Posted by: Alvin | February 9, 2009

A Creative Budget for BC

creativeoutletToday the BC Liberals will table legislation allowing it to run a deficit budget, thus paving the way for the annual mudslinging at the leg over what BC should be spending its money on. Like I mentioned last week, I have no problems with deficit spending when times are tough, its a necessary and positive function of government (even Gordon thinks so now!). So what should this budget include? For starters, it shouldn’t mortgage our future without benefiting the generations that will have to pay this debt all back.

That means a budget very different from the federal one passed a week ago. The federal budget did nothing to build long-term human capital through university and other post-secondary investments (except for some small capital investments that may or may not be easily accessible, we’ll see). It also failed to invest in tomorrow’s emerging sectors (new energy technology, agricultural engineering, advanced transportation, and inter-urban transportation just to name a few). Finally, it did nothing to help re-skill and retool Canada’s backward looking manufacturing sector. At a time where auto sales are at record lows, and manufacturing capacity for autos continues to grow in India, China, and Southeast Asia, pouring money into trying to save North America’s auto manufacturing base is just stupid. In 10 years these cars won’t be made here anymore and then we’ll be stuck with empty plants (plants attracted to the country because of large tax incentives) and out-skilled workers.

Luckily, BC doesn’t need to worry about a huge auto manufacturing sector, but it does have other potential areas for blunder if the BC Liberals (and NDP) fail to look forward. The beauty of deficit budgets at a time like this is that you can use them to change course in a way that would be more difficult to justify when times are good. This budget should be seen as an opportunity to lay the foundation for the kind of BC we want our children to inherit. So here’s my five point plan for this budget:

No Tax Cuts: No, this isn’t an ideological statement. BC already has some of the lowest tax rates in North America. This combined with our cheap energy and public health care makes BC an investment friendly province compared to most other North American jurisdictions. Tax cuts will simply transfer even more debt to the future. Like I said earlier, if future generations have to pay for this budget, you have to make it worth while for them.

Education and Re-Skilling: In the short term, this means massively expanding BC’s student loan program and bringing back cancelled grant and debt relief programs for our students. BC post-secondary graduates are among the most indebted in the country. If you want to build a healthy, forward looking economy, you have to start with a workforce that is highly educated and is relatively free of debt. Why is this? The higher the education and lower the debt, the faster young people can enter the workforce and build families. Couples with mountains of debt can’t buy homes and start families. According to the latest Human Resources and Skills Development Canada data, life-course milestones are being delayed more and more. People are graduating later (because of expenses), meaning finding partners later, meaning moving out later, meaning buying a home later, meaning starting a family later…etc… As for those that are already in the workforce, the BC government should make it easier for people in certain industries and in certain parts of the province to go back to school or provide incentives for companies to provide on the job training.

Civic Infrastructure: The federal budget made it unnecessarily difficult for municipalities to access infrastructure funding. Sadly, their budget is passed and its the game we’re all left to play. As a result, the BC government should either divert money directly to cities for projects or pay for it themselves and gain matching funds from the feds. All projects should be related to sustainable transportation and inter-urban transportation as well as capital investments in universities, hospitals, and community centres.

Preferential Incentives for New Tech: Alberta missed the boat in building a Canadian centre for new energy tech, they had the money, the companies, and the talent. But sadly, they were too short sighted to notice the need to set themselves up for the future. BC shouldn’t make the same mistake. They need to put into place the right mix of tax and development incentives combined with a long term commitment to building skilled workers. There are a raft of new companies springing up all over the USA and Europe. States like Michigan already have a head start and have pushed this hard. What BC needs to do is one up them by building a long term and strategic plan involving partnerships with local and international universities, infrastructure and tax investments, and local technology pioneers. There is no doubt that this is a long-term strategy, but that’s the point.

The Creative Province: We’ve all heard of the Creative Cities theory from Richard Florida, the idea that diverse and inclusive cities attract the world’s creative elite leading to long term cultural and economic success. There isn’t any reason why BC can’t use this model for the whole province (Ontario is already doing it). BC needs to invest culturally and socially in order to compliment its financially attractive position as a place to invest and relocate to. The creative class, while cognisant of financial incentives, can’t be lured by money alone. The province needs to make sure that its education and health care sectors are healthy and well funded. But this is only a first step. BC should build a Quebec-style universal childcare program (making it easier for women to go to school or re-enter the workforce), encourage the teaching of multiple languages from a young age, open up venues for citizen engagement, revamp the electoral system, create preferential taxation regimes for artists, and fund rural technology infrastructure improvements.

So what can BC do without? Well, a lot of things. This post has already gone on for a while so I’ll pinpoint one simple thing the government can cut back on…advertising. Under the BC Liberals, the advertising budget has grown from $11.6 million in 2002/3 to $28.1 million in 2006/7. What about last year? A whopping $29.5 million. That’s an over 250% increase, and it’s shameful. While some advertising is understandable, such as health care advisories and forest safety campaigns, most is basically partisan ad spending. It needs to be axed.

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