Think. Think. Think.

There are good reasons that Think Think Think is an Alanon slogan. Primarily, that not thinking things through, failing to carefully use thought to achieve an understanding of what the REALITY of the issue being decided IS and what the consequences of the choices that flow from that reality are, is how you find yourself sinking in the financial quagmire that BC, through its choices and actions, finds itself in.

Continuing to fail or to refuse to think or to consider reality and burying our heads in the sand of wilful denial is how you end up a financial disaster like Greece.

Or, as voters in BC did in June 2011, voting to reduce the services the government of BC (health care, education, etc) provides to citizens of BC by $300 million a year for the next 5 years.

Reducing services by $300 million a year may not be what voters intended to do when they voted to extinguish the HST. But by failing to invest the time and effort required to achieve an understanding of the HST and the consequences of extinguishing the HST, then voting to extinguish the HST, voters voted to reduce services provided by the BC government to citizens by $300 million a year for the next five years.

In order to understand how, in voting to extinguish the HST, voters were voting to reduce government services by $300 million a year for 5 years let us review the history of the HST in Ottawa and Victoria.

In late 2009 and early 2010 the BC Liberal government found itself in need of $458 million ($600 million final bill) to replace the roof on BC Place and a $billion$ or $two$ to replenish government coffers depleted by spending on the Olympics.

In Ottawa the federal government had just wrapped up its negotiations with Ontario as to the size of the bribe, I mean compensation, Ontario would receive from Ottawa to cover the costs of harmonizing Ontario’s sales tax with Ottawa’s GST.

With Ontario on board to bring in the HST, Ottawa turned its attention to getting Quebec and BC to harmonize their sales taxes with the GST; offering Quebec and BC $1.6 billion bribes, ahem – compensation, to bring in the HST.

Cash strapped as a result of Olympics costs and facing the need to pay for the new BC Place roof, BC’s Liberal government agreed to accept the – compensation – offered by Ottawa and bring in the HST.

When the BC Liberal government announced they would be bringing in the HST the citizens of BC jumped to the conclusion that the Liberals had lied during the provincial election, during which the Liberals had said they would not be bringing in the HST. With citizens citing the fact that politicians “ALWAYS” lie as ‘proof’ that the Liberals knew at the time of the election they would be bringing in the HST.

As to the matter of politicians lying. Voters point their fingers and accuse politicians of ‘always’ lying as if voters have nothing to do with politicians behaviour. For decades voters have been wilfully denying the Reality of what IS the state of affairs in BC (and Canada), wilfully denying the implications of the Reality of the state of affairs and the consequences that would (have to and do) flow from ignoring the Reality of what the state of affairs IS –  in favour of what voters WANT to be the Reality of the state of affairs.

In choosing to dwell in wilful denial, voters rewarded those politicians who told them what they WANTED to hear and punished any politician who dared to speak of what voters NEEDED to hear and consider. Only wilful denial would cause someone to be surprised that after decades of this behaviour, politicians now tell voters what voters want to hear – saying whatever is required to avoid telling voters anything that voters do not want to hear.

‘Politicians lie’ because voters have voted anyone who does not lie – particularly those who insist on addressing the Reality of the issues facing our cities, provinces, territories and country – out of office and out of public life. Thus voters themselves have voted to have politicians lie to them. A situation allowing voters to avoid facing financial Reality.

In the scheme of things it doesn’t really matter what Campbell and the Liberals knew and when they knew it, they had no choice but to say yes. Given the financial state of affairs in BC it would have been financially irresponsible not to take the $1.6 billion from Ottawa – and the additional revenue the HST would generate.

Feeling they had been lied to (ignoring their own culpability for politicians use of doublespeak to avoid telling voters what they don’t want to hear and to instead tell voters what they want to hear) voters condemned the government for implementing the HST.

Presented with the opportunity to exact a pound of flesh from Campbell and the Liberals – whose existence, by presenting an alternative to the NDP, led to the demise of the Social Credit and Bill Vander Zalm’s notoriety as the leader who killed the BC Social Credit Party – Bill Vander Zalm jumped on the anti-HST bandwagon and helped propel the issue to referendum.

While the political fallout suffered by the Liberals and Gordon Campbell’s resignation no doubt  were very satisfying to Vander Zalm, his actions in helping to extinguishing the HST have resulted in painful financial consequences and the financially driven need to reduce government services to citizens.

In an ironic twist of heroic size, Vander Zalm’s action put Gordon Campbell in London England as Canadian High Commissioner and allowed him to exit BC politics as the leader who lead the Liberals into power and left the Liberals in power with a majority. It also allowed Campbell to exit before financial realities began to place tighter and tighter constraints on what a BC government can do, what services it will have the revenues to supply and the need to cut services.

Which would have me, if I was in Mr Campbell’s shoes, enjoy a very merry last laugh.

Either Vander Zalm, sensing blood in the water, seized the opportunity to inflict a wound on Campbell and the Liberals OR Mr Vander Zalm is notably intelligence challenged. The implication, should Mr Vander Zalm possess a minimal level of intelligence, is that Mr Vander Zalm wanted his pound of flesh so badly he did not care how much financial damage extinguishing the HST of the fiancés of BC.   

Presented with the opportunity to score political points the NDP leaped on the bandwagon of a referendum and extinguishing the HST. Campaigning to reduce government revenues, even as the NDP called for the government of BC to spend hundreds of millions of dollars more on healthcare, education and other voter wants (as opposed to needs).

We are faced with another either. Either the NDP want power, to form the government of BC, so badly that they will do and say anything – no matter how much financial damage their actions inflict on the finances of BC OR the NDP are so financially incompetent that they see no conflict in advocating ripping $1.6 billion out of the finances of BC (giving it back to Ottawa), reducing sales tax revenue by extinguishing the HST – and being able to spend hundreds of millions of dollars more on healthcare, education etc.

When voters exercised their right to extinguish the HST in a fit of temper, they surrendered their right to demand increased services from the government and surrendered any right to expect the same level of services from the government. Because in choosing to extinguish the HST, voters chose to reduce the dollars the government has available to purchase services (healthcare, hospital beds, classrooms).

Of course, living in wilful denial the voters of BC simply refused to acknowledge they had voted to reduce the funding available to the government to purchase services. The day after voting to rip $1.6 billion out of BC’s finances and to reduce government sales tax revenue voters were once again demanding more, more, more, more.

Which is how we arrived at the financial state BC is in today.

In light of the reality that Ottawa transfers more than $1.6 billion to BC every year, not repaying the money to Ottawa was not an option. Thus the BC government found itself forced to negotiate the repayment of the $1.6 billion over the next 5 years. Borrowing the $1.6 billion, and repaying Ottawa immediately was also not an option as it would have caused BC’s credit rating to be downgraded – pushing interest rates and the cost of servicing the provinces debt up.

Given the effect of debt levels on the provinces ability and cost to borrow; the sputtering state of the economy; the uncertainty of the economies around the world; voters refusal to pay to cover the cost of the services they demand (and receive) from the government: the funds available to the government of BC to purchase and pay for services for the citizens of BC will remain approximately what was available in the 2011 – 2012 financial year.

What does that portend for BC and its citizens over the next five years?

The monies available to purchase services for citizens will, for the next 5 years, be reduced by $300 million. In other words, in order to repay Ottawa the government of BC will have to reduce the services it provides to citizens by $300 million a year or manage to raise $300 million extra to offset the repayment to Ottawa. This is one of the consequences of voting to extinguish the HST.

Healthcare costs consume the biggest piece of the provincial budget. Unless – miraculously – the cost to purchase the same services next year as purchased this year remains the same (for the first time ever), the province will need to increase spending on healthcare  – just to hold services provided at the same level of services as this year.

People demand new operations, procedures, drugs, equipment, hospitals, hospital rooms, etc and ask why they are not available. Simple – no budget for these services means there is no money to pay for these services, ergo no services.

Healthcare was estimated at $15.7 billion for the 2011 – 2012 fiscal year. Over the past decade healthcare has increased 6.4% a year on average. Which leaves the government needing an additional $1 billion to pay for health care in the 2012 – 2013 fiscal year.

With the money cut from the budget by extinguishing the HST and no significant increases in revenue where will the money come from to pay for healthcare? or education? the courts?

Reality: if there ain’t no (enough) money, their ain’t no (the desired level of) services.

The report prepared on what Ontario will need to do to avoid becoming the first Canadian political jurisdiction to become a ‘Greece’ included pegging annual healthcare funding increases at 2.5% even though cost increases are running at 5%. In other words Ontario is faced with being forced to cut healthcare services provided to citizens because it has failed to keep its financial house in order.

Healthcare, Education, Justice system are all poised to devour substantially more dollars. But the dollars to pay substantially more for Healthcare, Education, Justice System do not exist.

Mr Dix can demand the government spend hundreds of millions, a billion of two, more dollars on healthcare, education and the courts. It will no doubt win the NDP points towards winning the next election. But no matter how hard Mr. Dix huffs and puffs……his demands are meaningless, pointless grandstanding when the money cupboard is bare.

With the government limited in the amount that it can borrow (without the cost of borrowing reaching levels where the more you borrow the less dollars you have to spend) and without significant increases in revenue, Financial Reality is threatening to force citizens out of their state of wilful denial and face to face with financial reality.

BC can begin to set priorities, begin to chose what we spend our limited funds on (healthcare versus pointlessly locking more and more people up), begin to acknowledge reality and make rational decisions based on what IS rather than what we BELIEVE or WANT to be.

Or we can bury our heads more deeply in the sands of wilful denial until suddenly we find ourselves on the international news as the latest political jurisdiction to have hit the Greece’d plunge into financial hardship and a bleak future for citizens.

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