REALITY CHECK: B.C. Liberals go to great lengths to justify hospital announcements, fail to provide actual funding
The claim by the Liberal premier that the capital funding for a new St. Paul’s Hospital was actually in the 2012 budget was inaccurate, say New Democrats.
And the final explanation the government landed on points to a financial practice that makes little economic sense, and has been criticized by B.C.'s auditor general.
Here is a chronicle of the Liberals' failed attempt to show Wednesday's announcement had any substance at all:
No initial mention of a funding source
- The news release announcing a ‘new’ concept plan for St. Paul’s contained no mention of dollar figures for construction. Typically when the government announces an actual funding commitment, the dollar figure is trumpeted in the headline and the news release lead.
Premier’s claim it was in budget 2012 is unsubstantiated
- Only after several questions from reporters did the premier offer up the $500 million figure.
- Premier Clark said later: “We’ve budgeted for it in Budget 2012, and that’s better than the cheque is in the mail. It means the cheque has arrived on the doorstep.” She continued, “That money is there in Budget 2012.”
- But Table 1.19 (Page 40) of the Budget 2012 document outlines capital funding commitments of more than $50 million for the next three years. There is no mention of St. Paul’s or of the $750 million the health minister said a day earlier would be spent on Royal Columbian Hospital.
- Later, a health ministry spokesperson said the money is built into the government’s capital building fund, that the money will be spent over five to seven years, and that “the annual expenditures will be reflected in future budgets as they are incurred."
- The CEO of Providence Health noted that she had not been made aware of specific funding commitments, giving rise to the question of how the head of an organization was not aware that $500 million was already dedicated to a project in her balliwick.
Liberals' clarification leads to questions of fiscal management
- Finally, in the Vancouver Sun a government staff person attempted to clarify the premier’s funding claim by saying they are bulk borrowing the $500 million while interest rates are low.
- In Sept., 2011, British Columbia’s Auditor General John Doyle released Observations on Financial Reporting: Summary Financial Statements 2010/11, where he criticized bulk borrowing saying, “In reality, the interest costs are generally well in excess of any income earned, so there is a net carrying cost. This means the warehouse debt is not completely self-supporting.”
New Democrat health critic Mike Farnworth: “This is a Liberal government fairly desperate to change the channel, but confusing, often contradictory statements about how a capital project will be paid for is a bad way to govern. British Columbians are looking for a government with a plan, not just empty photo-ops.”
New Democrat finance critic Bruce Ralston: “The Liberals plan to borrow hundreds of millions of dollars to be spent over several years. The length of the borrowing period means taxpayers will still lose more in the long run. It just isn’t sound economic management. It’s clear that the Liberals did not have the money for their announcement. When they were caught off-guard with relatively obvious questions such as how they plan to pay for it, they failed to provide a reasonable answer.”