Something to remember when voting next month and beyond.
The BC Government has presented its financial outlook for this and two more years. This year it is expected to be in a nearly $8 billion deficit, with more of the same thing to follow.
There are two forces creating this and future deficits. The first is a public non-stop demand that more money be spent on socially wanted and maybe deserving issues. The second is a decrease in income from goods and services produced in the province.
To ease some of the difficulty these financial deficit challenges present, the Provincial Government has chosen to download responsibilities to local governments who have the ability to increase their financings using the “regressive” taxation model.
This is a deliberate “theft of wealth”, represented by rising property tax rates. For us, the best example is our burgeoning taxation for the Nanaimo Regional Hospital expansion.
The BC Finance Minister tries to ease the drama by using the debt to GDP ratio and comparing BC to other provinces with higher ratios.
One of the weakness of using this measure is the way our provincial GDP is determined, some of the same manipulation used to determine the rates of inflation.
Another temporary deferment method is the use of contracts. A current example would be the “Handy Dart” system and the contracts with private power producers worth tens of billions of dollars signed on behalf of everyone by BC Hydro.
A discussion of the issue of deficits is usually very difficult to have without generating anger, but deferment means the “hole” gets deeper and very troubling. The best example I can think of now is at the Canada Pension Plan Investment Board. This program is an example of ” abuse” of the use made of a regressive taxation system.
To put “meat on the bone”, I quote from the Independent Auditor reports of 2006 and 2024. In 2006 the CPP IB had reported deficit of about $24 million. By 2024 the total deficit number was/is $177,985 millions. Financing cost of this deferred “LOSS” is now over $ 6 billion of every ones hard earned income.
Several of us have pestered the federal government to remove this pending loss from our universal and important pension plan, ever since 2009, but to no avail. This example is what citizens get when a regressive taxation system is established and not much talked about. This encourages more of the same.
Categories: Economics
in-sights.ca 
BC amortizing everything.?
Auditor general telling BCHydro wheres your anti fraud checking?
BCHydro peaked demand 22 years ago and flatened but hydro kept building and p3 ing electricity contracts?
Pretty sad since we just got pipline upgrade and lng coming.zero public wealth annually there?
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I’m not usually allowed out the door with much more than return transit fare jingling due to my lack of financial acumen so my understanding of Erik’s point is probably off the mark. But in the spirit of dumb questions and being corrected to gain further insight, here goes.
I think I get the deferred debt piece re the provincial government. In BC Hydro’s case for instance, the Utilities Commission is by legislation supposed to set rates in concert with BC Hydro that allows Hydro to cover capital and operating costs. But successive governments have intervened and through various schemes deferred the collection of those costs from the ratepayer. Hydro shows the uncollected debt we owe as an asset, we pay unrealistically low current rates, the government and Hydro look good politically for the moment, and the debt we owe becomes intergenerational. Our grandkids will be so proud of us.
As for the Canada Pension Plan, if the bus were stopped today the plan would be in a net loss position of billions of dollars, because the asset fund itself does not contain nearly enough to satisfy the future pensions lawfully obligated. But the reason most people aren’t jumping off the nearest bridge is that when future contributions are added to the calculation, the net asset fund amount plus the future contributions roughly matches the future obligations. In the interim, and with the belief that the bus will never stop, the difference is recorded as an “unfunded” liability which, as Erik points out, has grown exponentially, no doubt as a result of the boomer wave and the regressive premium assessment he mentions. Although we’re assured the current scheme is solid for the next seventy-five years many feel we’re again handing a ticking time bomb to our descendants.
I understand that as the administrator of the direct interface with prospective and actual pensioners the federal government takes various administrative fees, and the investment board takes a cut to cover the cost of investing the fund, but what I’m having difficulty understanding is why there would be financing costs of $6Billion attached to the future liability.
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