March 1, 2010

With Olympics over, B.C. turns focus to budget

VICTORIA

The Olympics party is over and now it’s time to get down to business for British Columbia’s Liberal government as it prepares to table the province's budget.

Tuesday’s budget is forecast to contain a deficit of about $1.7 billion.

It calls for modest economic growth of almost two per cent after a recession that saw economic growth decline by about three per cent.

Last September, crashing government resource and tax revenues brought on by the crumbling economy forced the Liberals to update their February 2009 budget to include a record B.C. deficit forecast of $2.8 billion.

The government also implemented wide-ranging budget cuts that hit community, sport and culture organizations.

The Liberals acknowledged shortly after their May 2009 election victory that B.C., like much of the rest of the world, was slammed by the global economic downturn and the economy was in recession.

But Premier Gordon Campbell was adamant that no matter how dire things appeared economically, the province’s trump card was the Winter Games.

Thousands of visitors, millions of TV viewers and countless economic opportunities would make the Olympics B.C.'s launching pad into the 21st Century, Campbell said.

Vancouver economist Helmut Pastrick, of the Central 1 Credit Union, said the Games are more about providing short-term economic gain that may be just enough to keep the province jogging along until the good times hit again about four years from now.

Pastrick said he expects a slight hangover period immediately following the Games when the crowds leave and the construction, service and tourism sectors get back to reality.

“I think people are fairly well attuned to the fact that the Olympics are a temporary, transitory event and I don't think there should be any real disappointment, per se,” he said. “Factors greater than or other than the Olympics will come into play.”

Pastrick said British Columbians should expect to see moderate economic growth, but also brace for a bumpy ride as the U.S. economy continues to struggle through an uneven recovery.

He said the government's recent throne speech signals the Liberals are planning to keep spending to a minimum by providing services without increasing costs.

The throne speech outlined plans to offer deferred property taxes to families with children, education reforms and moves to regulatory reform, especially on the environment front where Campbell said $3 billion in B.C.-approved resource development projects are currently wrapped in federal red tape.

Pastrick said he was pleased the Liberals used their throne speech to signal the province is looking ahead 20 years to 2030 rather than just the current fiscal year.

The throne speech said environmental leadership, job creation and Asian trade are long-term B.C. government goals.

“It’s refreshing to see a government take a longer-term view,” Pastrick said.

Finance Minister Colin Hansen was not available to offer a pre-budget comment, but aides in his office pointed to the September budget update and the February throne speech as indicators of the direction the government is proceeding with regards to the budget.

Last November, the all-party Finance Committee made 49 budget recommendations but was split along party lines when it came to the controversial harmonized sales tax, which government plans to introduce as law in July.

The 10-member committee’s four New Democrats opposed 12 recommendations designed to lessen the impact of the HST, which combines the seven-per-cent B.C. sales tax and the five-per-cent federal Goods and Services Tax.

The NDP wants the HST to scrapped and are lobbying the Liberals to vote against implementing it.

-Canadian Press

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