Wednesday, January 23, 2002

Day of reckoning for BC has arrived

Times Colonist (Victoria)
In Victoria there is no shortage of people affected by the public sector job cuts announced Jan. 17 by the Gordon Campbell government. But amid the turmoil and the tears there is an understanding by many British Columbians that this day of reckoning was long overdue.

In the late 1980s, as then-premier Bill Vander Zalm stumbled from one political crisis to another, he attempted to buy his way back into the hearts of voters by increasing government spending by more than 10 per cent a year. By the time his Social Credit party was defeated, B.C. had gone from having a surplus to having a structural deficit of over $2 billion per year.

This left the new government of Mike Harcourt in a difficult situation. On the one hand, its public sector allies expected his NDP government to increase spending even more quickly; on the other was his election commitment not to spend money the government didn't have.

What emerged was a hodge-podge of policies where economic ministries such as Agriculture and Tourism found their budgets cut by millions, while the ministries of Health, Education, Social Services and the Attorney General found their spending increased by billions.

In order to cover the spread, the Harcourt government continued to run deficit budgets and jacked up taxes and introduced or increased a multitude of user fees. One particularly onerous tax -- a new provincial property tax on homes valued over $400,000 -- led to a taxpayers' revolt that cost Glen Clark his job as finance minister and brought a halt to further tax increases under the Harcourt administration.

With the election of the "new" Clark as premier things went from bad to worse. Billions of dollars continued to be added each year to British Columbia's debt while anti-business rhetoric and growing bureaucratic red tape drove investment and the head offices of companies such as Finning out of B.C.
Thus, in the midst of a North American-wide economic boom, British Columbia's economy flat-lined.

The public and private sectors in B.C. have always regarded each other with suspicion, but under Clark that attitude degenerated into outright hostility. Although some civil servants continued to work diligently to assist those attempting to do business here, others saw business as a socially and environmentally irresponsible force that must be carefully controlled and contained.

What these civil service crusaders failed to understand was that without private sector investment, B.C.'s economy could not grow and without economic growth, public sector funding increases could not be sustained. Tax increases and/or deficit budgets only delay the day of reckoning, and in delaying they also make it that much worse.

Now that day of reckoning has arrived. The tax cuts announced last year by the Campbell government did not cause or hasten these civil service cuts -- the cuts would have had to happen anyway -- but Campbell's tax reduction strategy will accelerate our economic recovery. Also accelerating the recovery is the government's decision to eliminate one-third of government regulation and red tape.

Every unnecessary government regulation hurts our economy by forcing business owners both large and small to spend time and money complying with that regulation. To add insult to injury, these same businesses are often forced to pay fees to cover the administrative costs to the government of these same redundant regulations.

Cutting taxes and reducing government red tape are both critical steps to economic recovery. Eliminating deficit spending is vital to ensuring that tax dollars go to pay for public services rather than interest on accumulated debt. Even NDP icon Tommy Douglas understood that if you deficit-spend, your tax dollars eventually end up going to the bankers rather than to providing services to the public.

There is one other element that is critical to economic recovery and that is having a government that is "open for business." That has certainly been achieved at the political level, but at the bureaucratic level work still needs to be done.

The culture of B.C.'s civil service needs to change so that, as in Alberta, civil servants see their role as assisting private sector investment, rather than serving as obstacles.

This change in attitude will be challenging, as many of the people brought in or promoted by the Clark government are still there. Some will be able to change with the times, others will not.

The challenge for the Campbell government will be finding those people within and outside the civil service who are willing to help bring about this change in the corporate attitude of B.C.'s civil service.

If the Campbell government can achieve this difficult task, they will have ensured the return of British Columbia to prosperity and as a place where people want to do business and invest.