With the B.C. government facing a shortfall of $1.1 billion over the next three years due to lower than expected natural gas royalties, finance minister Mike de Jong said he will impose a hiring freeze and a wage freeze at the public service managerial level in order to table a balanced budget in February.

Currently Victoria is looking at a $241-million deficit for next year, but the Liberal government is committed to balancing its February budget and that means belt-tightening for the provincial government, he warned.

With the "primary focus" on maintaining services to families, the finance department's strategy will include reducing operating costs as much as possible, he added.

"I know how families have to respond to decreased income - they have to adjust, to cut back on everything but the most essential, and that's what we're going to do," said de Jong.

That means no wage hikes for public sectors managers in areas such as education and health.

"I don't like having to do that - public servants are dedicated and do important work, and I want to reward that, but we also have to respect the taxpayers," said de Jong. "I don't believe in spending more than you take in every year."

Victoria will also impose an immediate hiring freeze in government.

In that context, the government will review its mandate as it prepares for union negotiations, said the minister, also the Abbotsford West MLA.

The alternative "favoured by the NDP" would be to incur a deficit, he said, a move that would "impose that burden on to future generations."

De Jong blamed a drop in natural gas prices "almost exclusively" for the dismal revenue projections.

Forecasted government revenues from natural gas royalties for the 2012-15 period were an estimated $1.9 billion.

But due to the glut of natural gas and the ensuing drop in prices, and lower royalties from other resources, the new projection is down by $1.14 billion to just $800,000 million, the government said in its quarterly report released last week.

New Democratic Party finance critic Bruce Ralston said he warned the government about its natural gas projections in May.

"I said to the minister that the risk seemed to me to be much more on the downside, given the world is awash in shale gas," he said Thursday. "They gambled on a price on natural gas and now that hasn't happened."

B.C. Conservative Party leader John Cummins said he believes the government is overplaying the crisis, adding documents released Thursday show that projected growth in the B.C. economy has improved since the February budget.

"The fact is that B.C.'s economy is doing better than the B.C. Liberals care to admit," Cummins said in a news release.

De Jong said there is some good news, given is that B.C. retains a triple-A credit rating, and its debt ratio to gross domestic product is "among the best."

B.C.'s fortunes should improve once liquefied natural gas goes online to Asian-Pacific markets such as Japan, which is looking to alternatives to nuclear power, "which is why we need to get those plants up and running," said de Jong.

The provincial government will also ramp up its efforts to tap new markets in which to sell B.C. goods, especially in Asia.

"B.C. is comparatively better off than other provinces because of our market diversity," he said. That has helped the province become a leader in job creation in Canada, de Jong said, with 53,000 jobs in the past year.

Twelve years ago, 70 per cent of B.C. exports went to the United States, but today that is down to 43 per cent, he noted. B.C. timber that went almost exclusively to the U.S. is now shipped to China, where the appetite for timber and value-added wood is expected to grow, said the former forestry minister.

De Jong added there will be greater efforts to break into India with B.C. goods such as Fraser Valley blueberries, which are now started to be sold in the South Asian continent.

"[China] has been a huge success story. What we did in China I believe we'll do in India," he said.

He admits that compared to other western exporters, B.C. has been slow off the mark to court India, "but we're going to work to change that."

- with files from the Vancouver Sun

CToth@abbotsfordtimes.com