The 2011 B.C. budget was short on detail and didn't contain cash for new infrastructure projects.
The 2011 B.C. budget was short on detail and didn’t contain cash for new infrastructure projects.
“They said this was going to be a status quo budget, so you would think there would be more detail,” said Tom Sigurdson, executive director of the British Columbia and Yukon Territory Building and Construction Trades Council.
“We are going to have to wait for a new premier in 10 days and then a budget sometime in May. They are waiting for the next generation of Liberal leadership to take over, before they have a budget of substance.”
Finance Minister Colin Hansen released the 2011 B.C. Budget in Victoria on Feb. 15, which he said could best be described as a “status quo” budget.
“It provides the government with spending authority to manage the province’s affairs for the coming year,” he said. “However, it does not set out new directions. That will be in the purview of the next premier, who will set the course for the next decade of growth and opportunity for this great province.”
Hansen admitted that the budget isn’t exciting.
However, the budget comes at an extraordinary time as the B.C. Liberal Party selects its new leader and the next premier of the province on Feb. 26.
“The real budget will be in three months from now, when there is a new leader in place, so this budget doesn’t really tell us a lot about the future direction of the B.C. government,” said Philip Hochstein, president of the Independent Contractors and Businesses Association.
Capital spending on schools, hospitals, roads, hydro-electric projects and other infrastructure in B.C. is expected to total $19 billion over the next three years.
Capital spending is anticipated to return to historical levels, as the accelerated infrastructure program winds down in 2011-12.
Some in the construction industry are happy how stimulus cash was doled out.
“You can’t underestimate the role the infrastructure program played in getting us through the downturn and setting the stage for economic recovery,” said Manley McLachlan, president of the BC Construction Association.
“So, the next premier will have to take a hard look at how to maintain that momentum.”
Since October 2008, the government committed $5.5 billion to about 900 accelerated capital infrastructure projects to stimulate the economy and create about 35,000 jobs in the construction sector.
This investment was partially funded by $1.5 billion in federal contributions.
The total provincial debt is forecast to be more than $60.4 billion in 2013-14, at the end of the current B.C. Liberal fiscal plan.
This represents a large increase since former finance minister Carole Taylor tabled her last budget in 2007, when the debt stood at $34 billion.
“It is not surprising there is an increasing debt because the spending was directly related to infrastructure construction and job creation,” said Hochstein.
“There was a worldwide plan to keep the economy from going into a recession.”
The provincial government is undertaking a massive public sector investment program, which includes rebuilding and upgrading B.C. Hydro’s transmission and distribution network, construction of the Port Mann Bridge, the Canada Line and other roads, bridges and transit projects.
There was also a significant investment in schools, colleges, universities, hospitals, and other public facilities.<0x000A>Despite the vague budget, there was some detail to be found.
The debt to GDP ratio is projected to increase from a low of 13.4 per cent in 2008/09 to a peak of 17.8 per cent in 2012/13 due to committed additional borrowing for infrastructure spending, anticipated deficits and lower Gross Domestic Product (GDP) projections in the short-term.
Budget 2011 projects deficits of $925 million in 2011-12, $440 million in 2012-13, and a surplus of $175 million in 2013-14 as the government returns to balanced budgets.
“Now, that we are coming out of the downturn, we need an ongoing systematic investment in infrastructure, so we can get infrastructure in place that will support growth of the economy,” said McLachlan.
“There is a glaring need for a more systematic approach for infrastructure investment.”
The Ministry of Finance forecasts the economy to grow by two per cent in 2011, 2.6 per cent in 2012, and 2.8 per cent in the medium term, which is closer to historical growth levels.
The economy performed better than expected in 2010, with an anticipated growth rate of 3.1 per cent.