VICTORIA -- Premier Christy Clark's BC Liberal government on Tuesday fulfilled its promise of returning to a balanced budget by borrowing tax increases proposed by NDP leader Adrian Dix, booking an expected $800 million windfall from the sale of government assets and properties, and by imposing extraordinary spending controls across the entire government.
The government's budget included a one per cent increase to the province's corporate income tax starting April 1, bringing the rate to 11 per cent. It also included a temporary increase in personal income taxes for people making more than $150,000 per year. Dix has speculated both would measures be part of a fully-costed NDP election platform -- due for release in the coming weeks - although his proposal would have increased corporate taxes by an extra one per cent.
Coming 12 weeks before the May election, the budget also includes a four per cent increase to MSP premiums - bringing the rate to $138.50 for families of three or more -- and a $2 per carton increase to the tax on cigarettes.
On the spending side, the BC Liberal budget cuts increases in government spending in the coming year to under one per cent - a level below the expected growth in the province's GDP and comparable to dramatic restraints the Liberals employed during their first few years in office.
After combing all these measures with plans in the coming year to sell $475 million in surplus government assets - as well as a combined windfall of about $330 million expected from the completion of the sale of Little Mountain and the sale of the Vancouver Liquor Distribution Branch warehouse -- government says it will end the year with a $197 million surplus.
"Today I am presenting what we promised to the people of British Columbia, and what they have worked hard to achieve - a balance budget," Finance Minister Mike de Jong told the legislature as he introduced the province's first balanced budget in five years.
"We will not spend money we don't have," he continued. "We will not have a legacy of needless debt."
John Winter, president of the BC Chamber of Commerce, applauded the government on its return to balance.
"Good on them for living up to the commitment to balance the budget, it's hard to do but I think it's realistic," he said.
Winter's only criticism was that the government did nothing to soften the blow to business that will come with a return to the PST.
Greg D'Avignon, president of the Business Council of British Columbia, agreed. He said he thinks the government's projections are credible, but raised pointed concerns about the return to the PST and other increasing costs.
"There's a layering on of costs of doing business here in British Columbia and we are uncompetitive," he said, taking an uncharacteristic warning shot at the business friendly BC Liberal government.
"We were one of the most competitive jurisdictions in North America and we're going to become one of the most uncompetitive. That has an impact on job creation, on economic growth."
Union leaders were highly critical of Tuesday's budget, questioning a decision to balance the book months before the May election on the back of planned asset sales.
"This is not a balance budget," said Jim Sinclair of the B.C. Federation of Labour. "We're going to fire sale so he can balance the budget," he added.
Sinclair also blasted the government on plans to shrink the public service by about 1,200 spaces over two years.
"This budget kills 1,200 jobs in British Columbia that are good paying jobs that support communities in healthcare and education and forestry," he said, in comments that were echoed by British Columbia Government and Service and Employees' Union president Darryl Walker.
"They call it attrition but it's still warm bodies that are going to be in cold seats," said Walker.
"People are going to be doubling up; they're going to be doing twice as much work. There's fear that people are going to be put in positions of danger."
Spending controls in Tuesday's budget are spread throughout government, but are felt most prominently in healthcare, where projected increases are dropping to 2.6 per cent from a previous annual average of 4.4 per cent. Between 2005 and 2008, health spending grew by about seven per cent per year.
Tuesday's projections mean the health sector will see an increase for the coming year that is $234 million less than what government projected at this time last year.
Government says it can accomplish this without sacrificing the quality of health care because of new rules for pricing on generic drugs, possible measures to reduce the cost of labs and by negotiating a hold-the-line contract with the province's doctors.
British Columbia Nurses' Union president Debra McPherson was not convinced.
"We're quite concerned about this budget," she said.
"On the overall funding increase, we see the health authorities getting a 2.3 per cent lift. In last year's forecast they were told they'd be getting 3.6. We don't think that's going to cover inflation and population growth."
Hospital Employees' Union secretary-business manager Bonnie Pearson was critical of the scaled-back increases, saying it means health workers will have to do more with less. She also took aim at the increases to MSP premiums.
"We think it's a sad commentary that by 2015 more of the provincial revenue will come from MSP premiums then come from corporate taxes," she said. "I don't think that's a sustainable model for B.C. families."
Government is increasing MSP premiums by about four per cent on January 1, 2014, bringing the rate to $69.25 for a single person per month, and $138.50 for families of three or more.
To help with balancing, government also saved around $150 million that would have been due in the incoming year by pre-paying a variety of grants and other obligations during the outgoing year - a time when government incurred a more than $1 billion deficit.
Speaking Tuesday, de Jong called the government-wide spending controls "plausible and achievable".
"We knew it wouldn't be easy to get back to surplus budgets," he said, adding the cost has meant Tuesday's budget has not been able to include the usual pre-election spending spree.
"That will give our province an edge in attracting investment in a still-uncertain global economy."
Across all of government, spending is projected to increase by just 1.5 per cent each year over the next three years.
While de Jong stressed the prudence of Tuesday's budget, he was able to unveil some pre-election goodies, mostly focussed on helping families.
Government has changed a program introduced by former premier Gordon Campbell that has invested $1,000 for every child born after 2007 in a government managed post-secondary education fund. Parents were told they could expect a payment of about $2,200 for their child's post-secondary education by the time the child graduated high school.
On Tuesday, Clark's government announced parents can now access that fund much earlier, by having the province deposit $1,200 directly into the child's Registered Education Savings plan.
"When the child turns six years of age the government will send to their family - direct into an RESP -- $1,200," said de Jong, adding he hopes the measure will encourage parents to start registered savings plans to help pay for their children's university or college educations.
Tuesday's budget also includes a commitment of $76 million over three years to help create childcare spaces, as well as additional tax relief for parents starting in 2015. That tax relief program - the BC Early Childhood Tax Benefit - will be worth $660 for families making under $80,000 annually.
The temporary personal income tax increase promised in the budget will cover only the top income tax bracket, or those making more than $150,000. The move - which will last for two years until the end of 2015 - will raise the provincial rate to 16.8 per cent from 14.7 per cent.
For a person making $300,000, the increase would mean an extra $3,100 in taxes each year.
"We are asking people who make a little more to contribute a little more," said de Jong, adding the measure was needed to help return the province to a surplus position.
Tuesday's budget brings the province to a projected debt of $62.7 billion for the coming year, raising the province's debt-to-GDP ratio to 18.2 per cent.
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Edited by inane, 19 February 2013 - 04:23 PM.