The B.C. government is hoping the private sector will help pay to train the workers required for a liquefied natural gas boom projected to create up to 100,000 jobs and wipe out the province's debt.
The Speech from the Throne and comments from the Premier have highlighted the need for schools to train graduates who are better attuned to private-sector needs.
But the government did not allot more spending in Tuesday's provincial budget to train workers to help along B.C.'s LNG potential. Finance Minister Mike de Jong said the private sector will need to help.
"We're not going to ask the taxpayers to shoulder this burden on their own. We see the potential for partnerships with the industrial sector that are going to be at the forefront in terms of the demands for these workers, so there is, we think, a partnership opportunity that needs to be developed," Mr. de Jong told a news conference during the budget lockup.
Mr. de Jong did not provide any other specifics. Earlier this week, Premier Christy Clark suggested post-secondary institutions should do more to provide graduates who meet the needs of the private sector. In the Throne Speech, the Liberals said they would change the education system to produce skilled tradespeople in the coming decade.
The budget shows a decline in spending at the Ministry of Advanced Education, which is being cut by $17-million between 2013-2014 and 2014-2015, with a further $25-million reduction in 2015-2016.
Asked about the issue, Mr. de Jong tallied up various spending commitments in skills training and said they highlighted a commitment to meet the province's needs in the area.
The provincial budget outlined $2.3-billion in capital spending for facilities that would offer skills training, including new trades training facilities at Camosun College in Victoria and an expanded trades-training complex at Okanagan College in Kelowna.
Over all, the province is allotting $1.5-billion to maintain, replace, expand and renovate K-12 educational facilities in B.C.
The minister was non-committal on another key educational issue, notably the potential economic impact of a recent B.C. Supreme Court ruling that restores teachers' bargaining rights of more than a decade ago. Education Minister Peter Fassbender has said the ruling could cost $1-billion. The government is appealing it.
Budget documents say costs associated with the ruling present a "risk" to the balanced budget.
Asked about the issue, Mr. de Jong said the government has two options for dealing with such unexpected costs, raising taxes or reallocating funds.
The minister said the government has generally ruled out tax hikes.
Of reallocating, he said, "That is never a happy circumstance."
He did not comment further.
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British Columbia Finance Minister Mike de Jong introduced a balanced budget for 2014-2015, noting the only other province to do so this year is possibly Saskatchewan (full story here). Here are some highlights:
By the numbers
“We continue to balance on a razor’s edge.” – Mike de Jong
The province projects a budget surplus of $175-million for the fiscal year ending this March, fulfilling the Liberals’ election pledge. The surplus is somewhat more than what Mr. de Jong predicted at the end of the third quarter – $165-million – but it is smaller than the $197-million surplus projected in last February’s budget.
The budget surplus for the upcoming year is forecast to be $184-million. Economic growth is expected to be two per cent.
The provincial debt for 2014-2015 is projected to be $64.7-billion.
“I don’t want to suggest a cascade of dollars flowing into the Prosperity Fund in the next five years.” – Mike de Jong, referring to the fund established last year to use profits from liquefied natural gas for, among other things, paying down provincial debt
Last year, British Columbia had promised to outline how it planned to levy taxes to realize the government’s much-touted dream of LNG riches, leading to a debt-free province. But Mr. de Jong was forced to admit the complexities of coming up with the regime mean the details will not be available until fall.
The government does not expect the first plant to begin production until 2018, and revenues are not expected to begin until after that.
Tuesday’s budget included the structure of how that tax regime will work: a two-tier system with a 1.5-per-cent tax applying for the first three years, transitioning to a tax of up to seven per cent by the sixth year and beyond.
The exact tax rate for the second phase will be introduced in the fall after an assessment of global and provincial conditions.
Measures for individuals
“Admittedly, the tax relief in this budget is pretty thin.” – Mike de Jong
In an effort to get into the black and to bolster an election campaign based on a balanced budget, the Liberal government introduced several new taxes on individuals last year.
The 2014-2015 plan has fewer of those. Medical Services Premiums, boosted last year, continue the pre-arranged climb. Effective Jan. 1, 2015, the premiums will rise by about four per cent, amounting to about $5.50 a month for a family of three or more.
Tobacco taxes will rise as of April 1 by 32 cents per pack. That is over and above the increase announced last week in the federal budget.
The B.C. Training and Education Savings Grant – a one-time payment for children born in B.C. in 2007 or later and whose parents have contributed to a registered education savings plan – kicks in with payments of $1,200 per child by the end of the coming fiscal year.
As well, starting in April 2014, the B.C. Early Childhood Tax Benefit of $55 per month per child under the age of six will begin to be paid out. The benefit is income-tested.
“We’re not going to ask taxpayers to shoulder this burden on their own. We see the potential for partnerships with the industrial sector.” – Mike de Jong on skills training
Funding for advanced education actually drops by just over $16-million, which the government says is a result of finding efficiencies and not cutting student services. Critics, however, question whether the number can reflect the government’s stated priority on skills development.
Provincial funding for Kindergarten to Grade 12 nudges up barely, with a $22-million increase over last year.
The spending estimates make no provision for higher expenses due to a judge’s ruling last month ordering the province to reinstate contract language for teachers that was in place prior to 2002. The language, wiped out by the Liberals, dictated class sizes and composition, and Education Minister Peter Fassbender has said following the ruling would cost $1-billion.
The province has filed its intention to appeal. If it loses, the money to pay for it this year would wipe out the $300-million contingency fund intended for unforeseen disasters such as forest fires and floods.
“We have more work to do.” – Mike de Jong on job creation
The government is devoting $29-million over three years to push the LNG strategy forward.
Another $9-million has been pledged for environmental assessments of resource development of proposed LNG facilities, as well as pipelines, mining and other major projects.
The province has also underlined a commitment of $5-million over five years to the Aerospace Association of Canada Pacific Division.
Still, Mr. de Jong acknowledged jobs growth isn’t where the province would like it to be, noting that though employment has been stable, job growth has been flat.