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Campbell Misled Public on NDP Finances

In 2001 the incoming premier called NDP finances “worse than we anticipated.” His briefing binders, gained by The Tyee through an FOI, told him the opposite.

Will McMartin 20 Apr
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Inherited $1.5 billion surplus

Mere days after winning the 2001 general election with promises of honesty and accountability, incoming premier Gordon Campbell misrepresented the province’s finances by portraying the massive surplus he had inherited from the defeated NDP as an enormous deficit.

He had every reason to know otherwise.

The facts were plain to read in the transition binders that outgoing NDP Premier Ujjal Dosanjh gave Campbell right after the election. Those binders were obtained by this writer through a Freedom of Information request.

In the third binder of seven, prepared by finance ministry bureaucrats, was an up-to-date accounting of provincial finances.

The numbers in the binder confirmed the strength of B.C.’s economy at the time, and the astonishing transformation of the province’s fiscal situation. It was a financial picture even better, in fact, than the rosy scenario the NDP had based its budget upon three months earlier.

A surplus topping $1.5 billion. That is what the figures in the binder recorded for the fiscal year 2000-01, the last full fiscal year of NDP government.

Among the details: The newly revised forecast of the consolidated revenue fund surplus was nearly $1.4 billion — an increase of $85 million over what was estimated in the NDP budget three months earlier. Net income for B.C.’s Crown corporations was now pegged at $185 million — a gain of $21 million. And since the ‘forecast allowance’ was not required, another $150 million automatically went to the bottom line. (The ‘forecast allowance’ is a cushion built into the annual budget not meant to be spent except under unforeseen circumstances.)

Consequently, the surplus in the overall summary accounts was a whopping $1.573 billion — a $256 million improvement from the NDP’s revised forecast for the previous year.

No ‘fudge’

This wasn’t “fudge-it budgeting.” British Columbia’s economy was firing on all cylinders. The public debt had been reduced, the budget was balanced, and the treasury filled to overflowing.

One might think that the newly-elected Campbell government had found itself in an enviable fiscal position. But the positive picture painted by the third briefing binder presented a political dilemma of sorts. After all, the B.C. Liberals’ election victory in part rested on their often repeated assertion that the New Democrats’ final budget was in deficit and, like a previous NDP budget, “fudged.” The briefing binders clearly showed those allegations to be untrue, a revelation that might prove embarrassing for the new government.

Yet, the B.C. Liberals’ election platform had promised to "deliver real transparent, accountable government." With pledges such as these, surely the new premier had no choice but to accurately disclose the binders' contents to the public. Or did he?

Two days after the transition ceremony when the binders were handed over, Gordon Campbell met a scrum of press gallery reporters at Victoria's Empress Hotel. There, where the 77-member B.C. Liberal caucus was holding its first post-election meeting, Gordon Campbell gave his answer. "Some of the problems that we face are as we thought and some are worse than we thought," he said, "The finances of the province are worse than we anticipated." He added, "The magnitude of the losses we may face compared to budget is still up in the air."

Banner headlines in the following day’s daily newspapers fairly screamed that the defeated New Democrats had left behind a fiscal mess for the new government. "B.C. Finances Worse Than Thought, Campbell Says," blared The Vancouver Sun.

Five weeks later, without fanfare, B.C.’s public accounts for fiscal 2001-02 were released by the comptroller general and auditor general. They confirmed record-shattering surpluses in the consolidated revenue fund and the summary accounts. So great was the fiscal windfall that British Columbia was able to make what was then the largest-ever reduction to the public debt.

Campbell’s record deficits

Far from inheriting a fiscal disaster from the NDP, Campbell and his party were given a provincial treasury brimming with cash. But the voting public was led to think very much otherwise.

Where then to lay blame for the deep deficits that the BC Liberals racked up in their first three years? The radical tax cuts announced by Campbell’s party just after the election, coupled with external blows to the BC economy such as 9/11 fallout and the softwood lumber dispute, were to blame for those record setting deficits. Big miscalculations by the BC Liberals, and not the NDP, forced Gordon Campbell’s government to scramble, cutting deep into social spending and clawing back regressive taxes in order to avert a deficit meltdown.

Those who don’t believe this can find the facts right where I did. They can see the very positive picture contained in the third transition binder Gordon Campbell was handed, and presumably read, just before he inexplicably declared, "The finances of the province are worse than we anticipated."

This is adapted from Will McMartin’s chapter in Liberalized: The Tyee Report on British Columbia under Gordon Campbell’s Liberals.

McMartin is a regular columnist for The Tyee, creator of The Tyee’s Battleground BC seat projection feature, and has consulted for various political parties.  [Tyee]

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