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Analysis
  |  
BC Politics

How Different Are NDP and BC Liberal Budgets? Ask Four Former Finance Ministers

The answers, from Libs and New Democrats, may surprise you.

By Bill Tieleman 26 Feb 2019 | TheTyee.ca

Bill Tieleman is a former NDP strategist whose clients include unions and businesses in the resource and public sector. Tieleman regularly contributed to The Tyee since its start and wrote a weekly column on B.C. politics in 24 Hours Vancouver from 2005 to 2017. Contact him at weststar@telus.net, on Twitter @BillTieleman or visit his blog.

Don’t tell me what you value, show me your budget, and I’ll tell you what you value.” ― Joe Biden, former U.S. Vice President

What difference does it make whether the British Columbia budget comes from an NDP government or from a BC Liberal administration?

Actually, quite a lot.

Or perhaps not so much.

It depends on your perspective and what you value, according to four former finance ministers interviewed by The Tyee following the introduction of the latest provincial budget last week.

Former NDP finance minister — and ex-Premier — Glen Clark and Paul Ramsay, another B.C. NDP finance minister, definitely disagree on some fundamental aspects of budgets with Kevin Falcon and Colin Hansen, both former BC Liberal finance ministers.

But they also agree on some issues.

What is clear is that each budget is a battleground of politics, priorities and ideology.

Where the province will spend what now amounts to $58 billion a year indicates what is important to the party in power. What gets left out or denied increased funding shows that party’s disinterest or, at best, benign neglect.

Clark has a unique perspective. He’s president and CEO of the Jim Pattison Group, Canada’s second largest private company with over $10 billion in annual sales.

But when Clark was NDP finance minister under then-Premier Mike Harcourt from 1991 to 1993, employment and investment minister from 1993 to 1996, and as Premier from 1996 to 1999, parts of the B.C. business community were often highly antagonistic to his decisions.

Now Clark is one of the leading figures in that community.

And his view of the difference between the left and the right parties in B.C. — the NDP and BC Liberals who succeeded the Social Credit Party — is clear. (Full disclosure: I was communications director in Clark’s premier’s office in 1996 and currently consult with companies in the Jim Pattison Group.)

“Philosophically, BC Liberals believe in smaller government and lower taxes, especially for business,” Clark told me. “They believe in the trickle-down theory — that what’s good for business is good for the province.”

“The NDP comes at budgets with a more social justice perspective — how can they help people who can’t help themselves.”

“Even within ministerial budgets, there are important differences,” Clark said.

Clark does note that about 50 per cent of spending is effectively locked in each year. Health and education are the largest budget commitments and require inflationary increases for labour costs each year, with governments rarely doing much to change that other than attempt to restrain wages.

Hansen, finance minister under BC Liberal Premier Gordon Campbell in 2004-2005 and 2008-2011, said provincial budgets are remarkably similar no matter which party is in power. Hansen is now a director of AdvantageBC, a non-government organization dedicated to promoting British Columbia as a place for international business.

“I think most people who look back through the past 30 years of budgets will be struck by how much they all have in common rather than being unique,” Hansen told me.

“There is not a lot of difference in the last Socred budget documents to the first NDP budget in 1992. Or from spring of 2001 to fall of 2001 under the BC Liberals. Same this time with the change of government. The format does not change very much,” Hansen said.

“The only document that is not really part of the ‘budget template’ is the finance minister’s speech, which is more of a political document than the rest of the material that is tabled on Budget Day,” he adds.

But Hansen does agree there are some differences that matter and reflect the relative weight each party places on its priorities.

“Both the NDP and the BC Liberals try to position their budgets to appeal to their base while making sure that at least lip service is paid to every issue du jour,” Hansen said. “So the BC Liberal budget speeches are long on the economic message and the NDP speeches focus more on social programs.”

“The BC Liberal budgets were driven by an obsession to avoid deficits — that said, of the five budgets that I tabled, I only got one without a deficit — and to increase and then maintain the credit rating,” he said.

While Hansen sees far less differences in budgets than Clark, Kevin Falcon who was Hansen’s successor as Liberal finance minister, has a somewhat different view — one critical of the last Liberal government of Premier Christy Clark and finance minister Mike de Jong.

“I may get in trouble with some BC Liberals, but I support some of the elements of BC NDP spending. I can live with welfare increases and childcare spending, for example,” Falcon told me in an interview. Falcon is now executive vice-president for the Anthem Capital Corporation, an investment firm focused on real estate, mining and energy, technology and consumer products.

“I realized after the BC Liberals second-last budget right away that they were in trouble — there was no significant investment in the things people were concerned about, like housing. It was a ‘don’t worry, be happy’ attitude,” Falcon said. “They totally missed it 100 per cent.”

Indeed, de Jong was criticized externally and within the BC Liberal Party when he introduced a budget with very little additional social program spending before the 2017 provincial election — and ended up with a $2.7-billion surplus.

While de Jong did not respond to an interview request, he has defended himself against critics in the past.

“I’m not going to apologize for B.C. becoming number one under our watch as government and my watch as finance minister,” he said in 2018.

The NDP, with support from three Green MLAs, ousted Clark’s government in a dramatic confidence vote in June 2017 and continue to maintain a narrow majority in the legislature, in part because voters want to see more done on housing, health, education, childcare and social programs.

That’s Paul Ramsey’s view as NDP finance minister from 1999 to 2001. Like Hansen, Ramsey sees some similar aspects in budgets from different parties, but also important differences.

“Recent Liberal budgets and NDP budgets have some things in common. They are based on conservative estimates of economic growth. They built in lots of ‘prudence’ — contingency funds, unallocated program expenditures, cautious revenue estimates — to ensure a higher probability of hitting their budget targets,” Ramsey told me.

“And they are quite transparent about the risks to both revenue and spending estimates. These are all good things.

“However, they differ dramatically in how they deal with surpluses. By and large, BC Liberal budgets focus on using surpluses to pay down debt and reduce taxes,” says Ramsey, a former political scientist at the University of Northern BC who also served as health minister and education minister.

“Their ultimate goal is, of course, to shrink the size of government. And they believe that lower taxes will strengthen the economy and eventually trickle down and help individuals. Large spending initiatives are a rare event.”

“NDP budget surpluses are also used to pay down debt and to reduce fees and government charges on individuals. But unlike the Liberals, the NDP focuses on using surpluses to improve government services. They believe that government programs can improve peoples’ lives, strengthen communities, and diversify the economy,” Ramsey concludes.

And when it comes to spending on government programs, Finance Minister Carole James, in her second full budget, delivered on its title — “Making Your Life More Affordable” — with significant spending that includes:

“The past government made the choice to make life easier for the few at the top, at the expense of everyone else. People were told they had to choose between a strong economy or investments in people. But the truth is, we can and must have both,” James said in her budget speech. “Under the last government, health and education were underfunded and neglected.”

But the BC Liberal view of James’s budget has been less charitable.

“This government’s actions have raised the cost of living and jeopardized the economic growth on which the NDP has pinned all hopes of paying for their spending spree going forward,” Liberal leader Andrew Wilkinson wrote in a Vancouver Sun op-ed article. “You’ll have less money to spend and it will be harder than ever for those struggling with the affordability crisis to secure their futures.”

And notwithstanding his acceptance of increased NDP spending on social programs, Falcon also has some negative things to say about James’ budget — and a warning for the government.

“The current government has the benefit of inheriting an enviable financial situation, but they are not sending the right signals to investors, to people who will put money into B.C. and create jobs,” Falcon says, referencing what he calls a “blizzard of fees and taxes” introduced since the NDP took office.

“It isn’t one thing that kills you in government — it’s the cumulative effect. Yes, they’re hitting the right notes for social investment, but there’s nothing for investors in the economy.”

“The NDP have ironically made expensive homes more affordable to the wealthy [with new taxes forcing prices down], but not lower prices for townhomes and condos — those prices are going up as a result,” Falcon said.

“Luxury vehicles — and I get the NDP don’t give a shit about this sector — but it’s revenue to the government that disappears when people stop buying them,” he added.

Falcon’s advice for the NDP is clear — be careful not to discourage investment.

“Capital is so mobile now, much more than when I first got into politics,” he said, noting that mining and other companies are not looking at B.C. for projects because of taxes, environmental regulations and uncertainty around Indigenous rights.

Ramsey didn’t comment specifically on the NDP budget. But he noted the different views of BC Liberals like Falcon and Hansen can translate into serious lurches from left to right and back as governments change.

“The problem with these diametrically opposed views is that it can create instability and uncertainty — a sense of whiplash as taxes rise and fall, programs come and go,” Ramsey said.

Glen Clark noted that impact as well.

“The 25 per cent individual tax cut by Gordon Campbell in 2001 drove the province into a huge deficit, and then came major service cuts.”

So is there an elusive magic formula for finance ministers and governments, both left and right, with the perfect balance of social spending, taxes and encouragement of investors to create jobs and stimulate the economy while meeting the needs of all British Columbians?

Unlikely.

But Kevin Falcon ended our interview on a surprisingly hopeful note.

“I get more pragmatic as I get older. There is a happy common ground that can be found,” he said.

But so far, B.C. budgets have been more battleground than common ground. And there seems little likelihood that the new NDP budget will change that reality.  [Tyee]

Read more: BC Politics

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