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Prudence and ambition are the twin pillars of this week’s British Columbia budget. It may sound like a stretch to pair prudence with ambition. But backstopped by Canada’s strongest provincial economy, it’s what the B.C. NDP and Premier John Horgan, with the narrowest of holds on government, have managed to deliver.

First, the prudence: The 2019-20 budget includes B.C.’s seventh consecutive surplus, and the NDP’s second, even as it increases spending on health, education, children and infrastructure.

This long run is a feat no other Canadian province can boast of since the 2008-09 financial meltdown. Before the crash, surplus budgets were the norm in Canada. But postcrash, most provinces – and Ottawa – are stuck in the red.

Finance Minister Carole James said Tuesday that B.C. is “thriving," and that’s largely true. Her government is reaping the benefits of a solid economy. But where critics might have expected the NDP to put the pedal to the metal on spending, that has yet to happen. Yes, spending has increased, but at a pace along with revenue gains – hence the continuing budget surplus. Economists at Royal Bank of Canada described the NDP’s fiscal policy as “conservative.”

Equally conservative is B.C.’s debt situation. Its net debt-to-GDP ratio is forecast this year at just 15 per cent and is expected to tick up to 16 per cent in 2021-22. Compare this with Ontario and Quebec at around 40 per cent, or Ottawa’s ratio at about 30 per cent.

Backed by this prudence, the NDP is showing some ambition on its priorities, from infrastructure spending to easing the burden on lower-income people. Spending will rise by $2.5-billion in 2019-20, mostly in health care, education and capital expenditures. The province has also embarked on its biggest three-year capital plan, worth $20-billion; that’s why the debt-to-GDP ratio is increasing slightly, even in a time of budget surpluses.

The NDP also introduced a new, more generous version of child benefits. Lower-income families benefit the most, but the average middle-class family sees a boost, too. The new child benefit, in combination with the elimination of health-care premiums, would see, according to the government, a family of four with an income of $80,000 paying about $3,200 in provincial taxes when the policies are fully in place. That figure, says the government, is down about 40 per cent – more than $2,000 – from 2016.

We can note, too, that $400 of the $3,200 in government levies on this family of four is a carbon tax. A crop of conservative critics across the country claim carbon taxes are economic suicide. But in B.C., where the tax is more than a decade old, it has been effective in lowering emissions without sinking the economy.

A note of warning, though. The NDP is doing its prudence-ambition trick on the back of several key elements. The first is that solid economy. The second has largely escaped notice.

The government predicts that government revenues in 2019-20 will rise by $2.4-billion, to $59-billion. A big share of that comes from two unusual areas: BC Hydro and the provincial auto insurer, ICBC. While the NDP in 2017 inherited fiscal books in relatively good shape from the BC Liberals, BC Hydro and especially ICBC were a mess. The NDP is forecasting the two Crown corporations will generate combined net income of about $660-million in 2019-20, a massive reversal from a loss of $1.6-billion in 2018-19.

The budget hinges on these turnarounds. The prudence-ambition act will collapse if the NDP can’t deliver on its plans at ICBC and BC Hydro.

Several other NDP initiatives are at play, as well. To eliminate the health-care levy on individual taxpayers by next year, the province introduced a payroll tax on employers, to generate $2-billion annually. This is a big tax shift. And will real-estate taxes introduced last year – on vacant homes and homes worth more than $3-million – bring in enough to cover for the slumping forestry and mining sectors?

The BC Liberals used to argue the NDP did a poor job on fiscal matters when the party was in charge in the 1990s, and many voters genuinely feared the prospect of NDP hands on the provincial treasury.

The last two years challenge that story. If the NDP can keep to the midpoint of the prudence-ambition balance, it will have a solid fiscal platform to stand on when the next election comes around.

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