The Greater Vancouver Board of Trade expects all parties running to form the next Provincial Government to develop a fully costed and financially responsible election platform. Our organization recognizes that B.C.'s current financial outlook compares very well to those of the other Canadian provinces. This enviable position must be safeguarded.
In addition to all our recommendations above, the Greater Vancouver Board of Trade urges all parties to pursue prudent fiscal management, discipline, and to commit to managing spending growth in the delivery of core services.
Where they stand
Green Party of BC fiscal platform [pdf]
The BC Green party platform commits to significant government spending paired with sharp tax increases to raise the necessary revenue. While their platform plans for a $146-million deficit in the first year, it aims to have the provincial budget running a $216-million surplus in the fourth year of a BC Green government.
Unfortunately, their fiscal goals are ostensibly built on the back of an increased carbon tax. The BC Greens have proposed using the carbon tax as a revenue generator for government and would not follow the currently legislated requirement of returning to taxpayers 100% of the collected revenue in the form of tax savings for individuals and businesses. The mandated revenue-neutral nature of our current carbon tax is necessary to protect our economic competitiveness while also protecting the environment from the long-term costs of climate change.
Rather than a strict adherence to the existing law that requires a yearly balanced budget, the BC Greens have proposed a novel approach. Their proposed Fiscal Responsibility Act would require the BC Budget to be balanced on average, over a government’s term of office. This unprecedented approach would allow for a government to accommodate short-term downturns in revenue, but still require long-term fiscal management.
The BC Greens have costed their platform further than any other party, showing planned expenditures for their entire four-year term in government. While this transparency is certainly laudable, the fiscal implications of their platform would aggressively increase taxes to pay for their promises. While this is the mandate they are pursuing, it raises significant concerns about the future of our competitive tax regime. This is especially important at a time when other jurisdictions are pursuing aggressive tax reforms, most notably in the U.S., who are contemplating dramatic tax reductions that will hamper our ability to attract job-creating capital and investment.
Today's BC Liberals fiscal platform [pdf]
[Note to reader: The Board of Trade has consistently commented on the fiscal track record and priorities of the incumbent BC Liberals through our annual provincial budget report cards and other advocacy efforts. As such, our analysis below is limited to specific elements that stand out in 2017 election platform. Our 2017-18 budget report card and analysis can be found here.]
The BC Liberals are running on their established track record of fiscal responsibility and B.C.’s solid economic footing. They stand alone in Canada as having delivered five consecutive balanced budgets and have put our province in the unique position to pay off the government’s operating debt by 2021. With its AAA credit rating, B.C. is in the strongest fiscal position of any Canadian province.
On top of a 50% reduction in MSP for families earning below $120,000 annually, the BC Liberals have promised to eliminate the MSP all together “in the long-term.” However, eliminating 100% of MSP premium revenues carries a large price tag that is not specifically listed in the platform. Commentary outside of the platform document, however, confirms that this is an objective specifically based on monitoring fiscal room in the coming years.
When focusing our analysis strictly on fiscal management, itself, the BC Liberals have an objective and externally-audited track record that grants them solid credibility as to their ability to live within their means without raising taxes.
BC NDP fiscal platform [pdf]
The BC NDP Platform is very heavy on a long-term vision (and related timelines for actual investments) for the province. The desired impact of their housing and childcare commitments, for example, will be felt on an increasing basis over 10 years. However, it is important to note the costing provided in the platform is only for the first two full years. To be clear, the platform omits the funding required during the balance of the decade to fully implement (and pay for) their plans. Therefore, it is not at all clear how some of these significant spending increases will impact our fiscal stability after the first two years.
For example, there is no indication of how much their $10-a-day childcare plan would cost once fully implemented. While not stated in their platform document, noted childcare advocates estimate this cost at a minimum of $1.5 billion annually, and this does not include the necessary and costly workforce and capital investments. As this policy is central to the NDP platform we are surprised the costing of this cornerstone initiative is not transparent and comprehensive.
Throughout the campaign, there have been valid questions raised about the BC NDP’s platform and whether many of their campaign promises are fiscally responsible, or fully costed. For example, they have not proposed a method by which to eliminate the MSP and instead intend to create an “MSP Elimination Panel” to explore options. Commentary by the NDP outside of the platform document, however, has repeatedly suggested the revenue required to replace MSP premiums may be raised through increases in income taxes.
Beyond the impact of a fully implemented $10-a-day child care program (above), there is a cumulative impact of other un-costed liabilities such as an indeterminate freezing of BC Hydro and ICBC rates (without mention of the impact to their existing operations, increasing service expectations, and their respective multi-year capital plans already in progress). When this is combined with the competitive impacts of other NDP platform elements such as increased corporate tax rates and the removal of the revenue neutrality of the carbon tax, we become incredibly concerned as to the degree of higher taxes along with increased government debt/deficits. The currently mandated revenue-neutral nature of our carbon tax is necessary to protect our economic competitiveness while also protecting the environment from the long-term costs of climate change. This is especially important at a time when other jurisdictions are pursuing aggressive tax reforms, most notably in the U.S., who are contemplating dramatic tax reductions that will leave us hampered as to our ability to attract job-creating capital and investment.
We must also cite further, specific concerns as to how an elimination of bridge tolls would turn the Port Mann and Golden Ears bridges into directly-held government liabilities (i.e. it will no longer be self-supporting debt). This severely impacts the health of the province’s finances and related interest rates we pay, as it returns these assets to the direct balance sheet of government without the assured revenue streams to pay for them.
It is critically important to note in this analysis the meaningful cumulative impacts of the BC NDP platform on our province’s AAA status. As has been experienced by Alberta and other jurisdictions, a lower credit rating materially increases debt servicing costs (i.e. interest payments). As a striking example, and noting the total B.C. Budget is approximately $50 billion per year, servicing B.C.’s debt using Ontario’s credit rating (and resulting higher interest rates) would cost B.C.’s taxpayers an extra $2.3 billion every year. This is money that the government must either raise from the taxpayer or secure by cutting services or deferring investment in the economy. Simply, it is economic dead weight without any taxpayer value.