Continued economic growth and stronger-than-budgeted revenues are providing government the flexibility to plan new investments in programs that benefit housing affordability and supply, set money aside to reduce provincial debt, and save money for the future through the B.C. Prosperity Fund, Finance Minister Michael de Jong announced today.
Revenues are forecast to improve by almost $2.5 billion in 2016-17, compared to Budget 2016. A robust economy, more people working and earning incomes, higher corporate income tax revenues and property transfer tax revenues are leading to a forecast surplus of $1.9 billion for 2016-17.
“About half the value of the increased revenue from the Property Transfer Tax ($500 million) will be invested in new programs to benefit housing affordability and $400 million will be invested in the B.C. Prosperity Fund as a legacy for future generations. We are also setting aside some of this year’s higher-than-forecast revenue to eliminate the government’s direct operating debt one year earlier than projected in Budget 2016.”
Higher revenues also mean the B.C. government is cancelling the planned 4% increase to MSP premiums, and those eligible for Regular Premium Assistance will see a 4% reduction of their premium beyond what was announced with Budget 2016. Cancelling the January 2017 premium increase and keeping regular MSP premiums at 2016 levels will save adults up to $36 per year. The enhancements announced with Budget 2016 will continue to be implemented as planned Jan. 1, 2017.
With steady economic growth and stronger-than-budgeted revenues, the Province continues to forecast balanced budgets throughout the fiscal plan, with projected surpluses of $896 million in 2017-18 and $941 million in 2018-19.
Government’s continued spending discipline is reflected in further improvements in the Province’s debt affordability. Taxpayer-supported debt for 2016-17 is projected to be $1.3 billion lower than forecast at Budget 2016, and the direct operating debt – money borrowed in the past to fund programs and services – is forecast to be $1.4 billion lower than budget. As government continues to successfully manage taxpayer-supported debt, the direct operating debt is now on track to be fully eliminated by 2019-20.
B.C.’s real GDP is forecast to grow by 2.7% in 2016, up 0.3 percentage points from Budget 2016, followed by growth of 2.2% in 2017 and 2.3% in the medium term. Year-to-date data show strong domestic activity when compared to 2015 and private sector forecasters expect B.C. to rank first in provincial economic growth in 2016. When compared to Budget 2016, exports are lower than expected, while employment, retail sales and housing starts are performing better than expected.
The minister also released the Budget 2017 Consultation Paper and intends to meet with the Select Standing Committee on Finance and Government Services on Sept. 19.
- Revenue improvements are allowing government to invest $500 million in new housing initiatives.
- Improvements to revenues and the commitment to allocate $1 billion of the surplus-to-debt reduction will result in the direct operating debt being paid off in 2019-20, one year ahead of what was anticipated in Budget 2016.
- Employment activity in B.C. has been relatively strong during the first eight months of 2016, as year-to-date data shows a 3.3% increase, which translates into about 74,600 more jobs.
- Year-to-date to June 2016, B.C. retail sales rose 6.7%, compared to the first half of 2015, with consumer spending being supported by low interest rates, strong employment growth, interprovincial migration, and increased tourism.
British Columbia’s 2016-17 First Quarterly Report is available online at: http://www2.gov.bc.ca/assets/download/E3EBC744E2444700BD161A66C6009324
Budget 2017 consultations: http://www2.gov.bc.ca/gov/content/governments/about-the-bc-government/bc-budget/consultations
First Quarterly Report, fiscal plan update: https://news.gov.bc.ca/files/2016-Q1-final-deck.pdf