Budget 2007: Cracked Foundation?

In a $3.2 billion surplus year, the Campbell government cut financial assistance to college students and is asking us to wait until next year to find out what it will pay to achieve the radical cuts to greenhouse emissions promised in last week's throne speech.

But everyone making up to $100,000 got a 10 per cent tax cut. And corporations saw another $100 million lopped off their taxes, too.

The budget's big theme, according to its makers, is "Building a Housing Legacy." But critics were quick to point out cracks in the foundation. This is, after all, the government that axed spending on social housing in 2001, helping to trigger the surge in homelessness B.C. now faces. So housing advocates were in no mood for window dressing.

They fumed that the 10 per cent personal income tax cut was billed as a main component of the B.C. Libs' housing strategy. They found meagre the promise of a mere 250 new social housing units built in B.C. over the next two years -- to be charged to Ottawa. They wondered how, for people living on social assistance, a $50 boost in shelter allowance was supposed to change their living circumstances in any serious way. And they noted that a lot of the funding is aimed to increase beds in shelters or "transitional" housing, with relatively little going for just plain affordable housing.

"Rather than making a long-term investment in housing for the homeless, this government's solution is to create more shelter beds -- temporary beds that do not provide the homeless with a place to call their own," said NDP finance critic Bruce Ralston.

"And by converting existing social housing to supportive housing units, this government threatens to cut the number of existing affordable housing for low-income families even further."

Sullivan's calculus

The menu of housing-related initiatives included:

• A $250 million Housing Endowment Fund expected to kick out $10 million a year "to support innovative housing solutions."
• Raising the rental assistance cut-off from families making $20,000 a year to those making $28,000.
• A tax break of up to $5,500 for first-time home buyers.

One big enthusiast is Vancouver mayor Sam Sullivan, whose e-mail blast called the B.C. budget "good news" for his city.

Sullivan found reason to "hope that we can begin development as soon as possible on the 12 sites the city has purchased and earmarked for social housing," but it isn't clear what budget line he was looking at, given the hundreds of millions of dollars a dozen such social housing projects would cost.

Sullivan also praised the provincial government for "immediate funding for up to 300 shelter beds and transitional beds as an interim measure." By his math, it all adds up to "one of the largest investments in social housing in history."

'Tax cuts real centrepiece'

Don't tell that to Marc Lee, senior economist at the B.C. Office of the Canadian Centre for Policy Alternatives. He fired off this blistering analysis:

"For every dollar of housing expenditures in the three-year fiscal plan, there are four dollars in income tax cuts. And tax cuts are the real centrepiece, which makes B.C. Budget 2007 perhaps the most cynical document in recent memory because it counts the tax cuts as a substantial part of its housing plan.

"The stated rationale is that tax cuts will make it easier for everyone to pay for their housing. This is an astonishing claim. For example, my house doubled in value over the past five years, and I already will pay no tax on the resulting capital gain. Yet, not only did I win the housing lottery through sheer luck, I am rewarded with a tax cut that I did not ask for (and that is small enough that it will not be noticed). In fact, I do not recall anyone, business groups included, who did call for tax cuts in this budget.

"If the $1.5 billion in tax cuts over three years had instead been allocated to building new social housing, we could have made a real dent in homelessness. Instead, we have a budget that not only fails to deliver new social housing, but will be taking 750 existing social housing units and converting them to supportive housing for seniors. This is robbing Peter to pay Paul. And it is reminiscent of the game the provincial government played a few years ago, taking federal money for low-income social housing and using it to build assisted living spaces for seniors.

"One can only conclude that the provincial government really does not care about homelessness. Even the 250 new social housing units over two years are funded out of $50 million in federal dollars. The province is going to take $250 million out of the 2006/07 surplus to park in a fund that will pay for $10 million of new initiatives per year, although it is not at all clear that any of this money will fund new social housing."

B.C. Federation of Labour president Jim Sinclair joined the fray:

"Those unfamiliar with housing policy may be impressed by the "legacy" numbers, but consider this:

• The 300 new shelter beds promised by Taylor would provide interim relief for only about 15 per cent of the homeless now on Vancouver's streets, but will be spread across the province;
• The 600 new supportive beds, also to be spread province-wide, would also provide minimal relief and no long-term solution to the homeless;
• The 750 additional beds promised for supportive housing -- which would help the drug-addicted people who are so visible in some of our towns and cities -- are being clawed out of the social housing stock; and
• The $50 increase in the shelter allowance will not make up for the cuts most income assistance recipients endured during the last mandate.

"Strip away the flim-flam, like income tax cuts dressed up as "housing" initiatives, and direct expenditures on housing are less than the $100 million offered to corporations as new tax incentives or reductions," said Sinclair, who noted corporate profits are at record levels and are expected to top $720 million in B.C. this year.

With expectations primed by a series of big budget surpluses, Olympic hype and the premier's bold new green talk, other groups expressed dismay at the unveiled budget for 2007.

B.C. Teachers Federation President Jinny Sims read the budget as "a document that fails to improve students' learning conditions -- but focuses resources on additional bureaucratic government assessment and data collection."

Sierra Club: 'Wrong direction'

Show us the green, demanded the Sierra Club of B.C. "Government has set out an ambitious climate change vision, yet the reality of the budget raises real questions about intentions," said Campaigns Director Lisa Matthaus of the Sierra Club of B.C. "Instead, we see more money and tax breaks for the things that take us in the wrong direction -- adding to our greenhouse gas emissions -- and very little for the initiatives that take us in the right direction."

"All Talk and No Action" was the headline on the press release from Arts Future B.C., an umbrella organization representing cultural groups around the province. The presence of cultural facilities, artists and cultural programming in a community is one of the top reasons skilled workers choose to relocate, said the release, arguing that funding arts shores up the long-term strength of the provincial economy.

"With no additional core funding, no infrastructure program and an overall decline in the funding to the Ministry of Tourism, Sports and the Arts, leading up to 2010, we are given a message that the provincial vision for growth in our sector is a private sector responsibility. Yet, this budget provides no further incentive to stimulate private sector investment," said Arts Future B.C.'s Ian Case.

At least one group of pretty smart people were fairly positive about the budget, though. B.C.'s university professors gave a "high B" grade to the B.C. government, with an A- for research funding, but a C+ for making higher education accessible to lower income students. Said Chris Petter, president of the Confederation of University Faculty Associations of B.C., "The government has a lot of potential, but it needs to finish some projects, and work harder in a few areas if it wants to get to the top of the class."

Related Tyee stories:

• How Homeless Housing Got Stalled
• Province Pledges More Social Housing
• BC Health Spending Exploding? Don't Believe It