Premier Gordon Campbell went on the offensive in his address to the Union of British Columbia Municipalities today, laying the groundwork for coming battles over education and health care spending.

In a departure from his tradition of announcing new provincial spending initiatives before the annual gathering of local government officials, the three-term Premier told this year’s UBCM convention that the province needs to cut spending.

“We ran out of money about $2.8 billion dollars ago,” Campbell said.

“We have no choice but to take a close and hard look at both our health and education services in the months and years to come,” he warned.

On education: “We have to ask ourselves questions. Maybe we need a new funding formula for K-12? Maybe we need to restore taxing authority for boards of education? Maybe we need to realign some of the responsibilities for providing services?”

On health care: “By any measure, the current rate of growth of health spending is not sustainable.... If we don’t deal with this, health spending is going to squeeze out every other spending priority that we may have in government.”

The Premier was persistent in his effort to re-frame the health care debate.

“Right now in British Columbia, we spend the second least per capita amount in Canada on health services,” he said. “Now some people say that’s a bad thing. But think of what it means. It means that we are better utilizing our health care dollars.”

He noted that B.C.’s health care system was named the best in the nation by the Conference Board of Canada, and said, “If B.C. was a country, we would have the highest life expectancy in the world for men, and our woman would have amongst the highest life expectancies in the world.”

The Premier address came only an hour after the UBCM passed a resolution opposing B.C.'s implementation of Canada’s harmonized sales tax, or HST.

“Deciding to implement the HST for B.C. was hard. We all knew what would be said. And we didn’t think it would be popular,” he said.

“Every leading economist in the country has said it’s the single most important thing we can do to encourage investment and to move our economy forward. It will lower costs of production by almost $2 billion annually, and put our companies on an equal footing with six other provinces and 129 other countries who don’t have any sales tax on business inputs,” Campbell explained.

“Our HST will be the lowest in Canada. That will be combined with the lowest personal income tax rates... the lowest corporate tax rates and the lowest small business tax rate,” he said.

“We have one of the most competitive tax regimes in the country, and in spite of what the leader of the opposition may think, I can tell you this: When you have a competitive tax regime, you’ve got investment, you’ve got jobs and you’ve got prosperity.”

Monte Paulsen reports for The Tyee.