B.C. budget overestimates natural gas revenue: consultant

The B.C. government’s budget forecasts for natural gas should be lowered, according to a just-released report by economist and B.C. government consultant Tim O’Neill.

Yesterday, the government released the report in anticipation of the budget, scheduled to be released this afternoon.

Finance minister Mike de Jong has promised B.C. a balanced budget.

The government has spun the report as “a strong endorsement” of the 2013 budget by O’Neill, a former chief economist at the Bank of Montreal.

However, O’Neill’s report is more measured in its assessment of the budget, which it called “generally well-founded.”

“One specific revenue forecast, that for natural gas, warrants added caution and it is recommended that the natural gas price used for the revenue forecast be lowered to reflect that caution,” O’Neill said in the report.

In releasing the report, the government acknowledged that O’Neill made several recommendations, “including one significant suggestion on the natural gas price forecast that required a last-minute adjustment to the province’s fiscal plan.”

O’Neill’s report noted that the budget relied on private-sector forecasts of natural gas prices and commented that those forecasts have regularly missed their targets. He recommended that the budget should incorporate a natural gas price outlook at the lower end of private sector forecasts.

By Jenny Wagler, Business in Vancouver