BC NDP not impressed

The BC Liberal government says today’s budget maintains discipline by being balanced and supports economic growth and job creation.

The budget includes forecast surpluses in all three years of the fiscal plan and modest investments in priority areas, said Finance Minister Michael de Jong Feb. 18.

B.C. is forecast to end the fiscal year 2013-14 with a surplus of $175 million, with progressively larger surpluses forecast in all three years of the fiscal plan: $184 million in 2014-15;$206 million in 2015-16; $451 million in 2016-17.

While the fiscal plan shows continued spending discipline, modest surpluses allow government to make choices and ensure new spending is put into priority areas, states a Ministry of Finance press release. Within the budget, government is providing additional funding of $415 million to benefit B.C. families, help make life more affordable, and help stimulate economic growth and job creation, the release notes, highlighting Community Living B.C. getting incremental funding of $243 million over the three-year plan and an additional $15 million over three years for Ministry of Children and Family Development for children and youth with special needs.

An additional $15 million over three years is being allotted for increased RCMP policing costs and $6 million for legal aid-related services, while $29 million over three years is being provided to support the development of an LNG industry in B.C., including attracting investments to B.C. and supporting a stable environment for investment decisions; facilitating timely processing for regulatory and permitting requirements; and ensuring ongoing environmental protection, management and stewardship.

“B.C. has demonstrated that with hard work, due diligence and fiscal discipline, it is possible to achieve something that few other jurisdictions in Canada can claim to have today: a balanced budget. B.C. is now in the enviable position of having a balanced budget this year and in all three coming years of our fiscal plan,” said Minister de Jong.

The Official Opposition NDP charge the budget is a litany of mismanagement and fails British Columbians in a number of areas.

“This is a budget that fundamentally fails British Columbians as costs for hydro, medical service plan premiums, and car insurance continue to go up. Nothing is being done to address real issues like child poverty, unemployment and skills training,” said Columbia River – Revelstoke MLA Norm Macdonald.

British Columbia continues to have the highest rate of child poverty in the country and the province lost 8,500 private sector jobs last month. But while little is being done to use taxpayers’ money to make life better for British Columbians, B.C.’s debt is rising faster under Christy Clark than any premier in the province’s history, Macdonald stated in a press release.

“What is truly disturbing about this government’s record on financial matters is that we have skyrocketing debt, and very little to show for it. Health and education services are being cut due to a lack of funding,” Macdonald said. “And now, due to more than a decade of government interference, Crown Corporations that have traditionally operated with significant surpluses are struggling to stay afloat. This budget is a classic example of mismanagement of the province’s resources: taxpayers’ get less while paying much, much more.”

Minister de Jong argues that by maintaining fiscal discipline the government is beginning to generate “moderate surpluses” that will allow it to address more matters.

“Private sector economists are forecasting B.C. to be among the strongest economies in the country over the next couple of years,” he said. “This increasing economic growth is the result of the fiscal discipline we have demonstrated in the recent years, and it is beginning to generate the modest surpluses that allow us to continue to make investments that reflect the priorities of British Columbians.”

The government has also introduced legislation to implement the new B.C. Early Childhood Tax Benefit. Starting in April 2015, the benefit will provide $146 million annually to approximately 180,000 families with children under the age of six (up to $55 a month per eligible child). About 90 per cent of B.C. families with young children will be eligible, the Ministry of Finance (MOF) press release outlines.

Also, British Columbians buying their first home will pay less Property Transfer Tax, as the province is increasing the threshold for the first-time homebuyers program to $475,000 from $425,000, an exemption that can save the purchaser up to $7,500 when buying their first home.

The Ministry of Health budget will increase $2.5 billion over three years. Total health spending by function will reach $19.6 billion, or more than 42 per cent of all government expenses by 2016-17.

Taxes on tobacco will increase by 32 cents per pack, or $3.20 a carton, effective April 1, 2014. This increase is expected to generate an additional $50 million in annual revenue over the course of the fiscal plan. Government will dedicate a significant portion of these revenues to provide specified funding for cancer prevention and will work with the Canadian Cancer Society and other research partners to develop and implement a number of innovative cancer-prevention initiatives, the MOF release relates.

Government continues to develop and implement all the elements of a competitive tax and policy environment to assist with LNG development in B.C. To this end, government intends to introduce income-tax legislation later this year applicable to the LNG industry.

The LNG Income Tax will be a two-tier tax with a tier-one tax rate of 1.5 per cent and a tier-two rate of up to seven per cent, with the final rates to be determined and confirmed in legislation. The LNG Income Tax will apply to income from liquefaction of natural gas at LNG facilities in British Columbia.

The B.C. LNG income tax structure and rates are subject to approval of the legislature. Government intends to have legislation ready for introduction by fall 2014, once the complex drafting process is complete.

Regulations and additional legislation will follow in 2015.

“Our LNG income-tax-revenue framework strikes the right balance between the need to maximize the return to British Columbians, while also ensuring B.C. is an attractive and competitive place to develop LNG. The LNG revenue framework will deliver long-term benefits for British Columbia and provide industry with the certainty it requires to be successful.”

The independent British Columbia Economic Forecast Council forecasts provincial real GDP growth to be 2.3 per cent in 2014, 2.7 per cent in 2015 and an average of 2.7 per cent over 2016-2018. Government’s economic growth forecast is two per cent in 2014, 2.3 per cent in 2015 and 2.5 per cent in 2016 – a forecast that is prudent relative to the Economic Forecast Council.

The Economic Forecast Council’s forecast for provincial real GDP growth takes on new significance with the budget, the MOF suggests. Government’s Economic Stability Mandate offers employees the opportunity to benefit from B.C.’s economic growth through the Economic Stability Dividend. Under this agreement, employees will receive a wage increase equal to half of any percentage-point gain in real GDP growth above the Economic Forecast Council’s forecast published in the February budgets.

Major risks to the economic outlook include the potential for weakness in the U.S. economic recovery and slowing Asian demand. Additional risks include the ongoing sovereign debt situation in Europe and a fluctuating Canadian dollar.

Might the budget hold some future good news for School District No. 5, still trying to convince the provincial government to ante up for a replacement to Cranbrook’s Mount Baker Secondary School?

Spending on schools, hospitals and other infrastructure across the province over the next three years is expected to total $11 billion, the MOF states. This includes $1.5 billion to maintain, replace, renovate or expand K-12 facilities; $2.3 billion for capital spending by post-secondary institutions across B.C.; $2.6 billion on health-sector infrastructure; and $3.4 billion for transportation investments.

Revenue outlook

Total government revenue is forecast at $44.8 billion in 2014-15, $46 billion in 2015-16 and $47.5 billion in 2016-17. Revenue is expected to average 2.6 per cent annual growth over the next three years.

Expense outlook

Total expense over the three-year plan is forecast at $44.4 billion in 2014-15, $45.6 billion in 2015-16 and $46.7 billion in 2016-17 – an annual average increase of 2.2 per cent over the next three years.

Government is increasing program spending by $3 billion over the three-year fiscal plan (from $43.7 billion in 2013-14 to $46.7 billion by 2016-17).

Natural resources and the environment

Budget 2014 also provides $12 million in 2016-17 for silviculture, inventory, and forest and ecosystem health/restoration activities. This funding will increase silviculture activities in regions hit hard by the pine beetle epidemic.

Capital spending

Taxpayer-supported capital spending on schools, hospitals, roads and other infrastructure over the next three years is expected to total $11 billion.

Debt

The total provincial debt is forecast to be $64.7 billion in 2014-15, $66.9 billion in 2015-16 and $68.9 billion in 2016-17.

Taxpayer-supported debt is forecast to be $43.1 billion in 2014-15, $44.5 billion in 2015-16 and $45.5 billion in 2016-17.

For more details on the 2014 budget visit: www.bcbudget.ca.

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