The first figure is the one from the government’s own books. The second is the number that would come up if the B.C. Liberals used the accounting methods recommended by auditor general Russ Jones.
Most homeowners, struggling to balance their own books, would immediately say: “Let’s go with Russ’s numbers. I like the way he adds.”
Jones and Finance Ministry staff disagree about the right way to count some federal transfer payments, which is what creates the conflicting deficit figures. Finance Minister Mike de Jong says the government’s method is “more plausible.”
In de Jong’s accounting, which is the official one, the deficit is $178 million higher than the $968 million the government budgeted. The larger deficit is blamed on several factors, including lower revenues from natural gas and minerals, and reduced federal transfers.
The finance minister might wish he could use Jones’s system, because the Liberals have staked their political future on balancing the budget, and that exercise is a delicate one.
The $178-million figure is greater than the projected surplus for this fiscal year, which is $153 million. That puts into perspective just how difficult the government’s balancing act is. This year’s surplus number has already been adjusted downward because of falling natural-gas prices.
The many factors outside the government’s control, to say nothing of the differing views on how to do the accounting, reinforce the notion that the quest for a balanced budget is more politics than finance.
Unfortunately, the deficit debate doesn’t make much difference to taxpayers in the end. To paraphrase economist John Maynard Keynes: In the long run, we are all debt.
The 2012-13 deficit is rolled into the provincial debt, which we all have to pay off eventually, and no one disagrees that the debt is increasing.
By the end of the past fiscal year, the debt had risen by $5.6 billion to $56.8 billion. While de Jong says other provinces would love to have a debt that’s that affordable, it’s a problem for Premier Christy Clark’s government.
In addition to being budget-balancers, the Liberals want to be known as debt-cutters. They want to eliminate the provincial debt altogether. But it’s going in the wrong direction.
The New Democrats say the situation is even worse than it appears because the province has committed to almost $100 billion worth of contractual obligations for major projects that stretch over 30 to 40 years.
The government’s plan is to pay off the debt with revenue from exports of liquefied natural gas, which is still years away.
The government argues the outlook for LNG is improving, as Woodfibre Natural Gas Ltd. filed an application for an export licence on Tuesday with the National Energy Board. The board has already approved 20-year licences for Douglas Channel Energy Project, Kitimat LNG and LNG Canada.
It further backed up that optimism with a report Tuesday from the B.C. Natural Gas Workforce Strategy Committee that the LNG sector will need 60,000 workers during peak construction and 75,000 when the plants are running.
Those are impressive numbers from a government whose other main election plank was job creation.
B.C. will need every one of those jobs to slay the province’s debt — no matter whether the finance department or the auditor general wins the argument over calculating the deficit.
