Gabriel Yiu: Gordon Campbell's $100-billion legacy
Recently, the Fraser Institute again praised Gordon Campbell as the best premier in fiscal management in Canada. This is indeed a big joke, as well as a lie. But such an absurd matter was reported by many media outlets.
This so-called “research report” has shown again the total lack of trustworthiness of the right-wing think tank.
Let’s take a look at the Campbell Liberal fiscal record from 2001 onward.
When the NDP formed government in 1991, the provincial debt was $20 billion. In 2001, the year the Liberals got into power, there was an operational $1.2-billion surplus and a debt of $33.8 billion. In other words, after a decade of NDP rule, the provincial debt increased by $13.8 billion.
The biggest deficits in BC’s history were recorded during the decade of the Liberals’ governance.
On the debt front, the Liberals' record is very scary. In 2011, the traditional debt on the books is $53.4 billion—that is, an increase of $19.6 billion in the years after they formed government. It’s 42 percent higher than the NDP government's debt increase in the 1990s.
Nevertheless, behind the image of adroit fiscal management, the Liberals have another ledger that they’re unwilling to account for. The debt load in this ledger is a staggering $80.2 billion!
It’s because the Liberal government has been using the P3 (public-private partnership) model instead of the traditional approach for financing their capital-spending projects (building bridges, roads, hospitals, etc.).
In the traditional model, the cost of construction is borrowed by the government, so it’s defined as debt and must be reported in the budget this way.
Since the government can borrow at a much lower interest rate than the private sector, its cost is less compared to proceeding with a P3.
Under the P3 model, the government still needs to pay for capital projects, but this payment is defined as a “contractual obligation” and not debt. As a result, this enormous “contractual obligation” (in fact, debt) is not shown in the B.C. budget.
The humongous “contractual obligation” also includes long-term power purchase contracts signed by BC Hydro with private power merchants. These contracts last for decades and the purchase price is double that of the market value, or 15 times the cost of B.C. Hydro’s generation cost. The price under which the provincial government agreed to buy private power is higher than what B.C. Hydro charges its customers.
The Liberal energy policy brings huge losses not only to B.C. Hydro. B.C.’s residents and businesses all have to pay higher electricity bills as a result.
The intriguing coincidence is that many of these private power merchants who benefit from the deals are generous donors to the B.C. Liberal party.
At this time, the public can only find out the contractual obligation “debt” in the B.C. Public Accounts. If the former Auditor General had not instructed the government to declare the contractual obligation, then the public would have no idea how serious the matter is.
The contractual obligation was first revealed in 2005. Since then, the sum has grown threefold. Just last year, the Liberals added $27.2 billion “debt” to the contractual-obligation ledger.
So if you add the Liberals’ traditional and non-traditional debts together, the last decade has seen an increase of debt to the tune of $99.8 billion.
That is seven times more than that accumulated by the NDP in the 1990s.
Ten years of Liberal governance with almost $100 billion of new debt, and yet we don’t see a single media feature on this grave matter. Instead, we have a right-wing think tank praising Campbell as the best fiscal manager. That’s truly incredible.
Gory details revealed in megaproject estimates
The about-to-be-completed new roof of the B.C. Place was supposed to cost $365 million, according to government announcement in January 2009. Now, the government says it will cost $563 million.
That’s more than 50 percent over budget, but the Liberal government keeps saying the project is “on budget”. And so many media just report the deception without checking the facts.
Yet Campbell can still be held up as fiscally the best premier in Canada. Isn’t it amazing?
The fact is, this kind of nonsense is not unique. Earlier, the Fraser Institute released a shocking study, which said that immigrants are a huge burden on Canada. Each year, according to the report, the government has to subsidize an immigrant $6,501 on average or $23 billion in total.
Immigrant communities immediately rebutted the findings of the report. But since this is a study conducted by a renowned research institution and the media has reported it, many Canadians would think that it’s true.
Then, two scholars at Simon Fraser University studied the Fraser Institute immigration report and concluded that it overstated the subsidy by 11 times! According to the calculation of the SFU scholars, the average subsidy per immigrant is $450.
Many might recall that in June last year, just before the implementation of the HST, the Fraser Institute released a “study” supporting Campbell’s HST. The right-wing think tank stated that HST is revenue-neutral, so the B.C. government would not collect more tax. The Fraser Institute study also stated that low- and middle-income families would save money due to the HST.
After more than a year with the HST, we all know how unreliable the Fraser Institute study is. By now, I hope the media and the public will realize that the mandate of the Fraser Institute is given by big businesses, and it definitely does not stand for the public interest with these types of studies.
Gabriel Yiu is a small businessperson and a former NDP candidate in Vancouver-Fraserview.