B.C. Budget 2015: Canada's only province in the black
High earners, home buyers and fewer car insurance claims push surplus to almost $1B
British Columbia's higher than expected surplus of close to a billion dollars puts the province in a one-of-a-kind club.
"We are the fiscally healthiest team in the league," Finance Minister Mike de Jong proclaimed in his speech to the B.C. Legislature in Victoria on Tuesday afternoon.
Stricken by the collapse of global energy and commodity prices, so far no other Canadian province has forecast a budget in the black this year — yet B.C.'s Liberal government will manage to end 2014-15 with a surplus twice as large as predicted as recently as November.
Continuing the sports analogy, de Jong explained B.C. took "no bad penalties" and made "no self-imposed mistakes."
The finance ministry's forecast of a $444-million surplus has been bumped up to $879 million, with the expected addition of a $100-million fiscal cushion at the end of the year.
Extra revenue booked
The biggest reason for rosier numbers is higher than predicted revenues from personal income tax — in particular, richer British Columbians earning more and paying more tax.
ICBC also gets a big assist. The provincially owned auto insurance corporation contributed $166 million more than forecast to provincial coffers, thanks mostly to savings on collision claims.
Taking a cut of Vancouver's super-charged real estate market continues to fill the government's coffers. The property transfer tax, paid whenever a property changes hands, added an extra $85 million.
As for liquefied natural gas, any potential benefits for B.C. remain years in the future. Once again, the budget predicts zero revenue from the gas, despite Premier Christy Clark's claim that up to 18 potential projects could eventually add $100 billion to a so-called prosperity fund.
Despite the struggles with getting the new industry established, the big picture, said de Jong, is that B.C.'s economy has diversified to the point that a crash in any single sector isn't fatal.
"The fact we are less dependent on one market, the United States, has assisted us greatly," he told stakeholders in Victoria.
Roughly 37 per cent of B.C.'s exports are now sent overseas to Asia, versus 50 per cent to the U.S.
Ontario, on the other hand, sends almost 80 per cent of its exports south and Alberta's energy sector is virtually tethered to the U.S., sending a whopping 90 per cent of its exports south of the border.
Consumer confidence in B.C. also continues to be strong. Retail sales were up six per cent — double the forecast.
Likewise, it was a better than expected year for manufacturing, with the low dollar powering exports and generating 6.3 per cent growth.
Betting on fiscal discipline
De Jong's critics will highlight a paucity of measures to help middle-class families, along with the continuing practice of hiking service fees – such as those for the Medical Services Plan or taking BC Ferries.
The teachers' union also claims some of the half a billion dollars the government is setting aside to pay for settling the recent teachers strike, will simply be shuffled out of existing education funding, thereby depriving kids of buses, school lunches or other programs.
Still, the premier and her finance minister appear to have calculated that despite doing better than expected when it comes to revenue, being tight-fisted on new spending measures comes with little political risk.
Looking ahead, de Jong is forecasting surpluses for the next three years — right up to the next provincial election.