The B.C. Liberal government won’t recall the legislature this fall because it is not ready to unwrap its tax regime for a liquefied natural gas industry, creating a legislative logjam that will leave the House empty until the spring.
Premier Christy Clark promised seven months ago to establish a B.C. Prosperity Fund, which would begin, in 2017, to collect some of the billions of dollars in revenue that her government expects will flow from the construction of at least five LNG plants. But the details of just how industry will be expected to contribute remain the subject of extensive consultations with the proponents.
“It’s urgent because of the measure of import we have assigned to getting on with the development of the liquefied natural gas industry,” Finance Minister Mike de Jong said Tuesday.
But he said the drafting of the tax package is complex. “You have got to find that sweet spot between ensuring the citizens get a fair return and being competitive – and the risk you run in searching for that sweet spot is that [investors] will go elsewhere.”
However, he said he’s not concerned that proponents will lose interest in B.C. because of the continued uncertainty of the tax landscape they would operate under – he said industry is at the table helping shape it. He stressed that cabinet will make the final decision, and the framework for the tax system should be public by the end of the year.
The creation of an LNG industry has been a key target for the Clark government, and the Premier announced Tuesday a trade mission in November to China, South Korea and Japan to pursue those opportunities.
But John Horgan, the New Democratic Party house leader, said the tax issue isn’t the only question surrounding LNG, and maintained the legislature should be recalled this fall to debate other matters, including how the industry’s massive energy needs will be met.
“We are in competition [for investors], but that should not consume the entire government of British Columbia – it is one element of a very complex, open economy and to just focus on that is an abdication of other areas,” he told reporters.
Mr. de Jong was in Victoria on Tuesday to release his latest fiscal update for the province. He said B.C. is still on track to balance the budget this year – as his party promised during the spring election – but the surplus sits on a “razor thin” edge of just $136-million. That is a small but worrisome drop from the budget he tabled in July, when the surplus was forecast to come in at $153-million on a $44-billion budget.
With that small margin, even relatively small changes in the economy could bump the province into the red – something the Liberals have vowed will not happen.
The fiscal update shows higher-than-expected costs for fighting fires and floods plus lower-than-forecast personal income taxes. However, asset sales are still on track, Mr. de Jong said, while revenue losses were offset by improved corporate tax revenue. The economy is still expected to grow 1.4 per cent.
The B.C. Liberals owe their fourth consecutive term of office in large part to a campaign that promised a “debt free B.C.” that hinges on the development of LNG. Balancing the budget was another central campaign theme.
“There is no room for additional spending,” Mr. de Jong said. “We are not out of the woods yet.”