Vaughn Palmer: Prudent James vague on spending cut targets, but decision makes sense
Credit to Author: Stephen Snelgrove| Date: Thu, 03 Oct 2019 02:03:18 +0000
VICTORIA — Finance Minister Carole James moved quickly to set the record straight last week, when one of her cabinet colleagues created the impression that the province was preparing to cut spending by five per cent.
“It isn’t true,” James said Thursday, after a rumour to that effect swept the Union of B.C. Municipalities Convention, prompted by a ministerial comment in one of the sessions.
Ministers were indeed being asked to rein in discretionary spending, James confirmed.
But the target was nothing like five per cent across the board — which would amount to about $3 billion over a full year’s operating budget of $58 billion.
Rather the goal was to come up with $300 million. That’s the amount James herself sequestered from contingency funds to keep the budget in surplus after the economy slowed in the first quarter of the financial year.
She’d like to restore the full amount to contingencies in anticipation of more economic uncertainties in the months ahead. The finance minister has already scaled down the forecast economic growth from 2.4 per cent to 1.7 per cent for this year, and from 2.3 per cent to 1.9 per cent for next year.
She cited global economic turmoil, mill closures and layoffs in the forest industry, and the precarious finances of government-owned ICBC as reasons for wanting to rebuild the contingency fund.
Next day, Premier John Horgan was asked if he were worried about the budget in light of the money-saving directive from the finance ministry.
“I’m not worried about the budget because Carole James is the finance minister and she’s doing what any prudent minister would do,” Horgan told reporters Friday.
“Her first quarterly report was very clear. We’ve seen a downgrade of economic growth rate across Canada, indeed, right around the world. B.C. is not immune to that.”
B.C. would continue in the top rank in Canada in terms of economic growth and employment, the premier predicted.
“But we need to be prudent,” he emphasized. “I think most British Columbians are saying ‘good on you — let us not wait until the fire is in the kitchen, let’s tend it while we can.’”
Despite James’ effort to clarify her intentions, some doubt remained as to the full extent of the drive to contain spending.
In a confidential note to The Vancouver Sun, a program director insisted his ministry has been told to prepare proposals for cuts in program spending of three per cent and five per cent.
The final call on those proposals would then be made higher up in government — by the Treasury Board committee of cabinet in concert with the Ministry of Finance.
James, for her part, maintained the target was more modest.
“We’re talking about less than one per cent of the total budget — that’s what we’re aiming for,” she told Rob Shaw of The Vancouver Sun. “I’ve asked ministers to take a look at their budgets and discretionary spending — things like office expenses, staff travel, office equipment — and make sure they’re looking for any kind of savings.”
She put the challenge to each of her cabinet colleagues this way: “We can tighten up around travel, we don’t need to hire that consultant in the next few months, we don’t need those office expenses.”
Travel. Consultants. Office expenses. James mentioned those three categories several times as targets in her drive to save $300 million.
Public servant travel for all ministries is budgeted at $62 million this year. There’s $715 million for professional services, including consulting contracts. Office expenses come in at $100 million.
Together funding for the three categories named by James totals just under $900 million. Keep in mind, too, that as of Sept. 30 the financial year is half gone. Ministries would be hard pressed to save $300 million from those three alone.
Perhaps she has other targets, not mentioned in media briefings. But when I put that question to the finance ministry this week, the answer added nothing to what James had said earlier.
“We are doing what any responsible fiscal manager would do — taking another look at discretionary spending inside government, such as travel, consulting contracts and office expenses,” were the words attributed to James Tuesday.
“Our priority is to make sure that every dollar possible is going to people, that is why we are looking to reduce discretionary spending for items that do not impact services and programs for British Columbians.”
Wednesday the ministry added a bit more detail and clarification. The focus on discretionary spending is not “necessarily limited to travel, office expenses and professional contracting services.”
Rather, “each ministry has discretion to identify ongoing strategies for savings within their discretionary expenses, provided these savings do not impact core services, programs or benefits for British Columbians.”
So there are other targets for savings. They are just not saying what those are.
Even without the hoped-for $300 million in discretionary savings, James still has some budgetary leeway. There’s still $450 million left in the contingency fund plus a $500 million forecast allowance.
I would note, too, that the country is in the midst of a federal election campaign where the incumbent prime minister carelessly discarded his 2015 budget balancing promise and is simply promising more deficits this time.
James is at least trying to keep the B.C. budget in surplus territory, never mind precisely how she intends to get there.
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