Now that the Throne Speech is out of the way, the ground is prepared for something that is a far meatier subject: the provincial budget.
The budget for the coming fiscal year (which begins April 1) will be tabled next Tuesday. It’s the last one before the provincial election, so it is expected to be laced with goodies on both the spending side and the tax side.
But the spending goodies may actually now be somewhat limited in nature, given that the B.C. Liberal government, in that Throne Speech, promised to deliver what sounds like a major tax break in the coming budget.
Any tax break has to be fairly large to create any political advantage for the government. And the larger the tax cut, the more expensive it is for the government treasury.
For instance, a one point cut in the provincial sales tax would reduce government revenues by about $900 million. The government’s three-year fiscal plan suggests the budget could absorb that loss and still have enough dollars left over to generate a budget surplus (but not necessarily a large one).
A significant cut to income tax rates (presumably another option the government is considering) would also incur a large loss in revenue (likely in the hundreds of millions of dollars).
This leaves little elbow room for a spending spree. Oh, the health budget will go up by another half billion dollars or so, because that’s what happens every year (the next time you hear complaints about “cuts” to health care, remember that half billion dollar annual increase).
But most other areas of government spending will likely either be frozen, or be treated to a modest increase, with a few exceptions.
For example, the K-12 public education system is in line for some big bucks. That Supreme Court of Canada decision that ruled the government acted illegally when it arbitrarily stripped the teachers union’s contract of language that determined class sizes is a costly one for the government.
How costly? Some estimates exceed $300 million, as thousands of teachers may have to be hired to meet class size requirements. It is unclear how much of that new funding will be in the next budget, and how much may be earmarked for the following year.
It will be interesting to see if the beleaguered Children and Family Development Ministry gets a significant budget increase. The fiscal plan shows it is supposed to get a less-than-modest hike of $21 million, which is less than a one per cent lift.
That scathing and alarming report by the Children and Youth Representative on the death of Alex Gervais may finally bring enough pressure on the government to top up the ministry’s budget by much more than that paltry increase.
Seniors’ home care is another area that will receive some extra attention and funding as will mental health, both largely courtesy of the health care agreement signed Friday with the federal government, which stipulates these two areas are where the feds want their contribution to go.
How, back to that looming tax cut.
Part of the government’s strategy here is to throw a potential wrench into the NDP’s election platform. If that tax cut removes a huge amount of revenue out of the budget, it will be harder for the NDP to promise all kinds of spending hikes (as Opposition parties tend to do, given they criticize government for not spending enough at every turn) without tipping the budget into a deficit.
The NDP has yet to release its election platform, or explain how it will pay for various things (such as a $10-a-day-daycare program) without running a deficit (of course, it may well choose to run deficit budgets, a la Justin Trudeau, in the hopes that is a more attractive option than squeezing government services).
This budget, with its potential for a significant tax cut, could well shape the narrative of the upcoming election campaign for both of the major parties. For many voters, it may come down to a choice: lower taxes, or more government services.
We should have a clearer picture when Finance Minister Mike de Jong takes his feet in the legislature around 2 p.m., and delivers the most politically-tinged budget in the last four years.
Keith Baldrey is Global BC’s legislative bureau chief
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