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BC Politics

Child Care, Housing Funding Boosted in Budget

New tax on business to fund elimination of MSP premiums in 2020.

By Andrew MacLeod 20 Feb 2018 |

Andrew MacLeod is The Tyee's Legislative Bureau Chief in Victoria. Find him on Twitter or reach him here.

Smokers, people who pay no income tax in the province but own expensive homes and luxury car buyers will pay more to the government under the budget Finance Minister Carole James presented Tuesday.

At the same time the budget eliminates Medical Services Plan premiums in 2020, creates a new health tax on employers starting in 2019 and provides new funding for child care and housing.

“This budget is balanced in its approach and it’s fiscally balanced,” James said presenting the budget to reporters and stakeholders Tuesday morning. “We are economic leaders in Canada. But I do not believe we can consider ourselves leaders if we’re not sharing the prosperity of our province with the British Columbians who helped create it.”

It includes more than $1 billion over three years “to reduce child care costs for families, create over 22,000 new licensed child care spaces, and deliver high quality early care and learning services.”

The money will lower the cost of licensed care by up to $350 per child each month, which is expected to benefit 50,000 families. There will also be per child benefits available of up to $1,250 a month, which will benefit 86,000 families.

A family earning less than $45,000 a year will pay little or nothing for child care after the change, James said. There is also money to create 22,000 new child care spaces and grants to encourage building them.

“This represents real transformational change for our province,” said James.

The NDP ran on a promise of universal $10-a-day child care, which it has said will take a decade to implement. On Tuesday James said, “It’s going to take time to deliver, so that’s why we’re starting right away in a big way in this budget.”

The child care and early learning investments are budgeted at $182 million in 2018-19, $357 million the following year and $464 million the year after that.

On the housing front, there’s $1.6 billion over three years “to build and maintain affordable rental housing, help finance new student housing projects at public post-secondary institutions, increase rental assistance for low-income seniors and working families, and provide supportive housing for at-risk British Columbians.”

It also includes new tax measures “aimed to improve housing affordability.” They include a new speculation tax, an increase and expansion to the Additional Property Transfer Tax, often referred to as the “foreign buyers tax,” and increases to the school tax and property transfer tax on homes worth more than $3 million.

The foreign buyers’ tax will be raised from 15 to 20 per cent and will be extended beyond the Lower Mainland to the Capital Regional District, Central Okanagan, Fraser Valley and Nanaimo.

The measures were part of “A 30-point Plan for Housing Affordability in British Columbia” included with the budget.

“This problem’s been ignored for far too long,” James said. “People have been clearly hurt by this housing crisis.”

The province is also spending $453 million to build 19,000 units of affordable housing and $450 million for 5,000 student housing beds.

James said the government is working towards a goal of creating 114,000 housing units over a decade, as it promised ahead of the election, but that the goal will only be met through partnerships, so it is creating a Housing Hub at BC Housing.

The budget lacked a promised $400 rebate for renters, but did provide some support for renters by expanding the Rental Assistance Program for low-income working parents by $800 a year and the Shelter Aid For Elderly Renters by $930 a year.

The budget shows that after recently announced reforms ICBC is on track to lose $1.3 billion in the current fiscal year, $684 million in 2018-19, and return to having a surplus in two years.

“What’s so frustrating about the issue of ICBC and the situation we’re faced with is that could have been predicted and there were changes that could have taken place to be able to address this crisis,” James said.

There is $4 million over two years “to test the feasibility of a basic income in B.C.” and money for “improved access to justice and family law services through increased funding to the Legal Services Society.”

On the revenue side, the government is introducing an “employer health tax” which will raise nearly $2 billion a year by the time it is fully implemented in three years. It won’t apply to businesses with a payroll under $500,000 a year, and businesses won’t pay the full amount until their payroll exceeds $1.5 million a year.

The new speculation tax and income tax credit will raise $200 million a year, B.C. is expecting $75 million a year from cannabis taxes and is increasing tobacco taxes by $95 million.

The surtax on luxury passenger vehicles costing more than $125,000 is being raised from 10 to 15 per cent and the tax rate on those with a purchase price over $150,000 is being increased to 20 per cent.

The budget includes $900 million in contingencies and forecast allowance for 2018-19, growing to $1.25 billion in the next two years.

There’s also an additional $1.37 billion in 2019-20 and $1.25 billion in 2020-21 “in funding available for priority spending initiatives to be developed for future budgets such as government’s reconciliation commitments to Indigenous peoples, and to accommodate budgetary pressures such as caseload growth and new compensation mandate costs.”

“A budget is more than revenues and expenses,” James said. “A budget is about people.”

Over the last 16 years, opportunities became further out of reach for many people, she said, and the government is moving to reverse that.

Supporting people will help build the economy, James said. “Child care and housing are two of the most important examples of the link between social services and a strong economy.”

Responding to questions from reporters, James said she hopes the supply and demand housing measures the government is taking will cool the market. “The public’s been asking for the market to be corrected,” James said.

“Our hope certainly is the tax measures we’ve put together in particular in the housing strategy will look at lowering the price of housing and moderating the price of housing,” she said. “That is going to be a big support to people who are looking to get into the market. Right now it’s impossible for people to even imagine coming into the market.”

She said that while the budget does not include the promised renter’s rebate, it does include spending that will help many renters. “We’ve begun with the most vulnerable,” she said. “We’ve been government seven months. We’re not going to do everything overnight.”

On child care, James said, some families will be spending less than $10 a day after the changes. “We are continuing to work on the program and it will roll out over the next 10 years.”

Greens like child care, BC Liberals fret about taxes

Andrew Weaver, the leader of the B.C. Green Party, which has an agreement with the NDP to support its budgets, said, “Overall we find this budget quite refreshing.”

The Greens were pleased with the steps on child care and that the resources will be spent based on need, rather than as a universal system where someone earning a large salary would receive child care for $10 a day. “Let’s get there as opposed to jump there.”

The steps on housing are welcome but not enough to deal with the crisis, Weaver said. Nor was there enough attention to building the economy of tomorrow, he said. “What’s lacking in the budget is a vision for the future... in terms of the economic future.”

Critics for the BC Liberals said the government isn’t collecting enough money to pay for its spending promises and that it’s adding too many taxes onto businesses.

“As the official Opposition we are deeply concerned about the fact that this new government continue to have massive spending promises and very little attention being paid to revenue generation in the province,” said Shirley Bond, the party’s finance critic.

“At the same time, we see a significant attack on job creators in British Columbia. If you can imagine adding a payroll tax, a carbon tax, the list of taxes is lengthy, on the very people the NDP people are assuming will grow the economy.”

Finance and BC Hydro critic Tracy Redies said, “This is a tax and spend budget.”

She criticized the government for not spending more to help Lower Mainland commuters and warned that the province’s attempts to cool the housing market will amplify steps the federal government has already taken. “You need to be very, very careful about precipitating a housing crisis,” she said.

Celebration for youth, anti-poverty activists still waiting

Response was positive from many of the stakeholders attending the budget briefing in Victoria.

“Younger British Columbians have real reason to celebrate,” said Paul Kershaw, a professor in UBC’s School of Population and Public Health and the founder of Generation Squeeze. “We will not solve the affordability crisis overnight with this budget, but we see more progress toward big ticket price problems for young people like child care and housing than we have seen in years.”

He said more could have been done on the supply of rentals and housing supply more generally. He argued there’s a need to have a conversation to tax housing wealth more fairly. And in the rest of the budget, the biggest spending increase went to medical care, which tends to benefit older people more than younger ones, he said.

Still, he said, “You’ve got to give a government in its first year a heck of a lot of credit for doing some seriously impressive policy wonkish stuff that often takes years to pull off.”

Simka Marshall, the chairperson of the BC Federation of Students, said many students would benefit from the child care funding, but that she’d been hoping to see the elimination of interest on student loans. “It certainly is disappointing.”

Nor was there the tuition fee freeze the BCFS had hoped for, she said, noting that tuition fee revenue is scheduled to go up six per cent.

BC Federation of Labour president Irene Lanzinger said she was pleased the government is addressing the two major affordability issues for working families with its housing and child care measures. “They did a very good job of addressing both,” she said. “Not the end of the story, but a very good first step.”

‘Poorest folks in BC’ left behind

The budget did not increase welfare and disability benefits, something Trish Garner, a community organizer with the B.C. Poverty Reduction Coalition, said was disappointing. “We’re leaving the poorest British Columbians far behind,” she said. “I’m disappointed the government chose not to prioritize the poorest folks in B.C.”

In its September budget update, the government raised welfare and disability rates by $100 a month, but Garner said there remains a big gap between what people receive and what they need to get out of poverty. Before the increase, rates were frozen for more than a decade. “The loss in purchasing power was significant. I don’t think the $100 made up for that.”

Iglika Ivanova, a senior economist with the Canadian Centre for Policy Alternatives, said the government seems to be waiting until its consultation on poverty reduction is finished before improving the benefits for people receiving assistance.

“I think we could have found the money to help them right now,” she said. Even after last year’s increase, “It’s just deep, deep poverty.”

She said she was glad to see a long overdue increase to the funding for legal aid, as well as support for Indigenous languages. Increases to rental assistance are good, but will help fewer than 10,000 families, Ivanova said. “You have to be extremely poor to qualify.”

Michael Law, an associate professor at the UBC Centre for Health Services and Policy Research, said that the elimination of pharmacare deductibles for people with low incomes is a major advance. “The elimination of MSP premiums is also a positive step,” he said. “They are unfair because they fall much more heavily on households making lower incomes.”

Torrance Coste, the Wilderness Committee’s Vancouver Island campaigner, said more needs to be done on land use planning and on climate action beyond raising the carbon tax. “We’re just not seeing the urgency of this crisis reflected.”

This story was updated on Wednesday, Feb. 21.  [Tyee]

Read more: BC Politics, Housing

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