By Cindy Oliver
B.C. finance minster Colin Hansen has to be more than a little nervous these days. With his credibility in disarray following a 2009 budget that completely missed the obvious economic implosion that was rolling across North America and a September 2009 “update” designed to finally concede what he tried to deny seven months earlier, his latest fiscal plan shows little in the way of vision, credibility, or fairness.
The tax cut mantra that has been a mainstay of B.C. Liberal economic strategy over the last decade now looks not just wrong-headed but extremely bankrupt. Provincial revenues are falling short of the finance ministry’s estimates, says Hansen. What does he expect after 10 years of steady and inequitable cuts to corporate tax rates? Despite assurances from both the premier and his various finance ministers over the decade that tax cuts would pay for themselves, by decade’s end, British Columbians are now finding out just how voodoo the government’s voodoo economics really are.
Given the challenges that B.C. faces both economically and socially, a wise fiscal strategy at this point would include substantial new investments in public postsecondary education. It’s a view that has broad support amongst B.C. voters. A poll by Ipsos Reid found that over 85 percent of respondents wanted the government to invest in postsecondary education programs that helped B.C. make the transition to new skills and career options. The budget tabled on March 2 did not provide any of those new investments in postsecondary education. Quite the opposite—the latest provincial budget effectively freezes funding for postsecondary institutions at current levels, closing the door for thousands of students looking to start or complete their postsecondary education.
The budget numbers for postsecondary institutions show virtually no increase in their operating grants. Even more disconcerting is that per student funding is set to decline as the ministry forecasts more students and less overall funding. By 2011, per student operating grants will fall by 0.6 percent. That decline understates the real funding shortfall because it does not reflect the impact of inflation on operating grants.
Just as troubling is the budget’s information on tuition fees. The government’s policy choice of deregulating student tuition fees has meant a doubling of those fees since 2002. The impact of that policy change along with the government’s long-standing drive to cut corporate tax rates has led to a perverse outcome in 2010: tuition fee revenues exceed corporate tax revenues by close to $300 million in the budget documents tabled by Finance Minister Hansen. In effect, students have become the latest victim in the government’s steady push to shift taxes on to those who can least afford them.
The specific problems in postsecondary funding reflect an overall problem that the government has created for itself. The tax cut drive which has been a key feature of the current government’s economic strategy has greatly diminished the provincial treasury’s ability to adequately fund both current and needed public services. The challenge is without a new approach to fair taxation, the government has no capacity to make even the most necessary investments in public services. The irony, of course, is that these services—things like an accessible and affordable postsecondary education system—are the very services that will help spur the economic growth that the provincial government wants so desperately to kick-start.
The budget also includes a number of suspect fiscal maneuvers. Hansen is proposing to bundle a number of existing and new taxes and dedicate their revenue to support the province’s health-care system. Not surprisingly, one of the taxes included in this “bundle” is the new harmonized sales tax which takes effect on July 1. Opposition to the HST has been significant and crosses many political boundaries. The move to include HST in the dedicated revenue bundle is a cynical attempt to deflect opposition to a tax shift policy that is unfair, unsound, and in serious need of reconsideration.
B.C. students and voters deserve far more than what Hansen has tabled in his budget. Hopefully, the pressure he faces in both the legislature and across the province over the coming months will be enough to make him rethink his fiscal priorities in the coming year.
Cindy Oliver is the president of the Federation of Post-Secondary Educators of B.C.