B.C. budget: Five things to watch

B.C.'s Finance Minister is expected to turn on the taps with Tuesday's budget, promising both substantial tax cuts and significant spending increases.

Here are five things to watch for when Mike de Jong stands up in the legislature on Tuesday afternoon to present his fifth budget.

Economic outlook

British Columbia enjoyed the fastest-growing economy in the country with 3.3-per-cent growth in 2016, driven in large part by a superheated real estate market. Economists predict the economy will expand at a more modest pace in the coming year: Welcome to the posthousing boom.

The province's private forecast council last November predicted 2.2-per-cent economic growth for 2017. Mr. de Jong routinely builds his budget around a more cautious forecast, which means his budget will peg growth at something closer to 2 per cent. There are strengths – the growing high-tech sector is one – but also risks to the outlook. Domestically, the cooling housing market will reduce what has been a driving force in the provincial economy. And uncertainty around global economic activity is a challenge for much of the province's resource sector, and none more so than the producers of softwood lumber.

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The budget will likely seek to counter those forces with job-creation measures that could include targeted tax relief for business. At the very least, the government has promised a rural infrastructure investment plan for those communities that have not enjoyed economic growth.

Education

The government defended its education cuts all the way to the Supreme Court of Canada – and last November, it lost. The province has already offered $50-million to hire the equivalent of 1,100 new teachers in the current year, and Education Minister Mike Bernier has promised an annual funding lift of $100-million to ensure those salaries are covered in the coming school year. However, the B.C. Teachers' Federation maintains that nothing less than a $300-million boost will provide enough teachers to meet the court order. In addition, there is rising enrolment to contend with.

Talks continue between the government and the BCTF to determine how to restore class size and composition to the levels that existed in 2002. There will be more money for education in the budget, but the province may have to dig into its contingency funds to pay for the cost of the final settlement with the BCTF. "You will see flexibility built into the upcoming budget to work with teachers to invest in student outcomes," Mr. Bernier said in a recent statement.

School boards set their budgets in April and will need to see just how much flexibility the budget holds for them by then, to plan for the school year that begins next September.

Child protection

Almost three months ago, the B.C. government was handed a prescription for reducing the number of Indigenous children and youth in care. The report from Grand Chief Ed John called for a sweeping overhaul of the province's child-protection system and millions of dollars in additional spending.

His report adds to a tower of damning reviews chronicling the province's services for vulnerable children. Retired bureaucrat Bob Plecas described two decades of chaos that has failed children in government care. The office of the independent watchdog for children and youth has reported on dozens of specific examples in which children died or were critically injured because the support they needed wasn't there.

And the union representing social workers has detailed how there are not enough front-line services to meet child protection needs. The B.C. Government and Service Employees' Union (BCGEU), in a budget submission, acknowledged that last year's budget promise to hire additional social workers was a good start to turning matters around. But because of attrition, the union says there are fewer workers today than there were a year ago.

Mr. de Jong says his government is anxious to address the funding gap with Tuesday's budget. The spotlight will be on how deep that commitment is in a budget that is set up to meet so many other expectations as well.

Taxes

"There are a lot of taxes I want to get rid of because I think we should be figuring out how to get more money back into people's pockets," Premier Christy Clark told CBC News last December.

In the Speech from the Throne last week, the B.C. Liberal government made it clear that tax relief is on the way. "Our government is now in a position to pay you back, to relieve some financial burdens, and to invest in your household and in your families," the speech said.

Which taxes would the BC Liberals get rid of? The government can tinker with fees, income taxes, sales taxes. The one levy that the Premier has singled out is Medical Service Plan premiums, which will bring in $2.5-billion this year. But it is unlikely she will eliminate it, as proposed by the opposition New Democratic Party. Although she says the current system is unfair and antiquated, she has said that would simply move the burden somewhere else. The government might seek to modernize the premium by linking rates to income.

Affordability

On Monday, the Finance Minister made this prediction about reaction to his budget: "There will be no shortage of commentary and criticism about 'Why didn't you do more here?'"

That will be especially acute if welfare rates remain the same on Tuesday.

Mr. de Jong's comment was prompted by questions about the $50-a-month rate hike announced on Friday for those who receive income assistance because of a disability. He conceded that an additional $600 a year won't make life markedly easier, but he said choices are limited to "what we can afford."

While the province racked up consecutive surplus budgets over the past four years, the 70,000 people surviving on basic rates for welfare did not receive a penny more.

The BCGEU, which has lobbied for a provincial policy to tackle poverty, noted: "In spite of our vast social and economic resources, an unacceptable proportion of B.C.'s population continues to live in conditions far below what is befitting of a province that is 'the envy of the nation.' Currently, 10.4 per cent of our population, or 469,000 British Columbians, live in poverty based on Statistics Canada's low income cut-off."

The one overriding principle of this budget is that it is designed with the May 9 election in mind. Mr. de Jong explained: "We are trying to ensure that the benefits of our strong economy are shared by the widest possible group."

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