Monday, June 23, 2014

At least Liberal inconsistency is consistent

BC’s recent Budget and Fiscal Plan states total provincial debt is $63 billion. This amount, 62% higher than in 2009, is 27.3% of gross domestic product. Five years ago, the ratio was 18.7%.

By any standard, that is rapid debt growth. Unfortunately, those numbers present only part of the story.

In addition to admitted debt, the province is obliged by $100 billion in other contractual commitments.

If Liberals conducted business and accounting now as they did a few years ago, the debt reported for fiscal year 2014 would be nearer $163 billion than $63 billion. But, at least the details of how and where that money was spent would not be hidden behind secret public private partnerships.

The following summarizes these obligations for fiscal years 2012 and 2013. I will update the worksheet when numbers become public. Of course, the amounts listed are millions of dollars.

Future Commitments 2012 and 2013

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  1. When you have a government full of liars, con-artists and alike, do not be surprised at the results.

    Both the RAV Canada line and the Evergreen Line p-3's (well they are not true P-3's at all because the operating consortium did not assume risk and are P-3's in name only.) account for $1.342 billion and is easy to see why TransLink is in financial peril. Now add in the over $300 million transit subsidy and the three rapid transit lines (soon to be 4) is costing the taxpayer over $1.6 billion annually - build a subway under Broadway, this debt will triple, if not quadruple!

    We live in a fools paradise, run by fools for fools.

  2. Looks like a pretty good list to me. I'd leave out items that aren't "net new" though, like the policing agreement. Past governments have also had that agreement in place. It's the net new stuff, the P3s, the ASD contracts, and IPP agreements, that are creating new "shadow debt" unreflected in the books.

  3. You make good points. True, some line items, like future policing costs, would not have been calculated as debt throughout the province's history. However, acquisitions of physical assets through timed payment schemes previously would have been recorded as capital assets with the stream of future payments recorded as liabilities.

    Since we cannot examine the details behind most service agreements, we cannot say they are not liabilities. If you or I agree to pay $20,000 a year for 25 years for an asset, without being able to walk away on short notice, our bankers would certainly calculate us as starting with a $500,000 debt, ignoring present and future values, which accounting purists would not.

    We know that BC Hydro shut down its own capacity and dumped water over the dams because, forced to buy private power, it had a surplus in the system. This cost at least hundreds of millions, perhaps billions of dollars.

    It is useful, I think, to display the whole list and allow individuals to draw their own conclusions. I simply report all items listed on the Ministry of Finance reports. This should be an easily examined format. I’ve heard the former Auditor General was not happy with treatment of future obligations and this, along with BC Rail, the $1 billion unrecorded credits owed gas producers and other matters, determined that he had to be replaced. His departure was costly too, something that happens often when unclean hands are on the wheel.

  4. I am astonished by all the "P3"'s listed behind health care! When the hell did this all happen? Privatization is well under way and we should be very, very concerned.

  5. Norm, Is the Corporate Tax Rate in BC 10 or 11 percent:

    Competitive Support and Targeted Tax Environment - British Columbia - June 26, 2014

    British Columbia’s general corporate income tax rate is only 10 per cent and when combined with the federal rate, British Columbia businesses pay a combined general corporate income tax rate of only 25 per cent – among the lowest in the G7


    February 19, 2013

    2013 British Columbia Budget Raises Tax Rates

    Today British Columbia Finance Minister Michael de Jong delivered the province’s 2013 budget. The budget increases both corporate and personal tax rates.

    The budget accelerates last year’s provisional 1% increase in the B.C. general corporate tax rate to 11% (from 10%). The increase will now take effect April 1, 2013, one year earlier than previously announced. The small business corporate income tax rate will remain at 2.5%.



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