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Public Debt Operations in British Columbia since 1952
Published online by Cambridge University Press: 07 November 2014
Extract
In 1952, when a Social Credit Government assumed office in British Columbia, the net public debt stood at $190 million. On August 1, 1959, the public debt was declared nil, and a document confirming this declaration was issued by the Comptroller General and the Deputy Minister of Finance. To celebrate the debt-free status of the province, a bond-burning ceremony was held in Kelowna. In summing up the record of his Government, Premier Bennett stated: “It took 70 years to build the debt; it took 7 years of Social Credit to wipe it out.” To consolidate this claim and to affirm the continuing rectitude of the Government, the legislature, in the 1960 session, passed a bill cancelling the borrowing powers of the province.
Taken at their face value these developments suggest a high degree of fiscal integrity. Taken in conjunction with an increase in capital expenditures far in excess of the increased revenues of the province, they have aroused confusion and bitter opposition. The paradox of debt elimination coincident with increased capital expenditures will be the subject of this paper. We shall examine, firstly, the techniques and, secondly, the apparent objectives of the Social Credit Government.
- Type
- Articles
- Information
- Canadian Journal of Economics and Political Science/Revue canadienne de economiques et science politique , Volume 27 , Issue 1 , February 1961 , pp. 64 - 71
- Copyright
- Copyright © Canadian Political Science Association 1961
References
1 Budget Speech, 1952, 14.
2 A Review of Resources, Production and Government Finances (Victoria: Province of British Columbia, 08, 1959), 38.Google Scholar
3 “Debt Free B.C. to Cut Taxes in '59,” Victoria Daily Times, 07 16, 1957, 3.Google Scholar
4 Votes and Proceedings of the Legislative Assembly of British Columbia, March 11, 1960. This bill limited borrowings to those which could be repaid within the fiscal year in which they were contracted.
5 Budget Speech, 1954, 21.
6 This is particularly evident in the allocation of funds between health and welfare on the one hand, and transportation and communication on the other. In 1951–2, health and welfare received 34 per cent of the budget expenditures on current account; transportation and communication received 16 per cent. In 1959–60, health and welfare was given 23 per cent; transportation and communication, 30 per cent.
7 Budget Speech, 1960, 48.
8 According to the Minister of Finance, “The guarantees initiated by this Government are either in respect to works and projects backed by immediate revenue returns with ultimate high profit yield, or in respect to services vital to the public good and involving participation by local government.” Budget Speech, 1955, 12.
9 Statutes of British Columbia (hereafter SBC), 1954, c. 30, pp. 135–6.Google Scholar
10 Ibid., c. 29, pp. 127–34.
11 Had the Government not insisted on the Railway's completely self-sufficient character, and especially on its profitableness, it is likely that the debt reorganization would have been more readily accepted by the Opposition.
12 SBC, 1953, c. 37, pp. 307–15.Google Scholar
13 Budget Speech, 1960, 47.
14 “Toll Road Operates in the Red,” Financial Post, 03 26, 1960, 67.Google Scholar
15 Carswell, Roger E., “Road Proposals in the United States,” Canadian Tax Journal, 09-Oct, 1955, 356 ff.Google Scholar
16 In its Financial Statistics of Provincial Governments (Ottawa, 1958).Google Scholar
17 SBC, 1953, c. 33, pp. 181–6Google Scholar; and 1954, c. 37, pp. 199–202.
18 $95 million as of Dec. 31, 1959 (Budget Speech, 1960) plus $22 million borrowed in 1960 (according to unpublished figures supplied by the Department of Education).
19 Budget Speech, 1951, 76.
20 Public Accounts, 1952–3.
21 Budget Speech, 1960, Table 14.
22 The estimate of the sum of the debts of the PGE ($113 million), the Toll Authority ($85 million), and the Government's share of the school debt (approximately $58 million).
23 Budget Speech, 1955, 12. This equating of practices, similar in kind but dissimilar in magnitude, has been called by Arthur Koestler “the fallacy of the unequal equation.”
24 Ibid., 1959, 18.
25 Douglas, C. H., The Monopoly of Credit (Liverpool: K.R.P. Publications, 1951), chap. IV.Google Scholar
26 Douglas, C. H., Social Credit (London, 1934), chaps, VI and VII.Google Scholar
27 See especially Hattersley, C. M., Wealth, Want and War (Mexborough, England: The Social Credit Co-ordinating Centre, 1953), chap. III.Google Scholar
28 Social Credit Association of Canada, Social Credit Manual (Ottawa, 1958), 33.Google Scholar
29 Budget Speech, 1950, 65.
30 Ibid., 1960, 44.
31 “Debt Free B.C. to Cut Taxes in '59,” Victoria Daily Times, 07 16, 1957, 3.Google Scholar
32 “Bennett's Arrow Kills Debt,” Vancouver Daily Province, Aug. 3, 1959.
33 Budget Speech, 1952.
34 Under the system of accounting used by the province, these interest charges cannot be pin-pointed. One can assume, however, that on the Government's share of the total net indebtedness of $117 million, at least $2 million must be attributed to interest charges payable by the Government.
35 Budget Speech, 1960, 53.
36 These revenues in 1959 amounted to $3.4 million. Ibid., 1959.
37 According to Government sources, assets have increased from $189 million in 1952 to $466 million in 1960. Ibid., 1960.
38 “British Columbia Really Debt Free?” Financial Post, 02 28, 1959, 4.Google Scholar
39 “The Debt Liquidation in British Columbia,” Financial Times (Montreal), 08 7, 1959, 7.Google Scholar
40 Unpublished information supplied by Dept. of Education.
41 “B.C. Bonds Unpopular on Market,” Daily Colonist, 11 29, 1959, 5.Google Scholar
42 Budget Speech, I960, 20. While this 5 per cent rate is comparable to the six-year average rate of the Canada Savings Bond issue of the same period, features of the PGE bonds made them particularly attractive to the public. As a result of special provisions for resale by the market at no cost to the Railway, none of these bonds has been redeemed.
43 “Bennett Plans Bond Issue Every Year,” Vancouver Daily Sun, 05 7, 1960, 20.Google Scholar
44 Budget Speech, 1959, 37.
45 Ibid., 1957, 56, 58.
46 Ibid., 1960, 53.
47 In this year a budget surplus of $28 million was offset by a net increase in agency liabilities of $26 million.