Wednesday, March 3, 2010

BC Budget - Someday We Need to be Debt Free

The budget has not been well received by much of the people that commented on it in the media. I personally found it to be about what I expected.

One aspect no one has highlighted is the rise in the cost of debt management. The 2009/10 cost of debt management was $1,186,000,000 in 2010/11 it is projected to rise to $1,300.595,000. This is a rise of $115,000,000 or 9%. This is the horrible reality of the debt we carry, it costs us money, a lot of money. In 2011/12 it is projected to rise to $1,379,000,000 and $1,432,000,000 the year after.

The cost of debt management will surpass the money available to the Ministry of Children and Family Development this year. Consider that, we are spending more on debts costs than we pay for the core social services ministry.

The total take for government from the lotteries is not enough to cover the cost of servicing the debt.

Were it not for the cost of debt, BC would have a surplus budget next year.

The rise by $115,000,000 this year means there are fewer options for what government can do. This is an expense that can not be avoided and is rising. We receive fewer government services than we should because there is a lot of interest being paid. Is it really in our interests as province to be paying interest on debts?

No one is willing to say their interest could or should be cut. Everyone says "but look at how little this is in the overall budget". But good and useful programs are suffering because we do not have the revenue coming in to fund them. Borrowing more money is a short term fix but only passes the problem onto people in future years and increases the amount going to service debt. Fundamentally it is an issue of ethics, we do not have ethically right to burden people in the future with our lack of will to deal with a problem

The problems of today are from us as a province not being willing to push for a debt free province. Not only should BC have a plan to debt free, it should develop a 20 year plan to have enough of an accumulated surplus to tide any government over a recession. Being free of debt will allow the government to deliver more services while at the same time not have to raise taxes.

It sucks at the moment, but we have to recognize that the decisions in the past to accumulate the debt have caused us to have more budget problems today than we should have. $1,300,000,000 is a lot of money, it is shame to see it going to paying for debt costs and not be providing us with anything tangible.

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