B.C. Finance Minister Mike de Jong tabled what he described as a "boring, balanced budget" Tuesday, with few surprises or goodies for British Columbian taxpayers.
The three-year fiscal plan includes the planned Early Childhood Tax Benefit and Training and Education Savings Grant for B.C. families, as well a break for first-time homebuyers.
However, it also budgets for an increase in MSP premiums, a rise in tobacco tax and a decrease in the Homeowners' Grant.
De Jong described the budget as "a triple B budget — a boring, balanced budget," and said he was proud to "boast that happy state of boring."
MSP premiums rise for sixth time
MSP premiums will increase by four per cent, taking the cost for the average family up to $144 per month.
Meanwhile, de Jong said, healthcare spending will increase $2.5 billion over three years, and will account for 42 per cent of government expenses by 2016/2017.
"This is significantly less than would have been the case just a few years ago when healthcare budgets were increasing by up to five per cent year on year.
"I'm very pleased with the job the health sector has done, in many ways leading Canada in cost control."
Nevertheless, Rick Turner of the B.C. Health Coalition said the extra money is not enough.
"It will not keep up with demand. ... We don't see enough support for seniors, and the time has come to introduce a lot of innovations into the system," said Turner.
Meanwhile, tax on tobacco will increase $3.20/carton from April 1, 2014, which combined with a recent federal increase of $4/carton, will mean a carton of cigarettes costs an extra $7.20.
De Jong said it was a bad day for smokers, but pledged to enter into partnership with Canadian Cancer Society and other agencies to use a significant portion of that revenue to reinforce cancer prevention.
B.C. families benefit from tax credits
The three-year plan sees the introduction of the much-touted Early Childhood Tax Benefit, promised last year, giving up to $55/month to families with children under the age of six.
It is estimated around 90 per cent of families in B.C. will be eligible, although the benefit will not be in place until April 2015.
The budget also introduces the planned Training and Education Savings Grant, a $1200 government RESP contribution for any child born on or after Jan. 1, 2007.
However, Jordan Bateman of the B.C. Taxpayers' Federation says the budget offers nothing real in the way of tax relief for families.
"It was pretty bland," said Bateman. "You've got to give them credit for balancing the budget, but there was nothing else."
Bateman was particularly upset about the rise in MSP premiums, which he described as "a slap in the face."
$2.9 billion contingency fund
The budget offers modest surpluses of $184 million, $206 million and $451 million over the next three tax years.
These, combined with large contingency funds and prudent growth estimates, mean a potential cushion of almost $2.9 billion by 2016/2017.
De Jong explained this fund is intended to cover unexpected costs, including public sector contracts in the process of being negotiated and LNG development.
It could be particularly important given the unprecedented ruling by the B.C. Supreme Court last month that the B.C. government had violated teachers' constitutional rights and tried to provoke a full-scale strike.
The court awarded the British Columbia Teachers' Federation damages, which some estimate could total $2 billion. The government is appealing the decision.
However, the ruling wasn't factored into the budget.
"From time to time costs descend upon government, unforeseen costs in some cases. ... But we can't quantify the fiscal consequences of a decision now being made by the appellant court," said de Jong.
Glen Hansman of the BCTF said the minister's contingency numbers were pulled out of thin air.
"What we need to do is sit down and figure out how we do this thing in an orderly way," said Hansman.
"It will take more money and they have it in the contingency fund so let's do it now."
A mixed bag for real estate
First-time homebuyers got some relief this budget, with an increase to the threshold for Property Transfer Tax Relief for first-time buyers to $475,000.
The new threshold means first-time homebuyers will also get partial transfer tax relief up to $500,000.
De Jong acknowledged the thresholds were set at a time when property values were very different.
It is estimated 1,700 individuals will benefit, with possible savings of up to $7,500 per purchase.
Meanwhile, the threshold for the phase-out of the Home Owner Grant is lowered to $1.1 million.
For properties valued above the threshold, the grant is reduced by $5 for every $1,000 of assessed value in excess of the threshold.
It is expected at least 93.8 per cent of homeowners will still be eligible for the grant, down from at least 95 per cent when the threshold was originally set.
LNG taxation regime outlined
For the first time, De Jong also laid out plans for the taxation of the province's planned liquefied natural gas industry, specifically anticipated liquefaction plants.
The two-tier tax plan would see plant operators taxed 1.5 per cent of its net proceeds for the first three years, by which time it would be expected to have paid off its capital investment.
In years four and five, operators would pay up to seven per cent of net proceeds, with tax credits amounting to total paid in the first three years.
From year six onward, the operator would then pay a full rate of up to seven per cent.
The rates would apply to plants from the moment commercial operation begins. Final rates will be subject to legislation to be introduced in the fall.
No LNG revenues are expected within the next years, and de Jong said construction is itself some way off.
"We'd like investment decisions to be made, construction to start as soon as possible. ... We've set targets for ourselves. We're being driven by that," said de Jong.
Last year, Christy Clark suggested revenues from the anticipated LNG industry would flow into a prosperity fund to help the province pay off its debt.
The budget dedicates $29 million to the development of the industry and $9 million to related environment assessments.
"We have a choice as a society and government whether we want to embed that revenue stream in expanded government and programming, or whether we want to earmark it for something few societies have an opportunity to do — retire the accumulation of debt. And that's what we would like to do, but it is some years off," said de Jong.
Government assets sale continues
The government's drive to bring in revenue from the sell-off of the province's property portfolio is continued in this year's budget.
De Jong says the sales are on target and projects revenues of $300 million and $200 million in 2014/15.
With a portfolio in excess of $72 billion, he says, we should expect some movement of property within that portfolio every year.
Economic indicators look positive
Employment stands at 2.3 million, while exports were up almost seven per cent in 2013, amounting to $3 billion.
The budget also sees an increase in total debt to $68.9 billion over three years, but a drop in debt-to-GDP ratio to 17.8 per cent by 16/17.
That is a third of Quebec's debt-to-GDP ratio and the first time the ratio has dropped since 2008/09.
Meanwhile, the government forecasts growth of two per cent in 2014, 2.3 per cent in 2015 and 2.5 per cent in 2016.
De Jong said they continued to build in prudence to their forecasts compared to Economic Forecast Council's slightly higher predictions.
Revenue is anticipated to rise from $44.8 billion in 2014/15 to $47.5 billion in 2016/17, but expenses are also expected to rise from $43.7 billion to $46.7 billion in 2016/17.