Gabriel Yiu: B.C.'s lost decade—fact versus rhetoric

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      After 16 years in government, the B.C. Liberals are still using the “lost decade” to refer to the NDP’s period of governance in order to scare voters.

      Was the economy under the NDP in the '90s that bad? People on the street said in the '90s that they were able to buy a house but nowadays even professionals are not able to.

      Prior to the last provincial election in 2013, the Business Council of British Columbia released a study, “A Decade by Decade Review of British Columbia’s Economic Performance”

      It compared the economic indicators of the three decades governed respectively by the Social Credit, the NDP, and the B.C. Liberals. The result is that the NDP’s '90s had the best economic performance.

      Here are the conclusions of the study.

      GDP growth: The Social Credit decade had an average growth rate of 2.12 percent, the NDP 2.72 percent, and the Liberals 2.36 percent. The NDP decade is the best of the three.

      Job creation: Under the Social Credit jobs grew by 1.91 percent, under the NDP by 2.17 percent, and under the Liberals by 1.58 percent. The NDP decade also had better job performance.

      Unemployment: Social Credit had an average rate of 11.48 percent, under the NDP it was 8.87 percent, and the Liberals registered 6.63 percent. The Liberals scored.

      Business investment (Non-private residential investment): Regarding nonprivate residential investment, the Social Credit growth was 0.81 percent, NDP attracted 3 percent, and the Liberals had 5.53 percent.

      Exports: The NDP had the best export performance, whereas the Liberals had the worst record, according to the business council study.

      So for the above five economic indicators, the NDP’s governing decade recorded the best performance on three counts: economic growth, job creation, and exports, whereas the Liberals were better in business investment (non-private residential investment) and unemployment.

      The Liberals’ so-called lost decade definition for the 1990s runs contrary to the facts.

      During the Liberals’ governing years, the debtload increase has been alarming.

      When the Liberal premier Gordon Campbell stepped down, I wrote an article “Gordon Campbell’s $100 billion debt legacy”. The B.C. debtload at that time was $53.4 billion, plus $80.2 billion in contractual obligations.  

      The contractual obligations are mainly from two sources: first, capital projects built under public-private partnerships (P3), in which the government signed long-term contracts with private corporations to build a bridge or a hospital.

      Corporations would borrow the capital, build and manage the project, and the government would pay for the use of it by long-term regular payments. Since the corporations’ borrowing cost would be much higher than the conventional government-borrow-and-build method—plus there was profit sharing by the investors—the P3 model costs a lot more but it wouldn’t be listed as debt.

      The second source is the electricity-purchase contracts B.C. Hydro signed with private power corporations. The power rates of these contracts are generally more expensive than the generation cost to B.C. Hydro and prices in the power market.

      These private contracts are one of the major reasons for our hydro rate increases year after year.

      Since the government won’t get broke, it must honour contracts it signed and is responsible for paying these obligations. It may not be called debt, but it amounts to the same thing.

      So what is B.C.’s current debtload?  

      The answer is, the provincial debt is $66.7 billion, plus an additional $101.1 billion in contractual obligations. That is a total of $167.7 billion!

      Veteran provincial political pundit Vaughn Palmer recently pointed out that the B.C. government has the most signed contractual obligations among all provinces.

      When the Social Credit left office in 1991, the provincial debt was $20 billion.

      When the NDP stepped down in 2001, it left a $1.2-billion surplus and a debtload of $33.8 billion.

      Thus, the NDP had increased the provincial debt by $13.8 billion, whereas the B.C. Liberals have added $139.9 billion debt under its governance up to now—that is, 10 times more than that of the NDP. This is a fact to bear in mind in this election.