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Review results in tweak to natural gas revenue

The British Columbia government dropped its projection for natural gas revenue for next year by as much as $70 million based on a consultant's review of budget documents, finance minister Mike de Jong said.

Tim O'Neill's 22-page report, which he said took him about seven 10-hour days to produce, found the government's economic and revenue expectations in the budget to be released tomorrow "are generally well founded."

He pointed out that B.C. has overestimated natural resource revenue in five of the last six years and that natural gas revenue estimates in particular have been off by as much as $1.25 billion.

O'Neill suggested the government use a more conservative estimate for natural gas revenues, given the tendency in the past to get it wrong.

"He identified a particular area relating to natural gas, made a recommendation that we've accepted around pricing for natural gas, you'll see that confirmed in the budget documents tomorrow, that's had an impact of between $60 and $70 million," said de Jong.

The province's total budget last year was in the order of $42 billion.

The minister noted that O'Neill had looked at revenues but not expenditures, arguing the government has a "notable and positive" record of being closer on its spending targets.

"He states the obvious about natural gas revenue, that the government has overestimated natural gas revenue for the last four years," said NDP finance critic Bruce Ralston. "On the key question of whether the budget is balanced or not, he doesn't pronounce at all."

The government is trying to deal with a "credibility gap" its budgets have with the public, Ralston said. "They understand and believe the people of the province aren't going to take them at their word and they're trying to fix that. I don't think they can fix that by tomorrow."

Ralston said it was a "noticeable omission" that O'Neill didn't give much consideration to the revenue estimates from Crown corporations since the government used them in 2009 to pad its budget with what turned out to be over-estimations.

A ministry spokesperson said O'Neill's contract to produce the report was for less than $25,000.

Andrew MacLeod is The Tyee’s Legislative Bureau Chief in Victoria. Find him on Twitter or reach him here.

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