The committee met at 8:36 a.m.

[B. D’Eith in the chair.]

B. D’Eith (Chair): I’d like to bring the Select Standing Committee on Finance and Government Services to order, Monday, September 17, 2018.

Before I get started, I wanted to welcome a couple of new members to the committee, Nicholas Simons and Sonia Furstenau. Thank you very much for stepping up. I also wanted to thank members Andrew Weaver and Jagrup Brar for their service to the committee. It was a great year, and now we have another chance to go out on the road again. I’m really pleased to have two new members. Thank you for your service.

We’re really excited today because we have the Minister of Finance, Carole James, and the presentation of the Budget 2019 consultation paper.

I will turn it over to you, Minister.

Presentation by Minister of Finance

Hon. C. James: Thank you, Chair, and thank you to everyone. I said as I came in that I felt like I was sitting in the wrong place because, as many of you know, I sat on this committee for a few years, so I feel like I should be packing a suitcase and getting ready to head on the road. I remember it well.

I know that by the end of the trip, all of you will be feeling exhausted. I’m sure you have the same kinds of feelings as I did in going on this committee, which is the opportunity to be able to hear firsthand from people in communities about their priorities for their budget. I think, really, it’s the best committee, from my perspective, around the government and opposition, because it really is a chance to travel to communities, to hear firsthand their issues and to be able to bring that back.

I guess that’s where I wanted to start, by saying thank you. Thank you for the work that you’re doing, and thank you for the report that will come back to us in Finance. It really does give an opportunity for myself as Finance Minister but for all of us across government, opposition — all of us in the Legislature — to be able to know what the priorities are as we set a budget for the people of British Columbia. Thank you for your work as you get ready to head out today.

I thought I’d take a little bit of time to just go through the kind of fiscal position of British Columbia currently. Many of you, I know, will have seen both the public accounts and the first quarterly report, but I thought I’d just give a very quick overview of where we are from both of those reports. Then I’ll just refer to the questions at the end of the consultation document and then give you a chance to be able to ask any questions that you may have.

I have Heather Wood, our deputy and secretary to Treasury Board, who’s here with us; Alex Chandler, executive director in Treasury Board, and Heather Hill, executive director for capital, who are here in the back row; and Rob Gillezeau, my MA, as well — just so you’re aware of who’s here.

I think you know, and I’m sure you’ve heard me and others say often, that we as a government have been focused on three priorities as we looked at setting our budget. The first is to make life more affordable. The second is to improve services that people rely on, that people count on. And the third is to build a strong, sustainable economy. Those three priorities have driven the work that we have done in the budget and have driven the work that we’ve done in government.

I’ll talk a little bit about the two priority areas in the 2018 budget, which were child care and housing — our two key priority areas. I’ll talk a little bit about that as well.

[8:40 a.m.]

To take a look at the economic and fiscal outlook for British Columbia, as I said, I’ll give just a broad outlook, talk a little bit about the public accounts for ’17-18, which is looking back at the previous year, a little bit about the first quarterly report, which is looking ahead of the budget, and then finish up, as I said, with a little discussion about the questions.

As you can see from the slide that’s here, B.C. continues to be in a very strong fiscal position, with surpluses projected for all three years of the plan. In fact, compared to the budget tabled in February, we now expect improved moderately improved surpluses over the fiscal plan.

GDP — as you know, an important indicator — grew by 3.9 percent in 2017, which was the second-highest among provinces. That strength is expected to continue. Certainly, private sector forecasters are expecting that B.C.’s economic growth will continue to rank near the top of provinces, both in ’18 and ’19. So we’re in a very good position as we go into this coming fiscal year.

Taking a look at the public accounts… Just a reminder that the public accounts takes a look at the ’17-18 year. First quarter takes a look at our ’18-19 budget and the results based on that. As you can see, the surplus for ’17-18 was $301 million. That’s $55 million greater than the budget estimate of $246 million.

You can see taxpayer-supported capital spending. This is a very important piece, from our government’s perspective, making sure that as we’re looking at the kind of economic growth we’re seeing in our province, we also provide the infrastructure that’s there. It certainly was something we heard often on the committee. I’m sure you’ll hear it as well: that as you build economic growth, you need to make sure the infrastructure is there, or we won’t see the growth continue, won’t see that kind of sustainable growth.

Again, $3.9 billion. As you would imagine, that’s capital spending in most of the common areas that you would think of: roads, bridges, schools, hospitals and other capital infrastructure.

Taxpayer-supported debt to GDP came in at 15.6 percent, which is a reduction from 16.2, which was forecast in Budget 2017 — again, a positive piece as we looked at the public accounts. All three major credit-rating agencies affirm B.C.’s ratings, which helps us when we look at borrowing and when we take a look at the strength of our province.

I mentioned debt because I think it’s important to take a look at managing our debt responsibly. As I said, I certainly believe, and we as a government believe, it’s important to look at building British Columbia as we continue to grow economically. But it’s also important we make sure we’re managing our debt responsibly.

As you would know, debt-to-GDP and debt-to-revenue are often used by investors and certainly by credit-rating agencies when they look at assessing our province. Those are metrics that they pay close attention to. We’re very fortunate in British Columbia: 15.6 percent. We continue to have one of the lowest taxpayer-supported debt-to-GDP ratios in the country, and this is the lowest that it’s been in four years. As well, debt-to-revenue ratio, again: 82.5 percent. Very manageable, and of course we’ll continue to watch that as we look at investing in capital in the province.

February’s budget was our first full budget as government. As I mentioned, there were two key priority areas. These are our three areas that we are focusing on, as I mentioned earlier: the issue of affordability, improving services and building a strong economy. The two priority areas in our February budget, as you know, were child care and housing.

I just want to speak for a moment about both of those investments. Particularly with child care, people often think that it’s an important issue from a social perspective. And there is no question that if we give children the best start in life, that’s going to be a benefit to all of us. If we provide those opportunities in the early years, we have a much better opportunity of addressing those challenges early and actually saving resources later on and providing a better experience for families.

There is no question that child care is a benefit to us as a society from a social perspective. But I think the other part that’s important to recognize with both child care and housing is that these are important investments when it comes to building a strong, sustainable economy.

[8:45 a.m.]

If we don’t provide the opportunity for women — and it’s still mainly women in the area of child care — to go back to work, to be able to get back in the workforce, then we will not see the kinds of numbers that we need for employment to be able to keep our economy sustainable, to be able to continue to grow.

When you’re looking at productivity, when you’re looking at the opportunity for parents to have their children in quality child care and not be worrying every day about where their child is and whether it’s a sustainable situation for them as a family, again you provide support for families.

The economics of investing in child care and housing are also critical pieces that I just wanted to point out. When it comes to the investments, these are pieces that certainly…. Whether it’s the Vancouver Board of Trade or the Business Council of B.C. or individual chambers of commerce all across this province, it was a number one priority. In fact, housing and child care were often 1 and 2 from businesses when they talked about investments they wanted to see government make, because they’re having trouble recruiting and retaining employees.

If you look at the labour market in British Columbia, we have a very strong labour market, very strong employment numbers. We will need workers. We will need people to be able to be in the workforce, to carry the sustainable growth on. You’re seeing it already when it comes to businesses. Many of you will have seen businesses saying: “We’re closing on Monday and Tuesday because we can’t find employees.” We need to make sure that we invest in the training, the child care and the housing to be able to have strong employees coming forward.

There are a number of other pieces, and I won’t run through all of them — a number of other investments. Those were our main two investments in the 2018 budget, but certainly, you’ll know we’re investing in eliminating MSP premiums, medical services premiums, again to help families. We’re looking at supporting seniors and people with disabilities and improving our justice system. We are lowering the cost of prescription medicines for very low income families so they won’t have a deductible to have to pay, and then supporting businesses, with everything from lowering the small business tax rate to eliminating PST on electricity for businesses. That final elimination will come this coming year.

The last piece I want to mention is the work that we’re doing that underpins all of our work, and that’s our work for making sure that truth and reconciliation are addressed and that we implement UNDRIP, the declaration on the rights of Indigenous peoples, for First Nations as well. As I said, that really underpins all of our work.

So Q1…. This is looking ahead. This is the result after the budget was tabled, in the first quarterly report. Again, I think it’s important to note that it reflects a fiscal plan that remains balanced and continued investments, as I mentioned, in the two priority areas. Costs that have arisen since Budget 2018 are funded by revenue improvements. We’re continuing to see very strong growth.

Again, in the first quarter, we’ve seen our debt affordability matrix improved from the February budget, mainly as a result of lower debt projections, and that’s while maintaining our capital build. I think that’s important to recognize when we look at Q1.

Where are the changes? We’ve seen higher income tax revenue, based on 2017 income tax assessments. That has helped in our first quarterly. We’ve seen lower property transfer tax revenue, and I’ll speak about that in a moment. We’ve seen greater uptake of film tax credits, which is a good-news, challenge-news story. I’ll talk a little bit about that in the next slide as well.

Then certainly, higher fire management costs for the 2018 year. I think we’re getting to the stage now…. As you know, the state of emergency was lifted, but there are still communities that have a lot of work to do and are still facing some huge challenges. So I think it’s just important to note on this one that we have the statutory authority for the spending that needs to occur. That isn’t an issue in the budget. You have the statutory ability to be able to spend that — and we have been — to address the communities. But there’ll be some challenges coming, I think, ahead for those communities as well. I know that all of us are still thinking about those communities as they go through those struggles.

Take a look at the specifics. As I mentioned, I’ll talk a little bit about the specifics. Taxation revenue. First, as I said, the surplus has improved by $450 million — now projected for the ’18-19 year to be $669 million. That was from $219 million at Budget 2018, so those are improved numbers.

[8:50 a.m.]

You can see some of the changes here. Higher personal and corporate income tax. That’s partially offset by the property transfer tax drop.

I want to speak to housing for a moment. As you know, that’s one of our main priorities. We have really focused on the issue of housing and a 30-point plan. When you take a look at the property transfer tax revenue coming in, we have projected a drop in each of the three years that we’re projecting out: a $250 million drop for this year, for ’18-19; $300 million for ’19-20; and $400 million for ’20-21. What that really means is that we’re starting to see moderation in the housing market, which is what we’re looking for when it comes to supporting families to be able to live where there’s work. We won’t address our employment challenges unless we address the housing crisis, particularly in our metro areas.

We continue to see housing starts remaining strong. The numbers continue to remain strong on housing starts, and while we’re seeing some price moderation — you’ve just seen it in the last couple of months — it’s early going yet. While I’m cautiously optimistic, I continue to remain cautious.

We certainly saw previously, when the previous government put on the foreign buyer tax, a dip down, and then we saw it climb back up again. I think it’s important to take a look at this from the long term, not the short term, and see whether that moderation continues. That’s something that we’re going to be tracking very closely and watching very closely. As I said, there are certainly some positive signals in the Q1 report that I think point to some moderation occurring.

I think it’s also important to note, as I’ve said often, a government doesn’t hold all of the tools when it comes to housing. There are obviously things outside of government that influence the housing market — everything from the federal government increasing interest rates, to mortgage rules changing. Obviously, those have an impact on housing as well. That’s why it’s important to make sure that we have a comprehensive plan, because there isn’t one item that’s going to solve the housing challenge. It’s going to take a comprehensive plan, but it also means we will have to make sure that we’re monitoring closely as we go along, and that’s certainly our intention.

Natural resource revenue, you can see, is up. That’s mainly forest. Prices are high right now in the forest industry. We’ve seen increased revenue coming in from forestry, from mineral tax and increased resources coming in from electricity sales under the Columbia River treaty.

Other revenue, up. Again, that’s everything from higher federal government contributions to higher revenue coming in from fees.

Then disaster cost, as I said, up — projected to be up by $639 million for this year. That includes both firefighting efforts and the cost for fighting fires but, as well, the flood challenges. You’ll know that Grand Forks and some other communities face some flood-related costs, so we’ve included that in that calculations as well, which is a challenge.

The film tax credits — as I said, a good-news, challenge-news story. We have seen in 2017…. It’s a year lag, so we get the results coming in from 2017 in 2018. We’ve seen very strong production work going on in British Columbia, partly because of our well-trained workforce. Obviously, I think all of us who live in British Columbia would say we have scenery second to none across this country. We have every variety of scenery for films to come in.

That also creates a challenge. You can see the kinds of numbers when you take a look at the fiscal plan when it comes to the film industry. We will continue to work with the industry to make sure that we bring that business here — that’s key to us and key to our success — but also that we make sure the tax credits are sustainable. That’s work we’ll continue to do.

Then the last piece, the other expenses, just to mention that those are from other delivery agencies — post-secondary, for example. This reflects their spending from external sources, which they then cover off as well, but it gets included in our numbers.

I mentioned the private sector economic growth expectations. They expect, again, as I mentioned, that our economic growth will rank near the top of the country’s in both 2018 and 2019. You are seeing moderation across the country in economic growth after what has been called by economists, for the last number of years, unsustainable growth.

[8:55 a.m.]

You’re going to see a more sustainable growth. You’re going to see more long-term growth, and B.C. continues to be in the top, as I mentioned.

In June, TD put out their fiscal report, and they noted that ongoing job growth and rising wages will continue to ensure healthy household spending in B.C. going forward. And Central 1 Credit Union in August, in their economic update, noted that B.C.’s economic growth will be relatively balanced over the forecast period, with both domestic drivers and export gains contributing to positive performance. So again, I think a good-news story.

The one piece I want to raise — perhaps this is endemic to Finance Ministers — which is to raise the concern around risks. I think it’s important to recognize and acknowledge that there are risks. This is a Q1 report, and we are early yet in the fiscal year.

Certainly, I think trade is the first piece that I want to raise. I hoped we’d have a trade agreement. I think everyone across this country hoped we’d have a trade agreement that works for Canada at this point, but we don’t, and I think that’s still an ongoing risk. It creates uncertainty, which is, as you know, for business investment, one of the biggest challenges. That’s a risk we have to watch as we’re looking at the fiscal plan.

Certainly, interest rates. We have built in an interest rate increase, but again, if we see further inflation and therefore a higher interest rate increase, that impacts, obviously, the budget.

Then wildfires and the challenges that we’re going to see not only fighting fires but the support for communities afterwards and those additional costs that could arise because of another bad year and work that needs to be done.

We have built in prudence, as we did in February. We have continued that prudence in the budget. Contingencies, for example — $1.95 billion over three years built into the budget, in case any of these risks cause challenges for us in B.C.

Our growth projections, as I mentioned, are below private sector forecasters. They have forecast higher growth than we have actually built into the budget. Again, that gives us a level of prudence that is important. Forecast allowance, $1.45 billion over three years — again, another piece of prudence built into the budget that we believe is important.

Then, you remember, in February there were resources built in for cost pressures for new programs and new services, public sector bargaining, in the budget. That’s $2.6 billion built in for ’19-20 and ’20-21. Again, while it’s important to point out the risks, I think it’s also important to point out the prudence that’s built into the budget to be able to address any of those risks and ensure we continue to have a balanced approach when it comes to spending in British Columbia.

That brings you up to date on the fiscal reports that have come out since we last had a chance to chat. I think it gives us a good solid position.

Sorry. Quick economic summary — just, again, changes. I won’t run through them all. I think I’ve talked about most of these pieces — the moderating growth that we expect but still a strong position for us in British Columbia. The big drop there obviously being in the home sales piece. We continue to see strong housing starts, but the home sales piece continues to be moderating, which again is what we’re looking for when it comes to housing, with the 30-point plan dealing with both supply and demand in our budgets.

Budget consultation. As I said, I think it’s important to note that we’re starting this from a strong position, but I want to acknowledge again the role that all of you have in having the opportunity to talk to people directly in communities. I have to tell you, all of us were at the Union of B.C. Municipalities, and there were a number of municipalities that were very pleased to hear that the committee was coming to their community. I know you’re doing some different communities this time around.

I heard some positives from municipalities and excitement at the opportunity to be able to present. While some of you will have heard people before at the committee, it is the first time for all those individuals, and they’re thrilled to be able to report to you directly. So I just want to thank you for your work and recognize how important it is, how important your work is when it comes to hearing from people directly.

[9:00 a.m.]

For the budget consultation, as you know from the document, we’re looking at four key questions to help understand the priorities of the people of this province. As I say often as Finance Minister, it’s very rare that something comes across my desk that isn’t worth funding. Most of the things that come to me that people bring forward are worth funding, are valuable pieces for people to bring forward, and we can’t do everything. It’s not possible to do everything, so setting priorities is critical. It’s a critical piece for government and a critical piece for us. We hope that we’ve framed that in the questions that you’ll see.

Top three priorities: to make life better for you, your family and community. Again, a broad question but an opportunity for people to really put in their priorities.

The second question focused on: if you had one dollar to put into programs and services across government, where would you divide it? You can see there’s a whole list of everything from education to economic development, housing to health care, justice to public transportation and debt reduction. Again, it’s an opportunity for people to be able to give their feedback. Each of these…. They all have an “Other” category, because you know you never have an exhaustive list. There’s always an opportunity for people to add additional pieces if they wish.

The third question focuses on the high level of demand for government programs and services and how you would pay for those. So if you were looking at enhanced programs and services, would you look at increasing taxes, for example — corporate taxes, PST, personal taxes? Would you look at increasing natural resource revenue? Would you look at reducing or eliminating existing programs? Are there areas where people feel we could make a shift? You could move resources from one program to another. That, again, gives the opportunity for the public to be able to weigh in on the priorities that government sets.

Then last, what can government do to build the diverse and sustainable economy and support businesses and industries across our province? That looks at everything from streamlining government processes and regulations, trade barriers, improving regulations in the financial and securities market, and opportunities for training, which I think, again, is a critical piece. Then again, another category for people who have other areas that we haven’t raised.

Just to give you an idea of the next steps and the timelines, as you can see, your process is underway, and we begin the process, as well, in government — an opportunity for ministers and others to bring forward their approaches. The second quarterly report comes out shortly after you’ve tabled your report to us. That’ll give us an updated forecast as we go on to making final decisions on the budget. December 7 will be the Economic Forecast Council. That’s, again, independent private sector forecasters who come together to be able to give their feedback on the state of finances in our province. And then the budget comes out in February 2019.

Thank you for the opportunity to give you a quick update on where things are at before you hit the road. I’ll look forward to any questions that you may have.

B. D’Eith (Chair): Great. Well, thank you very much, Minister. We really appreciate the summary and the task you’ve given us over the next few weeks to ask questions of British Columbians.

Before we go to questions, I did want to mention that we have made a few slight changes this year just to try to improve the process. The committee was very open to those, as was the Clerk’s office. I just wanted to thank Jennifer and Kate and Nicki and everyone in the Clerk’s office, because any time you have a change, it means more work for them. So I really appreciate all the efforts that have gone in.

One of those, of course, as you mentioned, was trying to get to some areas that we hadn’t ever been to, like Haida Gwaii, for example. We will be going there. Even in Victoria, instead of staying here in this room, we’re going to Esquimalt. So we’re trying really hard to get out there.

The other thing, too, is we found that a lot of times it was the same people presenting. They knew…. They present every year, and we get the same. So we slightly changed the admission process to try to make sure we hear as many voices as possible. And we’re also changing it up a bit at the end of each meeting so that there’s an opportunity for an open mike, as well, so that we can just pick up people that didn’t have a chance to register in advance. That will be more of a round-table type of approach. We’re trying to also make it a little bit more accessible to people.

So we’ve made a few, I think, positive changes to try to get more voices into more areas in British Columbia, and I wanted to thank all the committee members for their support of that. It’s unanimous that if we can do a better job with this in terms of reaching out with our voices, then everyone benefits.

[9:05 a.m.]

We’re really pleased to be going out this year and asking the questions that you’ve put to us.

Are there any questions?

S. Cadieux: Thank you, Minister, for the presentation. This government has made some pretty big commitments to the public around affordability. In almost every area of discussion, we talked about affordability, but there has never been a definition of affordability. We’re talking about decreasing the property transfer tax revenues coming into government — which, I think was a target, and expected. However, we have never heard what that target is. When will we know that government has had success in affordability in the housing market?

Minister, what is the target? You’ve said many times publicly that you’re looking to see a significant decrease in the overall price in the market. What is that target? When was housing affordable? Was it 2016, 2015, 2014? What percentage decrease in the housing market are we looking to see, to reach affordability?

I’m really struggling with that. I understand the challenge for families. But the investments that government is making in housing are all at the bottom end, housing the most vulnerable, which is very admirable and good. We did a lot of it ourselves and, of course, continue to see that and want to continue to see that in our communities. But it certainly isn’t dealing with affordability for the middle class in terms of housing. So what is the target?

Hon. C. James: Thank you for the opportunity to be able to talk a little more about one of the key priorities. On the property transfer tax, as you mentioned, it’s certainly something that we expected you would see. I think I mentioned that we have actually calculated that. We have actually included that in the budget — $250 million, $300 million and $400 million, as it drops. So that’s actually quantified in the Q1 report that came forward. On the issue of housing — people have heard me say this often, and I’ll mention it again — we are looking for a moderation in the market.

If you talk to individuals who work in the field — whether it’s researchers, real estate agents or people who’ve worked in the area of real estate — a healthy market has mobility. A healthy market has an opportunity for people, when they get a better job or when they expand their family or when they’re able, to be able to move to somewhere that perhaps has more space than the existing housing or to be able to change their circumstances and be able to move.

We have no mobility in the market, in our urban settings in particular. There is a very low vacancy rate, high prices and an inability for people to be able to move. I’m sure that members around this table have heard the same stories that I have of people who are living in substandard conditions in places that are not safe yet will not move, cannot move, because there is nothing else available.

The indicators that we will be looking for in the market as we continue to moderate it, as we continue to monitor it, will be a moderation in housing prices, more mobility, increased vacancy rates. Those are the indicators that we’ll be watching.

“What percentage is that?” people ask. We are not setting a percentage because, as I mentioned earlier, government doesn’t control all of the levers when it comes to housing. There are levers that are outside government’s control, obviously, so it will require close monitoring. It will require watching the market as we’re going through.

Certainly, as I said in the first quarterly report, in the real estate reports that have come out over the summer, we feel that you’re seeing a moderation. You’re not seeing the kinds of escalating prices that we’ve seen in the market before, where people are overbidding, where there are wars around bidding. Those are cooling off. You’re starting to see the moderation occur there, and that’s what we’re looking for.

When it comes to the housing that we’re building — I think you mentioned the issue of housing for people who are most in need — yes, we’re very proud of that. We’re very proud of the fact that we’ve been putting in place housing. But I think it’s also important to note the work that is being done through the housing hub, through B.C. Housing. That is work not only for those hard to house, but it is also work for low- and middle-income earners.

[9:10 a.m.]

There have been some incredible partnerships. The example that the minister often talks about and that I think is one of the most exciting that we’ve seen is the opportunity to partner with faith groups, where we’ve had faith groups come forward.

They have land in the centre of a city. They want to provide an opportunity for housing. That also helps support their congregation, which is shrinking. They want to provide for and maintain that congregation. We have some great partnerships that are happening right now with those groups, where we’re able to look at market rental housing and opportunities to be able to expand a range of housing for individuals.

Then the last piece I’d just mention on that, as well, is the work we’re doing with municipalities around densification on transit lines — again, another opportunity to be able to look at investments that will link together. If you’re building transit, the opportunity to increase density and provide more opportunities for housing is there, and it gets the best bang for the buck from both those investments that are going into place.

P. Milobar: Thank you, Minister, for the presentation.

Just a couple of questions. Well, I have two questions that I can roll into one, I guess. It’s really more around…. As the minister said, she’s been on this committee much longer than myself, previously. I find that a lot of times we get lots of presentations from very specific areas. I find it helpful, as we get together, to start coming up with recommendations for the minister, to have a bit of context that they might be presenting to us, to better understand where they may be coming from, I guess.

When the minister presented the numbers on the update…. I was looking at page 10 of the Q1 update as well. A large portion of that tax revenue increase is actually personal income tax. Do we have an idea if…? About $620 million of the $790 million is actually personal income taxes going up. Do we have a sense if that’s because at the lower end, as the minimum wage increases, they’re seeing that they’re moving farther away from the basic personal exemption? So there’s a whole category of people that are now paying income tax that previously didn’t pay income tax. In other words, is their income truly increasing or not, or is it a flow-through to government revenues?

The changes in the spending profile of service delivery agencies for the school districts, universities, colleges, health authorities…. We get tons of presentations on those. I’m just trying to get an idea of the scope of what those changes would have been. Is that strictly just accounting for the employer health tax changes, or was there some new programming post-budget that got inserted into the Q1 so that as we get these presentations from these groups asking for increased programming, we have that context as well?

Hon. C. James: I’ll just speak to the income tax, and then I’ll clarify the issue around the school districts, etc. Always, there’s a year’s lag when it comes to income tax. The federal government does the collection for British Columbia and for other provinces. We have an agreement, as other provinces do. We’re actually talking about 2017 income tax coming in. So it’s an increase coming in. We saw incredible growth over that year, which, again, provides a large amount of those resources.

It’s not an increase in taxes. In fact, there’s been very little increase in personal income tax. You’ve actually seen growth bringing in resources. Again, it’s based on 2017, not on 2018 and any changes that may occur there.

I don’t know. Heather, did you want to add anything on that piece?

H. Wood: No, I think that’s correct. This is prior year, so you have to bear that in mind. We’re dealing with a lag in data here.

P. Milobar: And maybe just a quick…. I understand it was prior year, and that’s why it’s a general question. We’ve seen increases going up in general, so I was wondering if we have a sense of if it’s the lower-wage earner that’s, year after year, picking up this. Or is it across the board?

Hon. C. James: We haven’t seen increases in the personal taxes. In fact, you’re seeing a drop when it comes to MSP, when it comes to personal taxes. You’re actually seeing a decrease when it comes to personal taxes with MSP.

On the issue of education funding, is that specifically what you were asking, Member?

P. Milobar: Yes, it was a little further down — the expenses increases in the update. It’s around the school districts, universities, colleges, health authorities. I’m assuming that’s to account for the change in the EHT rules, not new programming post the first budget that was brought in for the quarterly update. Just so I have context when they’re asking for access to housing and things like that.

Hon. C. James: Great, thank you. Yes, it was a result of increased enrolment, new programs — this is in the education area — an increase of universities and colleges and increased research activity. Don’t forget that that gets offset by tuition coming in. So although they see increased enrolment — that will be an increased expense — you’ll see the tuition resources coming in as well.

[9:15 a.m.]

On school districts, it was increased spending mainly due to general operating costs and amortization, which has an impact.

Health was, again, volume growth — an increase in usage of services and supports. That’s where that piece came in.

B.C. Housing was higher operating costs and grants to the Provincial Rental Housing Corp., so that just gives you a specific piece there. And then there was a decrease in spending by the Transportation Financing Authority. So that’s what’s combined in that account, due to lower debt-servicing costs and amortization there as well.

B. D’Eith (Chair): Thank you very much, Minister. I just had a question about when we go out. We found last year sometimes we get very large issues brought to us by, let’s say, universities or associations — big spends on, let’s say, post-secondary — and sometimes we’ll get very specific, relatively small asks.

In terms of guidance for the committee…. We had 119 recommendations that were unanimous last year. I think this year we may do that again; we may not. But I think it’d be really great to get some guidance on that, because sometimes it’s big asks, and sometimes it’s very specific. In terms of reporting back to you and the ministry, could you give us some guidance on maybe how we should approach those?

Hon. C. James: Certainly, from my advice to ministers and others as they’re coming forward with requests, I think it’s going to be important as we look at the budgets over the next couple of years, again, to be very focused on priorities. That’s going to be probably the most important piece because again, as I said, we’re seeing moderation in growth. I think it will be important for us. You can’t do everything. It’s not possible. So I think the more focus, the better.

I think it’s still important to hear all of the views. I think it’s one of the strengths of this committee. And one of the strengths of the report is that even if things don’t come forward as recommendations, they’re included in the report as feedback that’s been heard. I think that’s important because there are opportunities, as I said, to look at issues that come forward and arise, that are critical and need to be addressed.

I always appreciate the fact that the reports included all of the voices that were heard. But when it comes to budgets, it’ll be about setting priorities and making sure that we’re very focused about that, because it is really, from my perspective, the only way to manage the pressures that continue to arise and the pressures that are out there. I don’t want to underestimate the challenges that people are facing, but we won’t be able to do everything, and I think that’s important to note going in.

So the more focus, the better. The more priorities, the easier it is to be able to fit them in as we build the budget. I think we’ve talked about our three priorities as government. We continue to focus on those issues of affordability, improving services and building a sustainable economy. I think it’s helpful for issues that come forward that really focus on the areas that we’ve set as priorities. And then, as I said, include all of the voices so we ensure that everybody is heard, in case there is something that was missed.

B. D’Eith (Chair): I guess one of the challenges we have as a committee is we don’t actually have a budget, so to speak. This is how much we have, so it’s more a question of coming forward with, let’s say, priorities that we hear around the province. So thank you very much for that.

M. Dean: Thank you, Minister. A significant amount of our revenues comes from resources and the resource sector. Moving forward with reconciliation, there’s going to be more sharing of those resources, which I understand will be a redistribution so that different communities can actually spend revenues on their priorities.

I’m wondering where we’re at, in terms of timelines and processes, in actually moving forward and whether that, in and of itself, actually creates some shifting of priorities within budget-building too.

Hon. C. James: Certainly, the discussions around reconciliation and the work we’re doing with First Nations is work that’s ongoing. There hasn’t been a specific come-forward yet from the Minister of Indigenous Relations, but I know those conversations are happening around what reconciliation truly means.

[9:20 a.m.]

We’ve seen a variety of methods used, whether it’s treaty talks, whether it’s individual reconciliation agreements, whether it’s resource-sharing. There’s been a variety, over the last 20 years, of methods and examples that have been put together with First Nations communities and different governments.

I think we’re continuing those discussions, to say: what is true reconciliation? What does that mean what it comes to resources, when it comes to revenue in government, when it comes to work going on in First Nations territories? I don’t think that’s a fast conversation. I think it’s in-depth work. I know that the minister has been doing that in-depth work. Certainly, any of those kinds of changes have an impact on the budget and have an impact on our economy going forward.

You’re quite right. It’s very similar, in many respects, to the issue of medical service premiums and getting rid of medical service premiums. That puts money into families’ pockets and communities, which doesn’t get invested overseas. It gets invested in those communities, in local businesses. You certainly saw the impact.

If you speak to people in Terrace, they’ll talk about the impact of the Nisga’a treaty during a downturn in the economy — the real challenges that that region faced. In fact, the Nisga’a treaty brought resources into that community and into that region, not simply into Nisga’a but into Terrace and into other communities in that area, that provided support during a difficult time in those communities. I think those resources that get spent and get circulated back into communities certainly provide that support.

I know the minister is doing some good work. I know it’s going to take some time, but I think you’ll see some work coming forward in the next short while.

B. D’Eith (Chair): Great. Well, no more questions. I wanted to thank you very much, Minister, for your presentation, and hopefully we’ll make you proud with what we come back with. I think we’ve got a great group. We’ve already worked very well together over the last year, and I’m confident that we’ll come back with some great ideas for British Columbia.

Hon. C. James: Thank you to all of you, and safe travels. I know you’ve got a lot of travel ahead of you before we go into the Legislature. So travel safely, and again, thank you for really representing democracy, from my perspective, by listening to people directly in communities.

You can’t underestimate what a difference it makes to people to have someone, face to face, be able to listen to their issues and hear them firsthand. I certainly found that it made a big difference, hearing those issues. You can all read briefs, and we all get the binders and the materials ahead of us, but to hear it firsthand, I think, is a huge piece. So thank you to all of you for your work on this committee, and I look forward to the report.

B. D’Eith (Chair): A motion to adjourn.

Sonia, thank you.

Motion approved.

The committee adjourned at 9:23 a.m.