By Jennifer Kwan
VICTORIA, British Columbia Feb 19 British
Columbia will return to a budget surplus in the next fiscal year
by clamping down on spending, hiking taxes and selling assets,
its finance minister projected on Tuesday in a lean budget that
is seen as make-or-break for the Liberals ahead of a May
The Canadian province's annual budget projected a small
surplus of C$197 million ($194.69 million) in the coming fiscal
year, after a revised deficit of C$1.2 billion in 2012-13.
In the fall, the government projected a deficit in 2012-13
of C$1.47 billion and originally pegged the deficit at C$968
million last February.
It sees a surplus of C$211 million in 2014-15 and a slightly
larger C$460 million surplus in 2015-16.
True to comments leading up to Tuesday, Finance Minister
Mike de Jong's budget was thin on pre-election goodies and did
not pitch extravagant spending.
Instead, it was aimed at bolstering the Liberal government's
fiscal credentials ahead of the May election in which polls say
opposition New Democrats have an edge.
"The numbers themselves speak to the level of prudence that
is embedded here," de Jong told reporters before delivering his
budget speech in the legislature.
Over the next three years, total revenue is expected to grow
by an average of 3 percent annually, but the budget projects
spending will grow by an average of 1.5 percent a year.
The B.C. government is expected to swing to a surplus by
finding savings of close to $1.1 billion over the next three
years by keeping tight tabs on spending such as slowing health
spending, as well as freezes on hiring and management salaries.
Tax changes are projected to generate $1.2 billion over the
period, including a hike in the general corporate income tax
rate to 11 percent from the current 10 percent, which begins on
The government will also implement a temporary two-year
increase in the personal income tax rate for people earning more
than C$150,000, boosting rates by 2.1 percentage points to 16.8
percent beginning Jan. 1, 2014.
Planned property and asset sales are expected to return
roughly $625 million over the next two years.
The budget follows the release on Monday of an independent
review of the government's revenue projections by former Bank of
Montreal chief economist Tim O'Neill.
He said the numbers were "generally well-founded," but he
called for a more conservative approach to revenue expectations
for natural gas. The analysis also recommended moving forward
the implementation of the corporate tax hike.
Some stakeholders were skeptical the public would find the
budget credible, with some suggesting the Liberals had borrowed
from the New Democrats' playbook, particularly on corporate tax
As well, still fresh on the minds of most British Columbians
is former Premier Gordon Campbell's promise during the 2009
election campaign that the budget deficit would be a maximum of
C$495 million, but it wound up being C$1.8 billion.
"No one's going to buy this. They're laughing out there. The
whole province is having a good hard laugh and wondering when is
this going to be over," said Jim Sinclair, president of the B.C.
Federation of Labour. Sinclair also accused the government of
effectively holding a "fire sale" on assets to balance the
Jock Finlayson, executive vice president of the Business
Council of British Columbia, said the figures were credible, but
the province's competitiveness may be less attractive given the
impending return to the provincial sales tax, the corporate tax
hike and other economic factors such as the strong Canadian
B.C.'s total debt is forecast to reach C$62.7 billion in
2013-14, C$66.5 billion in 2014-15, and C$69.4 billion in
2015-16. Taxpayer supported debt is projected to be C$42.6
billion in 2013-14, C$44.5 billion the year after, and C$46.1
billion in 2015-16.
The budget projects modest economic growth of 1.6 percent in
2013, before rising slightly to 2.2 percent in 2014, and 2.5
percent in 2015.