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RELEASE: BCBC Budget Commentary September 2017
New government’s revised budget addresses important affordability commitments,
but concerns loom over longer term prosperity for BC
(Vancouver, BC) - The Business Council of British Columbia offered a mixed assessment of today’s provincial budget update presented by Finance Minister Carole James.
“We appreciate that the new government is taking steps to deliver on some needed commitments to improve affordability and address the cost of living pressures facing many BC families,” stated Greg D’Avignon, President and CEO of the Council. “That said, we are concerned about the added costs being imposed on employers and the business sector generally who ultimately support and create the high wage jobs and investments that enable trade, and support prosperity for both the kitchen and boardroom tables.”
“These cumulative economic and cost impacts have been rising over the last three years and are added to in this budget through higher corporate and carbon taxes that, when added to higher electricity prices, the return of the PST, increased and more complex regulatory requirements and other trends, have added over $3 billion to the cost of doing business in BC,” stated Jock Finlayson, Executive Vice President and Chief Policy Offer of the Business Council. “This comes at a time when the province is already challenged to attract investment in the natural resource, manufacturing and other industry sectors.”
The Business Council believes the province has further work to do to create conditions that will support the business investment and expansion that is necessary to generate revenue to fund the services and programs the government is contemplating in future budgets and platform commitments.
The budget update forecasts much lower budget surpluses in the coming years, following an unusually large operating surplus in 2016-2017. Given the length of the current North American economic expansion, it is important that the government continue to aim for modest surpluses while economic conditions remain favourable. “BC’s economy has been growing above potential for the past three years. We do anticipate a decline in the rate of GDP growth going forward, in line with the projections provided by the Minister of Finance,” noted Mr. Finlayson. “While the overall economy has been performing well, in part this reflects unsustainable growth in consumer and housing-related spending. Looking ahead, we need to see a pick up in business investment and further gains in exports in order to achieve a healthier and more balanced economic growth profile in BC.”
The Business Council believes the province needs to be cautious about hard-wiring permanent new spending increase into its fiscal plan over the medium term.
The Business Council looks forward to working with the government to advance a new agenda on innovation and to grow emerging sectors of the economy. “We support the creation of the Innovation Commission to develop an innovation agenda for the entire economy. We also endorse the decision to establish the New Economy Task Force. BC’s economy is changing in important ways, and government needs to understand these trends to develop sound policies and effective programs to spur economic development and the creation of high-paying jobs,” added Mr. D’Avignon.
Mr. D’Avignon added: “We applaud the government for phasing out the PST on business purchases of electricity, in keeping with the recommendation of the Commission on Tax Competitiveness. However, we are concerned about the rising, cumulative cost of doing business in the province as a result of tax increases and the growing regulatory burden evident at all levels of government.”
The Business Council urges the new BC government to consider acting on other recommendations advanced by the Tax Competitiveness Commission in its 2016 report.
About the Business Council of British Columbia
Now in its 51st year as the premier business organization in British Columbia, the Business Council of BC is a non-partisan organization made up of 250 leading companies, post-secondary institutions and industry associations from across BC's diverse economy. The Council produces exceptional public policy research and advocacy in support of creating a competitive economy for the benefit of all British Columbians.
Cheryl Maitland Muir