The Liberal Government is raising taxes, selling assets and setting aside more money for children and families in today's provincial budget.
It's a pre-election budget that raises taxes by $327 million in the coming year--including a one per-cent increase in the corporate income tax rate one year earlier than planned....plus a so-called temporary two year increase in personal income tax rates for people earning more than $150-thousand a year--their rate rises by two percent.
Taxes on cigarettes will go up by $2 per carton on October first; and we'll see another round of MSP hikes with premiums rising by four per-cent next January.
And light industry will see its school property tax credit phased out.
Sales of surplus assets are expected to raise $800 million in the coming year.
Spending restraint, a hiring freeze and management salary freeze will continue.
All of which works out to a surplus of $197 million, along with a safety margin of about $400 million.
There is some new spending in the plan including a new education savings grant of $12-hundred for children born after January first 2007; an early childhood tax benefit of $55 per child per month aimed at low income families--that would begin in 2015.
And $76 million in new funding over three years for new child care spaces and services.
Meanwhile the government now expects to finish the current fiscal year with a $1.2 billion dollar deficit, lower than the expected $1.5 billion.
Finance Minister Mike De Jong says he'd rather not do it....but he had to raise taxes to help balance the budget.
Taxes will rise by $327 million including a two percent hike in personal income taxes over $150-thousand.
"in asking people with a little more to give a little more, we're cognizant of the fact that to achieve our balanced budget objectives, that was necessary."
He insists that increase will be phased out after two years....but the corporate income tax is also rising by one point on January first of next year.
De Jong says it won't be easy, but the government will try to hold annual spending growth to just 1.5 per-cent over the next three years---far lower than many other provinces.
And health spending growth is to be held to about half its recent level.
"we're not at six percent growth in health care spending anymore, so are there again ongoing tough choices associated with squeezing that margin? Sure there are, but I think it is achievable."
The NDP calls it a "classic pre-election budget", even though it apparently steals some of their ideas.
Finance Critic Bruce Ralston says he doesn't believe the Liberals can balance their budget.
"they're going to use 475 million in asset sales which I think is very unrealistic."
But would an NDP government even bother balancing the budget? Ralston says yes--over the business cycle.
"definitions of an economic cycle vary, but generally that's four to five years."
While the opposition says it will still take some time to develop its platform and decide whether any parts of today's budget are worth keeping, Ralston says he does like the tax hikes for corporations and wealthy earners--as previously proposed by the NDP.
The leader of the BC Conservative Party says the Liberals achieved their goal of a balanced budget but used “questionable strategies” to get there.
John Cummins says the books are only balanced using a fire sale of government assets.
Cummins says it is pretty obvious what the goal of the budget is…
“At the end of the day Mr. De Jong simply wanted to be able to leave the legislature this afternoon and say well we balanced the books and that was it but as I say there is no pathway to the future in there and that was the problem I think with the throne speech. The throne speech didn’t clearly state where this government wanted to go.”
Cummins says the budget does not meet a reality check.
He says businesses will also be handicapped by a half-a-billion dollar increase in taxes over a two year span.
The business community likes what it sees in today's budget.
Candice Nancka with the Chartered General Accountants says a balanced budget is important for BC.
"we realize that it's not terribly sexy, a balanced budget, but the effects of years and years of deficits and unsustainable debt are even less so, Greece is a case in point."
Vancouver Board of Trade President Iain Black likes the fact the government is getting back to a balanced budget.
"we were really, really focused on seeing a return to a balanced budget in a manner that was credible, that was not traumatic, and we were hopeful that we might see that so we actually gave the budget overall a b-plus."
The BC Chamber of Commerce has some praise for the budget but even they found some fault with the government.
Chamber head, John Winter says business needs were ignored.
“We just wish that there was a little more recognition of some of the economic realities of our economy, the absence of anything in the budget to acknowledge competitiveness, the need for better and more competitiveness within the context of how BC performs."
Winter says the budget also doesn't mitigate against what he calls a billion-and-a-half dollar tax increase that is the returning PST.
The BC Director of the Canadian Taxpayers Federation calls the latest budget a "hatrick of tax increases."
Jordan Bateman says there are consequences to upping taxes on the wealthy.
"Well it is one of those things that sounds great on paper but we have seen from California’s experience, from France’s experience, from Great Britain’s experience that when we tax people more at the higher tax bracket those are your most mobile type of workers and families they will leave the jurisdiction. So the question now is will Alberta receive a number of wealthy British Columbia families over the next couple of years to avoid this tax."
Bateman says the only saving grace is the sunset clause which might head off an exodus by some.
Iglika Ivanova with the Canadian Centre for Policy Alternatives says the budget's promise of $55 a day for child care costs is a good start but nothing more...
"childcare today costs $800 to $1400 a month so we'll be paying for a day of child care every month so that's great, it's welcome, but it's not enough."
And Ivanova notes that program doesn't begin for two more years.
Meanwhile, Child and Youth Advocate Mary Ellen Turpel-Lafond is slamming the budget, which contains only a small funding boost for the Ministry of Children and Families.
"that more than $1 billion of savings that they are championing that they've made across government are savings on the backs of these programs that mean that people that are particularly vulnerable are not gonna be served, so it's gonna make my job harder that's for sure but certainly I'm not going to be able to be silent about it and it's not family friendly."
The BC Teachers' Federation is blasting the budget for once again keeping education funding flat-lined.
Speaking for the BCTF Executive, Glen Hansman says also missing is any money to cover the Premier's promise of a 10 year deal with teachers.
“I live in her riding and it is in all of her promotional material that she is sending around. It is sort of the thing right in the centre of the folder when you open it up. But, you know that proposal talks about an index to salary, it talks about having money for class size and composition so where would that come from."
Hansman says the government is also failing to address the class size and composition issue.
Teresa Rezansoff with the BC School Trustees Association is worried about the lack of new money for education.
"it's not keeping pace with the cost pressures, and this isn't the first year, this is yet another year of cost pressures not being funded through from government and it's school districts that are having to meet those obligations and the bottom line and it's absolutely students and classrooms that are being sacrificed because of it."
The president of the BC Nurses Union -- Debra McPherson-- says today's budget is bad for patients.
"The increase this year for the health authorities is about 2.3 per cent less than the 3.6 they were promised last year, so we think there'll be still a large number of people who don't get the services they need. Both those who are racked and stacked in the hallways, but also those out in the community whether they're the mentally ill, dually diagnosed or our seniors struggling to stay at home and stay healthy."
McPherson says she's also worried about the government breaking a promise to hire more nurses over the next four years.
An executive with the Hospital Employees' Union is predicting frontline services will suffer because the budget doesn't provide enough funding for health care.
Bonnie Pearson says increasing medical services premiums another four per cent isn't the answer.
"Premiums are going to generate more revenue for the province than corporate taxes. I think that's not a sustainable model going forward. You know, every year there's been a substantial increase on MSP premiums. I don't know how much more BC families are expected to take."
Pearson says -- compared to last year -- spending for health has actually been reduced $234-million.
BC Government and Service Employees' Union President Darryl Walker says the budget shows about 14-hundred government jobs will disappear over the next three years.
"I shouldn't say cuts, because it's through attrition, but it doesn't make any difference those again are not gonna be bodies doing the work that they ought to do. Children and Families, Ministry of Social Development, those are ministries that really need support, they probably need additional funds and they certainly don't need to be cut back on."
Doctor Jeff Rains with the BC Anesthesiologists Society questions how funding has been allocated for health care over the past three years.
"There's been a 28 per cent increase in administrative costs within the health authorities. We need to take a good hard look at those and if there's any fat that can be trimmed, we need to redirect those resources towards direct patient care."
Rains adds anesthesiologists in BC remain the lowest paid in this country.
BC Federation of Labour President Jim Sinclair says the government is not moving to balance the books with its latest budget.
“Now he is adding over half a billion dollars of asset sales so that he can balance the books. This is just an election budget and that is all it is. The only reason it is an election budget is clear the tax increases well as far as I know we had a deficit the last three years and he didn’t increase one tax. Why did he increase this tax this time? Because he is going into a budget and he has promised them get us re-elected by the way and I will dump the tax increase again and run another deficit.”
Sinclair says the budget also cuts 12-hundred jobs.
Katie Marocchi with the Canadian Federation of Students says the $12-hundred grants for kids in today's budget won't mean much when it's time to go to university.
"the value of this program means that a student in 12 years will have a grant that's worth one quarter of the first semester of their education and so this doesn't translate into access for post secondary especially at a time when 80 per-cent of our new jobs will require post secondary education."
Environmentalists are not happy with the budget.
Ian Bruce with the Suzuki Foundation is criticizing the government's unwillingness to expand or raise the carbon tax, saying it has already fostered a thriving clean tech industry in Vancouver.
"if there's any economic story here that's been so good for BC it's been our leadership on global warming and the fact that our clean tech sector has really taken advantage of that fact and has positioned itself globally and I don't think it's a time for us to be halting on this."
