Columnists aren't economists.
Michael Smythe's column this morning had an interesting piece on the BC budget. Smythe editorializes that "the economic slowdown has ripped a $3-billion hole in his budget, which might force the government to do a little trimming of "discretionary" spending to avoid a deficit."
Ripped and forced, oh my how terrible. How could the government do "a little trimming" when so much money is involved? You would think, based on the inflammatory comments of Mike Smythe, that a $3-billion hole in the budget must mean financial Armageddon for British Columbia!
Well, the first rule of journalism is not to let the truth get in the way of a good story.
Here's what BC's Finance Minister Colin Hansen actually said, "the weaker economic outlook clearly means lower revenues going forward, in excess of $3 billion over the three years of the current fiscal plan."
Yes, $3-billion is a whole lot of money. But you need to view the $3-billion in the context of the provincial budget over the next three years. It's a reduction of $3-billion over the next 3 years. It's interesting to read that Mike Smythe failed to mention that the $3-billion decline in revenues is over a 3 year period. I guess he just missed it, or is he up to something else?
More importantly, lets look at the $3-billion in comparison to the spring forecasts.
The BC Government tabled a budget in the spring that said, "total government revenue is forecast at $39.4 billion in 2007/08, $38.5 billion in 2008/09, $39.9 billion in 2009/10, and $41.5 billion in 2010/11 — an average annual increase of 1.8 per cent over the next three years."
Surprise! The province was forecasting total revenues of $120-billion over the next three years! So, what does a $3-billion reduction or ripped from the budget as Mike Smythe so eloquently puts it, represent over the next three years. It means that our revenues will decline by 2.5% over the next three years.
Here is an example to put things into context. According to BC Stats, the average British Columbian earns $41,373 annually. A 2.5% reduction in annual income would reduce their income by $1,034. You can argue that a $1,000 is a lot or a little, however 2.5% is a fraction in comparison to total income.
Yes, $3-billion is a whole lot of money. However, $3-billion over 3 years, representing 2.5% of the next three provincial budgets isn't a catastrophe.
Except of course, if you are a columnist and not an economist.
Ripped and forced, oh my how terrible. How could the government do "a little trimming" when so much money is involved? You would think, based on the inflammatory comments of Mike Smythe, that a $3-billion hole in the budget must mean financial Armageddon for British Columbia!
Well, the first rule of journalism is not to let the truth get in the way of a good story.
Here's what BC's Finance Minister Colin Hansen actually said, "the weaker economic outlook clearly means lower revenues going forward, in excess of $3 billion over the three years of the current fiscal plan."
Yes, $3-billion is a whole lot of money. But you need to view the $3-billion in the context of the provincial budget over the next three years. It's a reduction of $3-billion over the next 3 years. It's interesting to read that Mike Smythe failed to mention that the $3-billion decline in revenues is over a 3 year period. I guess he just missed it, or is he up to something else?
More importantly, lets look at the $3-billion in comparison to the spring forecasts.
The BC Government tabled a budget in the spring that said, "total government revenue is forecast at $39.4 billion in 2007/08, $38.5 billion in 2008/09, $39.9 billion in 2009/10, and $41.5 billion in 2010/11 — an average annual increase of 1.8 per cent over the next three years."
Surprise! The province was forecasting total revenues of $120-billion over the next three years! So, what does a $3-billion reduction or ripped from the budget as Mike Smythe so eloquently puts it, represent over the next three years. It means that our revenues will decline by 2.5% over the next three years.
Here is an example to put things into context. According to BC Stats, the average British Columbian earns $41,373 annually. A 2.5% reduction in annual income would reduce their income by $1,034. You can argue that a $1,000 is a lot or a little, however 2.5% is a fraction in comparison to total income.
Yes, $3-billion is a whole lot of money. However, $3-billion over 3 years, representing 2.5% of the next three provincial budgets isn't a catastrophe.
Except of course, if you are a columnist and not an economist.
posted by Walter Schultz @ 8:00 PM
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