B.C Budget 2019

 

 

 

B.C. Budget 2019

Today, Minister of Finance and Deputy Premier, the Honourable Carole James, tabled the second NDP budget since taking power in July 2017. While many other provinces are moving to the right, Minister James delivered a budget that focused on progressive policy areas. Entitled “Making Life Better,” the budget builds on investing in people to drive the economy, with childcare, climate, education and energy transition acting as anchors to guiding the Province’s investment priorities. In addition, the budget continues to address the provincial affordability crisis.

The budget yielded few new initiatives and built firmly on the focus identified in 2018 of investing in people as economic growth levers. Only one specific economic investment was announced by government: $800 million of tax reductions to be implemented over the next four years to support investment in new equipment and facilities, supporting the priorities of the Government of Canada to address competitiveness as identified in the last federal economic outlook update.

The budget highlighted the elimination of Medical Services Plan (MSP) premiums in January 2020 – replaced by the now implemented Employer Health Tax (EHT). A large, strategic investment to address new poverty reduction targets was expected, but only a few initiatives were announced, including increasing assistance for people on income support and disability and providing family-based caregivers additional support payments. Minister James indicated that Social Development and Poverty Reduction Minister Shane Simpson will table a comprehensive list of initiatives for poverty reduction later this spring.

Economic Outlook

The Finance Minister predicted budget surpluses of $274 million, $287 million, and $585 million over the next three fiscal years, respectively, and expects B.C.’s economy to continue to lead the country in growth. B.C. remains the only province with a AAA credit rating from all three major international rating agencies, with a debt-to-GDP ratio of just under 15 percent.

The Ministry of Finance estimates that B.C.’s real GDP grew by 2.2 percent in 2018 and expects the economy to grow by 2.4 percent in 2019. Investment in B.C., both by businesses and government, is forecasted to grow by 8.2 percent and 4.6 percent in 2019 and 2020, respectively.

British Columbia had the lowest unemployment rate in the country in 2018, at 4.7 percent, with 26,800 new jobs created. The ministry forecasts a 1.1 percent increase in employment – another 27,100 jobs – and an unemployment rate of 4.9 percent in 2019.

2018/19 Supplementary Estimates 

The budget included specifics on supplementary estimates. These allocations must be tabled for the necessary legislative appropriation of funds are available for specific investments. The funds are now available because they do not need to be used for debt servicing, as the government has eliminated the operating debt.

The government has prioritized the following investments with additional funds for:

  • Connecting B.C.: expanding high-speed internet connectivity to more than 200 rural and Indigenous communities across the province. The government will leverage funding from the Canadian Radio-television and Telecommunications Broadband Fund;
  • Grants for health and life science research and development;
  • The Clean Energy Vehicle program;
  • Northern Capital and Planning Grant for 26 local governments in strategic planning and capital investments;
  • Dollars have been identified for contaminated sites;
  • Childcare initiatives including childcare fee reduction; and,
  • Peace River Infrastructure funding through the Peace River Agreement, focused on community development where local taxing jurisdictions do not apply.

Political Party Responses

Andrew Wilkinson, Leader of the BC Liberal Official Opposition, summed up his take on the budget by saying that taxes and spending are up which is concerning as economies across the world are starting to see economic headwinds. While he and the BC Liberal co-critics for Finance acknowledged that there are no new tax increases in this budget, they are arguing people will continue to feel the impacts of the very hefty spending, especially if the B.C. economy does not grow at the predicted rate. The BC Liberals also expressed concern about the lack of measures to encourage private sector investment in the province.

MLA for Surrey-White Rock and opposition co-critic for finance, Tracy Redies, delivered the Opposition’s official reply to the 2019/20 budget, describing the B.C. NDP’s tax policy as a “giant fishing net” aimed to catch taxes from the private sector, municipalities and British Columbian residents. Redies argued that the budget lacked an economic vision, with a distinct absence of efforts to stimulate the private sector or encourage foreign direct investment, and further is heavily reliant upon a one-time $1.6 billion federal transfer payment that may not be repeated.

B.C. Green Party leader Andrew Weaver expressed support for the budget, stating that it funds his party’s priorities through CleanBC, Pharmacare, education, childcare, youth mental health, and support for family caregivers. Though pleased with the $1 billion pledged over the next three years to address climate change, Weaver said he would have invested much more into environmental stewardship and into B.C.’s emergency response network to address the increase in natural disasters, like wildfires and floods.

Tax Measures 

The major tax incentive announcement in the 2019 budget focused on the new B.C. Child Opportunity Benefit. Additional incentives that were extended, or continued, include:

  • Climate Action Tax Credit was enhanced, with a staged increase over three years to $56.50 per child and $193.50 per adult;
  • Training tax credits were extended for one additional year until the end of 2019;
  • Farmers’ Food Donation Tax Credit was extended to 2020;
  • Mining Flow-Through Share Tax Credit and the Mining Exploration Tax Credit were made permanent;
  • Shipbuilding and Ship Repair Industry Tax was extended until 2022;
  • Pension Tax Credit was expanded in relation to certain retirement income security payments to veterans; and
  • Motor Fuel Tax was increased up to 1.5 cents per litre on gasoline and diesel purchased in the South Coast B.C. Transportation Authority (Translink) operating area.

Focus Point: B.C. First Nations, Province Partner in Revenue-Sharing Agreement 

The B.C. NDP continued its commitment to reconciliation and meeting the goals of the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP) with a new revenue-sharing agreement that will apply to all First Nations communities across the province and increased investment in the Ministry of Indigenous Relations and Reconciliation.

The agreement was established between the Province and the First Nations Leadership Council. Starting in April 2019, up to $3 billion over 25 years will be shared with B.C. First Nations. The province estimates that every First Nation community in the province will be eligible for between $250,000 and $2 million annually through the agreement, with the funding to focus on health and wellness, housing, infrastructure, training, environmental protection, economic development, governance capacity and more.

Focus Point: Child Opportunity Benefit

As of October 1, 2020, a new B.C. Child Opportunity Benefit will take effect and apply to all children under 18 years of age, replacing the early childhood tax benefit that only applies to families with children under the age of six.

The new refundable tax credit will provide a maximum of $1,600 for a family’s first child, $1,000 for a second child and $800 for each additional child. Families with one child earning up to $97,500 per year and families with two children earning up to $114,500 will be eligible.

Focus Point: CleanBC Strategy 

The new CleanBC strategy commits over $679 million in funding to reduce carbon pollution and promote the use of clean energy. The funding will support four core areas of the CleanBC Strategy:

  • Clean transportation – $42 million in incentives for battery electric and hydrogen fuel cell vehicles; $20 million for new public fast-charging and hydrogen fueling stations; $16 million in incentives to help vehicle fleets adopt zero-emission vehicles; $6 million for training and research into zero-emission vehicles; $5 million for incentives to install home and workplace charging stations; and, $6 million over three years for active transportation options.
  • Energy efficient buildings – $41 million in additional incentives to households and business that install high-efficiency heating equipment and improvements; $40 million toward energy efficient upgrades in over 1,500 government buildings; and, $3 million over three years to develop a net-zero building code applicable to all new buildings by 2032.
  • Indigenous and remote communities – $15 million to support the new Remote Community Clean Energy Strategy, which aims to reduce or eliminate diesel generation.
  • CleanBC for industry – $168 million over three years to support large industrial operations in reducing greenhouse gas emissions through targeted incentives.

Government has now invested over $900 million into the CleanBC strategy efforts, including the Clean Growth Incentive Program for industry released in the 2018/2019 budget. However, much uncertainty remains how government will meet the overall legislated targets.

Focus Point: Gender Budgeting 

The budget marked a new layer to the budget making process for government under the leadership of the B.C. NDP. Building on the creation of a Parliamentary Secretary for Gender Equity one year ago, MLA Mitzi Dean has been working closely with Finance Minister James to ensure that gender equity is reflected in government budgets, policies and programs.

 

 

Highlights by Sector 

Advanced Education 

  • The B.C Government will eliminate interest on new and existing loans as of the budget’s release through the British Columbia Student Loan Program, which will result in a cost to government totaling $318 million dollars.
  • The budget also includes $3.3 billion in total capital spending over the next three years towards the following highlights:
  • $450 million student housing loan program over six years to build new housing beds at public institutions; and,
  • $19 million for specialized equipment to develop the first quantum computer that will focus on health and life sciences, machine learning and cryptography through the B.C. Knowledge Development Fund in collaboration with Simon Fraser University.

Agriculture

  • In 2018, the government re-established the BuyBC initiative and made changes to the Agricultural Land Reserve (ALR) to prevent the building of mega-mansions on farmland.
  • In 2019, a food security task force will be created to bring more farmland into production and to grow new produce for market in the province and abroad. Additionally, the farmers’ food donation tax credit was extended to the end of 2020.

Education 

  • The Province continues to work towards meeting the increased demand in teachers after the Supreme Court of Canada’s decision to return class size and composition to 2001 standards. To reach this goal, the government, which hired over 4,000 teachers in the past year, budgeted $58 million for the Classroom Enhancement fund.
  • Approximately $2.7 billion will be invested to maintain, replace, renovate or expand K-12 facilities to address district growth and enrollment.

 

Healthcare

  • Budget 2019 allocates $1.3 billion over three years in total health spending. Medical Services Plan (MSP) premiums will be eliminated as of Jan 1, 2020, additional drugs will be covered under PharmaCare, with $42 million of new funding, and $74 million will be allocated to mental health and addictions services for children, youth and young adults.
  • The government also promised to increase funding to the B.C. Cancer Agency to $105 million.
  • Government has committed an additional $10 million per year over the next three years to address the opioid crisis.
  • Funds will be allocated to train more health care providers and to hire 200 new family physicians, 200 nurse practitioners, and 50 pharmacists.
  • Government is investing $89 million in grants to health and life sciences research organizations.
  • In addition, $4.4 billion in capital funding will be allocated over the next three years to expand and upgrade health facilities, medical and diagnostic equipment, and health information management systems.

Environment

  • The Ministry of Environment and Climate Change Strategy will have an additional $7 million dollars to support the resourcing and implementation of the new Office of the Superintendent of Professional Governance, with an additional $2 million dollars to be used for the creation of the new office.
  • The Environmental Assessment Revitalization process will receive $9 million to support implementation, regulatory framework and other resources required for the new legislation.

Housing and Homelessness 

  • In 2018 the B.C. Government tabled a 30-point plan called, “Homes for B.C.” During this current fiscal year, the province will invest $10 million to establish provincially-supported rent banks and may expand the initiative.
  • An additional $24 million for ongoing investments and $76 million for the province-wide homelessness action plan will focus on modular home builds, greater coordinated efforts for support services for those at risk of homelessness, as well as a province-wide homelessness count in 2020.
  • Minister James indicated that despite a decrease in housing sales and housing starts they will remain on course, focused with the various budget initiatives and policies announced previously.

 

Forestry 

  • The Ministry of Forests, Lands, Natural Resource Operations and Rural Development will receive $10 million over three years to support the Coast Forest Sector Revitalization Initiative. Funding will support the objectives of diversifying forest tenures and manufacturing, increasing domestic timber processing and collaborating and consulting with Indigenous governments, industry committees and other stakeholders.
  • The Ministry will also receive $13 million over three years to support the Forest Carbon Initiative that is to be delivered in partnership with the Forest Enhancement Society of B.C. and cost-shared with the Government of Canada. Funding will target the reduction of carbon emissions in the forest sector and the capture of carbon through the restoration of forests damaged by disease and wildfire.

Mining 

  • The Ministry of Energy, Mines and Petroleum Resources will receive nearly $20 million over the next three years to establish an independent oversight body, with more mine inspectors and a new auditing function: a Mines Health, Safety and Enforcement Division. A standing committee to review and update the Health, Safety, and Reclamation Code for Mines will also be created and additional resources will be provided to enhance Indigenous engagement.

Oil and Gas

  • New Remote Community Clean Energy Strategy with an investment of $15 million from the province. The strategy will aim to reduce diesel consumption for electricity generation in remote communities by 80 per cent by 2030. No additional details on the strategy were released.
  • The Province will invest $3 million to the B.C. Indigenous Clean Energy Initiative with matching funds from the federal government. The fund is focused on energy efficiency and clean energy projects in line with the Clean BC Strategy for on and off grid Indigenous communities.

Technology and Innovation

  • Approximately $10.5 million will go toward co-op placements for students and $5 million will be provided in 2021/22 to post-secondary institutions to support technology programming.
  • In 2019, the government will invest $50 million to expand high-speed internet to over 200 rural and Indigenous communities.

Tourism, Arts and Culture

  • To support B.C.’s tourism, arts and culture, the government will invest an additional $15 million in the B.C. Arts Council, $3 million into Destination BC, and $13 million per year into the Resort Municipality Initiative for infrastructure projects. Funds will also be provided to modernize the Royal BC Museum and establish a new Chinese Canadian Museum.

Transportation and Infrastructure 

  • Ride-hailing: The province will spend $9 million over 3 years to modernize the taxi industry and enable ride-hailing. This funding will support the Passenger Transportation Board in its new role as provincial regulator for passenger-directed vehicles.
  • The capital spending budget for infrastructure remained in line with previous announcements in 2018 and focused on the already announced $6.6 billion investment in key transportation projects. Budget supplementary documents included additional focus on the recently announced Community Benefits Agreement (CBA) that oversees the following three projects:
    • Pattullo Bridge replacement;
    • Four-laning of the Trans-Canada Highway between Kamloops and the Alberta border; and,
    • The Broadway Subway line.
  • Some $21 million was announced for B.C. Transit to expand bus services in 30 communities around the province, with a focus on accessibility for people with disabilities and seniors.
  • The deployment of the Smart Bus Technology will enable mobile fare payment and real-time technology to enable the use of mobile devices to see the exact location of a bus along its route, support automatic voice announcements and interior passenger information display.