In case you missed it, the British Columbia Government has run a deficit for the last few years and things don’t look like they’ll get better any time soon. In essence, the Government spends more than it brings in each year, so it borrows money to cover day to day expenses and to pay for debt racked up in previous years. It’s like using your credit card to pay your credit card bill while spending more than you earn each month. Eventually you hit the wall. Greece, Ireland, Spain, Portugal the USA are examples of countries where the deficits and debts are so gigantic that something has to give. European countries are facing this first because no one will lend them money.
When Gordon Campbell was first elected Premier, the BC Government cut taxes to stimulate the economy. It is true that we were the laggard of North America. The taxes here were such that we were not competitive in attracting business. This was largely the NDP’s fault. But after taxes were cut, things picked up and we had a Golden Era as they called it, where resource extraction (mining, forestry, oil & gas) and construction fueled a boom in Government revenues and the demand for certain expenditures was greatly reduced because our unemployment rate was low.
Campbell tried to plan for the inevitable reduction in revenue by implementing the HST. For reasons we’ll explain another day, the HST backlash gave life to the IRP scheme. In any event, the HST is now on the way out. Construction in China is grinding to a halt, so demand for many of our natural resources is drying up. Property prices seem to have reversed direction in most of BC. So what is our financial position?
We’re screwed. The Government has a somewhat misleading play-at-home budget calculator online at http://www.gov.bc.ca/mybcbudget which is worth trying out. Government revenue is not going to increase in the near future and expenses are going up. You’ll see there are only two options: tax hikes or budget cuts. And both options are unpalatable to most taxpayers.
Which brings us to IRPs. If the Government has to pay the immediate out of pocket expenses to 15,000 people who got 90-day IRPs for Fail, then that’s about $70 million. If they are required to reimburse people for their lost income, it could be three times that or more.
So do you think they really care whether you are prohibited from driving for the rest of your prohibition? Probably not but public safety, i.e. we can’t let you drive or the death rate will double, is a convenient argument when you don’t want to write cheques.
If the Government is successful, their offices will make the determination if your IRP is revoked or upheld. And of course, it is in the financial interest of the Government that your IRP is upheld.
So our hope lies with the Courts.