B.C. budget to address Vancouver’s hot real estate market

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The B.C. budget of Feb. 16 will include a double-barrelled response to Metro Vancouver's superheated real estate market, Finance Minister Mike de Jong says.

"The conversation has tended to be about pricing," Mr. de Jong told reporters on Thursday. "If all we do is help increase the number of people getting into the market without increasing supply, we'll probably have the opposite effect and drive up prices."

The province has been under pressure to impose measures to cool down the market. Mr. de Jong has already said he is looking at overhauling the property-transfer tax. The province is likely to raise the threshold for tax exemptions – and pay for the change by adding a new, higher tax rate for the most expensive houses.

The Finance Minister said the province also has to encourage new construction – a plan that may take more than one budget year to implement. "We need measures that we hope will encourage expedited construction."

Vancouver Mayor Gregor Robertson has called on the provincial government to impose a speculator tax and a luxury tax, while some academics have recommended a surtax on housing to be paid by anyone with no B.C. income. The Finance Minister has rejected many of the proposals, saying they would degrade the equity of existing homeowners, and he has cautioned that the extent of foreign ownership is poorly understood.

Mr. Robertson is also applying pressure to the province to contribute more money to build new units of affordable housing. This week, the mayor outlined plans to offer $250-million worth of city-owned property in an effort to secure $500-million over five years from Ottawa to build more social housing. Mr. de Jong would not say if his province will come to the table with matching funds.

Housing will be a significant topic in the next provincial budget, but spending on social programs is expected to be a major theme as well.

This will be Mr. de Jong's fourth consecutive surplus budget and, while warning that the province's export markets are still at risk, he promised a freer hand with new spending this time around.

He said the budget will include changes to the province's Medical Services Premiums to provide relief for some subscribers – single parents at the very least – as well as other initiatives to help the province's most vulnerable citizens. Premier Christy Clark has already committed to increasing funding to improve child protection services.

Mr. de Jong would not say whether the province will boost welfare rates, which have not increased since 2007, but promised the budget will offer marked changes for British Columbians.

"We are in a position, happily, to look in a responsible way across the spectrum [at more spending]. We can't do everything we want to do," he said. "But I think people will be impressed by the breadth of the investments we are making."

On the heels of an announcement earlier in the day that Royal Dutch Shell PLC is postponing a final investment decision on its proposed $40-billion liquefied natural gas plant project at Kitimat, Mr. de Jong said he will not be booking any anticipated revenue from LNG in the three-year fiscal plan he will table in a little more than a week. The LNG industry promised in the B.C. Liberals' 2013 election campaign was supposed to be in operation by 2015, but tumbling prices for oil and gas have led potential investors to delay plans.

The Finance Minister, who also serves as House Leader for the governing B.C. Liberals, said the legislative session that begins next week will also focus on the environment.

The province will enact a law to enshrine the conservation and logging regulations promised in the Great Bear Rainforest agreement that was announced on Monday. As well, Mr. de Jong all but confirmed his government will have to introduce legislation to revise its climate-change targets after a report last November said the province cannot meet its 2020 commitment to substantially reduce greenhouse gas emissions. "I think you will see targets referred to," he said.