Fiscal house is in order

MLA REPORT: B.C.'s triple-A credit rating saves taxpayers money

You may have seen recently that B.C.’s provincial triple-A credit rating – the highest possible – was re-affirmed by two major credit ratings agencies, S&P and Moodys.

Obviously, a high credit rating is better than a bad one.  But for everyday people on the street, it’s not always clear what difference that makes on a day-to-day basis.

The provincial government maintaining a triple-A credit rating is just like having a good personal credit rating. When you need to borrow money – say, for a big project you can’t cover out of pocket – it’s significantly cheaper.

With bad credit, borrowing is expensive, because lenders don’t feel completely confident you’ll repay the entire sum. So, they protect themselves with higher interest rates.

When a government has a poor credit rating, it has immediate and serious consequences for its citizens. When governments need to borrow money, they pay interest like anyone else. That interest is paid for by taxpayers. It goes without saying that money spent on interest is not available for things like health care, road improvement projects, and building more schools.

Governments with a poor credit rating face a choice: spend less and get their budgets under control, or just keep racking up the bills and interest by spending still more. The former can be unpopular, but the latter leads to ruin.

It’s worth remembering the years British Columbia was seen as an economic basket case, reflected in successive credit rating downgrades.

If you were here during the ‘90s, you remember an economy that struggled while the rest of the continent reaped the rewards of an economic boom. People left in droves. An irresponsible government, which spends recklessly and drives away investment, acts like the Pied Piper in reverse.

Had B.C. continued down that path of sustained, unchecked spending, the result would be much worse than just short-term belt-tightening. As our neighbours in Ontario are discovering, austerity isn’t just a European problem limited to places like Greece and Spain.

It’s no stretch to say this government was elected to fix our economic situation – to clean up the mess. Our strong fiscal management received outside validation, and by November 2004 B.C. had received the first of seven credit rating upgrades.

A good credit rating is also a strong signal to investors that B.C. is a safe, smart bet. In a competitive global economy, attracting investors is crucial.  Most British Columbians work for private companies.  New investment is key to protecting and creating jobs in every region of the province, which in turn supports the public services British Columbians want.

When we formed government in 2001, B.C. had just finished one of the worst decades of fiscal management, had received multiple downgrades, and was one of the least competitive provinces with high taxes and regulation.

I’m proud to say that’s no longer the case.

Visit Eric’s website at www.ericfostermla.bc.ca