At the recent Hope and District Chamber of Commerce Meeting — MLA Laurie Throness gave an insightful and thorough presentation on the latest Provincial Budget, demonstrating through fiscal realities that the B.C. budget is in a healthy state of affairs.
“We have a balanced budget and Saskatchewan is the only other province with a balanced budget this year — we don’t know about the feds yet, but Ontario has a deficit of about $12.5 billion this year and Alberta will have a deficit of $500 million,” said Throness. “We are doing quite well and we have forecast three more balanced budgets, so, we’ve had three and we’re forecasting three more, including a surplus this year of $879 million.
An economic forecast council will predict the next five years and is seen as measure of prudence by Throness. The Ministry of Finance will take about three tens of a percent lower than that and so confidence is high that officials will forecast budget concerns in a diligent manner.
“Our exports have grown — in October 2008 we had exports of about 3 billion dollars , they fell by about a third at the bottom of the recession and they are almost back up to where they were in October 2008. Figures are up by 6.3 per cent compared to 2013,” said Throness.
B.C. employment is up according to modest political terms — 12, 800 jobs were created last year, which is about 40 or 50 thousand jobs above what it was in June 2008, followed by population growth.
“Our job growth has not been stellar, which is why we have a big job figuring out different strategies to create jobs across the economy,” said Throness. “But, we maintain a budget — when the spending line curved a little bit, we curved spending. We held it down to three per cent and our revenue was up a little more than that.”
By continuing to hold expenses down the government is forecasting a little higher revenue, which means that there will be surpluses in every year.
“That’s how we get surpluses, it is by controlling spending and we are going to be really careful about that,” he said.
A few other levels of contingency for prudence include the forecasting of an allowance, or certain amounts of growth and they’ve gone below, ensuring the accruement of $950 million dollars, totaling surpluses of about 1.059 billion dollars. There are contingencies on top of that which amounts to another billion dollars or so according to Throness.
The summation of the figures including surpluses for this year equals about a 4 million dollar cushion over the next three years.
“I like that, that is the kind of a measure of prudence that I feel comfortable with —
we have not counted on a penny from LNG and really LNG fully developed without any risk to the tax payer,” he said. “It’s only the upside right now, it’s not on the downside and we’ve also assumed that gas prices are going to be very low —in the lowest twentieth percentile of the private sector forecast.
According to Throness there are five or six levels of prudence that have been built into the budget.
“We want to be really careful — because we never know what will happen.”
Throness spoke of good debt and operating debt as two different sides of the same coin. He likened operating debt to expenditures at the grocery store with a credit card and proceeded to define the operating debt B.C. has incurred and is restructuring over the past couple of years.
“Operating debt a couple of years ago was $10.2 billion — in three years it will be down to 4.8 billion, that’s what we’re doing with our surpluses, we’re paying down the operating debt and we think that’s another measure of prudence and that it will be at the lowest point since 1991.”
The total taxpayers supported debt is 45 billion dollars, 4.8 for operating debt and the rest will be for infrastructure.
Capital spending will be utilized for education and things like seismic upgrades for schools, advanced education, adding on to universities. There are big dollars for UFV and there are hopes for money for Seabird Island College and health care. Hospitals are being built and transportation plans are in the works.
“We have a big new transportation plan for about 300 million dollars — we’re building the stuff that we need.”
B.C.’s debt to GDP is a quarter of Quebec’s debt load, it’s half of Canada’s and it’s about a third of Ontario’s, while America is at 72 per cent.
“America is scary. This year the debt is 485 billion dollars and the White House has a deficit going into 2025 of 687 billion dollars and the debt will be 20 trillion dollars —just an astronomical amount and that’s why we’ve diversified what we’ve been doing,” said Throness.
B.C. has a very diversified economy, which puts it a step ahead of other provinces.
“Our economy is highly diversified and that’s why we’re not doing the same thing as Alberta and going into an immediate recession when the oil crisis hit, because we’re not as dependent on one commodity as they are.”
In 2001, 70 per cent of exports were to the Sates. To date 51 per cent of exports are to the States
“We’ve expanded into Asia and China especially to reduce our dependence on the U.S. and when we look at their debt deficit I feel good about that, because one little shove from the States and the whole thing could be back to the 2008 — I’m really worried about that and I say that wherever I go, he said. “When you look at dependency, we’re at 51 per cent compared to other provinces. Alberta is 90 per cent dependent on the States and Ontario is 80 per cent, that’s a huge dependency on the States — so I feel good that we’re first.”
Healthcare crowds out everything else in the budget.
“I talk to stakeholders all the time, we’re always pressed for funds because health care is consuming so much of the budget. Baby boomers retiring in 2011will hit age 75 in 20121 and that’s when they will begin to experience their greatest health problems, so health care spending is going to go up for the next three years, and it’s going up three billion dollars a year by 2017-18 — that’s a massive amount of money, but if you don’t do that people are going to suffer, so we feel the populace wants that — so that’s what we’ve done,” he said.
576 million dollars will fulfill the terms of the education settlement decided upon.
“We’re spending more and we have fewer students in the public system. The independent school system grew by six per cent after the strike, so that would mean about 3000 fewer in the public system — so we’re spending more on fewer students and that amount per student is growing all the time and hiking by an appreciable amount,” said Throness.
The tax decrease for earners making $150,000 and over was clarified by Throness who spoke directly of policy toward high income achievers.
“We don’t believe in penalizing people who work hard and are good entrepreneurs and create jobs for other people and they pay a 16 per cent tax rate anyway, while someone who’s making about thirty thousand a year will pay a five per cent tax rate, so it’s a hugely progressive system already.”
Supports are firmly in place for those who need it most. Community living B.C. has a $789 million budget every year and they look after 14,000 severely disabled people.
“We’re adding $150 million over three years to that budget, because there are pressures and there are people coming on who have real needs. We are going to exempt all child support payments from income and disability. That will be a raise for about 3000 single parent families, who will experience an increase in this way and it will cost us about ten million a year to do that — we would like to increase welfare and disability rates across the board.”
There are about 135,000 people on these programs and to increase them by 100 dollars a month would cost $160 million dollars a year, so it is a sum, chosen to try to get people to pay child support according to Throness.
“We’re also spending $20 million on growth and income assistance to help single parents get trained and back into the workforce and that really is the answer to a low income jobs.”
It has been decreed that anyone earning less than $19 000 will pay B.C. income tax and that is another way of benefitting people who are lower income earners.
“This is a way for tax credits to help people get more fit and for preventative health measures as well.
The early child hood tax credit has been issued. If you have two young children, you will get $11 500 a year in benefits for those two children and that’s for someone making thirty thousand and it goes down, as you make more.
It was a fairly good budget.
“We have the lowest income tax rates in Canada, we’re tied with Alberta, but you can see that we’re almost half that of Quebec — add in other taxes, consumption taxes, property taxes, and even health care premiums and we’re still one of the lowest tax burdens in Canada. We’re pretty proud of that and we think people are going to want to move here and invest here.”
B.C. is in an excellent fiscal situation and hoping that LNG will say yes.
“People are very serious —we’re going to grow the economy that’s really the way it is. We think we can get out of our budget pressures and grow the economy, so we’re working hard to do that.