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B.C. cuts health premiums in half with pre-election budget

Premier Christy Clark and Finance Minister Michael de Jong discuss housing issues in Greater Vancouver at the legislature in Victoria on July 25, 2016. (CHAD HIPOLITO/THE CANADIAN PRESS)

In a pre-election budget that promises to leave more money in the pockets of British Columbians, the B.C. government attacked one of its most contentious and regressive fees – the Medical Services Plan fees that residents must pay to access health care.

But the measure – the highlight of the blueprint the Liberals will take into the May election – only reduces the premiums, rather than eliminates them. British Columbia is the only province that has such fees and Finance Minister Mike de Jong told reporters that his government has felt the pressure from British Columbians who felt it was an unfair levy.

“A significant number of British Columbians remain troubled by the fact that we have this premium that doesn’t exist elsewhere in the country.”

The premiums will remain unchanged until next year, and the rate will only be reduced by a total of $200-million in the coming year. When it is fully implemented, it will save as much as $900 per year for a family earning less than $120,000.

After leading the country in economic growth for two years, the BC Liberal government has promised to use this budget to “pay back” British Columbians, just ahead of the May 9 election.

“We are going to help British Columbians keep more of their hard-earned money,” Mr. de Jong said in his budget speech.

The fiscal plan seeks to address some of the acknowledged social deficits with an additional $1.3-billion in spending for health care, education and child-welfare services. There is more money to add child-care spaces, a reduced interest rate for student loans, and a rate increase for people with disabilities who are on income assistance.

However welfare rates continue to be frozen for the 11 year in a row.

Mr. de Jong said his government selected MSP changes as the mechanism to reduce the tax burden and described the 50-per-cent cut as a “dramatic” measure. However voters will not see a reduction in their in household costs before Election Day. The change does not take effect until next January, and half of people who qualify for lower rates don’t see their MSP fees directly because they are covered in payroll or pension plans.

It means that businesses that pay the premium for their employees will enjoy the savings. “A lot of employers will be happy to see that,” said Jock Finlayson of the Business Council of B.C.

Roughly two million British Columbians, in a province of 4.8 million people, will benefit from the change. Households earning more than $120,000 per year will continue to pay the same rate, and the remaining two million individuals do not pay any MSP premiums.

Irene Lanzinger, head of the BC Federation of Labour, said the budget does little for working British Columbians. “It does nothing for the 500,000 people who are working below the poverty line,” she said, and it does not do enough to restore cuts to public services that have been made over the past 16 years that the BC Liberals have been in power.

The government has already been on a spending spree in recent months, and has reduced the current budget surplus by $700-million since the last fiscal update three months ago. As well, the $50.8-billion budget includes already-promised spending increases for housing affordability initiatives which are expected to be a central issue in the coming election campaign.

The province is forecasting economic growth of 2.1 per cent in 2017, which would mean it may no longer claim bragging rights to having the fastest-growing economy in the country. Ontario is expected to edge B.C. out of the top spot, with 2.2 per cent growth.

Mr. de Jong cautioned there are risks to the economy, particularly due to protectionist sentiments growing within Canada’s biggest trading partner, the United States. “We need to acknowledge we live in a world where economies continue to be fragile and unpredictable,” Mr. de Jong said British Columbia sends almost 54 per cent of its exports to the U.S. – meaning it is far less exposed to a shift in trade with the U.S. than Alberta or Ontario. But the renewal of the Canada-U.S. trade war over softwood lumber is of particular concern to B.C.’s forest sector, which accounts for 60 per cent of Canada’s sales of softwood lumber to the U.S.

There is also a potential cost pressure for education. The government is currently in negotiations with the B.C. Teachers’ Federation to restore contract language as a result of a Supreme Court of Canada ruling. The government has provided $100-million in additional money to hire new teachers but that is based on an interim agreement with the teachers. “There is money within the budget to address the ongoing negotiations that are taking place,” he said. “The cost will be determined by the negotiation.”

Corporate British Columbia will not miss out on tax cuts. The small business corporate tax rate will be reduced to the second-lowest in the country on April 1, a measure worth $68-million. And the provincial sales tax on electricity, which applies only to business, is being phased out starting in October, for savings worth $48-million.

Mr. de Jong, in his budget speech, noted that this budget is framed by the coming provincial election. “In a few short months, British Columbians will convene an electoral shareholders’ meeting to consider not just the merits of this budget, but the progress we have made as a province under the stewardship of this government and this premier,” Mr. de Jong told the House. “This is really the people’s budget.”