The B.C. budget

B.C. Finance Minister Mike de Jong has tabled his latest budget, gloating about the province's finances and yet another balanced budget, while introducing several measures to address concerns about the unaffordability of the province's real estate market.

'B.C. advantage'

B.C. has already raised eyebrows for taking a shot at Alberta during its recent Throne Speech, saying its neighbour had "lost its way" by failing to diversify its economy and control spending. Mr. de Jong continued boasting about B.C.'s fiscal situation as he released the budget, noting the province may be the only one to balance its books this year. Borrowing an old slogan from Alberta, Mr. de Jong declared: "The B.C. advantage is back."

Here are some of the economic highlights:

• The province’s surplus is projected to be $264-million for 2016-2017, increasing to $373-million by 2018-2019.
• The government is projecting GDP growth to be 2.4 per cent in the coming year, which the finance minister says is the highest in the country.
• B.C. will start its so-called “prosperity fund” this year with a $100-million deposit, which can be drawn upon in future years to pay down debt and fund services. The account was intended to be funded by liquefied natural gas revenues, but the province still does not have an LNG export facility up and running. When the government withdraws money out of the fund, half of the money taken out must be used to pay down the debt.
• The budget does not account for any revenues from the liquefied natural gas industry and notes economic conditions have slowed progress on the file. In 2011, the Throne Speech predicted the first export facility would be up and running by the end of 2015, but that did not happen.

Overheated housing

The debate about British Columbia's overheated housing market, particularly in the Vancouver region, has focused on concerns over speculation, foreign ownership and flipping – which many believe have all conspired to drive up costs so much that many people will simply never be able to afford to buy a home.

The latest budget includes several measures intended to increase housing supply, allow first-time buyers to enter the market, and finally measure the prevalence of foreign ownership.

They include:

• An increase in the property transfer tax for luxury homes with a new tier of three per cent on the portion of a purchase above $2-million. That is on top of the current rates, which impose a one per cent tax on the first $200,000 and two per cent for the portion between $200,000 and $2-million.
• At the same time, there is a new exemption for newly constructed homes, which will mean the property transfer tax won’t apply to new homes below $750,000. A partial exemption will apply for homes between $750,000 and $800,000. Those exemptions only apply for Canadian citizens and permanent residents purchasing their primary residence. The first-time home buyer program, which provides exemptions and reductions for houses below $475,000, remains in effect.
• The province will track foreign ownership by requiring anyone purchasing a residential property to disclose whether they are a Canadian citizen or a permanent resident – and, if not, where they are from. The requirement also applies to directors of corporate owners.
• Bare trusts will be required to disclose their beneficiaries.

Health and child welfare

The most notable announcement when it comes to social spending centres around health-care premiums for the Medical Services Plan, or MSP, which will increase overall but will be eliminated for children and reduced for others.

Some notable social policy announcements include:

• Health-care premiums will be eliminated entirely for all children in the province, meaning household premiums will only be calculated based on the number of adults.
• More low-income residents will receive reductions in their rates or complete exemptions.
• MSP rates will continue to rise for the wealthiest adults, with the maximum increase amounting to $3 per month per adult, while couples will no longer receive a discount for paying together.
• Overall, the province will collect significantly more through health-care premiums, taking in a projected $2.8-billion in 2018-2019, compared with $2.4-billion in 2015-2016.
• To address recent controversies overshadowing the province’s Ministry of Children and Family Development, the budget includes $217-million to implement the recommendations contained in a report by Bob Plecas, who called for more funding and social workers for the province’s child-welfare system.
• People with disabilities will see increases to their monthly benefits of up to $77 per month.