The first budget from the BC NDP government raises taxes on corporations and top earners while spending money to address several long-standing needs. But functioning as an update to an earlier budget from the defeated BC Liberals, it leaves other major NDP promises to be funded in the future.
Introducing the budget in the legislature this afternoon, Finance Minister Carole James said support for people announced in the budget, which includes about $52 billion in revenue and expenses, helps build a strong economy. “The budget really does invest in people to invest in British Columbia,” she said.
The update included $322 million to address the fentanyl overdose crisis, $681 million for education over three years, $500 million for housing and $668 million for wildfire management. It also raised funding to $2 million a year for the Therapeutics Initiative, a research group at the University of B.C. that provides independent advice on pharmaceuticals.
But the update left unfunded NDP campaign promises of a $400 annual credit for renters and $10-a-day childcare. Nor did it say how the future elimination of Medical Service Plan premiums will be funded, an issue on which a commission will make recommendations.
The budget update does not include details about how a disability bus pass program will work. “That’s being worked on. That’s going to come in the new year,” James said.
“I’ve said all along we’re not going to be able to do everything overnight,” the minister said, noting the last government implemented its policies over 16 years. She said she understood voters’ frustrations, but argued, “You can’t turn back the clock on 16 years overnight. That’s not possible.”
Overall, the budget includes surpluses similar to those presented in February, James pointed out. It also adds to forecast allowances and contingencies, giving the government added wiggle room.
The update included a $100 a month increase to income assistance rates, which will give a single person on regular assistance $710 a month and a person on disability $1,133 starting with their September cheques. “This is the first meaningful increase that’s been seen in 10 years,” James said. “It’s long overdue.”
The change will directly benefit 190,000 people and cost around $180 million a year by the time it is fully implemented.
There was $208 million over four years for 1,700 affordable rental units, as well as $291 million to build and $170 million to operate 2,000 modular housing units for people who are homeless.
James said the government is still developing a comprehensive housing plan. “We needed to make a first step,” she said. “We believe this is a great start towards beginning to address the issue.”
The update made changes to the plan for MSP premiums the Liberal government introduced in February. “It was very clear the previous government’s plan was unworkable,” James said. She said their proposal would have generated paperwork and raised privacy issues for people who would have needed to show their tax forms to their employers.
While the earlier plan would have cut premiums in half for households making less than $120,000 a year, the update extended the cut to everyone. “We felt the cleanest, straightforward direction was to reduce MSP premiums for all British Columbians,” James said.
The change will also be automatic, doing away with the need for people to apply for the premium reduction. James noted that often low-income people fail to apply for benefits to which they are entitled.
The money to address the fentanyl overdose crisis includes funding for the health ministry to provide services and for the new ministry of mental health and addictions to plan. There was also more funding for policing and the coroner’s office.
There was also $312 million to start rebuilding the child protection system, $20 million for child care, $15 million for the Healthy Kids Program and funding to create a poverty reduction strategy including a basic income pilot. And there’s a $7 million increase for the Residential Tenancy Branch, which James said has huge backlogs with landowners and tenants waiting months to have their cases heard.
On the revenue side, the update raised the tax on individual incomes over $150,000 by 2.1 per cent, bringing the rate to 16.8 per cent. “This is the top two per cent of income earners in British Columbia who will pay this,” James said.
Noting the money will fund programs that benefit everyone, she said, “We believe the people at the top can pay a little bit more.”
The update also raises the corporate income tax one percentage point from 11 per cent to 12 per cent and drops the small business tax rate from 2.5 per cent to two per cent.
It also eliminates the International Business Activity Program. There was no evidence the tax breaks given through the program, which is 30 years old, had created jobs in the province, James said. “Every dollar needs to be accountable.”
The update ended the revenue neutrality of the carbon tax, no longer balancing the money raised with cuts to other taxes. It will increase the credit for people with low incomes, but will use money from the tax for things like transit. “We want to ensure the resources that come in on the carbon tax are used for green initiatives as well,” she said.
The carbon tax is scheduled to rise, and by 2019 will bring in at least $400 million more a year.
There are various risks to the province’s financial situation, James said, including wildfires, ICBC’s finances, the renegotiation of NAFTA, the softwood lumber dispute with the U.S., rising interest rates and the need to negotiate future contracts with public employees.
The budget document also mentions a plan to review how Crown corporations, as well as schools, universities, colleges and health sector, report their financial information. It gave ICBC as an example of an entity where significant swings made it difficult for the province to plan.
Measured support for ‘a different tone’
Liberal finance critic Shirley Bond said that it was clear from the election that British Columbians wanted more attention in some priority areas, but that doesn’t mean they want the government to spend to meet every request. “The list will grow and the demand will be relentless,” she said.
The government inherited a strong economy, but it lacks a jobs plan or a strategy to generate revenue, Bond said. Instead the budget update added $1 billion in taxes over the next three years, which will be a drag on the economy, she said in the legislature.
B.C. Green Party leader Andrew Weaver said he was “thrilled” with the budget update. “The budget today was exactly what we were hoping to see.”
He said he was glad that the government has decided to consult on child care rather than push ahead with its plan for a $10-a-day program or with the subsidy to renters. “Absolutely thrilled that the $400 per renter was not in there.”
The subsidy for renters was poor public policy, Weaver said. It would have created a new layer of bureaucratic oversight and likely would have benefited people who didn’t need it, he said. There are better ways to use the money to help people, which the NDP is doing, he said.
The fair wages commission, poverty reduction plan and carbon tax increase were great, Weaver said. “There were no surprises in this budget. It was a budget that for the first time in a very, very long time focused on people. It made me quite emotional to listen to this budget.”
Stakeholders attending the budget presentation in Victoria generally said it set the right direction.
“I think it’s a good first step in advancing affordability for working families,” said B.C. Federation of Labour President Irene Lanzinger. She said she was glad to see the attention to poverty reduction, the increase to income assistance and the changes to the MSP.
“I think it’s a really positive step in the right direction,” BCGEU President Stephanie Smith said, adding she was glad to see the acknowledgment of the impact of government services.
She said she understood the mention of public sector compensation being a risk to the financial plan. “Of course they’re starting to prepare,” she said. “We’ve been preparing for a year.”
Jennifer Whiteside, the secretary-business manager of the Hospital Employees’ Union, welcomed the attention to addressing inequality. Compared to past budgets, she said, “The tone is very different.”
George Davison, the president of the Federation of Post-Secondary Educators of B.C., applauded the funding to remove the fees for Adult Basic Education and English as a Second Language. More was needed for the broader sector, however, he said. “Post secondary has been almost as affected as the K-12 sector, but it’s gone under the radar the last few years.”
He said he would be looking for more in the February budget and future years. “We would like to see the elimination of first-year fees by 2020,” he said.
The vice president of the Canadian Federation of Independent Business for Alberta and B.C., Richard Truscott, was glad to see the government follow through on the cut to the small business tax rate and the removal of the PST on electricity for businesses.
He said he disagreed with the change to the carbon tax. “That constitutes a pretty big tax hike,” he said.
Torrance Coste, a campaigner with the Wilderness Committee, said he agreed with making the carbon tax no longer revenue neutral. “We’re excited there will be some money freed up for green initiatives,” he said.
More, however, needs to be done on the environment, Coste said. B.C. voted for change and “we didn’t see enough of that yet,” he said, adding he expects more in the February budget.
Iglika Ivanova, a senior economist and public interest researcher in the B.C. office of the Canadian Centre for Policy Alternatives, said the government did a good job of lowering people’s expectations, so the update included nice surprises.
“That was pretty good for two months in government. It’s a solid start,” she said. Low and middle income British Columbians should see improvements quickly, she said.
It was good to see that some of the housing money included a plan for supporting people, she said. “We’ll see how it will ramp up through the government’s mandate.”
Ivanova liked the attention that was given to renters, something that had been missing in recent years as the past government instead emphasized first-time homebuyers. Renters face low vacancy rates and high rates that continue rising, she said. “There’s a huge group of people, especially in Metro Vancouver, who rent and they are suffering.”
It was also reasonable that people and businesses that can afford it will pay more in taxes, she said. “I’m pleasantly surprised by the tax fairness measures.” The province will still have the third lowest taxes in the country, she said. “We’re not talking about a very high increase.”
Ivanova said that while it was disappointing there wasn’t more in the budget dedicated to making $10-a-day childcare a reality, it was understandable. “There’s very little in this fiscal year. I’m optimistic we’ll hear more in February.”
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