British Columbia’s finance minister tabled a balanced budget Tuesday as he boasted that his province may be the only one in Canada to avoid falling into deficit amid plunging oil prices, but the long-anticipated liquefied natural gas industry has yet to produce one cent.
Finance Minister Mike de Jong’s latest budget projects a surplus of $284 million for 2015-2016, marking the province’s third-consecutive balanced budget.
“Through their hard work and perseverance, British Columbians have scored a fiscal hat trick,” he said.
“For the third year in a row, British Columbia will have a balanced budget. We are the fiscally healthiest team in the league. Our bench is strong. In British Columbia, we’ve already got the most talented players in the league and more are on their way.”
Quebec and Prince Edward Island have said they are aiming for balanced budgets for 2015-2016, but they have yet to release their fiscal plans for the coming year.
De Jong also said B.C. may be the only jurisdiction in Canada to post a surplus budget for the current 2014-2015 budget year with the possible exception of Saskatchewan. The province’s current projected surplus for the current year, which ends March 31, is $879 million.
Business Council of B.C. vice-president Jock Finlayson applauded the news of yet another balanced budget.
“There are no big surprises in here,” he said. “For the business world, we don’t want big surprises, especially on budget day.”
De Jong toned down his locker-room pep talk when it came to liquefied natural gas. B.C. Premier Christy Clark won re-election in 2013 by promising a multibillion-dollar industry that she said would create 100,000 jobs and generate enough revenues to wipe out the provincial debt.
Last year, the provincial budget was focused on the introduction of income tax and environmental laws for the LNG industry, but so far no project has reached a final investment decision. There are 18 proponents considering building in B.C.
“So, we remain optimistic, but what we won’t do is make budgetary assumptions until that first final investment decision is taken,” de Jong said.
De Jong said B.C. is not completely immune to the declining energy prices threatening the finances of Alberta, Saskatchewan, Newfoundland and Labrador, and Ottawa, but he said the province’s diversified economy has buffered it from the worst of the impact.
“There’s good reason to believe the tailwinds to B.C.’s economy will be enough to see growth accelerate a bit further,” write CIBC economists Peter Buchanan and Nick Exarhos in a research note. “A dramatically weaker Canadian dollar and a momentum-building U.S. economy mean that manufacturing activity is poised to build on 2014’s healthy 6.7% climb. And while capital expenditures are sliding in the oil patch, BC is expecting healthy growth in corporate profits to underpin commensurate gains in investment.”
Still, B.C.’s natural resource revenues are forecast to decrease by almost 7% in the next year. Natural gas royalties alone are expected to drop by 36.5% in 2015-2016 before partially rebounding in subsequent years.
De Jong said the government forecasts “steady, moderate” economic growth to be 2.3% in 2015, 2.4% in 2016 and 2.3% in 2017.
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Opposition New Democrat Leader John Horgan said the budget continues to place financial burdens on the middle class while offering a 2% tax break to people earning $150,000 and above. He was referring to a 2% tax increase for the province’s highest earners that was introduced in 2013 and is scheduled to expire at the end of this year.
“The government clearly has an agenda, and that is to pander to those who support them and leave the rest of British Columbians to fend for themselves,” he said.
Horgan said the government’s budget will mean British Columbians pay more for medical premiums, electricity and vehicle insurance, despite finishing the current year with a surplus of almost $1 billion. Health-care premiums will increase by four per cent as of Jan. 1, 2016.
Iglinka Ivanova, an economist with the Centre for Policy Alternatives, said the budget short changes low- and middle-income British Columbians. She said the government should have used more of its surplus money to fund social programs.
“Why are we not investing in our people?” she said. “The budget absolutely doesn’t do enough.”
The finance minister announced the elimination of a social services claw back that drew protests at the legislature from single mothers who said the government was taking away their spousal benefits. He said the change will benefit about 5,400 children and 3,200 families receiving income and disability assistance.
He also introduced minor tax credits for parents and teachers. Parents can claim a tax credit worth $12.65 a year per child for fitness equipment, while teachers who coach school teams can claim a credit worth $25.