British Columbia's new NDP government has tabled its first budget as it begins to shift the direction of the province, imposing new taxes on the wealthy and corporations while pledging to spend more on social programs, housing and the ongoing fentanyl crisis.
But the budget was cast as an incremental update, since it comes in the middle of a fiscal year that was interrupted by an election and a confidence vote in the legislature, which defeated the previous BC Liberal government. Many of the New Democrats' signature policies in areas such as housing and childcare are either sparsely mentioned or entirely absent.
Read more: B.C. NDP's first budget begins remake of province but puts off most expensive promises
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Here's what you need to know about what's in the budget, what's not, and what the fiscal plan says about where the NDP government is heading.
What has changed
The NDP have used a budget that was tabled, but never passed, by the Liberal government in February as a starting point, but there are some notable changes. Overall, the new government expects to bring in about $1.6-billion more in revenues than first projected, while spending about $1.7-billion more. That added spending includes more than $500-million in firefighting costs in what was the worst fire season in recorded history.
In the end, the surplus is expected to be fairly close: $246-million compared with the $295-million projected by the Liberals.
The government expects B.C.'s economy to be near the top of the country in terms of GDP growth, which the province predicts will be 2.9 per cent this year and 2.1 per cent in 2018. The economy has performed far better than expected so far this year, which meant the province ended the 2016-17 fiscal year with a $2.7-billion surplus – about 10 times higher than initially projected. That performance is expected to continue, but the large surplus is not.
B.C. continues to have among the lowest unemployment rates in the country, with a seasonally adjusted rate of 5.1 per cent in August – second only to Manitoba
The NDP government is pressing ahead with tax increases on the province's wealthiest residents and corporations. The budget restores a separate tax bracket for incomes over $150,000, with a rate of 16.8 per cent, up from 14.7. That is expected to bring in $32-million in the current year and more than $200-million next year.
Corporate taxes will also increase to 12 per cent, from 11 per cent. The government expects that change to bring in $103-million in the current year and more than $300-million in the first full fiscal year in 2018-19.
The province's carbon tax, which will increase in the coming years along with federal requirements, will no longer be revenue neutral. Instead of offsetting the carbon tax by reducing taxes elsewhere, the NDP government plans to use the revenue from the tax to fund programs that reduce carbon emissions.
The NDP's most significant – and expensive – election promise was a $10-per-day childcare system that could eventually cost $1.5-billion annually. It would take a decade to fully implement, the New Democrats warned, but the money would begin flowing almost immediately. The party's platform promised to spend $175-million in the 2017-18 fiscal year.
But the budget includes none of that spending this year and does not forecast what the program will cost as it comes online in the coming years. The government says only that it will begin consultations this fall on a universal, affordable childcare program.
Health and the opioid crisis
B.C. is the only province to charge citizens directly for the cost of their health care with premiums of up to $900 for a single person and $1,800 for families. The BC Liberals promised to cut those premiums in half for most people starting on Jan. 1 of next year, and the NDP's budget maintains that – with some important changes.
The Liberals' February budget restricted the premium cut to families earning less than $120,000 a year and required anyone eligible for the discount to apply. The new budget says the cut will apply to everyone, regardless of income, and it will be automatic. The government says that will save a single person $450 per year, while couples and families will save $900 each year.
The government says it will eliminate the premiums altogether over the next four years, but the details of exactly when that will happen, and how it will be funded, have yet to be figured out.
The budget also includes more than $60-million this year as the province continues to struggle with the overdose crisis, which killed nearly 1,000 people in the province last year and continues to worsen. The new money is mostly aimed at the Health Ministry, along with $5-million for the newly created Ministry of Mental Health and Addiction. Over the next three years, the government plans to add $322-million to fund the response.
The skyrocketing cost of housing, for both owners and renters, was among the top issues in the spring election campaign, and the NDP's first budget promises to begin easing the pressure. But several of the party's most substantial policies from its election platform are absent.
This year, the government will spend $13-million to build what are being billed as "affordable" rental units, part of a plan to spend $208-million over four years to build 1,700 units. The government will also spend $145-million to build modular supportive housing units for the homeless, part of a total of $291-million over two years.
There is no mention in the budget of a subsidy program for renters, which the party promised would provide $400 per year for every rental household to offset the costs of increasing rates. The platform said it would begin in the current year, but the government says it has more work to do on the housing file before rolling out the subsidy program. The Residential Tenancy Branch will see an increase to its budget and staffing levels this year to improve the agency that adjudicates disputes between tenants and landlords.
The government will maintain the existing 15 per cent tax on foreign home purchases in the Vancouver region, which was introduced in August of last year. The NDP's election platform included a new speculation tax, which would charge a two per cent levy on homes whose owners do not otherwise pay income taxes in B.C., beginning in the Vancouver region. But there is nothing about the speculation tax in the budget.
The government is also not touching a home loan program for first-time buyers that was introduced by the Liberal government at the start of the year. The program provides loans of up to $37,500 to help first-time buyers with their down payments, with no payments due for the first five years. The new government says participation in the program has less than expected.
Overall, the government is predicting that the housing market will cool over the coming years, resulting in a drop in revenue through the province's property transfer tax.
The province lost a 16-year legal challenge at the Supreme Court of Canada last year that has forced the government to hire 2,500 new teachers for the start of the school year. The case restored contract clauses related to classroom size and class composition that the Liberal government stripped from teachers' contracts in 2002.
The Liberal budget this past February had already increased the education budget by $120-million this year to cover the costs related to the court case. The NDP budget adds another $137-million. In the coming years, the government expects the court case to cost almost $300-million a year.
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