Canada's Housing Bubble

Mar 01, 2010 Justine Hunter Globe and Mail

B.C. Finance Minister Colin Hansen took some bone-rattling hits in a short but punishing game of wheelchair rugby, a fitting prelude to the tough budget he'll deliver Tuesday.

Mr. Hansen strapped himself into a battered wheelchair for a scrimmage with some of the sport's top athletes – think bumper cars without the rubber bumpers.

“The press gallery is nothing compared to that scrum,” he said after the event.

It was a twist on the usual pre-budget photo opportunity in which the finance minister dons new shoes. Instead, Mr. Hansen handed over a personal cheque for $3,000 to pay for new wheels for athletes, a move aimed at drawing attention to the coming 2010 Vancouver Paralympic Games.

The rugby game was part of the last few moments of euphoria in the capital over Vancouver's Winter Olympics. In the afternoon, MLAs from both sides of the House rose to their feet for a singing of O Canada after Premier Gordon Campbell delivered his ode to the Games.

On Tuesday, however, the tone will be different when Mr. Hansen introduces a fiscal plan that cuts operational spending and turns off the taps on new stimulus projects. The B.C. government is grappling with health-care spending pressures that exceed even the rosiest of economic-growth projections.

Mr. Hansen was criticized for cutting amateur-sport funding in his last budget and he promised his government would not forsake these athletes on Tuesday. But this won't be a budget full of goodies. After giving up roughly $240-million in harmonized sales tax rebates in recent months, there is little room to move.

“This budget is still going to be a belt-tightening budget,” Mr. Hansen said. “We're starting to see the recovery settling in [but] our revenues are way down from what they were two years ago.”

He said the budget will focus on the needs of families and seek to leverage economic growth from the Games.

Jock Finlayson, chief economist for the B.C. Business Council, said British Columbians are bracing for a big letdown: “All the excitement of the Games comes to a shuddering halt now with the budget.”

Although economists predict B.C.'s economy will grow by almost 3 per cent this year, the B.C. Liberals have pledged to return to balanced budgets by the end of this term in office. After a record-breaking deficit last September, “that creates precious little manoeuvring room,” Mr. Finlayson observed.

More than 200,000 public-sector workers' contracts expire this year and the government has set a “net zero” wage-negotiating mandate. That won't preclude further layoffs.

While the government has promised to protect health care, education and the social safety net, front-line providers of those services expect cuts and higher fees. Teachers rallied outside Education Minister Margaret MacDiarmid's constituency office on Monday to proclaim a funding crisis.

“Deep cuts will come – from the classroom, to the libraries to funding the class-size and class-composition language – unless money is found,” warned Anne Guthrie Warman, president of the Vancouver Secondary Teachers' Association.

New Democratic Party Leader Carole James also focused on education in Question Period, pointing to proposed cuts in one school district that would have bus drivers filling in as special-education assistants in their spare time. “Reality will hit in the budget,” she said.

In the budget he tabled last September, Mr. Hansen sketched out a plan to wrestle spending to a standstill.

But in an interview as he was putting the final touches on Tuesday's budget, Mr. Hansen conceded that the three-year target to maintain zero growth of government spending – after accounting for inflation and the growth in population – would be “very difficult to obtain.”

He said he doesn't expect the same volatility as the past year but there is little room for tax cuts.

“Given where the deficit is at, we are certainly limited.”