Budget 2013: It’s Balanced, but is it fair?

Mike De Jong, Minister of Finance, explains the 2013 budget to reporters. Photo supplied.

Trent Ernst, Editor

With only three months until elections, Mike de Jong and the BC Liberals have delivered a budget that is not your standard pre-election budget.

The standard methodology has historically been to cut deep after the election, and then spend liberally (no pun intended) right before the next.

But with the government obligated by their own rules to balance the budget, the new budget has moderate increases in spending to some areas, cuts to others.

Even more atypical is an increase to personal income tax rates on income above $150,000. For people making more than this, tax will increase from 14.7 percent to 16.8 percent. This increase will start in January 2014, and is set to expire in 2016, but before it does it should generate about $400 million in taxes. It is the first personal tax hike from the BC Government of any kind in over a decade.

Medical Services Plan premiums will also go up by about four percent, starting January 1, 2014, and corporate income tax is going up to 11 percent as of April of this year, a year earlier than expected.

If it comes to pass that the government does come out of this with the $197-million surplus they are forecasting, it will be the first balanced budget in three years.

While the numbers are not yet in, the government is expecting to lose over $1.2 billion in 2012/13.

In 2009, the government amended their balanced budget act to allow for four years of deficit spending, but the government was to return to a balanced budget by 2013.

In addition taxes and MSP revenues, the government plans to sell off surplus properties over the next few years, which is expected to provide $475-million in revenue over this fiscal year.

A few areas saw increased spending. A BC Training Education Saving Grant will offer a one-time $1,200 grant that will go into an RESP for children born after January 1, 2007. They can only apply after they turn six and before they turn seven.

The BC Early Childhood tax benefit, which will provide eligible families with up to $55 per month for each child under the age of six, was also announced.

The budget also set aside a $20-million carbon tax relief grant to help offset carbon tax cost for commercial greenhouse vegetable and flower growers and $4 million for the Agricultural Land Commission for “increased oversight” of the Agricultural Land Reserve.

Additional spending include: RCMP policing costs ($52 million), BC Creative Futures ($18 million), the renewal and renovation of the province’s 13 single-room occupancies in Vancouver’s Downtown Eastside ($13 million) and counseling services to address problem gambling ($5 million).

The budget didn’t go over well with everyone. The BC Government Employees Union was quick to condemn it.

“After a decade of budget and staffing cuts, extending the hiring freeze will lead to the loss of another 1,350 public sector jobs and most ministries are facing budget cuts or small increases well below the rate of inflation,” says Darryl Walker BCGEU president.

“Our justice system and Community Living BC are both in crisis. Neither are getting the meaningful budget increases they desperately need. Community and social service workers are the lowest paid workers in our health care system. They will see no increase. The Ministry of Children and Family Development will be unable to adequately serve the most vulnerable people in our society. These are just a few examples.” says Walker.

However, reaction was not universally negative. John Winter, President and CEO of the BC Chamber of Commerce, congratulated the government on returning to a balanced budget. “Business has been clear, governments priority was to get its fiscal house in order, Budget 2013 does that in a balanced way that controls spending while making modest increases to taxes.” Nine of the province’s 17 ministries will see some form of budget cuts in the next three years, and six additional ministries won’t see any additional funds.