Tuesday February 21, 2012

BC Budget News

'Dutch Disease'

Government falls short in creating a diversified and sustainable economy

Released by the BC Green Party


he BC Liberals interpret developing diversified trading partners for our resources as economic diversification. The budget fails to build a truly sustainable economy that is resilient and can withstand global economic pressures.

"BC Greens have concerns that the government is staking BC's future on trade of our non-renewable resources, gambling revenue and consumer spending, and revenue from our crown corporations which the auditor general has questioned," said leader Jane Sterk.

"Greens believe a diverse economy would be one based on local resilience. The BC Liberals plan furthers the risk of 'Dutch Disease' where our dependence on natural resources hollows out our ability to create real economic diversification throughout BC.

"Despite the conservative assumptions about growth and the impact of the global economy on BC, the government's strategy is questionable. They are prone to overstate resource revenue; they promote an expansion of gambling revenue; and they include income from BC Hydro when the Auditor General has questioned the deferral accounting methods the Crown Corporation uses.

"BC Greens believe the sale of assets produces a one-time cash inflow that distorts revenue. True revenue should be replicatable and able to maintain consistency year over year. In addition, Greens worry that the sale price of these assets will not reflect the true economic value of these enterprises.

"Greens question tax credits like those offered for children's fitness and arts. These benefit families that already invest in these programs thus denying government unnecessarily of revenues. Furthermore, tax credits clutter the tax system and mean greater government expenditures to manage the accounting of such rebates. The rebates for second and recreational properties are similarly unnecessary and benefit disproportionately the wealthy.

"Greens are very concerned about the implications to real action on climate change and our province's ability to meet our legislated targets given the review of the carbon tax and the language used which seems to indicate that the tax may be scraped.

"Greens notice that missing from the budget and the language used to frame the decisions is any dollars for climate change, food security, community based energy production, affordable market housing, energy efficiency retrofits and water security. These are all investments that would help diversify the economy.

"The continued emphasis by the BC Liberal government on tax cuts indicates a willingness to engage in a race to the bottom - that BC is for sale and on sale. Greens question the assumption that lowering taxes generates a positive economy given that the minister pointed out that consumer spending continued to climb even after the introduction of the HST," concluded Sterk.


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