Throne speech focuses on cost-cutting measures as revenues plummet

By Jonathan Fowlie
Vancouver Sun
August 26, 2009

VICTORIA — The Liberal government warned in a grim throne speech Tuesday that costs must be dramatically cut, requiring everything from public-sector wage freezes and possible layoffs to significant reviews of health authorities, boards of education and Crown corporations.

“The fiscal cupboard is bare and currently hangs on a wall of deficit spending,” said the speech, delivered by Lt.-Gov. Steven Point.

“We must minimize spending on non-essential services and target discretionary spending where it is needed most: to help patients, students, children and families and to create a new economic framework, new revenue and new jobs while protecting public services that are indispensable,” the speech said.

Saying B.C. is caught in an “economic maelstrom” and the province’s “worst recession in 27 years,” the speech shows Premier Gordon Campbell’s government now is focused on cost-cutting.

It foreshadows a return to the type of line-by-line spending reviews Campbell launched after he was first elected premier in 2001.

The government has already initiated a review of BC Ferries and TransLink to ensure public dollars are not “used to subsidize unreasonably high compensation levels or administrative costs.”

In the throne speech, the government said not only that it may change those organizations as a result of the review, it also promised similar reviews for all health authorities, boards of education and Crown corporations.

“Where Crown agencies or functions delivered by them can be more cost-effectively administered directly by line ministries, they will be,” the speech said.

“Where service-delivery mechanisms can be improved at a lower administrative cost, they should be.”

Early in Campbell’s first term, the government launched the “core services review,” which scrutinized all programs and services offered by government. It resulted in major restructuring of various government programs.

The government said last week it is closing Tourism BC and rolling its operations into the ministry of tourism.

Campbell said after Tuesday’s speech he did not have any specific plans for other organizations, but that it is important that every government dollar is scrutinized.

“When the government is the single shareholder, we have responsibilities to our taxpayers and we intend to exercise those responsibilities,” Campbell said.

“We’re focusing on what is critical. What’s critical is to focus on those health and education services as we move ahead. And in a tough economic time like this, it is important to make difficult decisions,” he said.

In the speech, the government also promised cuts in other areas.

“Significant reductions in controllable costs, including government funding for discretionary grants and contributions, will be necessary,” it said, adding that all ministries will face similar scrutiny.

In its February budget, the government announced plans to cut $1.9 billion in administrative and other costs over three years, and projected a deficit for this year of $495 million.

More recently the government said revenue dropped by more than $2 billion during the last three months alone, and costs have risen by more than $500 million to fight forest fires and provide additional social assistance.

It says that will mean larger deficits for a longer period of time, and more savings will have to be found.

The speech said rising public-service wage and benefit costs “only put more pressure on government to find savings through layoffs and other workforce reductions.”

“That is something that our government is working very hard to minimize. As long as we are mired in deficits, there is simply no money available for public sector wage increases.”

The government has said it will need to run a deficit for four years instead of two, suggesting it may propose a four-year wage freeze when talks begin with public-sector unions next year.

Darryl Walker, president of the B.C. Government and Service Employees’ Union said Tuesday he had been expecting a two-year freeze and was surprised by the apparent shift in position.

Walker said he was frustrated that the government used the throne speech to push its collective bargaining position. But he said he will reserve judgment until next Tuesday’s budget to see exactly what the government has in mind.

“We’re waiting until Tuesday to really see the budget so we can go line by line and see what it will mean for our members,” he said, adding he is mostly concerned about potential job losses.

The speech included a defence of the government’s plan for a harmonized sales tax, which it said “places us on a stronger job-creation and investment footing,” said the speech, adding that moving on the tax now — and taking the $1.6 billion being offered by Ottawa as an incentive — will help spur investment and avoid heavier debt costs.

“As difficult and rapid as this decision was, it was critical to our economic future,” the speech said.

Campbell’s government has faced heavy criticism from some business sectors, including tourism, homebuilders and restaurant owners.

In the speech, the government acknowledged some will be asked to make “significant adjustments,” but for the first time promised it will “work to help mitigate negative impacts.”

It did not elaborate on what measures might be considered.

New Democratic Party leader Carole James was immediately critical of the speech, saying it was a “disappointment” and offered no real solutions.

“There’s not a plan here to deal with the pressures that families are facing,” James said. “There isn’t an economic plan to deal with the downturn and the fiscal challenges we face in British Columbia.”

James said the reviews promised by Campbell are meant as a distraction to ease some of the public pressure he is facing over issues such as the HST.

“Let’s remember this government set up those agencies,” she said. “They set up the health authorities, they set up TransLink, they set up ferries in a private corporation.

“Now they are saying they are going to review them and maybe there is a problem.

“Well, the government created the problem. They set up those entities.”

jfowlie@vancouversun.com

Click here to read the entire throne speech

© Copyright (c) The Vancouver Sun

Energy in the Throne Speech

This government will implement an aggressive strategy to turn the challenge of climate change to our citizens' economic advantage.

Green energy will be a cornerstone of British Columbia's climate action plan.

Electricity self-sufficiency and clean, renewable power generation will be integral to our effort to fight global warming.

The BC Utilities Commission will receive specific direction.

Phasing out Burrard Thermal is a critical component of B.C.'s greenhouse gas reduction strategy.

Further, this government will capitalize on the world's desire and need for clean energy, for the benefit of all British Columbians.

Whether it is the development of Site C, run-of-river hydro power, wind, tidal, solar, geothermal, or bioenergy and biomass — British Columbia will take every step necessary to become a clean energy powerhouse, as indicated in the BC Energy Plan.

Government will use the means at its disposal to maximize our province's potential for the good of our workers, our communities, our province and the planet.

While these forms of power require greater investment, in the long run, they will produce exponentially higher economic returns to our province, environmental benefits to our planet and jobs throughout British Columbia.

High-quality, reliable, clean power is an enormous economic advantage that will benefit every British Columbian in every part of this province for generations to come.

Ready access to clean, affordable power has been a huge strategic incentive to industrial development in British Columbia.

We will build on past successes with new strategies aimed at developing new clean, renewable power as a competitive advantage to stimulate new investment, industry and employment.

New energy producers will be looking for long-term investments leveraged through long-term power contracts that give them a competitive edge in our province.

B.C.'s multiple sources of clean, renewable energy are far preferable to reliance on other dirtier forms of power.

We will open up that power potential with new vigour, new prescribed clean power calls and new investments in transmission. New approaches to power generation, transmission and taxation policies will create new high-paying jobs for British Columbia's families.

A new Green Energy Advisory Task Force will shortly be appointed to complement the work of the BCUC's long-term transmission requirement review.

That task force will be asked to recommend a blueprint for maximizing British Columbia's clean power potential, including a principled, economically-viable and environmentally-sustainable export development policy.

It will review the policies, incentives and impediments currently affecting B.C.'s green power potential, and it will identify best practices employed in other leading jurisdictions.

We will promote biomass power solutions and convert landfill waste into clean energy that reduces harmful methane gas emissions.

We will act to outlaw the international export of British Columbia's garbage and landfill waste.

The government has mandated methane capture from landfills to ensure we deal responsibly with our own waste and convert it to clean energy where practicable.

We can be leaders in the commercialization of cellulosic ethanol and other biofuels, as we are in hydrogen and fuel cell technology.

Low-carbon gas development is the key to maximizing B.C.'s energy potential where it can occur with minimal environmental impact.

A new comprehensive Asia Pacific Gateway Authority will be pursued with the federal government. Through it, government will redouble its efforts to open up the critical Northern Corridor with its massive potential as a trade and transportation corridor. That will generate billions of dollars in economic activity and thousands of jobs for Canada's and B.C.'s workers.

Together, we are opening up our transportation gateways, with new investments in our roads, bridges, ports, railways, airports, border crossings and ferries.

A new transmission line along Highway 37 will replace dirty diesel power in First Nations communities, open new opportunities in mining and clean power production and create job opportunities throughout the Skeena Region.

A new Northern Energy Corridor will open up our ability to export liquefied natural gas from the Northeast through the Port of Kitimat to the massive Asian marketplace.

Speech from the Throne, August 25, 2009