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BC Politics

How BC Is Making Fools of Past Health Spending Alarmists

Libs warned costs would devour the provincial budget. Um, no.

Will McMartin 26 Aug

Will McMartin is a public affairs consultant, once active with BC’s Social Credit party. He’s provided political analysis for news media including The Tyee.

Premier John Horgan’s New Democrat government — filled with people who revere Tommy Douglas as the father of Medicare — expects health-care expenditures in the current fiscal year to consume just 39.4 per cent of the province’s total operating expenses.

That’s a smaller percentage than what Christy Clark’s belt-tightening BC Liberal regime allocated when they held office.

So what’s the story? Have the social democrats running B.C. turned into grinches?

No. The grinches, hiding behind scare-mongering infographics, were the BC Liberals. For this is the story of how figures were manipulated by B.C.’s “business party” to manufacture a crisis proven laughable years later.

To begin, let’s revisit a news conference in Victoria on Sept. 16, 2006. The event was the release of B.C.’s first quarterly report for the fiscal year. During her presentation, then-finance minister Carole Taylor pulled quite a stunt.

She presented a chart that showed health-care spending rising so high, so fast, that by 2018 it would consume an eye-watering 71.3 per cent of the province’s total budget.

When funding for education — both K-12 and post-secondary — was added to the mix, not a single penny would remain in the annual budget to finance any other item of expenditure.

No monies for transportation, police and the courts, environmental protection, economic and resource development, social and children’s services, or even interest charges on the province’s debt.

“You can see what I’m trying to impress upon everyone,” Taylor exclaimed. “This is an issue that we all have to get our heads around.”

Sadly, as happens so often in B.C., our goggle-eyed news media fell for it, hard. Reports on skyrocketing health-care spending, sprinkled with words such as “crisis,” shocking” and “out of control,” seemed to fly out of the legislative press gallery. The Vancouver Sun’s Vaughn Palmer was still at it on Feb. 21, 2008, calling health spending “the beast that is slowly but surely devouring any manoeuvering room in the budget.” It would “inexorably” consume half of all spending by 2013, he uncritically quoted BC Liberal sources.

It was all a scam. Just 12 days after Taylor’s presentation — and three days after The Tyee (amongst a few others) had debunked the finance minister’s assertions — BC Liberal premier Gordon Campbell launched a much-hyped, year-long Conversation on Health.

“More people are moving to the province and our population is aging,” Campbell declared on Sept. 28, 2006. “Couple this with tremendous but costly advances in surgical procedures, diagnostic technology and pharmaceutical therapies, and we have very different pressures on our health system today than we had even a decade ago.”

A government news release continued the farce with the assertion that health outlays represented “42 per cent of the province’s annual budget.” And, “If the health budget continues to grow as it has in the past, it could consume over 70 per cent...”

Yikes. Might more private providers (big Liberal supporters) be a solution? Coincidentally, Campbell had just toured Europe and reported many systems there did provide more room for private care, compared to B.C. (He later fully confessed his ardour for private healthcare.)

Meanwhile, here we are in 2019 and health is budgeted to take up only 39.4 per cent of B.C.’s total expenditures — which, as even a journalist might know, is nowhere near 71.3 per cent.

Today’s math lesson

We are left to ponder a couple of questions. First, how come B.C.’s health spending failed to reach Carole Taylor’s wacky prediction?

Second, why is it that health care outlays appear to be shrinking under Horgan’s NDP?

Surprise! There is one answer to both questions, and it focuses on all of the other outlays — non-health items of expenditure, that is — in the B.C. government’s budget.

That’s because when it comes to individual allocations — which necessarily must add up to 100 per cent of total outlays — within the overall provincial budget, there is a zero-sum relationship between the various items of expenditure.

As a consequence, if one or more spending categories decline as a proportion of the total, one or more of the other components must rise. And vice versa.

Let’s look at social services, one of nine major categories of expenditure in B.C.’s annual budget, and a sub-component, child welfare.

Soon after taking office in 2001, Campbell and the BC Liberals began severely whacking social services. Within three years, funding had fallen by $805 million, to just $2.6 billion.

The budget for child welfare over the same three-year period similarly plunged, from $1.1 billion to a mere $759 million.

The next year social services and child welfare spending inched up some but was still well below where it’d been when the BC Liberals took office.

Between 2001 and 2008, social services — including child welfare — dropped from 11.2 per cent to just 8.2 per cent as a percentage of total government outlays.

Many other categories of government expenditure also fell over the period, including, thanks to dropping global interest rates, debt servicing charges.

Not surprisingly, as all of these spending categories fell as a share of the total, the remaining categories grew larger in relation.

So, whereas health and education consumed 59.1 per cent of total operating expenses in 2001/02, after several years of decline by nearly every other item of expenditure, the pair together climbed to 65.5 per cent of all outlays. That was all it took to sharply angle up Carole Taylor’s terrifying graph line, projecting budget Armageddon.

Not that health and education spending saw dramatic funding increases — far from it. No, both categories rose as a proportion of total spending only because so many other spending categories, notably social services and child welfare, had been pulverized.

582px version of CaroleTaylorGordonCampbell.jpg
Math was hard: In 2006, former finance minister Carole Taylor and then premier Gordon Campbell urged a rethink of public health care while falsely projecting runaway health costs.

Long after Taylor’s and Campbell’s political retirements — and the Conversation on Health sputtered to a merciful and inconclusive end — premier Christy Clark’s BC Liberal government continued to regard social services and child welfare as low priorities.

Result: Between 2001 and 2017, the amount BC Liberals spent per capita on social services rose from $841 to just $873.

That’s a total increase of 3.8 per cent. Meanwhile, according to BC Stats, the province’s consumer price index over the same period rose by at least 30.4 per cent.

What about child welfare? It remained of minimal importance throughout the BC Liberals’ entire tenure in government. That was made clear in October 2015, when Mary-Ellen Turpel-Lafond, the province’s Representative for Children and Youth, published a report entitled “The Thin Front Line.”

According to the study, “Staffing numbers [in the Ministry of Children and Family Development] have fluctuated since 2001, often in response to cost-cutting cycles by the B.C. government... This report clearly demonstrates that MCFD has managed its budget pressures in part by reducing the total number of front-line child protection workers. In 2013, the number of workers fell to 1,111 — 117 fewer than were working in B.C. in 2002...”

Two months later, the Clark government published its own report that conceded MCFD “has been slowly starved of the resources it needs to do its work,” and “what is inescapable is that the system is short on both staff and program resources.”

In response, the Clark Liberals reluctantly provided a modest boost to child welfare funding — but it still remained abysmally low.

Everything changed after John Horgan and the New Democrats were sworn into office in July 2017. Since then, spending on social services — and notably on child welfare — has risen dramatically.

Compared to Clark’s last full fiscal year as premier, Finance Minister Carole James’ current budget calls for an increase of almost $9.6 billion, or nearly 20 per cent over a three-year period.

Allocations to health have grown by $3.3 billion — a hike of 16.7 per cent — and for education have risen by $2.1 billion — up 17.2 per cent.

Obviously, both categories have seen significant funding increases, but at rates lower than the overall growth in total government spending. So where are the big increases?

Why, it’s in the areas the BC Liberals hit the hardest when they were in office: social services and child welfare.

Expenditures on social services from 2016/17 to 2019/20 under the NDP have risen from $4.2 billion to almost $5.8 billion — an increase of more than $1.5 billion, or a whopping 36.2 per cent.

The jump in child welfare outlays has been even more dramatic — from under $1.4 billion to nearly $2 billion. Spending in this sub-category is up by $607 million, or a stunning 44.7 per cent.

Somewhere a lot of grinches must be grinding their teeth.

Funny business

To sum up. Carole Taylor’s goofy forecast of health spending rising to 71.3 per cent of total government outlays never was predicated on soaring health-care costs. Instead, it was based on dramatic cuts to almost every other category of government spending, especially for the most vulnerable in B.C.’s society.

As a consequence of those cuts to non-health items of expenditure, the portion of the budget allocated to health care necessarily increased, rising from the low 30 per cent range to above 40 per cent.

The only way it could have risen higher would have been if Campbell, Taylor and Clark had further slashed non-health spending categories.

Moreover, now that the Horgan New Democrats are restoring expenditures for social services, the proportion of the budget consumed by health necessarily is dropping.

Does that mean the NDP is growing B.C.’s budget in ways that recklessly dwarf health spending? Quite the contrary.

The bogus, but much-hyped assertion by Campbell, Taylor and other BC Liberals — and many in the news media — that health-care spending in our province was out of control can be laid to rest by looking at health expenditures as a share of the provincial economy.

Back in 2001/02, the province’s health-care expenditures consumed 7.6 per cent of nominal GDP. This year, the comparable number is forecast to be only 7.5 per cent.

Similarly, total government spending by the Horgan New Democrats remains relatively modest. In 2001/02, B.C.’s public expenditures represented 22.3 per cent of GDP. The estimate for the current year is only 18.9 per cent — or about 3.4 per cent lower than it was almost two decades ago.

Nice to be done with all that budget-spinning funny business by the business party of British Columbia.  [Tyee]

Read more: Health, BC Politics, Media

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