As aftershocks from the provincial election subside, the question has to be asked: Where on earth do we go from here? Normally, when a government is re-elected, it鈥檚 business as usual. There are some cabinet changes, of course, and on this occasion the premier, Christy Clark, will have to find a new riding after losing her seat in Vancouver.
But otherwise, ministers take up where they left off.
Yet is that desirable or even possible this time around? For the past two years, the sa国际传媒 Liberals have been ducking and weaving, as one scandal and self-inflicted wound followed another. Long-distance planning has given way to firefighting.
Now, suddenly, they have a future to look forward to. But where does that future lie?
Over the next few weeks, we will devote our Sunday editorials to a scrutiny of the toughest problems facing the new administration. We begin today with the financial challenges that underpin all other issues.
During the campaign, this appeared to be the area of greatest disagreement. The Liberals promised a balanced budget immediately, and whatever spending controls were needed to make it happen.
The New Democrats wanted higher spending right away, and were hazy about balancing the budget. This apparent difference in philosophy helped the Liberals paint their opponents as spendthrifts.
But the truth is, the Liberals only look like tight managers. In reality, they鈥檝e found a way to game the system.
The debate about spending usually focuses on just one facet of the issue 鈥� whether there is a surplus or deficit in the operating budget. By that measure, the Liberals win the argument.
Between 2002 and 2012, they amassed operating surpluses of around $10 billion, and deficits of just over $11 billion. That overall shortfall of a mere $1 billion looked favourable, considering the NDP鈥檚 string of deficits when they were last in office.
But the operating budget is only part of the puzzle. There is also a capital envelope for construction projects like schools and road-building. For accounting reasons, this spending is recorded separately.
To get the full picture, you have to add both budgets together. And what happens if you do?
Over that same period, the Liberals outspent revenues not by a modest $1 billion, but by a whopping $14 billion. Most of the additional outlays came in the capital account. And all of that money had to be borrowed.
This is perhaps the most critical issue of the next four years. The total of sa国际传媒鈥檚 operating and capital debt, accumulated over 50 years, now stands at $40 billion. And better than half was borrowed in the past 15 years.
Interest charges alone are in the region of $1.8 billion annually. That鈥檚 more than the entire budget for the Ministry of Children and Family Development.
If the debt mountain continues to grow, even in surplus years, core public services will suffer. Or taxes will have to go up.
These accounting games are also insidious, because they are so difficult to penetrate. During the election campaign, Clark promised balanced budgets in each of the next three years.
Yet government records make it clear that another $3.5 billion in loans will be needed during this period, 鈥渂alanced budgets鈥� notwithstanding.
It鈥檚 clear we can鈥檛 go on like this. For years, our governments have been using cheap debt as a cash cow, with the consequences kicked down the road. But everyone knows interest rates will eventually rise. When that happens, this whole scheme will crash to the ground.
The premier said her election platform came down to 鈥淛obs, jobs, jobs.鈥� The best way to deliver on that commitment is to put government finances back on a sound footing.
