British Columbians will have a better picture of our collective financial situation next week when the budget is presented, but an article in the Globe and Mail suggests that the province is facing a $3 billion shortfall, about seven times what was originally suggested when the government announced plans to allow deficit spending to combat the global economic crisis. The finance minister also admitted last week that the province is facing deficits for the next four years, instead of two as originally planned.
All the signs are there for a financial blowout - the introduction of the Harmonized Sales Tax, the gaming grant program review, the demise of the Homeowner Protection Office, the assimilation of quasi-independent Tourism B.C. into the tourism ministry, the early death of the surprisingly popular LiveSmart B.C. home renovation program, and so on.
Large numbers get thrown around a lot these days to the point that they're almost meaningless so it helps to put it in plain language. So here goes - roughly 4.5 million British Columbians will shoulder an additional $3 billion in debt this year, which works out to about $667 for every man, woman and child in the province.
That also wipes out the roughly $3.1 billion in debt that the province paid back between 2004 and 2008 and will leave total provincial debt in the neighbourhood of $40 billion - roughly $9,000 for every man, woman and child.
B.C. is hardly the only province going through a slump right now. If anything we're probably in better shape than other provinces, including usually rich-as-hell Alberta.
Nationally, deficits over the next three years are expected to add $85 billion to our debt load (although some experts say it will be double that), wiping out almost four-fifths of the progress we've made on our debt in the last 12 years or so.
The circumstances that led us to this point were completely predictable, even in the realm of normal economic cycles. No boom can last forever, and every two steps forward is followed by at least one step back - and yet we're constantly caught with our pants down whenever it happens with no money in the bank or contingency to draw from.
Yet, Canadians still cling to the false narrative that our taxes are too high and vote for any party or politico that promises to let us keep more of the money we earn. This leaves no room for the occasional economic meltdown and gives us no choice but to assume new debt that will eventually have to be repaid by future generations.
The Conservative Party's decision to cut the GST from seven cents to five cents costs the federal government about $15 billion a year. They also cut income taxes to the tune of $2 billion, and then loudly proclaimed in July that they would continue deficit spending as long as it takes to turn the economy around instead of raising taxes or cutting programs.