The Columbia Journal
P.O. Box 2633 MPO,
Vancouver, British Columbia,
Canada V6B 3W8
Tank Proposes “Alternative” BC Budget
invited the world. They’re coming. And the place is a mess.
Canadian Centre for
Policy Alternatives BC office
The 2010 Olympic games are coming in just six years. The world will be
watching—but what will they see?
If the spotlight shines on a Vancouver ravaged by poverty and
homelessness, crippled by traffic congestion, or in the middle of an
environmental controversy, any efforts to promote the city or province
will be seriously blighted.
The provincial government needs to prepare British Columbia for a truly
world class performance in 2010. If we continue to ignore pressing
social needs, we’ll wind up hoping no one looks under the carpet,
instead of welcoming the global spotlight.
The 2004 BC Solutions Budget uses the Olympics to anchor a six-year
public investment strategy that would go beyond the minimum
requirements for hosting the games, and use the Olympics as a
springboard to revitalize the provincial economy.
The Solutions Budget six-year plan restores the province’s fiscal
capacity (tax revenues), rolls back the painful spending cuts, creates
a more fair and sustainable tax system, achieves substantial public
investments in the BC economy and key public services, creates a
meaningful plan to stimulate private sector investment—and leaves BC
with a smaller debt-to-GDP ratio than in any year since 1991/92.
It’s time to change direction for BC’s economy and finances.
So far, the provincial government’s plan for BC has centred on tax and
spending cuts, deregulation and privatization. But it simply is not
working. The economy remains weak, and has not been kick-started by tax
cuts. BC trailed the rest of Canada in economic growth the past few
years, and the outlook for 2004 is not much brighter. There is no boom
in private sector investment on the horizon, and public sector
investments—with the exception of Olympics commitments that are
concentrated in Vancouver/Whistler—have been cut back in the name of
Given the economic situation, there is no compelling reason why
balancing the 2004 budget should be the government’s number one
priority. Going from a $1.85 billion deficit in 2003/04 to zero in
2004/05 is no easy feat. Finance Ministry estimates suggest that about
$800 million in spending cuts will be required to balance the 2004/05
budget—and that would mean a drag on economic growth.
Balanced budget legislation is a completely artificial constraint.
Spending cuts have already had a major impact in terms of health care
waiting lists, school closures and larger class sizes, reduced
eligibility for welfare, cuts to children and family services, and
decreased environmental protection. Attempting to balance the budget
this year will only make the situation worse.
The Solutions Budget shows that budgets are about choices. There are
many alternatives to the narrow business-dominated thinking of the
provincial government. Indeed, by making strategic and thoughtful
investments, we can address the province’s social needs and improve our
economy at the same time.
An investment revival is key if BC is to reclaim its status as an
economic leader in North America. The public sector needs to play a
stronger role in launching new investment—along with measures that
encourage greater private investment.
The Solutions Budget rolls back spending cuts made since 2001 and sets
out a six-year public investment plan that focuses on education and
training, transportation, social housing and health care reform. The
six-year plan boosts investment in these areas by $2.3 billion (above
and beyond rolling back the government’s spending cuts) in 2004/05,
rising to $4.1 billion in new investments by 2009/10. Over the six
years to the Olympics, our public investment plan is a cumulative $19.6
Stimulating new private sector investment is also essential to BC’s
economic revitalization. Tax cuts have not done the job. Above all, BC
needs a coherent industrial strategy that includes resource industries
through to manufacturing and advanced technology sectors. We propose a
system of ‘carrots and sticks’ that creates the incentives for
investment, production and employment, plus other social and
The Solutions Budget implements a number of tax changes to fund our
public investment strategy and that make the tax system more fair and
sustainable, including the complete elimination of MSP premiums and
changes to the personal income tax structure that make it more
The Solutions Budget runs a deficit in 2004/05 and would gradually
reduce this deficit over the course of the investment plan, ending with
a zero deficit in 2009/10. Because the deficit is largely the result of
investments in people, it should not be as much of a concern as recent
deficits to finance tax cuts.