The B.C. budget is a low-drama peace offering about stewardship of the country’s best economy and a high-drama declaration of war on the country’s worst housing mess.
Skeptics have been waiting for John Horgan’s NDP government to step into the abyss and revert to the tax-and-spend stereotype opponents liberally – make that Liberally – apply.
Didn’t happen this time. This could have just as easily been a budget under the previous government.
It met head-on a sizable chunk of the provincial opportunities on housing with a 30-point – yes, that’s right, 30-point – plan that among many things penalizes speculation, expands and enlarges foreign homebuyer taxes, creates new charges on luxury dwellings, and prevents people from flipping a pre-sold property before it’s built and occupied.
It considers its plan to be about housing “affordability,” but it’s really about housing vulnerability to global capital and disreputable speculators, investors and builders. B.C. tried to close the barn door Tuesday, but let’s admit: the horses have been galloping in the fields for some time and even thunder and lightning may not rein them in.
The largest unpleasant surprise for the new government has been the triage at the Insurance Corp. of British Columbia (ICBC), and the province put some meat on the bones of its plan to tame the beast with a financial game plan still in need of specifics. Saying it will do so pretty much drives down the surplus by $1 billion to $219 million ($281 million and $284 million in subsequent years) – and it’s a surplus seemingly because the economy is even better than the province thought only months earlier.
Obviously, the NDP government has no appetite to veer dangerously toward deficit territory. There is little point in opening the flank to Liberal flailing in a precarious legislature in which the opposition holds more seats than the governing party.
Indeed, it projects the elimination of operating debt next year, the first time in four decades, as a measure of some salve to any skittish markets worried about record capital spending. There are reasonable contingencies in the mix – more about non-rainy days for forest fires than for rainy days of the economy. It is keeping the debt-to-GDP ratio below 16 per cent, so there ought not to be a clash with the credit raters.
James’ tax touches are deft, although perhaps not the 1.95% next year on payrolls of businesses with more than $500,000 in labour costs clearly to offset the elimination of Medical Service Plan premiums the year after. Business also won’t pay PST on electricity.
The Horgan government’s blueprint was oddly silent on new measures to deal with the opioid crisis, bearish on any financial benefit of cannabis legalization, consciously silent on any impact if NAFTA collapses, and less than the full-meal-deal in its investment in a B.C.-style childcare plan to boost workforce well-being.
If budgets are about choices that leave some expectations unmet, child care advocates can’t be pleased with what emerged Tuesday.
The province promises a record $1 billion commitment over three years to child care, but it acknowledges it is only a step on what it says is a 10-year path to universality smitten with exemptions meantime. This first step provides benefits for about 86,000 families and fee reductions to providers for 50,000 families by 2021, but the long road ahead even in good economic times seems mostly uphill.
Nowhere was there mention of the $10-a-day concept on which the party campaigned – nor, for that matter, its renter-targeted $400 annual rebate – and an acknowledgment by James in her speech that a universal program “requires a shift that will take time.”
Time is not on the side of bold moves, though. The economic outlook of 3.4% growth this year dampens to 2.3% next year and 2% the year after. That will close the walls in on a government that increasingly feels less radical than the doubters expected.