Campbell, finance minister face tough questions about B.C.'s $2.8 billion deficit

VICTORIA, B.C. - What the B.C. Liberals knew about the province's plunging finances and when they knew it has forced Premier Gordon Campbell and his finance minister on the defensive a day after delivering a tough-times budget with a record-high deficit.

VICTORIA, B.C. - What the B.C. Liberals knew about the province's plunging finances and when they knew it has forced Premier Gordon Campbell and his finance minister on the defensive a day after delivering a tough-times budget with a record-high deficit.

Campbell and Finance Minister Colin Hansen said Wednesday they knew during the campaign that government revenues were dipping, but were confident they weren't dropping enough to revise the forecast of a $495 million budget deficit.

But on Tuesday, Hansen tabled a budget that now forecasts a $2.8 billion deficit, hikes medical service plan premiums and offers some tax cuts.

Hansen said the government was hit with an unexpected drop in tax and energy revenues of $2 billion, ripping a huge hole in the budget and the previous deficit forecast.

Throughout the election campaign, in which the Liberals were elected to a third-straight mandate, Campbell and Hansen stuck firmly to the $495 million deficit figure contained in the budget tabled last February.

Campbell said he believed his government could hit that deficit target even though he was told during the campaign that revenues were sliding.

He said his deputy minister, Jessica McDonald, told him about revenue declines, but believed they could be handled.

"She did raise the subject of the budget," said Campbell. "That was in May. She told me there were revenue pressures. She also told me the director of finance believed there were a number of measures that could be taken."

Campbell said he continued to assert the $495 million figure during the campaign because he remained confident the number would stand.

At no time was I told that our February budget numbers were not going to be achievable," he said in the legislature. "I was told our budget was achievable."

Hansen, who delivered a post-budget speech to a business crowd at a Greater Victoria Chamber of Commerce luncheon, told reporters he received budget revenue information during the campaign and on voting day on May 12.

He said his deputy minister, Graham Whitmarsh, told him during the campaign that revenues were off by between $200 million and $300 million,but he noted that amounted to one half of one per cent of the total provincial budget.

On election day, Hansen said his ministry bureaucrats handed him a report that concluded revenues were down $1.1 billion.

Hansen said he was still convinced in early June that the government could meet its deficit forecast because the province was about to receive $1.6 billion from Ottawa if it introduced a harmonized sales tax, which it did.

"We still could have done it," he said.

Veteran political scientist Prof. Norman Ruff of the University of Victoria said Campbell and Hansen fooled themselves into believing they could slip out of the financial mess that has engulfed the world.

"They are victims of their own self-delusions," he said. "They wanted to believe that the situation wasn't as serious as it was starting to seem."

Opposition New Democrat Leader Carole James said Campbell and Hansen should have told British Columbians the province's finances were going south.

After five years of balanced budgets, B.C. now joins most other Canadian provinces and the federal government in operating in the red.

Ottawa has forecast a $34 billion deficit this year. Ontario's deficit forecast is $14.1 billion, and Alberta's deficit is projected to hit $6.9 billion.

Only Saskatchewan has forecast a surplus.

 
 
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