What a difference a couple of weeks make. Two weeks ago the Minister of Finance stated he was determined to balance BC’s budget by 2013 as required by the law. This week, armed with a new financial update and weakening prospects for BC’s economy, the Minister stated he will still try to do that, but isn’t willing to take a “damn the torpedoes” approach to balancing BC’s books.
If the Finance Minister is going to miss the legislated timeline to balance BC’s books by 2013, then, for the third time since 2009, the BC Liberals will have to introduce legislation next spring to amend the balanced budget law to give themselves the legal authority to run deficits for a few more years.
I wonder what the new balance budget D-day will be this time. Will it be 2015? The last two amendments each gave the government two years of grace, which in hindsight proved to be insufficient time.
Or, since the federal government has just admitted it won’t be able to balance its books until 2016, will the BC government choose that date? Or, since Ontario, which the government claimed was our benchmark for the HST, expects to run deficits until 2017, will that be the date?
Bottom line: the new D-day for balancing BC’s books will be chosen for political reasons, not fiscal ones. And, given the state of the global economy, it’s just as likely the government of the day will be unable to balance the books if a date is chosen within the next decade. Which would mean that that government will have to introduce legislation to, once again, delay the date the books need to be balanced.
Let me state this as clearly as I can: balanced budget legislation is an ideological failure and must be abandoned altogether. Rather than amending the legislation to reset the date for balancing the books we should repeal the balanced budget legislation in its entirety.
Every jurisdiction that has implemented balanced budget legislation hasn’t obeyed the letter of this law and balanced the books when the economy tanked – they simply changed the law to allow themselves to operate under a deficit, just as BC has done. This practice negates the whole point of having balanced budget legislation.
More importantly, constantly amending the balanced budget legislation centers the debate on the relative importance of balancing the books in any given year. Instead we should focus on whether our taxation system generates sufficient revenue to meet the expectations citizens have of their government so that government can manage those expectations within their means — over the entire budget cycle.