It’s a case of the “phantom savings.” That’s what the Opposition is calling $300 million in internal cuts the B.C. government claims are in the budget, but can’t actually be found anywhere and haven’t even been identified yet.
It’s a ghostly figure, haunting the pages of the fiscal plan, scaring the bejesus out of government employees and cabinet ministers alike with the spectre of budgetary reductions. Yet it has so little substance you can see right through it, as Finance Minister Brenda Bailey was forced to admit this week during her ministry’s budget estimates.
Bailey was quizzed by Opposition critic Peter Milobar repeatedly, over several hours, to show the $300 million in savings. After all, it’s written into her fiscal plan, which is supposed to account for every single penny of government revenue and expense so that MLAs can debate and pass the spending in minute detail in the house.
“Has the $300 million already been accounted for in the $10.9-billion deficit?” Milobar asked.
“If so, where have the targeted spending cuts happened? If not, why are we dealing with a document that has a totally inaccurate deficit number? The government doesn’t get to have it both ways.
“No wonder this budget has already been getting bandied about as fudge-it budget 2.0.”
Bailey bristled, as she so often does when Milobar questions her.
“Not at all,” she said. “The $300 million is in the initial savings that we have booked for the work that we are doing right now that will lead to that number or more.”
Bailey pointed to broad categories that may or may not be touched: Salaries, travel, professional services, office expenses, advertising, amortization, tenant improvements, grants and shared cost arrangements.
It’s all pretty vague. But at least once government finds the savings, the deficit will shrink, right? Maybe drop from $10.9 billion to $10.6 billion or less, Milobar asked.
Well, no, Bailey replied.
“The $10.9-billion deficit assumes the $300 million in savings,” said the minister.
So, the government has already built an imaginary $300 million in cuts into the budget, and is scrambling backwards to make the math work.
That makes it almost impossible to scrutinize the budget properly, because the figures don’t add up.
“I do not understand then how we have a budget document that has already accounted for $300 million in cost efficiencies,” said Milobar. “Because the $10.9-billion deficit will not change, the $300 million needs to have been found. Which means the government would have already had to have budgeted in those various areas to not expend that money, because that money does not exist in this budget for expenditure.”
Bailey shot back: “I think the member is struggling with what a budget is.”
The rookie finance minister, who was up against a critic with a full-term already under his belt, went onto say the budget is a plan.
“It is a future-facing document, not a past-facing document,” Bailey said.
But the financial picture gets even more confusing the further into that future you go.
The budget earmarks $300 million in savings in fiscal 2025-26, $600 million in 2026-27 and $600 million in 2027-28. Bailey called it a total of $1.5 billion over three years.
Not quite accurate, as Milobar discovered.
The first $300 million this year will be new savings. Maybe it’s a mix of less travel for civil servants, some cuts to office expenses and a smaller advertising budget — who knows?
But the next year, government intends to carry that forward and give itself credit for not bringing those expenses back. So it only has to cut $300 million in net new costs to reach its $600 million goal.
It gets even more crafty in the third year, 2027-28. There, government is actually cutting nothing new. It’s just promising not to undo its previous two years, and booking it as $600 million in savings.
Put another way, it’s not really $1.5 billion in savings over three years. It’s $600 million, spread out creatively over the fiscal plan using accounting tricks.
It took Milobar hours to get Bailey to admit this in the legislature. It was the verbal equivalent of arm-twisting.
And even when the minister fessed up to the best-guess amounts and artful accounting, she said none of it was irregular.
“It is not uncommon to use a tool like this,” said Bailey.
Milobar called her bluff.
“Can the minister say when was the last time the government showed a budgetary line item like this in a budget?” he asked.
After conferring with staff, Bailey returned with the answer. The last time a B.C. government tried to pull these moves was in 2009 under then-BC Liberal premier Gordon Campbell.
That should give New Democrats pause.
The 2009 budget was such a disaster, it cost Campbell his job. He tabled a $495-million deficit, with $1.9 billion in savings over three years, and insisted during an election that the figures would hold despite global economic uncertainty. His savings proved vague and unrealistic.
Campbell tried to pivot to the HST to bail out his budget, but faced a public revolt that cost him his job. The final deficit in 2009 was $1.8 billion — more than three times what was budgeted.
There aren’t many New Democrats still around from 2009, but the ones who are — Adrian Dix and Mike Farnworth come to mind — might want to have a word with Bailey about using accounting tricks from the 2009-era BC Liberals.
“What’s become abundantly clear after the last two and a half days so far is there’s no actual meaningful plans, there’s concepts, there’s precious little detail,” said Milobar.
“We’ve been scratching and clawing, trying to get answers and transparency.”
It sounds like a government with something to hide. And a fudge-it budget in the making.
Rob Shaw has spent more than 17 years covering B.C. politics, now reporting for CHEK News and writing for The Orca/BIV. He is the co-author of the national bestselling book A Matter of Confidence, host of the weekly podcast Political Capital, and a regular guest on CBC Radio.
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