B.C.’s balanced budget provides certainty and stability for the construction industry
Last week, B.C.’s Finance Minister Mike de Jong tabled a balanced budget that forecasts surpluses for the next three fiscal years. This is good news for British Columbia and good news for the construction industry.
Part of the government’s plan to grow the economy is to invest in infrastructure. Over the next three years, there is a healthy capital spending program of $11 billion and this doesn’t include spending of Crown corporations such as BC Hydro.
The construction industry should be pleased with this and the fact that this is the kind of budget that is good to see because it has stability, predictability and consistency.
The capital spending breakdown for the next three fiscal years is as follows:
- $1.5 billion to maintain, replace, renovate or expand K-12 facilities.
- $2.3 billion for capita spending by post-secondary institutions across B.C.
- $2.6 billion on health-sector infrastructure.
- $3.4 billion for transportation investments.
Specific projects include:
- seismic upgrades to Lord Strathcona Elementary in Vancouver and École Phoenix Middle School in Campbell River;
- new Mar Jok Elementary School in West Kelowna;
- redevelopment of Children’s and Women’s Hospital to include a new acute care centre;
- new Surrey Memorial Hospital emergency department and critical care tower;
- two new hospitals (one in Courtenay/Comox and one in Campbell River) to replace existing North Island hospitals;
- new clinical services building for Royal Inland Hospital in Kamloops;
- Okanagan Valley corridor and Cariboo connector programs;
- George Massey Tunnel replacement project;
- University Hospital of Northern BC;
- new trades training facilities at Camosun College in Victoria and an expanded trades-training complex at Okanagan College in Kelowna; and
- new campus for Emily Carr University at Great Northern Way.
Budget 2014 also offered the initial details of a competitive tax policy for B.C.’s emerging liquefied natural gas (LNG) industry. In the fall, the government intends to introduce legislation for a LNG income tax.
The LNG Income Tax will be a two-tier tax with a tier one tax rate of 1.5 per cent and a tier two rate of up to seven per cent. The final rates will be determined and confirmed in legislation. The LNG Income Tax will apply to income from liquefaction of natural gas at LNG facilities in British Columbia.
The tier one tax rate of 1.5 % applies to an operator’s net proceeds (revenue less expenses) after commercial production begins. The amount of the tier one tax that has been paid can be deducted from the tier-two tax.
Net income for purposes of the tier two tax will be net proceeds less up to 100% of the capital investment account (the basis of which is the cost associated with constructing a LNG facility). As such, the tier-two tax rate is not effective until the capital investment account is depleted.
Within the balanced budget, the Province also plans to invest $38 million in economic development initiatives, including the development of a LNG industry:
- $29 million over three years to of the province’s LNG strategy to foster the successful development and growth of the industry.
- $9 million to support environmental assessments of resource development impacts of proposed LNG facilities and pipelines, and mining and other major projects.
Overall, Budget 2014 had no new surprise tax measures; however, the government did increase the threshold for the first-time homebuyers program to $475,000 from $425,000, which can save the purchaser up to $7,500 when buying a first home.
B.C. is now one of only two Canadian provinces to balance its budget and this is the second consecutive year the government has balanced the budget. In doing so, this government demonstrates discipline and commitment to creating a safe harbour for investment, stimulating economic growth and fostering job creation.