Budget 2018 carves a new path to shared prosperity for everyone in the province with a made-in-B.C. child-care plan, a comprehensive housing plan and record levels of capital investment in every corner of the province, Finance Minister Carole James announced today.
“Budgets are not only about the bottom line, they should be about people. That’s why British Columbians are at the centre of every choice we have made in Budget 2018,” said James. “These include historic investments in child care and affordable housing that will be felt for generations.”
Over three years, an investment of more than $1 billion will set the province on the path to a universal child-care plan that will make child care affordable for parents and caregivers, create more than 22,000 child-care spaces throughout the province and ensure those spaces meet rigorous quality and safety standards.
Budget 2018 also lays out a comprehensive housing plan that introduces new taxation measures to tackle foreign and domestic speculation, to close loopholes and crack down on tax fraud, and to stabilize housing prices. It invests more than $1.6 billion over three years to build and maintain affordable rental housing, help finance student housing, increase rental assistance for low-income seniors and working families, and provide supportive housing for at-risk British Columbians.
“Budget 2018 balances the needs and priorities of British Columbians with the fiscal prudence that marks B.C. as an economic leader in Canada,” said James. “Our province needs bold action, and Budget 2018 delivers by investing in choices that make life more affordable, improving the services we all count on, and supporting a strong, sustainable economy for all British Columbians.”
Making Life More Affordable
Building on the Province’s progress to date, Budget 2018 takes action to make life more affordable by:
- Introducing a new affordable child-care benefit that will reduce child-care costs by up to $1,250 per month for every child and support 86,000 B.C. families per year by 2020-21.
- Providing up to $350 per month directly to licenced child-care providers to reduce fees for an estimated 50,000 families per year by 2020-21.
- Curbing speculation in B.C.’s housing market and helping to build 114,000 affordable rental, non-profit, co-op and owner-purchase housing units through partnerships.
- Eliminating Medical Services Plan (MSP) premiums by Jan. 1, 2020, saving individuals up to $900 a year, and families up to $1,800 a year.
- Making ferries more affordable by freezing fares on all major BC Ferries routes, reducing fares on non-major routes and fully restoring the Monday to Thursday seniors passenger fare discount.
- Improving B.C.’s Fair PharmaCare program to eliminate deductibles for families with annual net incomes below $30,000, starting Jan. 1, 2019. Approximately 240,000 families will receive expanded coverage.
- Reinstating free bus passes with the flexibility to support other transportation needs will help over 100,000 people receiving disability assistance to better connect them with their communities and the services they rely on.
Delivering the Services People Count On
British Columbians deserve services they can depend on. That’s why Budget 2018 invests in priority services, including:
- Significant investments in health care, with funding of $548 million over three years to improve care for seniors and $150 million to help connect those who do not have a family doctor with team-based primary care.
- Hiring more teachers, bringing the total to over 3,700 new hires around the province to support students and meet the need for qualified teachers in B.C.
- Making a historic investment of $50 million this fiscal year to support the revitalization and preservation of Indigenous languages in B.C.
- Dedicating $18 million to services that provide outreach and counselling support for women and children affected by violence.
- Improving access to justice through increased funding for legal aid, family law services, and the hiring of more sheriffs and court staff to help reduce court delays.
Building a Strong, Sustainable Economy
Budget 2018 invests in a strong, sustainable economy through B.C.’s greatest resource – its people, by:
- Supporting communities hit the hardest by the 2017 wildfire season and investing in wildfire preparedness to protect people, communities and wildlife.
- Increasing funding for B.C.’s agrifood sector to support enhanced Buy BC, Grow BC and Feed BC initiatives to drive consumer demand and get B.C.’s goods to overseas markets.
- Confirming the removal of fees for Adult Basic Education and English Language Learning to give people opportunities to grow and succeed.
- Partnering with industry, the federal government and First Nations communities to support Indigenous skills training programs with $30 million over three years.
- Increasing grants administered through the BC Arts Council and Creative BC, which support B.C.’s vibrant communities and creative economy.
- Expanding B.C.’s tuition waiver program and increasing financial support for former youth in care while they attend post-secondary school or training programs.
Budget 2018 commitments are being funded by improved revenue forecasts over the fiscal plan period, as well as new revenue sources, including:
- A speculation tax, and increases in the foreign buyers’ tax, to address housing affordability in B.C. by reducing foreign demand, and curbing speculation in the residential property market.
- An employer health tax to allow for the full elimination of MSP premiums.
“For too long, British Columbians have not been able to get the services that they need or afford to live in the communities in which they work or grew up in,” James said. “We are taking bold action to change that with Budget 2018 – a budget that works for everyone in B.C.”
For more details on Budget 2018, please visit: www.bcbudget.ca
For information on government services, programs and for general information, please see: www.gov.bc.ca
Two backgrounders follow.
Sonja ZoellerMinistry of Finance
A Strong B.C. Economy
British Columbia experienced stronger than previously forecast economic growth in 2017. Budget 2018 reflects an upward revision to the 2017 real GDP estimate, to 3.4% from 2.9%, estimated in the Budget 2017 Update, due to better-than-expected performance of B.C.’s main domestic indicators, including employment, retail sales, housing starts and exports.
Strong growth is expected to continue with the provincial economy projected to grow by 2.3% in 2018. Private sector forecasters expect B.C.’s economic growth to continue to rank near the top of provincial standings in the near-term.
The near-term global economic outlook has also improved since Budget 2017 Update, with upward revisions to 2018 real GDP growth for the United States, Japan, China and the euro zone.
Downside risks remain, including uncertainty regarding U.S. fiscal and trade policy and ongoing economic challenges in Asia and the euro zone. The Budget 2018 economic forecast is prudent, compared to the outlook provided by the independent Economic Forecast Council, in recognition of the downside risks to the outlook.
Budget 2018 projects surpluses of:
- $219 million in 2018-19
- $281 million in 2019-20
- $284 million in 2020-21
Government has included several layers of prudence into the fiscal plan, to help account for lower-than-expected revenues, unforeseen expenses or emergencies. Budget 2018 includes a forecast allowance of $350 million in 2018-19, $500 million in 2019-20 and $600 million in 2020-21. Budget 2018 also includes contingencies of $550 million in 2018-19, $750 million in 2019-2020 and $750 million in 2020-21.
Total government revenue is forecast at $54.2 billion in 2018-19, $57.6 billion in 2019-20 and $58.6 billion in 2020-21.
Total expenses over the three-year fiscal plan are forecast at $53.6 billion in 2018-19, $56.8 billion in 2019-20 and $57.8 billion in 2020-21.
Taxpayer-supported capital spending over the fiscal plan will total a record-level $15.8 billion, and includes urgently needed investments in critical infrastructure, such as:
- Education: $2 billion to maintain, replace, renovate or expand K-12 facilities.
- Post-secondary education: $2.6 billion to build capacity and help meet the province’s future workforce needs in areas like science, trades and technology.
- Health: $3.1 billion to support major construction projects and upgrading health facilities, medical and diagnostic equipment, and information management technology systems.
- Housing: $379 million to preserve existing affordable housing and to help fund the construction of supportive housing units.
- Student housing: $450 million for a student housing program for public post-secondary institutions that will help finance 5,000 new student housing beds.
- Transportation: $4 billion in provincial operating and capital funding, which will leverage an additional $1.3 billion through federal cost sharing and partnerships with private organizations, local governments and other agencies.
The operating debt is forecast to be eliminated by the end of 2018-19, one year earlier than forecast in Budget 2017 Update. Primarily, this is a result of stronger-than-predicted economic growth in 2017. This will be the first time the government has been free of operating debt in over 40 years.
The taxpayer-supported debt-to-GDP ratio, a key indicator used by credit-rating agencies, is expected to remain below 16% over the fiscal plan period, despite record-level capital spending.
Budget 2018 will eliminate Medical Services Plan (MSP) premiums, effective Jan. 1, 2020.
By eliminating these unfair and regressive fees, the B.C. government will help lift a significant financial burden off individuals and families. Eliminating MSP premiums will save individuals up to $900 per year and will save families up to $1,800 per year.
MSP premiums disproportionally affect low- and middle-income earners. Currently, all households with adjusted net income of more than $42,000 per year pay the same amount. This means a person earning $45,000 per year pays the same premiums as someone earning $250,000 per year. Eliminating this regressive fee for all British Columbians will result in a fairer tax system that works for everyone.
British Columbia is the only province in Canada that levies MSP premiums. They are complex and expensive for businesses to administer. They also lead to substantial administrative costs for government.
The B.C. government committed to eliminating MSP premiums within four years. The government took the first step in Budget 2017 Update by cutting MSP premiums by 50%, starting Jan. 1, 2018, and increasing the threshold for premium assistance by $2,000.
The decision to eliminate MSP premiums was informed by the MSP task force’s interim report, including the decision to eliminate premiums all at once, as opposed to phasing them out over time, and to provide advance notice of the changes.
In order to continue to deliver the services British Columbians depend on, the Province is replacing the revenues from MSP premiums with an employer health tax.
This new payroll tax will come into effect Jan. 1, 2019, with the following rate structure:
- Businesses with a payroll of more than $1.5 million, will pay a rate of 1.95% on their total payroll.
- Businesses with a payroll between $500,000 and $1.5 million, will pay a reduced tax rate.
- Businesses with a payroll under $500,000 will not pay the tax.
By exempting businesses with payrolls under $500,000, the employer health tax is designed to help protect small businesses. At 1.95%, it is the lowest rate among provinces with a payroll tax in Canada.
Further details about the employer health tax will be provided prior to its implementation on Jan. 1, 2019.
The Province estimates the new tax will raise approximately $463 million in 2018-19. The B.C. government will use this revenue to help people by investing in services and the economy.
- In 2016-17, MSP premiums provided a total of $2.6 billion in revenue.
- The new employer health tax is estimated to provide $1.9 billion in revenue per year in 2019-20 and 2020-21.