B.C. government tables lean budget

The B.C. Liberal government tabled a lean budget Tuesday that promises to deliver a surplus and includes a limited number of pre-election goodies.

Features tax and fee increases; few pre-election 'goodies'

The provincial government's new programs mostly benefit families with young children 4:42

The B.C. Liberal government tabled a lean budget Tuesday that promises to deliver a surplus and includes a limited number of pre-election goodies, though it will require hiking both corporate and personal income taxes.

Finance Minister Mike de Jong said the surplus will be achieved by increasing revenues and reining in spending, adding that continuing to operate a deficit is no longer an option. 

The provincial deficit is forecast to come in at $1.2 billion for the 2012-13 fiscal year, while the Liberals are promising budget surpluses in all three years of the 2013-16 fiscal plan for a total of $868 million by 2016.

"I think the citizenry should still be somewhat skeptical," said political analyst Michael Prince.

"They need to read the details, they need to hear what the finance minister will be saying over the next days and weeks and the caucus certainly has to go out, and they think they've got a budget to sell."

Income tax, MSP hikes

The budget includes a few tax increases aimed at middle income and higher earners.

"We're asking people with a little more to give a little more," de Jong said.

Effective in January 2014, the province is introducing a temporary two-year, 2.1-per-cent personal income tax hike for those earning more than $150,000 a year.

The general corporate income tax rate will increase one percentage point to 11 per cent from 10, effective April 1, 2013.

Medical Services Plan premiums will increase by about four per cent in January 2014.

Jordan Bateman of the Canadian Taxpayers' Federation criticized the tax hikes, saying the increases will do "a lot of damage" to families and employers.

"It's a hat-trick of tax increases ... for a government that's staking everything on their jobs plan, I was really surprised to just how tone deaf they are to the competitive concerns of B.C. businesses," he said.

"MSP is terrible. This is the sixth increase in five years. The average increase has been more than $300 per family ... It's a lot of money and it's hurting a lot of families ... They need to get less reliant on MSP, not continually re-entrench that system."

But the provincial government also rolled out a few pre-election goodies in line with its "families first" agenda – though one isn't slated to kick in for three years.

The province is implementing the B.C. Training and Education Savings Grant – a one-time $1,200 grant toward the Registered Education Savings Plan of any six-year-old child.

Effective in 2015, the province aims to introduce a new tax benefit of up to $55 per month per child for families earning less than $100,000. Those earning between $100,000 and $150,000 will receive a partial benefit.

'Still a lot of question marks'

The budget includes speculative revenues from natural gas royalties and asset sales, though de Jong was quick to point out the projected surplus also hinges on a number of other factors.

Natural gas royalties are estimated at $282 million in the first year and another $677 million over the following two years.

The sale of more than 100 surplus properties is estimated to bring in $500 million by 2015. The province is in various stages of negotiating agreements on the sale of properties, but to date has not brought in any revenue from selling assets, a plan rolled out in last year's budget.

CBC News created a wordcloud of Twitter traffic on the hashtags #bcpoli, #bcliberals and #bcbudget Tuesday afternoon. An expandable version is at the bottom of this story. (CBC)

Prince questions whether the numbers will actually add up.

"Those are the honest questions that are going to be asked – they're selling a lot of assets, a lot of properties, to get to that magic black number out of the red," he said.

"Is that a sustainable number? What will they actually get? There's still a lot of question marks as to that final bottom line."

When asked whether the public can trust the numbers outlined in the budget, de Jong said the government's record of fiscal and expenditure management isn't perfect but withstands reasonable scrutiny.

A leaner budget

Nine of the province's 17 ministries will see cuts in at least one of the three years outlined in the plan. But taking inflation into account, all government ministries save health, agriculture and aboriginal affairs will effectively see funding cuts in the next fiscal year.

While health care spending is going up, the rate of spending increases has slowed in recent years. Health spending is forecast to increase by an annual average of 2.6 per cent, compared to a 3.2 per cent annual average promised in the last provincial budget. Health-care spending is forecast to increase by a total of $2.4 billion by 2016.

Prince is skeptical the budget delivered Tuesday will be enough to get the Liberals re-elected in May.

"This is a pretty skimpy, lean, mean budget. It's an incredibly risky budget in that it almost ignores the fact that there is an election coming," he said.

"I think the government has pinned its hopes on the word 'balanced budget,' that that phrase is going to be the campaign slogan that's going to win back disaffected Liberals. I don't see that in this budget."

De Jong admitted the budget is lean, particularly for a government seeking re-election.

"If we chose to, we could ... roll out big, new spending programs. That is not uncommon in election years. And there is always pressure on the government, from many fronts, to increase spending in a long list of areas to try to please as many voters as possible," de Jong said.

"I'll tell you right now – we're not going to do that." 

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With files from the CBC's Dan Burritt.