acton@ubc-cs.UUCP (Donald Acton) (10/25/85)
With respect to my statement that Stats Can reported a $460 dollar deficit when the NDP left office in late 1975 (Dec 22nd to be exact) <2675@watcgl.UUCP> jchapman@watcgl.UUCP writes: >Well I won't take issue with Stats. Can. figures here. I do remember >the controversy at the time though and as I recall the Socreds were >claiming the NDP had left a debt of around $150million and the NDP >claimed they left a surplus of $40million - it seemed to depend on >which bookkeeping method used and whether startup costs of ICBC (later >to become a profit making operation) were to be included. > The NDP's budget for 1975-76 estimated that there would be a surplus of a half million dollars, not even close to the $40 million you claim. The next budget, a Socred one, for 76-77 said that it appeared there was going to be a deficit of $560million for 75-76 which is $100 million more than it actually turned out to be. In the budget speech the Finance Minister said the discrepancy between the actual deficit and what was predicted a year earlier could be attributed to 1) a shortfall of >$220 million in revenues and 2) an underestimation by more than $200 of expenses. It is true that ICBC had a deficit in fiscal 75 but it was only $175 million, hardly $460 million. ICBC was started in 73 so the initial startup costs to cover infrastructure would not appear in 75. However, the government placed restrictions on ICBC that forced it to keep its rates below market value hence the deficit in 75. To cover this debt, and in the process subsidize everyones insurance, the government gave ICBC the money it needed. That money was gone and couldn't be spent on anything else so it is rightfully an expense of the government's, even if it hadn't been originally included in the 75 budget. When the Socreds gave $400 million to BC Rail a year or so ago they didn't claim that that didn't add to government expenses and I think the NDP would have been fully justified in screaming at them if they had claimed it didn't add to the deficit. As for ICBC being a profit maker that is very debatable. When it does make a profit it doesn't turn the money over to the government to use in general revenues. Instead, it rolls the profits over to the next year and uses them to minimize the inevitable increase in rates. When assessing the success or failure of ICBC one should also keep in mind that unlike private insurance companies it 1) pays no taxes on profits, 2) it pays no municipal taxes, 3) it doesn't collect a premium tax for the government on each policy (ie a sales tax on the insurance) and 4) it gets the revenues from fines levied due to points (keep in mind that in other provinces these fines go into general revenues). All of these measures are effectively subsidies to ICBC and they result in a reduction in government revenues that wouldn't occur if there was private insurance. In the book "On the Insurance Corporation of B.C.: Public Monopolies and the Public Interest" it estimates that if ICBC didn't have these subsidies its rates would have to be 35% higher. With reference to the governments of Ontario and BC John says: >By no stretch of the imagination can either of those two governments be >considered "socialist" - which was/is my point; your comment regarding >socialists and spending was both inaccurate and unwarranted. In my book these governments have racked up deficits because they insist on pursuing socialist policies. They may not claim to be socialists but when they buy oil companies, subsidize wine makers, start coal mines, and engage in huge make work projects like EXPO 86 and the Coquahalla (sp?) Highway then they certainly aren't free enterprisers. I must admit that the NDP aren't too happy with the spending in some of these areas but they have their own idea of what a make work project is. Donald Acton