B.C. Liberals defend timing of budget deficit

Liberal Premier Gordon Campbell and Finance Minister Colin Hansen insist they did not deceive the public about the size of B.C.'s deficit.

The embattled minister has been trying to explain how a projected $495-million deficit ballooned into a $2.8-billion deficit, which he announced Tuesday in an update to the provincial budget.

Hansen said he was told during the campaign in the lead-up to a provincial election in May that revenues had dipped by about $300 million.

"I took that to mean that would be annual, over the entire calendar year."

Hansen said he was confident the government could handle the shortfalls and still keep the deficit at $495 million.

"At no time did finance officials suggest to me that that $495-million deficit was not doable."

The minister said two days after the Liberals were elected to a third straight term on May 12, he was told the revenue shortfall would be more than $1.1 billion.

But Hansen said he still believed the province could keep the deficit down because it had received an offer from Ottawa that would give the province $1.6 billion if it implemented a harmonized sales tax.

"In late May, as we began discussions with the federal government with regard to the possibility of us changing our position on the harmonized sales tax, it became apparent to us that the federal government was putting $1.6 billion on the table," Hansen told the legislature on Wednesday afternoon.

"So at the time of the June 10 swearing-in, I was already at that point convinced in my own mind that a shift to HST would be important for British Columbia and that I would be recommending that going forward," said Hansen.

"At the time, I was also of the impression that we would have to take the total $1.6 billion in one fiscal year. We have since actually negotiated with the federal government to allow us to spread that over a greater period of time," he said.

However, the Opposition New Democrats said that's just not believable.

"There is not one single person in British Columbia who believes that bafflegab," said New Westminster MP Dawn Black.

The NDP has accused the government of deceiving British Columbians, saying Hansen and Campbell knew during the campaign that finances were falling apart, but they didn't tell the public.

When he was cornered by reporters while leaving question period Wednesday, Campbell stuck by Hansen, saying he still has confidence in his minister.

The deficit timeline

• Feb. 17:  Finance Minister Colin Hansen introduces a budget for 2009/2010, projecting a deficit of $495 million.
• April 14: The provincial election campaign begins.
• April 23: After an election debate, Gordon Campbell tells reporters, "The deficit for 2009/10 will be $495 million maximum."
• Mid-campaign: The finance minister has what he later describes as a casual conversation with his deputy minister. The deputy tells him the revenue estimates in the budget may be off by $200 to $300 million. Hansen tells neither the premier nor the public of the conversation.
• May 12: The B.C. Liberals are re-elected with a majority.  
• Later that week: Ministry officials do formal projections and confirm the shortfall now stands at 1.1 billion. Again, the public is told nothing.
• Late May: Hansen says he had a discussion around this time with the federal government about introducing the HST in B.C. in exchange for $1.6 billion, but said nothing to the public at the time.
• June 10: Hansen is once again sworn in as finance minister. He tells reporters, "Given what we know today, if I were in a position to table a budget today, it would be a deficit of $495 million or less."
• July 9: Hansen finally admits he won't meet the deficit target saying, "I can no longer say that I'm optimistic."
• July 23: Hansen and Campbell announce the province will introduce the new Harmonized Sales Tax in July, 2010. The province will receive $1.6 billion from the federal government to ease the transition.
• Aug. 20: Hansen says the province will have to amend its balanced budget law to run a deficit for four years, rather than two.
• Sept. 1: Hansen introduces a fiscal update that projects a deficit of $2.8 billion. He reveals the conversation he had with his deputy during the election campaign in which the deputy warned of the shortfall in revenues.  
• Sept. 2: Hansen reveals ministry officials told him after the election that the shortfall had grown to $1.1 billion, but says he still thought the deficit target was achievable, since by this time he knew of the possible offer of $1.6 billion from Ottawa to implement the HST.