The B.C. Liberals plan to balance the books next fiscal year by selling off assets and raising taxes.
Finance Minister Mike de Jong tabled a $44-billion budget Tuesday that proposes to bring the province’s budget out of the red using a combination of asset sales, tax hikes, reining in spending and forecasted economic growth.
Government expects to finish the current fiscal year ending in March with a $1.2-billion deficit.
Budget 2013 identifies savings of close to $1.1 billion in ministries and Crown agencies over the next three years and spending growth is limited to an average of 1.5 per cent per year.
Effective April 1, the corporate income tax rate will increase to 11 per cent from 10 per cent, and there will be a two-year, 2.1-per cent increase in the personal income tax rate for individuals earning more than $150,000, starting in 2014.
The budget also proposes a four-per cent increase in Medical Services Plan premiums, effective next January, a tobacco tax hike of $2 a carton, and phasing out school property tax credits for light industry for the 2013 tax year.
Also included are measures to benefit families, including a one-time grant of $1,200 toward a resident child’s Registered Education Savings Plan; a new B.C. Early Childhood Tax Benefit, giving families with young children up to $55 per child per month, which doesn’t come into effect until 2015; and an Early Years Strategy that will invest $76 million over three years to support the creation of new child-care spaces and improve the quality of child care and other early years services.
Parksville-Qualicum Liberal MLA Ron Cantelon called the budget the result of a lot of hard work and fiscal discipline.
“Overall, it’s a very responsible budget that puts us in good shape,” he said. “It’s kind of boring, but boring is the new normal. You talk to business people and they recognize it’s a different world now – you can’t expect things to just rebound. I feel very good about it, that we’re not having to saddle our children and grandchildren with debt.”
Cantelon said careful management of budgets by health authorities, the new drug pricing regulation and moderate wage increases will keep health care spending increases to an annual average of 2.6 per cent – historically, the average annual increases have been more like six per cent.
He expects the tax increases won’t be greeted enthusiastically but will be reasonably well tolerated and emphasized that the personal income tax increase is only temporary.
Nanaimo NDP MLA Leonard Krog said the proposal to increase taxes for business and higher-income individuals are similar to what the NDP would do should it form government in May, but he sees this move as the Liberals’ former policy chickens finally coming home to roost.
“They should have been doing this before instead of us running deficits for the last four years,” he said.
As for the savings in ministries that the budget identifies, Krog said this will mean service cuts and people won’t be so thrilled with a balanced budget if they can’t access basic services.
“It appears to be a budget from a government that is stumbling towards an election,” he said, adding it will be hard for people to trust the numbers after the Liberals’ last budget before an election promised a deficit of $495 million and it turned out to be closer to $1.8 billion.
Budget 2013 was reviewed by an independent consultant, economist Dr. Tim O’Neill, who ruled the budget well-founded except for the natural gas forecast.
Krog also questions the Liberals’ proposal to sell off surplus assets and properties totalling $625 million over the next two years.
“These are vacant lands in urban areas where the demand for public facilities is going to increase,” he said.
Lisa Trimmer, Greater Nanaimo Chamber of Commerce treasurer, said the chamber is happy to see the province has fulfilled its commitment to return to a balanced budget.
“From a business perspective, we know that it’s pretty important to balance your balance sheet,” she said.
Trimmer said the chamber is also happy there will no tax increase for small business – the increase affects mid- to large-business and even with the increase, B.C. is still competitive with other provinces.
Ellen Oxman, president of the Nanaimo, Duncan and District Labour Council, said in a press release that working and middle class families will continue to bear the brunt of stagnant wages and higher charges for medical services, tuition fees and hydro.
Elizabeth Pennell, Nanaimo school district’s coordinator of early learning and community liaison, said the benefits for families are a step in the right direction, but not enough.
More child care spaces are needed, but they also need to be more affordable, she said.
“Parents are paying as much for child care as they are for their mortgage,” said Pennell. “I think the issues of affordability and sustainability are still there.”
– with files from Tom Fletcher