About two million people will see their Medical Services Plan premiums cut in half next year as part of a government plan to eliminate the fees if the B.C. Liberals win re-election in May.
Finance Minister Mike de Jong announced the change Tuesday in a $50-billion balanced budget that also trims the small business tax and boosts spending on education, child protection and youth mental health.
“With this budget, we are going to help British Columbians keep more of their hard-earned money, we’re going to invest in programs and services that make the province stronger, and we’re going to give a hand to those among us who need our help most,” de Jong told the B.C. legislature.
He faced immediate criticism, however, for extending a 10-year freeze on welfare rates, while limiting a rise in disability assistance to $50 a month.
“We’ve got a triple A rating on the finance side; I think on a social policy we’ve got a triple C,” said Michael Prince, Lansdowne professor of social policy at the University of Victoria.
NDP Leader John Horgan said the budget seemed designed to make British Columbians forget 16 years of fee hikes and service cuts.
“British Columbians need to know that the only reason [Premier] Christy Clark is doing this — the only reason she is trying to make us all forget the neglect of the services that are so important to people — is that she wants to hold on to her job,” he said. “Now, after doubling MSP premiums, next January they’re going to reduce them by half. Half measures. Not good enough.”
But de Jong said the government is able to cut MSP premiums because the B.C. Liberals have done such a good job of managing the economy.
“We are taking the first significant step, not by raising taxes elsewhere, but by drawing upon the benefits of having Canada’s strongest economy and the surpluses we have achieved,” he said.
The MSP change is slated to take effect Jan. 1, 2018 and will halve premiums for families and individuals earning less than $120,000. At the top end, a family’s premiums will fall from $1,800 a year to $900.
The premiums remain frozen for people earning above $120,000, but de Jong said the B.C. Liberals plan to eliminate the fees at some point down the road.
“Timing and the structure of that next step will depend on the province’s fiscal capacity in the future,” he said.
Jordan Bateman of the Canadian Taxpayers Federation applauded the move.
“We’re tickled pink,” he said. “We’ve been arguing against MSP for a long time. This really is Premier Christy Clark’s signature tax cut; it’s the biggest tax cut in B.C. since the 2007 income tax cut.
“It’s hard to actually explain how much it will mean to families. I mean, $900 more a year for my family and many other families across the province.”
The budget gives the Ministry of Children and Family Development an extra $109 million this year for additional supports to cut waitlists, add 2,000 new child care spaces and improve services for children in care.
The ministry will use some of the money to act on recommendations by Grand Chief Ed John to overhaul the indigenous child welfare system.
Representative for children and youth Bernard Richard said the investment represents a step forward.
“It’s obviously not sufficient, but it’s a good start, no question,” he said. “In some cases, it’s replacing money that’s been taken out of the system over a number of years.”
The ministry will get an additional $15 million to provide more mental health counselling and treatment for children — part of an overall $46-million investment in mental health across multiple ministries.
“It has never been clearer that mental health challenges, which are inextricably linked with addiction issues, require more resources,” de Jong said.
The Ministry of Social Development, meanwhile, will get an extra $49 million to deal with a growing number of people requiring disability assistance or temporary welfare — partly due to changing demographics and more people moving to the province.
The welfare rate for a single employable person, however, remains at $610 a month.
“We have chosen instead to focus resources on doing what we can to equip them to return the workforce and to ensure there are job opportunities for them,” de Jong said.
Irene Lanzinger of the B.C. Federation of Labour called the minister’s explanation for freezing rates “appalling.”
“We haven’t had an increase in 10 years,” she said. “It is a very expensive province. Can you imagine trying to live on $610 a month?”
Prince said it’s difficult to be “job ready” when you’re struggling to survive.
“You need to raise the rates so people will be more able, more willing to take the chance and take the opportunities available to them,” he said.
Education will receive an additional $256 million this year — nearly half of which will cover the interim cost of a Supreme Court of Canada decision that forced the province to restore class-size and composition clauses removed from teachers’ contracts in 2002. The government is still negotiating a long-term deal with teachers.
The rest of the education lift will pay for expected enrolment growth, salary costs, transportation and preventing rural school closings .
Glen Hansman, president of the B.C. Teachers’ Federation, said the education money was a bit of a mixed bag. “Some of it was court-ordered, some of it is putting back what was taken away just two years ago,” he said.
“What we’re concerned about is making sure that, at the end of the day, when we do resolve the court case implementation, that the money actually does flow to school districts.”
In future, post-secondary students will repay student loans at the prime interest rate, rather than prime-plus-2.5 per cent.
“With prime at 2.7 per cent right now, those in repayment would have to pay 5.2 per cent today,” de Jong said. “After Aug. 1, they will just pay that prime amount.”
As for business, it will benefit from a decision to phase out the seven-per-cent provincial sales tax on electricity. The B.C. Liberals promise to cut the tax to 3.5 per cent on Oct. 1 and eliminate it on April 1, 2019.
The budget trims the small business tax rate from 2.5 per cent to 2 per cent beginning April 1 — the second lowest rate in the country behind Manitoba.
The Business Council of B.C said the PST cut on electricity will particularly help forestry, mining and manufacturing.
“Today’s budget offers a series of tax measures which, together, will help to keep B.C. on a path towards a more productive and competitive economy,” Jock Finlayson, executive vice-president, said.
lkines@timescolonist.com
