Finance Minister Carole James faced a tough challenge as she presented the budget update Monday: She had to put a New Democratic face on what remains, to a large extent, a B.C. Liberal vision.
Beyond that, James needed to ensure that her party does nothing that would undercut the B.C. economy, which has been on a roll for several years.
But this steady-as-it-goes update is just the start, a transitional document to carry the province through to the full budget that is due in February 2018.
There are few surprises. We knew the key policies of the NDP; they were made public during the election campaign and have been repeated in the months since, including in Friday’s throne speech.
We knew as well that the government had to respond to two major crises, the deaths being caused by fentanyl throughout society as well as the wildfires that have been raging in the Interior for months.
We also knew that a sharp shift in direction that might appeal to the hardline NDP faithful would not be the best thing for the economy.
So to a large extent, James had little room to manoeuvre with this document, an update to the budget presented in February by former finance minister Mike de Jong. Drawing from Liberal plans as well as Green-influenced NDP ideas, it might be as close to a coalition budget as we will ever see.
Many elements remain the same, but there are tweaks. The Liberals wanted to cut MSP premiums in half in January 2018, and the New Democrats have agreed, but have removed the need for much of the paperwork and have promised a complete removal of the fee within four years.
The Liberals wanted to respond to the Grand Chief Ed John report, which would reduce the number of Indigenous children in care, and again, the NDP agreed.
Carbon tax increased
But there are major changes, including an increase in the carbon tax, which will make gasoline more expensive for all drivers. The government is also abandoning the notion of revenue neutrality, which has been a major selling point of the tax since it was introduced by former premier Gordon Campbell.
The tax is a small acknowledgement of the damage being done, and the damage to come, as a result of climate change. The increase in the rate, starting with $5 a tonne on April 1, is overdue.
The government is also removing the tolls on the Port Mann and Golden Ears bridges, which will cost taxpayers throughout the province $479 million to make travel easier for drivers in the Lower Mainland. There is also the reconsideration of a replacement for the George Massey tunnel, the piece of mainland infrastructure that matters most to many people in Greater Victoria.
James has promised increased spending in many areas, including health and education. Much of the latter spending would have taken place even under a Liberal government, since the Supreme Court and increased enrolment are forcing the province’s hand.
There is a strong commitment to reducing poverty, with plans to spend about $500 million over three years in a variety of ways.
Major moves include $291 million for 2,000 modular housing units for people who are homeless, $189 million for home and residential care for seniors, and $2 million for the restoration of the Therapeutics Initiative, which deals with evidence-based information on prescription drugs.
Some promises ignored
This update ignored some major NDP promises such as $10-a-day child care and a $400 renters’ credit, although James insists that these promises will be acted upon. We will have to wait until February to see the impact of those programs on the government’s spending plans, and how the government will pay for that spending.
A great unknown is the fate of the Site C hydroelectric plant in northeastern B.C. The government has called for a review of the project, which will need another $7 billion to complete. There will be a cost to taxpayers if the work is cancelled or delayed, and the decision will have a large impact on the provincial budget for years to come. (The government’s decision to write off $52 million in cancelling procurement for the Massey tunnel replacement will look like chump change compared to spending at Site C.)
In some ways, the budget update gave with one hand and took away with another. British Columbians will see a slight increase in the tax rate on their income above $150,000 a year, and the general corporate income tax rate also rises. Small businesses will see their tax rate drop.
James is calling for four per cent growth in retail sales next year, so it is important that she recognizes the role that the business community plays in keeping our economy moving along. The NDP must govern for all sectors in the province, and not repeat the Liberal mistake of favouring a select few.
The government’s strategic plan stresses the need for a strong, sustainable economy. Without that, the other two priorities — making life more affordable and delivering the services people count on — would be reduced to wishful thinking.
In the final analysis, James’s update is balanced, as de Jong’s budget was, and represents a strong move toward the full NDP budget to come in February.
The initial reaction from the business community has been positive. But James should be prepared to show in her full budget that she is a friend of business, and does not see it as an enemy, or a cash cow to be milked to pay for social programs.
