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The Auditor General's Report - Unplugged

Author: Mark Milke 1999/08/05
With due respect to accountants, few of their manuscripts rank up there with John Grisham-type bestsellers. The dry, plodding style that accompanies number crunching do not usually catapult their writings to Top 10 lists. But if one cares to find out how tax dollars are spent, or as the case may be, misspent, those carefully honed skills are worth their weight in taxpayer gold, especially given that governments take so much of our gold to begin with.

BC's chief accountant, George Morfitt, recently released his analysis of the province's 1997-98 finances (it takes a while to dig through a year's bills,) and here is a selection from what he found.

In the corporate-welfare-in-drag department, and pay special attention if you or your RRSP own Air Canada or WestJet shares or work for them, the BC government continues to give $11.1 million to Canadian Airlines International every year, and will until the four-year deal expires. Count the wad: That's $44.4 million.

The politicians will claim that since they reduced the fuel tax payable for Canadian Airlines, that hardly counts as a subsidy. OK, but only if that reduction was offered to everyone. It wasn't. Here's how the AG put it. "The province has chosen to record this amount as a reduction in fuel tax revenue rather than as a direct grant. Because the amount is set, and is a concession to one airline, we believe it should be more appropriately recorded as an expense."

Tax revenues: Despite the Asian flu, which the government blames for almost every ill to hit it, and probably soon to include Moe Sihota's next cavity, tax revenues hit $13.5 billion in 1998, up from $11.4 billion in 1994. Well, perhaps that's due to population growth Nope. Per capita, each BCer generated $3,182 to the provincial coffers in 1994 compared to $3,455 in 1998.

And here's a little secret: Between 1997 and 1998, "other" revenues flowing into provincial coffers (user fees, licenses, extra crown corporation skimming, and so forth) rose by 9.4% in one year. It's not your imagination. User fees really have increased.

And where's that money going In 1998, 69 % went to healthcare, education, and social services. (Note to Gordon Campbell: If you depose Mr. Clark, these areas will have to be temporarily cut to balance the budget, since they form the majority of government spending.) The rest goes to transportation, debt interest, and government ads telling taxpayers that politicians at 16% in the polls are actually swell.

And my, what big increases you've presided over Mr. Clark. Spending on social services jumped 17.6% between 1998 and 1994. Education climbed 17.8%, while healthcare dollars rose by 18.7%, all significantly faster than BC's rate of inflation during those five years. And while population growth rose 8.3%, overall economic growth in the province was up by 17% between 1994 and last year.

That means the province's deficits would have been higher but for the economic goose growing as fast as it was being plucked. It also explains why taxpayers of all varieties have been treading water, as the government kept feeding money back into its coffers as quickly as the economy produced it.

Despite the taxpayer plucking, debt increased, and the government found itself in the Auditor General's woodshed over its ability to produce three debt management plans in four years, and its further ability to shred most of the goals contained therein. But then, that's not new: budget follies were the main subject of his last report.

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Franco Terrazzano
Federal Director at
Canadian Taxpayers
Federation

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