VICTORIA, B.C. – A recession is in the wind. The budget is bleeding red ink. An election is less than three months away.
Times certainly are tough for British Columbia’s Liberal government, who will face voters on May 12.
The world’s economic troubles have hit Premier Gordon Campbell’s government after years of record job creation and consecutive billion-dollar surplus budgets.
On Monday, the government will have to send an assuring economic and campaign message in its speech from the throne.
And the next day, they’ll have to table a budget that the finance minister has already said will include a deficit.
Business and labour groups differ sharply on what most needs government attention during a declining economy, but strangely both agree aggressive action is needed to tackle the declining economy.
“I think it’s pretty clear all of Canada is in recession,” said Jock Finlayson, vice-president of the B.C. Business Council. “It certainly feels like recession.”
The B.C. Liberals have yet to admit the province is in recession, but there’s no way British Columbia can insulate itself from the declining world economy, said Finlayson, whose organization represents about 260 large B.C. businesses.
He said the business council is looking to the government to provide economic leadership during the tough times – and that may involve stabbing a few Campbell sacred cows, like his controversial carbon tax.
“In today’s recessionary economy, particularly given the enormous difficulty facing a lot of export industries, there is a case for freezing that carbon tax for one year, at least, as opposed to increasing it which is going to add additional cost on the backs of industry,” he said.
The government announced its escalating carbon tax on fossil fuels in its last budget. Starting in July, the tax added an extra 2.4 cents per litre to the price of gasoline and other fuels.
Labour organizations see the economic downturn and the government’s decision to embrace deficit spending as the opportunity to invest in people infrastructure, said Jim Sinclair, B.C. Federation of Labour president.
The organization that represents thousands of unionized B.C. workers says the government should invest in the green economy, post-secondary education and permanent job creation.
“The throne speech should give a new vision for British Columbia and that vision should be about creating real, lasting jobs, moving to a green economic agenda not just in words but reality, massive infrastructure for public transportation, education and housing,” Sinclair said.
There are a lot of needs and not a lot of funds to fill them.
Norman Ruff, a professor emeritus of political science at the University of Victoria, said the Liberals must focus on the economy in the throne speech, budget and the few months leading to the election.
And he warns Campbell to embrace deficit spending during this unprecedented economic period or risk alienating voters. Campbell has built his political reputation on slaying deficits.
“He still has a fetish about the deficit,” said Ruff.
Prime Minister Stephen Harper, also a noted deficit opponent, recently embraced five years of deficits. Ontario, Quebec and the Atlantic provinces have all warned of spending in the red in the next fiscal year.
“We’re in an unprecedented economic situation, but if people have a sense the situation is extremely serious, they might think of the need for clear protection of the social safety nets and that would turn in favour of the NDP,” said Ruff.
“This deficit fetish is potentially dangerous for Campbell.”