NDP must clarify how it will pay for deal with Greens

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Appeared in the Vancouver Sun, June 17, 2017

The power-sharing deal struck by the NDP and Green Party means British Columbians could soon see an NDP minority government propped up by Green Party support. But if NDP Leader John Horgan becomes premier, the deal with Andrew Weaver’s Greens would commit the NDP to policies and government spending not part of the NDP’s election platform.

This raises an important question—will a Horgan-led government keep the NDP’s election promise to balance the budget, and if so, how?

On Election Day, more than 80 per cent of B.C. voters supported political parties (the Liberals and NDP) that promised consistent balanced budgets. The Greens are the only party that did not commit to balancing the budget every year while in power. But the initiatives outlined in the NDP-Green deal—including new spending initiatives—suggest British Columbians could be in store for budget deficits.

The deal does not provide details on how much the new policy commitments will cost. However, some of these policies come straight out of the Green Party platform, which contains cost estimates of the initiatives.

For example, the agreement commits a Horgan-led government to hiring new government workers. The Green Party’s platform puts the cost of increased staffing at public care homes (nursing homes, for example) at $200 million over four years and $100 million for additional social workers. Other new initiatives—a work experience program for students and skills training for some displaced workers—would cost more than $100 million over four years.

This new spending alone would put the NDP’s balanced budget pledge at risk. But there’s more. The NDP-Green deal calls for a basic income pilot similar to the one happening now in Ontario. (The Ontario version costs $50 million annually.)

Additional spending increases will be needed for other new commitments made by the NDP in their pact with the Greens including the creation of an essential prescription drugs program, an innovation commission and a new “task force” on the economy. Interestingly, according to the agreement, the budget for the latter two initiatives will be decided jointly between the NDP and Greens at a later date.

The new proposed spending means a Horgan-led government is unlikely to fulfill its balanced budget commitment—again, something the overwhelming majority of British Columbians voted for. To pay for the new spending required to gain support from the Greens, a Horgan-led government would either have to a) cut other spending, b) raise taxes or c) run a deficit.

However, the uncertainty—particularly from the potential for higher taxes—will undermine the province’s attractiveness as a place to do business.

Importantly, if a Horgan-led government decides to raise taxes to pay for new spending to appease the Greens, it will come on top of economically damaging tax increases (including personal, business, and carbon tax hikes) that are already proposed in the NDP platform.

Running a deficit and increasing government debt would also be problematic. After all, a deficit today is nothing more than a deferred tax that must be paid by taxpayers in the future.

Adding debt will leave businesses and households uncertain about future tax hikes and that uncertainty impedes investment and entrepreneurship today. Increased government debt can also lead to higher debt interest payments, which will take away resources from the public programs British Columbians value.

To alleviate some of the uncertainty in what has become an uncertain time in B.C. politics, and to inform British Columbians who are wondering about the future, the NDP should clarify whether it remains committed to a balanced budget and how it intends to pay for its deal with the Green Party.

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