We know that the people of deserve better than two tax and spend parties

This afternoon John Cummins, leader of the BC Conservative Party, spoke to the Surrey Board of Trade.  His speech covered the party's response to the BC Liberal Budget released earlier this week, and how a BC Conservative government would do things differently. Here is the complete text of that speech:

John Cummins, BC Conservative Party Leader

Good afternoon. Thank you for inviting me to speak at the Surrey Board of Trade. I especially want to thank Anita Huberman for putting together this great event.

I’m here to speak with you about the budget that the Liberal government tabled on Tuesday.

In order to understand the budget and what it means for the future of BC, we have to understand some facts about BC’s economy and the state of the economies we are competing against.

British Columbia has the worst unemployment rate in the west. It isn’t a surprise that unemployment is worse than Alberta, or even newly booming Saskatchewan. But we trail NDP-run Manitoba as well, and by a significant amount.

When comes to income taxes BC is very competitive, but families pay far more than just income taxes. When you include the highest gas taxes in Canada, that are going up another 3 cents this spring in the lower mainland, MSP premiums and other fees and surcharges – the average family in BC pays more in taxes than in any province west of Quebec. That means more than Ontario and more than NDP-run Manitoba.

On top of this is the cost of living in this province. I don’t need to remind you of the various international surveys that have come out in the past few months that show that living in the greater Vancouver area to be one of the most expensive places in the world.

When you combine higher taxes, higher unemployment and higher cost of living than the provinces we compete with the most, you would expect people to leave. And that is exactly what happened in 2011. Last year, more people moved out of BC to other provinces than moved here.   

For me this is an extremely telling measure – people have a choice about where they can afford to live, where they keep more of their money and where they can find a job. And they are not choosing BC.

The statistics on inter-provincial migration only go back to the late 1960’s, and since then this is only the third time that BC has seen more people choosing to leave to other parts of Canada than come here. The other two times were in the mid-1970’s and again in the late 1990’s. Both times coincided with the NDP running the province. 

Imagine that Christy Clark and the Liberals have accomplished something no free-enterprise government has done before – drive people out of BC.

I want BC to be the best place to live and find a job, a place where people from across Canada choose to come and live, not only because it is beautiful, but because they can afford to live here and get good jobs. That’s why I moved to BC. When I came here as a young man, this was the place to be. Across Canada the word was that if you wanted to find good work, build a life and raise a family, British Columbia was the best place to do it. And I want BC to become that place once again.

So going into this budget I was looking for policies to address these problems – high taxes, high unemployment and a high cost of living. There are no easy fixes, and I didn’t expect Minister Falcon to wave a magic wand and solve all British Columbia’s problems. But I did hope for progress.

Instead we got the reverse.

We got a budget that takes us backwards.

Just on Monday, only 24 hours before he delivered the budget Kevin Falcon said about the NDP, and I quote “They've already committed to raising business taxes, small business taxes…  exactly the road map that was in place in the 1990s”

But on Tuesday Falcon did exactly those things himself.

Corporate taxes are going up.

Small business taxes are going up.

Medical Service Plan premiums are going up.

Gas taxes are going up.

All of which will make businesses in BC less competitive, less able to expand and hire more people. To make matters worse the cost of living will increase as well

Hydro rates are going up.

Insurance rates are going up.

BC will be a more expensive place to live and everyone taxes are going up for families and seniors. And we have to consider the Hydro and ICBC rate increase as taxes, because both of these profitable crown corporations have been raided to pay for spending in Victoria. 

This fiscal year the transfer comes to $712 million and next year, when the budget is supposed to be balanced it depends on $829 million coming from the pockets of ratepayers. These transfers are so large that we see both BC Hydro and ICBC raising their rates. And who pays? Anyone who uses electricity or operates a vehicle in BC. 

But it’s worse than that because since electricity and transportation costs are priced into the cost of running a business – this means that the price of almost everything in BC will go up as well, or businesses will be forced to absorb the cost meaning less growth, and fewer jobs.

Their approach to the corporate tax rate says a lot about the mindset of Premier Clark’s Liberal government. What the Minister of Finance said in his budget speech is that if economic growth isn’t enough he’ll be forced to raise corporate taxes in April of 2013.

Think about that – the so-called free-enterprise Finance Minister who thinks the solution to low economic growth is higher taxes on corporations. I believe just the opposite. If we want to create jobs we should be lowering tax rates, not jacking them up.

But when you actually look at the budget document the truth is even more concerning. This tax hike is included in the budget, no matter what the economy does. Corporate taxes are going up in just over a year and when this budget passes it will be the law. This will hurt the economy, and kill jobs. It will drive more people looking for work to Alberta and Saskatchewan.

What makes this tax hike even harder to swallow is that corporate taxes were being reduced from 12% to 10% in order to offset the carbon tax. Well corporate taxes are going back up to 11%, and every business in the province will still have to pay the full carbon tax. In fact, the carbon tax is going up another 1 cent per litre on July 1^st.

The approach to small businesses is even worse. Small businesses are the most productive part of our economy. They create the most jobs, and they are the places where creative and intelligent British Columbians transform ideas into wealth and jobs. Small businesses were supposed to see their taxes cut to 0% on April 1, 2012. This was a bold policy that I supported – what a great message to send to the world – that BC doesn’t charge small businesses any income tax.

But the Liberals cancelled that tax cut. In effect they have raised taxes on small business. This fiscal year this hike will cost small businesses in BC $281 million this year alone. 

I’ve run a small business and I know how thin margins are, I understand how difficult it is to make ends meet in this economy, and I know how easy it is to put off a major investment or hiring a new employee. I know small business people who were counting on this tax cut, and are now having to redo their plans for 2012 because they will have to pay more taxes than they expected.

What really adds insult to injury is the fact that this small business tax hike was offered one of the items the government promised in its package to fix HST. Remember last spring when they promised to reduce the HST to 10%, well one of the ways they were to pay for it was by cancelling the small business tax cut. 

The people of BC voted in the summer, and rejected the Premier’s HST package, including the small business tax hike. Well the people said no, but small business gets punished anyway.

The increase in MSP premiums is just as bad. Everyone will have to pay more – about 4% more. Making it more expensive to live and work in BC. And since many businesses pay the MSP premiums for their employees, they have effectively raised payroll taxes on top of the corporate and small business tax hikes.

These are not the actions of a government committed to economic growth, these are the actions of a government committed to the fig leaf of balanced budgets by nickel and diming British Columbians to cover their spending problem.

And that’s what BC has – a spending problem.

This budget is trying to claim that spending will drop this year by about half a billion dollars. Nothing could be further from the truth. 

The government has booked the entire cost of the $1.6 billion HST re-payment to Ottawa in the 2011/12 fiscal year. So while they claim that spending in the year just ending was about $44.4 billion and will drop to $43.9 billion in 2012/13, in fact real spending was $42.8 billion in 2011/12. Which means that spending is project to go up by about $1.1 billion over the next year. And of course that assumes that the government can actually stick to their spending targets. 

Just in this past fiscal year, the first full year of Christy Clark’s Premiership, spending ballooned to $881 million over budget. Now everyone knows there will be some variance around budget targets, but with the Liberals in charge the variance is always in the direction of spending more than was planned.

Next year spending is projected to go up by 2.5%, but real growth in the economy is projected to increase by only 1.8%. The economy is the tax base, and if spending keeps growing faster than the economy the province will end up going down the path of Ontario, or even worse Greece.

Just like when the NDP was in power spending is out of control.

And with spending out of control comes debt. And debt is simply differed taxation.

The dramatic rise in BC’s debt is the untold story of the Liberal government. In 2006/07 the province’s total debt sat at $33.4 billion. This year it will hit $57.5 billion, and will grow to $66.4 billion in 2014/15. That means in eight years of Liberal government the debt will have grown by 98.8%

That means $7,500 more debt for every man, woman and child in BC. This growth in debt is even worse than NDP-lead Manitoba. Increasing debt at this rate is not the definition of conservative financial management.

  

Speaking of accounting smoke and mirrors, I will ask this question: Although the government is claiming there will be a surplus in the 2013/14 fiscal year, the provincial debt will be increasing by nearly $5.1 billion. 

Let me repeat: a surplus budget, but debt increasing $5.1 billion? Even if the government is calling it a surplus, the government is spending more than it is taking in. The only surplus the government is going to achieve is a surplus of debt.

The projected surplus of $154 million just in time for the election is a mirage. We know the Liberals cannot contain spending and hit their budget targets, and their tax hikes on job creators will reduce revenue and possibly increase social assistance costs. But on top of this a large part of the projected surplus depends on a gamble on natural gas prices.

BC’s natural gas royalty revenues are dependent on natural gas prices, and I’m sure as everyone here knows the price of natural gas is at the lowest levels since the late 1990’s. Prices are not projected to rise quickly, but the government is depending on big increases. 

Using the futures market, which is basically the considered opinion of people who are willing to put their money where their mouths are we have calculated significantly lower revenues for the government of BC. 

This year the shortfall is projected to be $74 million, and next year it rises to $116 million.  That would only leave a surplus of $38 million – and this is a government that overspent by $881 million last year. The only way BC can get back into surplus is by restraining spending and lowering spending and pursuing policies that will encourage job creation and economic growth.

I have spent a lot of time speaking about what is wrong with this Liberal budget which has taken a page from the NDP and put BC on a path of high spending, higher taxes, out of control debt and fewer jobs. But I want to take a few minutes to discuss what we would do differently.

Two of the core principles of British Columbia’s Conservative party are that we must live within our means and get government out of the way of economic growth. 

Everything we do is seen through the lens of what can we do to make BC the place where young people stay, and other Canadians choose to move. A place where starting a small business is easy, where it is easy to hire new employees and where average families can afford to live in the communities they grew up in.

The approach a new BC Conservative government would take has two essential components – tax relief and spending restraint.

We will get spending under control, and that includes health care spending. A BC Conservative government would undertake a comprehensive spending review and cut and eliminate programs based on the following criteria:

Does this program help economic growth?

Does this program help people who, through no fault of their own, cannot help themselves?

Does this program make BC a safer place to live, work and raise a family?

The simple truth is that if a program does not do one of those three things, the government has no business providing it. If a program does not meet one of those three criteria it will be phased out or eliminated outright.

We will restructure the civil service to ensure that more money flows to front line workers, not middle managers. Through attrition we will reduce the ratio of managers to workers within each department.  We will deliver a balanced budget every year we are in office.

Tax relief is vital to get our economy going again and to create more jobs. The first tax the BC Conservatives will eliminate is the Carbon Tax. There are three reasons for this:

1.  Everyone pays the carbon tax. Both individuals every time you fill up at the pump, to large corporations to small businesses. Eliminating this tax wholesale will give instant relief to people all over the province and every sector of the economy.

2.  Because the Carbon Tax is a tax on transportation it is a tax on everything. Every good you purchase has transportation costs embedded in the cost. Eliminating the carbon tax will put downward pressure on the price of many goods that we all buy everyday. This will help BC become a more affordable place to live.

3.  The carbon tax is partially used to fund the Pacific Carbon Trust – a carbon bureaucracy that forces public institutions to pay carbon offsets. Last year that amounted to $18.2 million taken from schools and hospitals and sent to purchase carbon credits from large energy companies. Just two examples from Surrey – they charged the Surrey School District $496,892 and took $61,964 from Kwantlen Polytechnic. That’s over half a million dollars out of education in Surrey alone.

Tuesday’s budget was not a conservative budget. It was not a restraint budget. It was a budget devoted to out of control spending, a doubling of the debt in only eight years, raising taxes on job creators and raising the cost of living of everyday British Columbians. It did nothing to address the problems that BC faces.

This budget is proof of why we need the BC Conservatives. When it comes to spending and taxes the Liberals have more in common with the NDP than with the Conservatives.

We are the only party pledged to getting spending under control.

We are the only party pledged to reduce taxes on job creators and make BC more affordable for everyone.

We are the only party concerned about BC’s ballooning debt-levels.

We are the only party who will scrap the carbon tax.

We are doing this because we know that the people of deserve better than two tax and spend parties. BC can lead Canada again, we can make BC the most attractive province to live, work, invest and raise a family.