How B.C. got into this fiscal mess

0:00America leads the world in medicine development. It matters. We get new medicines first, nearly three years faster. Five million Americans go to work because we make medicines here at home, and not relying on other countries keeps us safe. But China is racing to overtake us. Will we let them? Or will we choose to stay ahead? When America leads, America cures. Let's tell Washington to keep us in the lead. Learn how at americacures.com. Pay for by Farma. This is BC and the Red on the Jazz Joe Hall Show, presented by the Business Council of British Columbia, celebrating 60 years in business. So as we wrap up our month-long series BC and the Red, we wanted to speak with someone who understands how provincial budgets are actually built, the trade-offs, the pressure behind closed doors, and the signal a budget sends to investors and the public. Carol Taylor knows that world well, a veteran broadcaster,

1:00former Vancouver City Council, and former BC Finance Minister. She delivered four surplus budgets. She later chaired Canada's Economic Advisory Council during the global financial crisis and served as Chancellor of Simon Fraser at universities. She's also an officer of the order of Canada. Carol Taylor, good to see you. Thanks for dropping by. Good to see you, Jazz. I was very happy when we heard that you could make it. I really appreciate your time and your insight and your experience. Let's start just bigger picture for a moment. When you look at the current financial challenges before our province, what goes through your mind as a former Finance Minister? Well, first of all, I think that, you know, math can be very complicated. Like math can be quantum physics. It can be calculus. But the math of debt and deficit is really simple. And I guess I'm shocked that despite the, what happened with the 90s and the NDP government and all the financial problems and the mismanagement, that here we're going again. I mean, look at this deficit

2:04of $13.3 billion. And that just came about in the last couple of years because Horgan left a $6 billion surplus. So, you know, something is wrong because any household that's listening, they know, okay, I've got this much money coming in and I've got these expenses. And if my expenses are way more than the money coming in, one of these days the bank is going to call and they're going to say, hey, this doesn't work. And so who's going to say that to the government? This is not working. Yeah. Now, governments often blame external pressures, as you know, trade disputes, tariffs, economic uncertainty. How much of this fiscal situation in your mind is external? And how much comes down to political choices made here at home? I think they're all political choices made here at home because I mean, let's face it, Trump's only been doing his tariff dance for a year. And this all started as soon as EB became the premier. And we started to go

3:05into this decline. And I've talked to economists who said they've never seen such a fast decline in financial situation as we've gotten BC. But a lot of the problems are, you know, things like policies. So there are policies that don't encourage businesses. There are regulations on top of regulations. There's no sense that you could grow your revenue some if you got business going. Did you see anything in that budget that said, oh, we're going to, we're going to really help business. We're going to get this going because we're only like about 1% at best GDP. Like we're just, you were just barely staying above a recession. And so when you're in that situation, the notion that you can spend like you're in a great surplus situation is just, it's just wrong. But you have to think about how, okay, if I don't want to cut everything, then I've got to grow revenue. And they've done nothing to grow revenue. And the other thing they did on the business negative

4:08side is to bring in all these taxes. So, so business doesn't get any encouragement to say, let's get the economy going. So we can bring more revenue in and we can pay more for healthcare. No, but we're also going to whack you with more taxes. I can't see the logic in this. One of the things you hear behind the scenes is, look, it's not just Mr. Eby, Mr. Horgan also signed deals with the public service, which were quite generous. Mr. Eby has as well. And I don't regret, you know, you should be paying public servants a fair share. Absolutely. When you were at Finance Minister, and you also had to make deals with, with all the unions, and I was right before the 2010 Olympics, walked me through sort of what your mindset was in regards to getting a deal done. But at the same time, look at the numbers saying, this is how much money I can spend. I can't go beyond that. Walk me through sort of what you were thinking, what your team was thinking. So I was named Finance Minister in June. And within about a week, somebody came up and said,

5:12oh, by the way, you're also responsible for all the labor negotiations. And oh, by the way, they're all due on March 31st. And, you know, the whole idea of what could happen if the province goes down on one day. And I said, why isn't it in labor? Well, it's all finance. It's what you can afford. So fortunately, I had the best deputy minister in government, Tamara Vrooman, who's now running the airport. And she and I sat down and we just did some hard math. We looked, what could we afford? Let's start there. And we decided what we could afford. And then we said, we are going to tell all the unions exactly what we can afford. And then no negotiator said, no, no, no, no, that's not how it works. You say this. And then we say that. And we all, we said, no, that's not how we work, right? We know what we can afford. This is what we can afford. So we came out of the gate like that. And even a lot of our own people thought we were quite nuts. But then we said, okay, so that's the financial side. But let's talk policy.

6:17Because for every union, doctors, teachers, whatever, what could we do in policy that would make you happier to come to work? Because it's not just about money. And so that's what we ended up doing. And at one point, we had 60 tables going, we had 300,000 people. And we would say whether it was to the nurses or to teachers, whatever, are there policy things that are making your life miserable or harder? And could we change it? And so that was a big part of where we negotiated. And we stuck with our dollars. And I'll tell you, there were people in my own party who were not happy with me. There were people outside. No one is happy with you when you're a finance minister doing negotiations. But we were so clear in our intent what we could afford because we were determined to stay in surplus. And I think finally in about February, they started to believe us that, oh my god, she means that March 31st and the offers off the table. Wow. One of the other issues in this budget is

7:23just the PST. And we can talk about that after the break. But what I found interesting is they're hitting seniors for PST on cable. These little things, and I know the finance officials always like to tweak with the PST. But it does speak also to internal pressures, whether it's from the bureaucracy or from your own caucus and cabinet colleagues. How much pressure did you have from internally from your colleagues who say, I want this project on or, hey, can you look at this, I need this little bit of money? Or it could even be special interest groups. And everybody is coming to you always your finance minister for dollars. Walk me through some of the internal challenges that you may have without mentioning names of course. So if you accept the job of being finance minister, you have to accept the fact that you're going to have to say no. You have to say no to so many things. And you have to be clear in your own head what's driving you? What are the values driving you? And what are the values for the province? And where are you trying to get to?

8:26And but it's not easy because I had lots of good colleagues that just thought I was doing an awful job because I was, you know, towing the line and saying, we've got to stay in surplus and we've got to do this properly. But your point about seniors, I think seniors just got whacked in this budget. I mean, they got whacked with the PST and all kinds of little things, right? Just I found it fascinating. I know it's a financial document, but I also view these budgets should have a political lens. It's almost like nobody in that party, the NDP government said, let's look at this through a political lens. Am I wrong? Did you, did you look at your, your, your finance documents as a political, through a political lens as well? I always tried to have a theme for the budgets because I did a few of them. And you know, one year it was housing. So we tried to get a lot of the policies working around housing. When it was the green budget, we tried to get all of the different ministries coming up with ideas for green. And so I think you always have to have an idea of what

9:31you're trying to do to help your community and where the source spots are and how to, how to lift people up. But it is, it's a tough job to say no to some very good causes. But you have, why you would take on seniors when our seniors are getting hit left, right, and center. I mean, they, they put seven of the projects for long-term care beds on hold. What, there was a funny word that they used. Yes, I know, I can't help you, but I accept it. We'll relook at that sort of thing. But you, and then hitting them, seniors, many are on fixed incomes, like they don't have pennies to spare. And to say, we're going to hit your landline. If you, if you're going knitting and you, that's going to cost you. And if you get your shoes fixed, that's going to cost you. And landlines, which most seniors are told they should have a landline. Yes. I don't know why it seemed very mean to me. How would you describe this particular budget in regards to where it stands in the

10:34budgets that you've seen? Worst I've ever seen? Really? And it really shocked me that I would say that. But I watched it closely because like you, when you're covering something, you're looking at all the details. But, you know, Jazz, I've never seen headlines that are so consistent. And I was collecting them because I was doing an interview on this. And, you know, EB is, we'll go down in history as the worst fiscal manager in BC's history. Or, EB has lost any financial credibility. I mean, and it was this party and that party, but all the headlines were the same. I mean, we all get some bad headlines, but all of them were saying, this is a disaster. And so I think what I see politics playing right now is you get these, oh, look at this little shiny thing. And so whether it's some, I'll go to India or whether it's Trump or something else, we'll do degolight savings

11:40time or whatever it is. So that that covers the media and we all get distracted and we forget that we are really in financial difficulties. I remember when Kretchen got handed a mess. And it was, it was really a mess. And there was only one way out of it. And it is brutal. And a good friend of mine, John Manley, who had been deputy prime minister, finance minister, everything minister. He, at that time, he was industry minister. And he told me the story that Kretchen called him into his office. Manley goes in and Kretchen says, John, your budget's cut in half. And John said, what? Like I've got hundreds of organizations under industry that I'm supporting and everything. That's it. That's what we've got to do. And Kretchen fortunately had someone like David Dodge, who was with Paul Martin, who were strong enough to stand up to their cabinet colleagues. And Kretchen backed them. And he said, this is not going to be nice. This is not going to be good.

12:44So I guess what bothers me is we've had these examples. Let's not go there. Let's not get it so bad that we have to be brutal. But I think that where we're headed now, whoever the next government is, they are going to have a mess to walk into. So we only have about two and a half minutes left. But broadly speaking, two or three things you would recommend that whoever the next finance minister is, what they would do, what they need to do to get us out of this mess. I would not take on the job of finance, mister, unless the premier promised to back the hard decisions that a finance minister has to make. Because it's kind of pointless if you're out there trying to do the right thing and it's not going to be supported. So that's number one. And I do think that it probably will have to be a change of leadership, change of government, because I don't think that premier EB, he doesn't think the way I do. I don't think he thinks that this is such a big deal. But it is a really big deal. I'm waiting for the rating agencies who are

13:50about to come out in the next few weeks. I used to watch them so closely as finance, mister, because although I've seen certain recent ministers just f**king them off, when they downgrade you, that means the investors around the world and it's global. They look and they go, oh, okay, well, I'm not sure I'm going to invest in BC, but if I am, I'm going to charge more interest, it goes higher. And so I think what their downgrades have been saying is this is not sustainable, this is a bad track. BC is not a good place to invest. Yeah, well, it's tough, but we've got to do it. And Jack Finlesson was on about a month ago, and he said, we were probably going to think about five or ten years today. He got ourselves out of this, but you got to do it, right? At the end of the day. Carol, always good to see you. Thank you so much for your time and insights today. Thanks. Great to see you. Good to see you as well. That's Carol Till a former BC finance minister joining us for our series BC in the Red. BC in the Red. Presented by the Business Council of

14:52British Columbia, celebrating 60 years in business. Hello there. Thursday's on global. I'm Madeline Matlock. She's the lawyer with a legendary name. Don't underestimate this Matlock. This one is a shark. You know it, baby. The one you can trust, even if she has to bend the rules. Things aren't always as black and white as they seem. Took cracker case. This is how I get things done. Any winning actress Kathy Bates is Matlock. All new Thursday's at 90's turn on global. Stream on Stack TV.