February 20, 2018 – Today the BC government released Budget 2018: Working for You, the first full budget tabled by the now seven-month old NDP government.
Finance Minister Carole James has delivered a budget that aims to be balanced in more ways than one. The 2018 budget balances a plan to boost the economy through record capital investments with steps to deliver affordable universal child care, provides a $6 billion investment in affordable housing over ten years, and outlines bold steps to curtail speculation and tax evasion in the runaway housing market – all with a $219 million surplus.
Building on a foundation of strong growth in 2017, now expected to reach 3.4%, the fiscal plan projects 2.3% growth in 2018. The taxpayer-supported debt-to-GDP ratio, a key metric used by credit rating agencies, is expected to remain below 16% over the fiscal plan period despite record-level capital spending. The operating debt is forecast to be eliminated by the end of 2018-19, one year earlier than planned. Primarily, this is a result of stronger than predicted economic growth in 2017, and will mark the first time the government has been free of operating debt in over 40 years.
Total revenue growth is expected to average 4% annually over the three year period to 2020/21. Increasing revenues from taxation, federal government contributions and net income of commercial Crown corporations are partly offset by declining revenues from natural resources and the effect of the government’s decision to eliminate the Medical Services Plan (MSP) Premiums. New revenue measures include an increased tobacco tax, additional taxes levied on properties valued over $3 million, the introduction of a new speculation tax, and a new employer health tax to fund the elimination of MSP premiums.
The budget expands on three themes from the election campaign and September budget update:
Making Life More Affordable
- 30-point plan for housing affordability, including an increase in the foreign buyers tax, taxing speculation, increases in the property transfer tax and cracking down on tax fraud and loopholes and construction of 114,000 new units
- Investing more than $1 billion in a new affordable child care benefit to reduce child care costs and create more than 22,000 child care spaces across the province
- Eliminating MSP premiums by January 1, 2020. The MSP elimination will be funded by a new employer health tax designed to protect small businesses with payrolls less than $500,000, which will not pay any health tax. Businesses with payrolls between $500,000 and $1.5 million will benefit from a reduced rate while businesses with payrolls over $1.5 million will pay the full rate of 1.95%.
- Freezing ferry rates on major routes, reducing fares on non-major routes and restoring discounts for seniors
- Eliminating Pharmacare deductibles for families with annual net incomes below $30,000, providing 240,000 families with expanded coverage
Delivering the Services People Count On
- Over $1.5 billion invested in health care, including $548 million to provide improved care for seniors, $150 million to help connect those who do not have a family doctor with team – based primary care
- $409 million to hire 3700 more teachers, support enrolment growth in public schools, improve family law services, increase legal aid and reduce court delays
- An integrated, proactive and preventative approach to the opioid overdose crisis
Building a Strong, Sustainable Economy
- Investing $145 million to support higher education and skills training, including tuition-free Adult Basic Education and English Language Learning, support for former youth in care with tuition free post-secondary education, increased Indigenous skills training and enhanced support for newcomers to Canada
- Supporting communities impacted by wildfires with $72 million in wildfire recovery and resiliency activities
- Providing $40 million to improve land use certainty for economic development, create an energy roadmap to support the transition to a low carbon future and fund wildlife management to improve protection and recovery
- Adding $16 million over three years to modernize land use planning through engagement and collaboration with Indigenous peoples, governments, communities, stakeholders and industry
- Increasing funding for BC’s agrifood sector by $29 million to support enhanced Grow BC, Feed BC and Buy BC initiatives
- Increasing grants for the BC Arts Council by $15 million and Creative BC by $3 million to contribute to vibrant communities and the creative economy
- Investing $144 million in new federal labour market funding to help British Columbians seeking employment
- $11 million in annual funding is added to institution budgets in 2020/21 to continue the four year ramp up of new computer science, information technology and engineering training throughout BC that began last year, bringing annual funding for this program to $36 million
- Providing the Ministry of Transportation and Infrastructure a further $36 million over three years for the maintenance of BC’s network of bridges and roads
- $2 billion invested to maintain, replace, renovate or expand K-12 facilities, including investment in new school spaces to accommodate increasing enrolment in growth districts, and continued investment in the program to seismically upgrade or replace schools
- $2.6 billion for priority post-secondary education projects that will build capacity and meet the province’s future workforce needs in key sectors, including science, trades and technology
- Capital spending on infrastructure in the health sector will total $3.1 billion over the next three years, including major construction projects and upgrading of health facilities, medical and diagnostic equipment, and information and technology systems
- $450 million to build approximately 5000 new student housing beds at public post-secondary institutions
- $170 million over three years to support the construction of 2500 permanent housing units across the province to help house individuals who are homeless or at risk of homelessness
- $136 million over three years to support the construction of 1500 housing units across the province for women and children fleeing abusive relationships
- $4 billion of provincial investment and $1.3 billion of investment leveraged through federal cost sharing and partnerships with private organizations, local government and other agencies for transportation infrastructure over the next three years. Projects include replacement of Pattullo Bridge, four-laning the Kicking Horse Canyon section of Highway 1, construction of a new transit facility in Abbotsford and several improvements to rural highways and bridges.
Initial reaction has been positive. Questions about the specifics of the measures aimed at moderating the housing market dominated questions from the media, and business groups expressed some concerns about the health tax needed to fund the elimination of MSP fees, but many observers are characterizing this as a budget which balances high expectations from a diverse range of stakeholders with prudent measures to tackle a number of urgent social and economic issues.