2009 Budget Speech: Olympics and a 10-Point Plan Will Save BC

by Tina Kells | February 17, 2009 at 03:55 pm

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The BC Liberal Government tabled a deficit budget for 2009 but still the speech was full of Olympic drive optimism. Minister of Finance Colin Hansen proudly declared that although the world is in a financial crisis BC will prevail due in large part to the 2010 Olympics.

In the closing statement of the 2009 BC Budget speech Minister of Finance Colin Hansen clearly tied the future success of the BC economy to the 2010 Olympic and Paralympic Games.

We will continue to have one of the most competitive tax rates in North America, along with a
more diversified economy… and a quality of life that is second to none.
We will return to surplus budgets, pay down our debt and continue to build on our sound
economic and fiscal footing.

And, after the 2010 Olympic and Paralympic Winter Games, we will be a destination for
thousands of people… from all around the globe… who, until 2010, might not have known what
British Columbia has to offer.

They are going to come here — to work, to visit, to invest, to build new partnerships — because
they’re going to see what I saw at the economic summits the government organized earlier this
month.

Although economists around the world, and even newly elected US President Barack Obama, are warning that the global recession will be around for years, Colin Hansen and the BC Liberals are confident that recovery in British Columbia will begin in early 2010.

Whether or not the 2010 recovery date is accurate this deficit budget doesn't offer much help to the average British Columbian. Not surprisingly the BC Liberal budget focuses heavily on things like "targeted investments" and "future renewed growth" with little mention of any new tax relief for individuals. Almost all the tax breaks are decidedly employer and business centric.

The small business income tax was also reduced — effective last December 1st — to 2.5 per cent.
This will save small businesses more than $120 million over three years.

Another $60 million over three years will flow to businesses collecting the provincial sales and
hotel taxes on the Province’s behalf. And the industrial employers who are working hard to
maintain jobs will benefit from a new property tax credit, saving them more than $115 million
over three years.

There is some direct tax relief coming to working British Columbians, but it is not new relief. The only tax breaks for individuals are those that were announced in late 2008, when the financial crisis first hit, as part of Premier Gordon Campbell's 10-point plan.

We accelerated a planned cut to personal income taxes — and we made that five per cent
reduction retroactive to January 2008.
This one move will put more than $130 million back in people’s pockets each year. It also means
that British Columbia now has the lowest personal income taxes of any province in Canada… for
individuals earning up to $116,000 a year.

The Premier’s 10‑point plan included steps to protect consumers as well. British Columbians now
have unlimited deposit insurance protection in credit unions. RRSPs are protected from seizure by
creditors. And work is under way to give every British Columbian the option of enrolling in a new
registered pension plan.

While the income tax cut is welcome it is worth noting that with a $116,000 cap many MLAs will actually see a cut in their taxes too. The base salary for MLAs is $98,000.

Very quietly mentioned in a short sentence in the budget are plans to reduce the number of senior executives in government by 20%, which translates into an unspecified number of layoffs in the BC government bureaucracy.

We are also reducing, by 20 per cent, the number of senior executives in government.

While the Liberals are happy to send senior government executives to the chopping block there appear to be no plans to roll back even a fraction of the obscenely generous salary increases MLAs gave themselves and the Premier in 2007. No doubt however, when it comes time to negotiate with the province's unionized workers, pay freezes, if not outright rollbacks, will be put on the table.

Raises too much: NDP leader
James said she doesn't oppose a reasonable pay increase, but feels this raise is simply too high.

"I don't know anyone in the public or private sector that would expect to get 29 per cent in one raise. And even more obscene was the premier's 54 per cent.

"At a time when the premier says 'no' to increasing the minimum wage for people making $8 an hour, he's quite willing to take his pay raise and run."

The bill boosts MLA paycheques to $98,000 a year, while the premier will now get $186,000 annually.

The 2009 BC Budget is not all bad, there are cuts to discretionary spending at all levels of government that when combined with the layoffs of senior government executives will save the province an estimated $1.9 billion over the next three years. There are also measures to help the environment and tax credits for lower income families.

Other budget measures worth noting include:

Make-work spending on infrastructure and upgrades or improvements to public buildings, like schools, as well as the building of new facilities, that will create 88,000 jobs.
$15 million for the Arts.
Provincial property tax deferrals for up to 2 years for cash strapped British Columbians.
More money for special needs individual and social programs.
2,000 new apprenticeship training spaces.
More support and training for new immigrants and their families.
Help for the mining sector and forestry industry, including a sure to be controversial 70% cut to the coastal stumpage rate.
Direct support for displaced mining, agriculture and forestry employees.

Noticeably absent from BC's feel good deficit budget are long awaited worker and consumer friendly measures like a cut to the PST or an increase in the minimum wage.

Also not addressed is the still controversial provincial training wage, which dooms young workers to earning below poverty level incomes (PDF) during a 500 hour training period, or the numerous labor code exemptions provided to the technology sector.

HEU secretary-business manager Judy Darcy says that if British Columbians were looking for bold, decisive measures to address the looming recession through strategic investments in health care and other services, they won’t find it in this budget.
“I am underwhelmed by the meekness of the government’s approach at a time when British Columbians are facing the most serious threats to their economic security in a generation,” says Darcy.

All in all the budget is pro-business, pro-industry and pro-employer, which is to be expected from the BC Liberal government, but is weak in direct breaks to working British Columbians. Economic stimulus under the BC Liberals apparently does not include any new measures to put cash in the hands of BC taxpayers.

Even though global economic conditions have significantly deteriorated since Gordon Campbell introduced his 10-point plan it seems the only breaks given to working class British Columbians are those that were already announced in 2008. Nothing new for BC taxpayers was announced in the 2009 Budget Speech.

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