Orders of the Day

Hon. M. Farnworth: I call second reading of….

Interjections.

Mr. Speaker: Members. Members, order, please.

Minister.

Hon. M. Farnworth: I call second reading of Bill 2. In the little House, Committee A, I call the estimates of the Ministry of Agriculture.

Tabling Documents

Mr. Speaker: Hon. Members, I have the honour to present the following reports of the Office of the Registrar of Lobbyists: Investigation Report 17-03, lobbyist: Robert Iasenza; Investigation Report 17-04, lobbyist: Adrian Pollard; Investigation Report 17-05, Gateway Casinos and Entertainment Ltd., designated filer: Tony Santo; and Investigation Report 17-06, lobbyist: Lorne Valensky.

Second Reading of Bills

BILL 2 — BUDGET MEASURES
IMPLEMENTATION ACT, 2017

Hon. C. James: I move that Bill 2, the Budget Measures Implementation Act, 2017, be read a second time.

Bill 2 consists of two parts. Part 1 includes a number of provisions that will enable government’s Budget 2017 Update. Part 2 of the bill amends eight statutes in order to implement many of the tax measures that are in the Budget 2017 Update. I’ll take my time in second reading just to go through those specific changes that are in this bill.

[R. Chouhan in the chair.]

In part 1, the North Island-Coast Development Initiative Trust Act is amended to increase the total amount that may be paid by government to the North Island–Coast Development Initiative Trust by $10 million, a request coming forward from the trust that fits with the act. The act is also amended to clarify the powers and duties of the directors in relationship to the receipt, deposit, investment and use of money paid by the government to the trust and in relation to the investment of other moneys in the trust’s regional account.

The Transportation Investment Act is amended in this bill to authorize transferring ownership of the share of the Transportation Investment Corporation from government to the B.C. Transportation Financing Authority.

[11:00 a.m.]

The amendment also makes the board of the B.C. Transportation Financing Authority responsible for appointing the board of the corporation. It is consistent with common practice that the shareholder appoints board members of its subsidiary companies.

Part 1 of the bill also includes two transitional provisions. The first clarifies that certain references to the estimates and other documents for the 2017-18 fiscal year are those tabled with the budget. This is a clarification because of having two budgets — a budget in February and a budget in September. This clarifies that when we talk about estimates, we’re talking about the estimates that were tabled with the budget update in September. The second provides appropriation for the Transportation Investment Corporation share transfer, if required, and for the continuation of existing agreements.

Part 2 of Bill 2 promotes a strong economy by amending various tax statutes to ensure that our tax system is fair and competitive, to ensure that everyone pays their fair share for the programs and services that, in fact, every British Columbian benefits from.

We believe when you take a look at indicators, when you take a look at individuals speaking about the economy of British Columbia, that we will continue to be among the top performers this year and next. Bill 2 amends eight statutes in order to implement many of the tax measures that we believe will continue to build the strong economy that is needed for British Columbia.

I’ll just go through some of these individual acts. Bill 2 amends the Carbon Tax Act to increase the carbon tax rates annually by $5 per tonne of carbon dioxide–equivalent emissions for four years, commencing April 1, 2018. That will give us the opportunity to meet our federal requirements, in fact, one year ahead of the requirements. That’s something that I believe British Columbians are pleased about — that we will once again be a climate leader here in British Columbia.

While not part of this bill, this also ensures that the Low Income Climate Action Tax Credit — and you’ll see that in the next budget — is increased to help low- and modest-income families. When the increase occurs, it’s about 17 percent. You will see the low-income tax credit also increase by 17 percent to ensure that families are managing the increase that is there.

We’ve also removed part 2 of the act. It is repealed in this bill. That’s removing the requirement to prepare an annual carbon tax report and plan, because that was based on the so-called revenue neutrality that was in the previous bill with carbon tax. This will allow our government, the new government, to spend carbon tax revenue on initiatives that, in fact, directly reduce emissions. With all government spending, this will be reported out publicly.

The Income Tax Act is also amended to increase the rate on personal income over $150,000 to 16.8 percent from 14.7 percent. The public will remember this. This was a tax break that the previous government gave to the top income earners in our province.

We believe, again, that everyone should pay to be able to benefit from all of the services and programs that are important to British Columbia. So we believe this increase, which impacts less than 3 percent of the tax-filers, will, in fact, ensure that the tax system is more fair and provide and contribute towards programs and services that everyone benefits from.

For example, if we are taking a look at something like adult basic education and English language learning, ensuring that those programs are free of tuition will benefit not only those individuals but, in fact, will benefit businesses, will benefit employers. It will help them, in addition, to be able to attract and retain employees here in British Columbia. Everyone paying and contributing to what everyone benefits from is what a fair tax system is all about.

Bill 2 also amends the Income Tax Act to increase the general corporate income tax rate to 12 percent from 11 percent, as we committed to in the election. That’s effective January 1, 2018, and that keeps us comparable, again, to western provinces, ensuring that we continue to remain competitive here in British Columbia.

We recognize the importance of small businesses and the role that they play in creating jobs and strengthening our economies. So the Income Tax Act is also amended to reduce the small business corporate tax rate to 2 percent from 2.5 percent, and that’s effective April 1, 2017. The dividend tax credit rates are also adjusted accordingly.

[11:05 a.m.]

With all of these changes, British Columbia will continue to have a very competitive tax rate with, in fact, our small business tax rate being the second lowest in the country — continuing to grow our economy and continuing to ensure affordability for families as well as improving programs and services that everyone benefits from.

Bill 2 amends the Income Tax Act as well to create the volunteer firefighters and search and rescue volunteers tax credit. This was a tax credit that was proposed back in February, in the budget brought forward by the previous government, and from my view of it — although we didn’t get a chance to vote on the February budget — supported widely by all members in this Legislature.

I think, certainly, this measure — as you would know, hon. Speaker, and as all the members would know in this House — is particularly timely, given the significant efforts by all firefighters, including volunteer firefighters, this year to combat B.C.’s wildfires. This non-refundable credit is available, starting for the 2017 tax year, to British Columbians who provide at least 200 hours of volunteer service to a volunteer fire department or an eligible search and rescue organization.

I know that all members in this House not only support this but send our thanks and appreciation to those individuals who are out there putting themselves in danger to ensure that they can protect all of us.

The credit amount, for members’ information, is $3,000, providing a tax benefit of more than $150 per year. Combined with the corresponding federal credit…. I think this is an important piece to note as we go through this budget and this budget bill. There are federal tax credits that correspond with the British Columbia tax credits — in some cases, tax credits that will end because the federal government is also ending their tax credit, so there’s often coordination. If you combine the volunteer firefighters and search and rescue volunteers with the federal credit, individuals will be eligible for more than $600 per year, which, again, I think is a small measure of appreciation for those individuals.

Bill 2 also amends the Income Tax Act to enact the back-to-school tax credit that was included in a previous budget. It was included but not enacted. There was an agreement with the federal government to administer while enactment took place. This non-refundable tax credit is a very small benefit, as we’ll see with a few of these other tax credits. It provided a benefit of about $13 for a child, and this credit does not continue on beyond 2016.

It is a small credit, and again, it’s not accessible to most low-income families. This is a non-refundable credit. Therefore, you have to have enough income to be able to claim the credit. Therefore, many low-income families do not benefit from this credit. Instead there will be, as you saw in the budget, significant investments made in the education system to provide better support for all children.

The Income Tax Act is also amended to expand, extend, clarify or eliminate several tax credits. I’ll just run through a number of those and the timing on those individual tax credits.

I’ll start with the scientific research and experimental development tax credit. That’s extended in this bill for five years to August 31, 2022. This credit certainly helps continue to ensure that B.C. companies innovate and develop new technologies.

The book publishing tax credit is extended for one year to March 31, 2018. As with many of these credits, they are one-year extensions as we do a review around a fair tax system. Many of these were, in fact, one-year credits in the previous budget as well. This extension of a credit ensures government support to approximately 30 book publishers in British Columbia.

The training tax credits are extended for one year to the end of 2018, and these credits help with skill development of apprentices in British Columbia. This is a small piece of the work that is going to be done by our government to look at how we actually improve access to trades training opportunities and support apprenticeships through employers across our province. That will be a bigger discussion that the minister will bring forward as time goes on.

As in the February budget — so identical to the February budget — the B.C. mining flow-through share tax credit is extended to the end of 2017. The mining exploration tax credit is expanded to include costs incurred for environmental studies and community consultations — now a large part, in fact, of much of the work of mining companies when they’re going in to look in communities. That will now be included as part of that credit.

We know that the mining sector is a vital part of our economy, and these amendments will certainly continue to encourage investment in mining exploration and in development.

[11:10 a.m.]

Again, I talked a little bit about credits at the federal level and provincial level. The children’s fitness, the children’s fitness equipment and the arts tax credits end in 2018 and subsequent tax years. These changes parallel the elimination of the federal child fitness and arts credits in 2017, so again, linking the changes that are being made at the federal level to look at…. Rather than very small benefits that are non-refundable and that, in fact, don’t benefit low-income families in particular, you will see these changes and the money invested in better ways to provide support to families when it comes to either arts or when it comes to fitness or education.

The Income Tax Act is also amended to make changes to the interactive digital media tax credit. Previously, there was a restriction against corporations that participated in the small business venture program. That’s removed. They will be able to now participate in this tax credit. In addition, the principal business requirement is adjusted so that companies whose principal business is not interactive digital media can now claim the credit, so long as they incur the qualifying B.C. labour expenses of approximately $2 million.

The interactive digital media tax credit provides support to B.C.’s tech sector, which, as we all know, is an integral part of our growing economy. These amendments will certainly further support B.C.’s tech sector. I think one of the pieces we’ll be looking at, as we look at tech support, will be the innovation commission and the work that they’ll be able to do as well with the tech sector, to ensure that we’re staying on top of the new technology that’s coming in.

As we put these tax credits in place…. In many cases, the technology is ahead of where the tax credits are, which means definitions need to change as you’re looking at that work. So I expect you’ll see continued changes that will need to keep up with where the private sector and tech sector is to ensure the benefits are there.

There’s also an amendment in this Income Tax Act that restores the tax benefit for credit unions. I’m very proud that we’re bringing this piece forward. It’s a piece that we worked hard on, on the other side, to provide that support. We all know the vital role that credit unions play in providing investment opportunities, particularly in small and rural communities.

In many communities, credit unions are, in fact, the only financial institution in that community. They also ensure that they provide support to small businesses that often are too small to be paid attention to by the big banks and that don’t receive the kind of support that they need. The credit union is always there for them, to provide that support. So to be able to ensure that the tax benefit for credit unions is in place and ensure that the resources that credit unions lend come back to communities…. That really is the strength of this change — the money that is invested by credit unions in lending to small businesses circulates back into the community. It provides strength to the local economy, particularly rural communities, as well as strength to our bigger economies.

I’m very pleased that we have this change coming forward — a permanent change. Previously, the government had frozen the change and was tapering it up, getting rid of the tax break that was there. We’ve made it permanent so this won’t be an issue coming up each year in the budget.

The government is also committed to combating tax evasion and fraud, and that’s why you see some changes in this bill to provide administrators with access to B.C. assessment information. Also to facilitate information-sharing for the purposes of administering the homeowner grant.

These provide opportunities for sharing of information that will be critical to determining what next steps have to be taken to end speculation; to close tax loopholes; to be able to address the challenges, particularly in the area of housing. It will give us the opportunity to do a comparison on the information coming in on the income tax end and on the homeowner grant end to hopefully begin to address and put specific measures in place to close those loopholes and to ensure that we end speculation in the real estate market.

These two amendments also will improve the government’s audit capacity by ensuring that capital gains from property transactions are accurately reported and by ensuring that homeowner grants only go to homeowners who are eligible. So these are important pieces.

[11:15 a.m.]

The International Business Activity Act is also amended to eliminate the program, as of September 12, 2017. It was very clear in the review of this program that it was not generating the level of economic activity and the employment that was envisioned. In fact, most of the companies involved who were receiving the tax benefit through this program were already based in B.C. — did not come to B.C.; were already based in B.C. — and were receiving a bigger tax benefit after they were already in B.C. Certainly, the employment numbers did not play out.

While I appreciate that there was a most recent review that was tabled to a number of members in this House about the program, there were a number of shortfalls in that report — most importantly, that the report was based on interviews with the individuals receiving the tax benefit.

The work that was done and the analysis done in the Ministry of Finance was done based on actual tax information, not simply interviews of people on how they felt about the program, but actual tax information. I think that’s very important. These are taxpayer dollars. We need to make sure that we do our due diligence on how dollars are spent. Even the report that came forward just recently had to point out that there was no specific link between the dollars that were provided, the tax breaks provided and the jobs created, because there was no evidence to show that. I think that’s a very important piece. That’s why you see that the program is eliminated in this budget.

Bill 2 also amends the Property Transfer Tax Act to increase the threshold for eligible residential properties under the first-time-homebuyers program. Effective for registrants after February 22, 2017, the threshold is increased to $500,000 from $475,000, and that increases the maximum property transfer tax exemption under the program to $8,000. This higher threshold will help first-time homebuyers as they are buying their first home.

We also see an amendment in this bill to the Tobacco Tax Act to increase the tax rate on cigarettes to $49.40 from $47.80 per carton of 200 cigarettes and to increase the tax rate on loose tobacco to 24.7 cents from 23.9 cents per gram. I think we’ve certainly seen in British Columbia the benefit of increasing tobacco taxes. Increasing the price of tobacco is a very effective deterrent, particularly for young people. We know we have a very good record in British Columbia when it comes to British Columbians quitting smoking or never starting in the first place. I know my colleague the Minister of Health will appreciate this piece in the bill, to continue making sure we keep that good record here in British Columbia.

Bill 2 also amends the Motor Fuel Tax Act to exclude natural gas used in locomotive rolling stock or other vehicles when run on rails from the three-cents-per-litre tax on locomotive fuel. Not taxing natural gas used as locomotive fuel is very consistent with other exemptions that are in place for natural gas when used in motor vehicles or in a ship. It provides an added incentive for railways to switch over to natural gas from more carbon-intensive fuels — which supports, again, our climate action strategy. So a win-win all the way around.

Another piece. When I talk about business competitiveness, Bill 2 amends the Provincial Sales Tax Act to phase out the provincial sales tax on electricity. This has been recommended by the Commission on Tax Competitiveness and, certainly, requested for a number of years by businesses to ensure that we remain a competitive environment for investment and for business activities here in British Columbia. The PST will be reduced to 3.5 percent. Then, effective April 1, 2019, electricity will be fully exempt from PST.

This exemption, when fully implemented, will provide businesses large and small with a savings of more than $150 million annually — a very significant investment in businesses, a significant investment in competitiveness and a significant investment, again, in climate action. If we can encourage businesses to take a look at clean energy and a transfer to clean energy, that’s going to be a benefit to all of us in British Columbia.

These savings will allow businesses to reinvest in new equipment and new technologies, hopefully increase our productivity in British Columbia as well, and give us an ability to compete globally. It’s going to be, certainly, a positive step. It also provides an added incentive for businesses, as I said, to switch over to electric power, which helps with our climate action.

[11:20 a.m.]

This bill, and this government, will promote a fair and competitive tax system, as I’ve said often in the introduction of our budget, to ensure a strong, vibrant economy in British Columbia, while investing in people, investing in affordability and investing in services that are critical for every British Columbian.

We believe that this bill meets those objectives. This bill enacts the areas in the budget that, as I said, I believe will benefit a strong economy in British Columbia and, most importantly, will support the very people who create that strong economy.

S. Bond: I appreciate the opportunity to make some remarks about Bill 2, the budget implementation act. I think it was refreshing that the Finance Minister got a vigorous round of applause for her work on this bill. In fact, what this bill is, is actually the technical implementation part of delivering a budget in British Columbia. I do want to thank the minister for her remarks.

I also want to reflect on the fact that while we stand in the Legislature and review the number of acts that are going to be amended, the consequential things that are necessary to adjust legislation, this really breathes life into the principles, the changes and the direction that the government has set in its budget. While we allow the names of the acts and everything to be read, these changes affect people’s lives. And there are changes here that as the official opposition, we are concerned about.

Today I’ll make some introductory comments. Of course, when we get to committee stage, that’s when we’re going to have a conversation about why some of the changes were made. Obviously, the budget has been passed in this Legislature, and we’ll move forward, but this really is the bill that sets in motion the implications of the budget that was introduced by the government.

From the outset, we want to say how much we appreciate the retention of many features in this budget update that were actually introduced by our government in the February 2017 budget that was introduced previously. Obviously, what’s important will be how the implementation takes place, but we should start with a very significant one: the reduction of MSP premiums by 50 percent. That was actually introduced in the previous budget by our government. We will see, and obviously there’s been…. The approach to the MSP reductions will be something that we will be monitoring and holding the government to account for.

The reduction in the small business tax rate from 2.5 percent to 2 percent is, once again, obviously, absolutely essential to B.C. entrepreneurs and small businesses. We know that small businesses are the heart of the economy in British Columbia. But we also have to recognize that there is a layering effect in this budget that impacts small businesses. On one hand, we’re going to reduce their small business tax rate, but we’re also going to see the carbon tax increase. We’re going to look at a number of other things that impact those small businesses.

If we want to talk about the impact of this budget…. Today, the bill is about how we bring life and give life to that budget. Let’s take a look at what’s happened with small business confidence since July in this province. Since the new government came into place, we’ve seen the optimism of B.C. entrepreneurs drop from first to sixth place in British Columbia, according to the CFIB.

Now, I have every reason to believe that some of the very significant policy decisions and shifts, things that haven’t been included in this budget, have actually impacted the confidence of small business entrepreneurs in this province. That is something that we should not take for granted.

The budget also retains the phasing out of the PST on electricity paid by industry. As someone who lives in a resource-dependent community, I can assure you we worked long and hard and recognize the importance of the reduction of PST on electricity paid by industry. Once again, it is another way of providing some relief to small businesses, who very often operate at the margins — for people, for example, in the forest and paper industry, like Catalyst.

[11:25 a.m.]

Their vice-president said, and this was after we put the PST reduction in the last budget: “The elimination of this tax will help industry in B.C. improve its competitiveness.” Again, I do want to recognize that the government looked at, which I think was a very wise thing to do, the introduction of many of these items by our previous government and retained them.

The introduction of a $3,000 non-refundable tax credit for volunteer firefighters and search and rescue volunteers. I appreciate the member noting that that is something that was introduced in the previous budget. All of us recognize, especially those of us who represent small, rural interior communities.... We know how important it is with volunteer firefighters. We know this is a small way of recognizing the incredible work that they’ve done that has been highlighted even more during the unbelievable wildfire season that we’ve faced in our part of the province. Again, we very much appreciate seeing that particular initiative being retained.

We’re also glad to see the extension of the book publishing tax credit and the training tax credit. I do want to note, and one of the areas of concern that I have…. The minister made the comment that, in fact, these are typically one-year extensions. I should point out — again, we’ll talk about this in committee — that we previously announced a two-year extension to both of these programs. So I’d be very interested in knowing what prompted the Finance Minister to move from a two-year extension, which was promised in the previous budget, to a one-year extension. Because every time we introduce that kind of uncertainty….

When we look at, particularly, the book publishing industry in British Columbia, they want certainty. We have a phenomenal book publishing sector in this province. Again, it’s a simple question of: why move that from a two-year commitment that was made previously back to a one-year commitment? That matters. Certainty matters, and we’ve now added an additional degree of uncertainty.

I think much of that is designed to look at what will be affordable for this government when it announces its full budget in February. These are all items that British Columbians were already counting on because of the previous budget that we introduced in February. And it is important to note that these tax cuts contribute to a very healthy and competitive economy.

I have to take the opportunity, as you can imagine, when we’re talking about the budget…. We were able to afford those types of broad-based tax cuts because we had worked incredibly hard with British Columbians to present five consecutive balanced budgets, as we now know, which produced a very significant, more than $2.5 billion surplus. That was turned over to this government and, in fact, was confirmed by the Auditor General very recently. As we know, as part of B.C.’s balanced budget law, we applied the surplus primarily against public debt.

The government inherited a very healthy, robust circumstance when it comes to the fiscal health of this province. We have an economy that was growing. We had one of the leading economies in the country, the best job creation record, and that sets the bar for this government. We will be looking at how this budget update impacts British Columbia’s standing on the national level.

The February 2017 budget also included investments in things that were most important to everyone in B.C. We constantly hear from the members on the other side that we didn’t provide funding for education or health care — all of those things.

Well, in fact, when the Auditor General reviewed the financial situation in British Columbia, it was confirmed that health care spending increased by $486 million, or 2.5 percent, over the previous year. The education sector also had a significant increase of 2.1 percent, and the social services sector increased by $137 million or 3.3 percent. Not only did we look at how to remain competitive and have one of the lowest tax burdens in the country, we also invested in those important services.

[11:30 a.m.]

We acknowledge that British Columbians made it clear when we went to the polls in May that they did expect their government to add additional resources to important programs. But they did not go to the polls to reject the fact that having fiscal prudence and discipline, looking at balanced budgets, looking at growing the economy, looking at job creation was an important thing for governments to consider. All of these important factors were recognized by the Auditor General when we look at what happened with the fiscal circumstances in the province.

I want to speak to a couple of the specifics in the bill. Obviously, the minister has outlined virtually every act that will have to be amended and the consequentials as well.

We have said, from the introduction of the September budget update, that we are very concerned about the principles that underlie the ability for this budget to remain balanced in the future. We’ve seen this government move from a practice of prudent fiscal management to large-scale increases in program spending with very little certainty about how those promises are going to be paid for.

Quite frankly, British Columbians know well that, in fact, it relies on an almost $1 billion increase in taxes to pay for the commitments that are outlined in this budget update. That has prompted…. We’re going to have, in committee and also in estimates, a discussion about what the credit-rating agencies are saying about this. In fact, the budget update prompted credit-rating agencies such as Moody’s and Dominion Bond Rating to issue a warning of sorts to the government about ambitious increases in program spending.

In fact, one of the analysts said: “The government’s plan is credit-negative, as it will increase taxpayer-supported debt and remove a dedicated line of revenue for debt repayment.” Hardi goes on to say: “We assume that action will be taken in addition to other actions to be announced in the upcoming September budget update. Any ratings impact would therefore need to take into account other possible measures would be announced at that time.”

One of the things that I have learned over my time in this House and as now a fifth-term MLA is that when you talk about a triple-A credit rating, most people’s eyes glaze over. They don’t make the connection about how important that is to being able to fund important services in this province. I can assure you that we believe that there is the potential to put the triple-A credit rating of this province at risk with some of the decisions that have been made and, more importantly, with many of the significant promises that have been made by this government that are not reflected in the budget update.

The remarkable feature, as I said, is that the government is implementing wide-scale tax increases on top of a built-in $2.7 billion surplus. In other words, the budget implementation bill anticipates spending well in excess of the current fiscal framework.

Currently, British Columbians enjoy some of the lowest tax burdens in the country. Following passage of the Budget Measures Implementation Act, that will no longer be the case. Bill 2 proposes a significant personal tax increase on high-income earners from 14.7 to 16.8 percent. The income threshold for this bracket is set as $150,000.

This new measure is estimated to bring in $67 million in 2017-2018, $273 million in 2018-2019 and $287 million in 2019-20. While these figures represent a large sum of money, it pales in comparison with the government’s total spending plan in excess of $51 billion for 2017-2018.

What other tax increases are we looking at? This bill will increase the corporate income tax rate from 11 percent to 12 percent. At the current rate of 11 percent, British Columbia has the lowest general corporate income tax rate. This gave our province a competitive advantage, not only in comparison to the rest of the country but in the global marketplace where we as British Columbians have to compete for business.

According to the Minister of Finance, this will make British Columbia “comparable to Manitoba, Saskatchewan and Alberta.” In fact, British Columbia will be tied with Alberta and Manitoba for the fourth-highest general corporate tax rate in Canada. Well, there goes our competitive advantage.

[11:35 a.m.]

Why should large companies like Amazon locate in a province like British Columbia when the tax rate is much higher than the rest of the country? Where is the incentive? While it’s easy for the Minister of Finance to stand up and list all of the acts that are going to be impacted by the budget, perhaps we need to stop for a moment and think about the implication of those measures on the lives of ordinary British Columbians, everyday British Columbians, on the lives of small businesses, small business owners in the province. And what about those big companies that we’re trying to attract to British Columbia to create good family-supporting jobs?

As a matter of fact, the current Premier once provided a media interview to the Northern View a few years ago and stated the following: “The lowest tax jurisdiction in North America is not something we should strive for. Why wouldn’t we strive to be the middle tax jurisdiction in North America?” Well, I can tell you why: because we want to attract businesses.

The government talks frequently about an emerging economy in British Columbia. Well, I can tell you one thing. One of the things that companies that are in those emerging sectors, like technology and life sciences…. They’re looking for a competitive tax regime. They’re looking for a place where they are going to make a choice about investing those dollars. In terms of our competitive advantage, Bill 2 certainly strives and achieves for mediocrity. As a result of this legislation, B.C. now stands proudly in the middle of the pack.

These are just two of the significant tax increases. The third concerns me and certainly concerns many British Columbians. The increase in the carbon tax, as laid out in this bill, will impact individuals, small businesses and industry all at the same time.

The Budget Measures Implementation Act sets out four consecutive tax hikes in the carbon tax in each of the next four years. This will have a compound effect in raising taxes. Furthermore, Bill 2 abandons the principle of revenue neutrality.

I have to say to the minister: I very much appreciate the work she does. But to stand in the House today and use the phrase “so-called revenue neutrality….” Under the previous government, any increase in the carbon tax had to, by law, be accompanied by a decrease in personal or other forms of tax. That is called revenue neutrality. This legislation effectively will end that.

When we designed the carbon tax, referenced as the so-called revenue-neutrality piece, it was held up as a model around the world. This was primarily because of the very aspect that the minister dismissed so freely in the House today — and with it, the transparency of reporting out.

Our government required a plan to be laid out with each and every budget to demonstrate to British Columbians how that revenue that was generated would be returned to them. Then we didn’t stop there. We didn’t lay out a plan. In fact, there was a required reporting back. Was the plan met? Did we achieve the results that were expected?

I’m sorry. Neither British Columbians nor the opposition accept the fact that simply telling them the money was spent and that it will be reported out, without the requirement by law, is a serious flaw. Members on the opposite side can chuckle about that. We are talking about hundreds of millions of dollars that impact people’s prices at the pumps. And in this bill, we look at it being applied to every single kind of fuel, as it should be. But what analysis has been done?

For example, there is a long list of fuel types. We will certainly be exploring this in committee. What kind of analysis has been done on the impacts to business? We already know it will affect consumers at the gas pumps. So after paying all of their income taxes, consumers in British Columbia can look forward to more tax on gasoline and, where I live, home heating fuel, making it more expensive to heat your home in the winter.

What about industry? We’re going to ask about the kind of analysis. Has it been done on the increases in the cost of jet and aviation fuel, for example? How much will carbon tax increases affect travellers who use air travel? What effect will the increases have on our province’s tourism industry?

[11:40 a.m.]

All of those things matter. It’s easy to announce additional tax increases and to list them here, one after another. What kind of analysis has been done on the economic impacts of things like raising jet fuel or aviation fuel over the next four years? When we lifted the taxes on aviation and jet fuel on the international side, it led to a dramatic increase of air traffic at YVR, particularly with Asia. So we’re going to have a discussion about those kinds of things in committee. The people of British Columbia deserve to know how well-thought-out Bill 2 is and how it will impact our provincial economy.

The minister also walked through the tax breaks that will disappear with this act — the child’s fitness tax credit, the child’s fitness equipment tax credit and the child’s arts tax credit. The minister gave some explanation to that, but we’re going to actually pursue that a little bit when we go to committee stage.

We want to also emphasize again that the government continues to claim that it wants to make life more affordable for British Columbians. I think every person standing in this Legislature would agree with that notionally. But here we see a series of tax increases. We see a loss of tax credits aimed at children’s activities, and it seems to counter that objective. So that’s the revenue side.

To recap, in addition to a $2.7 billion surplus, the NDP and Green coalition government have seen it necessary to implement increased personal, corporate and carbon taxes. It’s almost a billion dollars in tax increases in just the first year.

I also want to look at the expectations that have been laid out in terms of the economic forecast. The government has increased its economic forecast from 2.1 percent in the February budget to 2.9 percent in 2017-2018. In other words, the government is banking on the same remarkable economic performance British Columbia experienced last year, but with a heavier tax burden that will make it less competitive in the coming year. Remember, British Columbia now proudly stands in the middle of the pack.

No wonder that the credit-rating agencies are keeping a close eye on our triple-A credit rating, and they should be. There are significant risks to the government’s economic forecast. The central bank has raised interest rates twice since July — the first in seven years. The softwood lumber dispute continues to threaten the performance of the forest industry. And we haven’t even begun to factor in the worst wildfire season in the province’s history. We also have the renegotiation of NAFTA. That is still unresolved. All of this comes at a time when the U.S. administration is proposing drastic cuts to its corporate income tax rates, making it much more difficult for a province like British Columbia to compete south of the border.

Let’s take just a quick look at the ambitious spending plans that the Budget Measures Implementation Act brings to life. So $4.5 billion over the next three years, and all of this spending is limited to the current bill we have before us. Even more concerning for us are the unfunded campaign promises that were omitted in the September budget update. These are not insignificant financial matters. They’re big-ticket items — $10-a-day daycare program, $400 annual renters rebate, rollback on ferry fares, a freeze on hydro rates, elimination of interest payments on student loans, $1,000 completion grant for colleges.

Also missing is any mention of transportation and transit infrastructure, long-term funding for transit, additional capital spending on hospitals and schools, the introduction of a new essential drugs program, additional funding for K to 12 and post-secondary, a new pilot program on basic income, and new investments in affordable housing — not mentioned, not funded, all promised.

To pay for all of these items, it is absolutely apparent that the NDP and Green coalition are looking to either eliminate long-standing programs…. Because we certainly haven’t seen a revenue-generation program, other than taking out of the pockets of British Columbians.

Let’s face it. We’ve had two surprises over the last two weeks. I’m wondering how the government plans to fund the now taxpayer-supported election fundraising process in British Columbia. Promised: no, it won’t be taxpayers paying for it. We now know that millions of dollars will be required from taxpayers to actually fund elections in British Columbia. And then yesterday. Where’s the budget for the referendum on electoral reform?

[11:45 a.m.]

I do appreciate the minister, because I know she’s lived in northern and rural parts of British Columbia. I’m going to digress for just one moment to say this. She spoke passionately about the importance of changing the credit union bill. That’s so important because rural and northern communities and small communities require that special attention.

Well, I want to say to the members opposite that when the government introduces a referendum on proportional representation that reflects 50 percent plus one and has no regard for the size of this province or the geography, I’m not just concerned about how they’re going to pay for it. I’m concerned that virtually the future of the voting process in British Columbia will be decided by urban British Columbia, simply saying to rural B.C.: “Your voices do not matter in this referendum.”

Not only are we concerned about the policy implications. We’re concerned about one more thing to add to the list in terms of how they’re going to pay for it.

I also want to comment for just a few minutes about the elimination of the international business activity program — once again, dismissed completely by the minister in the House today. “Didn’t work. Not worth it. Report wasn’t really very good.”

It was interesting. The minister should actually be more specific about her comments about the analysis that was done because, in fact, in the analysis that the ministry did, certainly to the best of our knowledge and the information we were provided with in our briefing, was the fact that the last time the analysis of this program was done by the ministry was in 2010.

Now, I can assure you that if the decision to eliminate that program, based on a 2010 analysis, is the way that the framework for the policy decisions are being made, that doesn’t give us a lot of confidence. That program has been around since the 1980s. In fact, it’s been supported and expanded by ministers of all political stripes, including the NDP. The program is designed, once again, to attract and retain international business activity that simply would not otherwise be located in British Columbia.

Back in 1987, then Finance Minister Mel Couvelier said that the IBA is designed to “develop an international financial centre in Vancouver so that we can be Canada and North America’s financial gateway to the Pacific Rim.” In the late 1980s, British Columbia did not rank anywhere as an international financial centre. But by 2008, that had changed. Vancouver ranked as 33. Today, Vancouver has climbed to No. 17.

All of us recognize that there is more to be done. But B.C. benefits from international commerce. You can’t attract international investment or head offices like Amazon unless they have ready access to financial services. The financial services sector is an important generator of employment.

The IBA program is totally administered by the Minister of Finance. It does not come at a cost to taxpayers because the income generated by increased investment is returned to taxpayers in the form of corporate tax income.

Every jurisdiction in North America has some form of tax incentive. Unlike British Columbia, most simply cut a cheque to individual companies for direct corporate subsidies. B.C. did away with that practice in 2001.

As you can imagine, we’re going to have more to say about that. I’m not sure why the minister, at this point, would simply have eliminated the program without a proper review, without at least considering the report that’s been presented to her in draft form. And why not potentially refer that program to the emerging economy task force, rather than simply eliminate it?

[Mr. Speaker in the chair.]

In conclusion, the official opposition remains very concerned that the government will be capable of achieving ongoing balanced budgets. The spending contained within this legislation essentially takes up all of the fiscal room that the government has.

I appreciate the opportunity to speak this morning. We look forward to having further discussion in committee.

[11:50 a.m.]

Hon. A. Dix: It’s wonderful to rise in this debate. When you look at the detail…. I think most British Columbians, when they saw the budget presented by the Minister of Finance, which makes life more affordable, which makes the taxes more progressive, which relieves costs on business and on British Columbians…. They were delighted.

When we have the opportunity here to review these changes in detail.... Contrary to what we’ve been hearing from the members of the opposition, there are facts and then there are facts. The facts are contained in the budget document. Those facts on page 60 show that there is a net tax reduction of $389 million in this budget — and annualized in 2018-19 of $881 million. Those are the facts, not what was put forward by them.

Now, as members will know, that’s actually what’s in the budget. I know that reading the facts is disturbing. Reducing the facts….

Interjections.

Hon. A. Dix: You know what, hon. Speaker? I challenge them to read page 60 of the budget, to actually read the budget and see the tax changes, which are a reduction — $1.3 billion annually in MSP cuts, paid by individuals and business.

How can they stand there seriously, when the facts say opposite, and claim that this budget raises taxes? It is absolutely untrue, and they continue to say it day after day in this House.

I want to say, because we only have a short period of time before the House adjourns for lunch…. Well, the tax information is very clear in the budget. It’s on page 60, and the members opposite can either read it or not, either pay attention to the facts or not. I understand they have a difficult job in opposition, and they’re having a difficult time making the adjustment.

I want to make one point, with respect to what…

Interjections.

Mr. Speaker: Members.

Hon. A. Dix: …the member from Prince George just said. I want to make one correction.

She claimed that the policies around proportional representation were designed to limit voices. There was a referendum on STV in 2009, produced by that government over there, which was 50 percent plus one. Now, that referendum happened to be defeated. That government over there did a referendum on minority rights, on First Nations rights, in 2002 and 2003. There was a referendum on First Nations rights. What was it? Fifty percent plus one.

How can they make that argument seriously in this House? How can they make that argument seriously? It is so disrespectful. When they do a referendum that’s 50 percent plus one, it’s okay. When we do it, it’s not okay. That’s their policy. They are completely out of touch. It was 50 percent plus one in 2009. You know it. You know it was 50 percent plus one in 2009, and to say differently now is incorrect.

Hon. A. Dix moved adjournment of debate.

Motion approved.

Committee of Supply (Section A), having reported progress, was granted leave to sit again.

Hon. M. Farnworth moved adjournment of the House.

Motion approved.

Mr. Speaker: This House stands adjourned until 1:30 this afternoon.

The House adjourned at 11:55 a.m.