The provincial government has suddenly discovered, almost halfway through the fiscal year, that it has again failed in the core task of budgeting.
That's party that has made much of its managerial competence troubling, particularly from a governing and prudence. And so is Finance Minister Mike de Jong's announcement that the government is now going to re-examine its bargaining mandate for some 27,000 government employees - even though negotiations have been underway for months.
De Jong presented the first-quarter financial results this week, more than 10 weeks after the quarter ended. That delay is a problem in itself.
The government's budget was flawed, he said, and it wants to cut spending by $241 million in the final six months of this fiscal year, $389 million next year and $483 million in 2014-15. The cuts are needed to keep the promise of a return to balanced budgets next February, before the May provincial election.
The main problem is natural-gas prices, which are lower than the government forecast. Lower prices mean lower royalties. This year, the government now says it will take in $157 million, not the $398 million it budgeted.
It's not our fault, de Jong said. The budget was based on the independent forecasts of energy analysts, who got it wrong. But that's not the whole story. The government knows how volatile these revenues can be. Its 2009 budget overestimated natural-gas royalties by $550 million, one of the factors that pushed the deficit from the $495 million claimed by the Liberals during the election campaign to $1.8 billion. (A botched budget that did serious damage to the party's credibility.)
In the past, the Liberals have chosen to include a significant "forecast allowance" in the budget - essentially a cushion against risks like falling natural-gas prices or surprise expenditures. In 2008, for example, the allowance was $750 million. The current budget provided just $200 million as a forecast allowance, a decision that has proved imprudent, and costly. The government now proposes spending cuts that, because the year is half over, must be deeper and less carefully considered. De Jong offered the usual solutions - cuts to travel budgets and "discretionary spending." But the government has claimed that it has eliminated unnecessary spending already, especially since the recession hit in 2008.
De Jong acknowledged program cuts would be coming quickly, and could continue for three years.
And he said the government would review its bargaining mandate with public-sector employees.
The government's apparent willingness to make employees pay the costs of its miscalculation is troubling. Bargaining has to reflect economic realities. But public-sector pay has been frozen for more than three years. The government had offered to work on ways to find labourcost savings and share them with employees. Now, it appears to be reneging on the offer.
Critics like Conservative leader John Cummins suggest the Liberals see a fight with public-sector unions as politically useful, a way to show they would be tougher with unions than the New Democrats. That is, we hope, far too cynical. There are concerns about the NDP's ties to large unions (and the Liberals' ties to large business interests).
But picking a fight with employees to score political points is wrong, and bad for the economy. The B.C. Government Employees' Union has not had a strike of core government workers since 1988. That kind of stability is valuable, and appealing to investors. Public-sector employees are our neighbours and contribute to this region's economy. No government should pit citizens against each other.
The government budgeted badly. The solutions - in reduced spending, new revenue measures, or both - should require sacrifices by all British Columbians, and carefully considered decisions on what's most important for the future of the province.
