since he was appointed finance minister in 2012 — a portrait of surging revenues and increased spending room thanks to an operating surplus approaching $2.8 billion for the financial year ended March 31.

The rosy picture was greeted with predictable disbelief, given close proximity to the non-confidence motion and the accompanying machinations by Premier Christy Clark to seek another election.

But the black ink was foreshadowed in the budget tabled in the legislature in February. It predicted the province would finish the financial year ending March 31 with a $1.5 billion surplus on the operating side and a further $800 million tucked away in contingencies and forecast allowances — $2.3 billion in all.

The $500 million addition to the surplus reported by de Jong last Wednesday represented an increase of about one per cent on a $50 billion annual budget.

The amount could be readily accounted for by a B.C. economy that grew faster than even the most optimistic members of the province’s independent forecasting council.

The financial update released by de Jong was still subject to scrutiny and sign-off from the independent auditor general Carol Bellringer.

“I’m advised that that work will not be complete until July 10,” de Jong conceded. “So that will be for someone else in all likelihood to facilitate the release of the formal audited public accounts.”

If recent practice is any guide, the auditor-general’s bottom line is not likely to be all that different from the one released last week.

Since taking office three years ago, Bellringer has been engaged in a running dispute with the office of the comptroller general in the ministry of finance over the correct way to account for promised funding from the federal government for cost-shared projects.

She has twice placed a reservation on the books over the issue and may well do so again this year. But the dispute has so far not amounted to much in dollar terms.

In the 2014-15 financial year, Bellringer’s interpretation would have increased provincial revenues —and hence the accumulated surplus — by $191 million. In 2015-16, her difference of opinion with the comptroller translated into a mere $3 million improvement to the bottom line. Not even a rounding error given the size of the budget.

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So the incoming NDP government might well be in line to begin building on a surplus in the same range as the one de Jong touted last week.

Poetic justice, one might say.

Sixteen years ago this summer, the audited financial statements — released just weeks after the New Democrats were driven from office — confirmed they had left behind a $1.5 billion operating surplus for the 2000-01 financial year.

Relative to the then-size of the budget, the NDP surplus was larger (six per cent of revenues versus five) than the one now claimed by the Liberals.

Presuming de Jong’s numbers do withstand scrutiny by the auditor general, it would pose a provocative question for each of the major parties.

The New Democrats predicated their fully-costed election platform on expectations of a smaller surplus for the current financial year. They relied on increases in income and corporate taxes to keep the books in balance.

But if the surplus turns out to be in the same range as de Jong suggests, would it not be possible for John Horgan to keep all of his promises and keep the books in balance without increasing taxes?

As for the B.C. Liberals, the challenge is to reconcile this rosy financial picture with the election results. Though the numbers have been updated, there was ample evidence before election day that B.C. led the country in economic growth, job creation and balanced budgets.

“Have you thought about how a government with that economic record can end up doing so poorly in an election?” I asked de Jong.

“We came a seat short,” he replied on the defensive. “Government has been in power for 16 years. We’ve had to make tough, tough, decisions. You’ll accumulate baggage along the way … Is it a bit frustrating? Sure it is. It wouldn’t be human if it wasn’t.

“But it is tough to win two Stanley Cups in a row, let alone five.”

I’m no master of the sports metaphor. But I have to think that if a team blew the big game the way the B.C. Liberals did this year, it would be ticketed for a house cleaning, starting at the top.

Vpalmer@postmedia.com

Twitter.com/VaughnPalmer

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http://vancouversun.com/opinion/columnists/vaughn-palmer-liberals-made-books-bloom-before-party-wilted-in-election