Like the B.C. Liberals, the New Democrats were way off the mark in the deficit guessing game both parties played in the months leading up to the May election.
In its platform, the NDP projected a deficit of $1.3 billion for 2009–10, about three times larger than the $495-million gap that Premier Gordon Campbell’s government was projecting back in February for the fiscal year.
The New Democrats also pledged to bring their projected shortfall down to $877 million through a combination of reallocations and new revenues to be generated by an economic stimulus package that they would introduce in government if elected.
But neither of these numbers comes to the $2.8-billion deficit now expected this year. The figure was cited in the updated budget laid out by the B.C. Liberal government on September 1.
Economist Helmut Pastrick doubts the fiscal outlook would be better if the New Democrats had won the election.
“Let’s assume everything is the same, except we had an NDP government instead of a Liberal government, and nothing else changed. I suspect we would be in a similar situation,” the chief economist for Central 1 Credit Union told the Straight.
Pastrick himself questioned the $495-million deficit projection made by the B.C. Liberals in their February budget, and came up with his own estimate of $1 billion to $1.5 billion at the time. His estimates have turned out to be low compared with the new $2.8-billion forecast.
“The financial crisis at that time was unfolding very rapidly,” Pastrick recalled. “It was a period of high uncertainty, and every forecaster that I am aware of—whether based in B.C., Canada, the U.S., elsewhere—was in the process of downgrading their forecast on a regular basis at that time.”
The provincial government is forecasting deficits of $1.7 billion in 2010–11, $945 million in 2011–12, and $140 million in 2012–13, with a balanced budget expected in 2013–14.
The NDP’s election platform projected lower deficits of $497 million in 2010–11 and $172 million in 2011–12, including reallocations and new revenues. The party promised to bring in a balanced budget in 2012–13.
However, Pastrick suggested that an NDP government could have faced a worse fiscal outlook than the B.C. Liberals, whose books will get a boost from the federal money the province will receive by moving to a harmonized-sales-tax system next year.
“It’s not clear to me that we would see the HST under the NDP, and of course the HST brings in $1.6 billion from the federal government,” Pastrick said.