Yesterday, we presented our recommendations for the 2013-14 B.C. Budget to the Standing Committee on Finance and Government Services, meeting in Parksville. You can see our report and press release by clicking here. The following is a transcript of our presentation to the committee:

J. Bateman: Thank you for having me, Mr. Chairman. I know that this is the penultimate day for you folks travelling the province. It's a bit like a rock star world tour but without all the excitement, I guess. Thank you for it.

It is an important process, and I've been following the Hansard and seeing exactly the kind of presentations you're getting around the province. When it comes to input provincially, this is really unique and probably a model that we should look at for other issues as well. Our presentation — I provided you each with a copy. The number one priority for us at the Canadian Taxpayers Federation is balancing the budget. We cannot understate the importance of this to our supporters across B.C. We feel like, in a post-HST British Columbia, it is very important for our economic competitiveness that we balance the budget.

This will actually help us to stand, as one of only two provinces in Canada, with that balanced budget next year. It gives us a step up on the competition. It shows people that the government of British Columbia is willing to make the tough choices and fiscal responsibility that's necessary in order to balance the budget. We think that's very attractive to industries coming here and to people who create jobs and employ our British Columbians, and whatnot.

The bottom line for us is that we don't feel like we can continue to live on government's credit cards. Even a small percentage deficit is still sliding backwards. Already we pay six or seven cents per dollar in interest. That obviously limits our purchasing power now. That's debt we've accumulated from previous generations. We're sending that debt on to future generations. We want to make sure that we're stirring those resources properly.

For that reason, that's why when we recommend that we kill the carbon tax, we also make the tough decision as an organization talking with our supporters across B.C. that we would be willing to kill the revenue-neutral tools with it. It's not ideal. Ideally, we'd find a way to keep the $228 million personal income tax cut.

Surveying our supporters, talking to them across B.C., most people feel like they're sliding backwards when it comes to the carbon tax, and they're right. If you look at the percentage when the carbon tax was introduced, we got about a third of that money back in personal income tax cuts. Now it's about 17 percent. That share of that income tax cut has shrunk as compared to what we're paying in carbon tax.

The other carbon tax — you're absolutely correct — is revenue-neutral. That money does come back to various groups in different forms. But the average guy filling up their tank or heating their house doesn't feel like they can access $38 million in digital media tax credits, for example. This is where the fairness issue comes in. So the carbon tax is one of our top priorities.

Two programs we think are worth rethinking this time around are the Pacific Carbon Trust and the childhood education fund. The trust a lot of us have been writing about, talking about. Even some of the noted environmentalists are pretty unhappy with how it's unfolded, taking money out of classrooms, out of hospital rooms, out of government itself and putting it into, essentially, corporate welfare projects.

The Vancouver Sun reports 22 to 25 of them would have happened without trust involvement anyways. That's really kind of worrisome to us. It's $14 million, not a huge amount in the grand scheme of things, but when we're this close to balancing the budget, every penny is going to count.

The other one that doesn't get a lot of mention is the childhood education fund. I'll forgive you if you don't recall it off the top of your heads. The childhood education fund was started in 2007. It's on page 16 of my submission. Essentially, government said: "We're going to put a thousand bucks aside for every child born after whatever date in 2007, and they can get that money when they go to post-secondary, beginning in 2025."

I have kids on both sides of that divide. I have two kids who were born before '07, and I have one kid who was born after. I can tell you that there was no documentation from the hospital, nothing from the government mentioning it to me. If you didn't actually study the budget or happen to be in the room when that announcement was made, you have no idea about it.

We find now, estimates tell us, that there is about $285 million in that account. That account now generates about $20 million a year in interest. Government now puts in about $40 million on top of that. Our suggestion to try to get this budget balanced would be to freeze that program and take the $60 million — the $20 million in interest that is now being made by that fund and the $40 million that government pays in every year — and use it for things like education, post-secondary education, jobs skill training, balancing the budget.

These are the things that I think will actually help post-secondary students even more in 2025. My little guy would be greatly helped if I have a good job, if there's good work to go into, if schools are healthy now. There's no point, really, setting this money aside when there are other issues in the meantime that we need to address. So that's one that doesn't get a lot of play, but we wanted to point it out to you as well.

The final thing is public sector bargaining. We were great supporters of net zero. I would like to see better clarification of the cooperative gains mandates.

We've seen a couple of agreements signed under that now, but the cooperative gains side of it is pretty nebulous. We're not really sure exactly what government has identified as cost savings. We propose a compensation equity act in here, but one of the other things we propose is opening the dialogue with UBCM to include local governments in provincial wage mandates. What we saw pre-Olympics…. And I was a councillor in Langley, so I'm guilty of this. Pre-Olympics, municipalities felt the pressure to settle with their public sector unions in order to get peace through the Olympics, so we followed the provincial government's wage mandate. Obviously, boom times for the economy, pretty generous raises given out: 18 percent over five years, $4,000 signing bonuses — the whole thing.

Sadly, when the provincial government moved to net zero for two years, municipalities didn't even consider it. It just wasn't…. You know, there isn't a municipality in the province that's seriously talking about net zero. If there was some ways to tie these mandates together…. The cost of employing people at municipal hall drives up the cost of employing people in Victoria, because people look across these government sectors. This is a discussion we need to have with the Union of B.C. Municipalities to see if there is a way to tie these two wage mandates together.

Those are some of our ideas for this year. We appreciate it, and if you have any questions, I'm happy to answer.

D. Horne (Chair): Thank you for your presentation. We'll start our questions with John Les.

J. Les: Thanks, Jordan, for coming to the committee and sharing your brief with us. I appreciate it very much. I agree with many, perhaps not all, of the suggestions you make, as I'm sure you're not that surprised.

Just quickly scanning through your longer presentation here, you have a section that deals with equalization. I'm sure this must be a misprint. Your exhortation to us it to follow the European example. Excuse me?

J. Bateman: The modern European example, not the one that got them into this mess.

J. Les: But which one would you like us to follow: Greece, Italy, Spain or who?

J. Bateman: If you look at what the eurozone is doing in order to get these free-spending countries out of debt, they're basically passing laws now saying that they don't get these bailouts unless they pass laws and actually are fiscally responsible going forward.

We have these issues going on. Ontario has a deficit now that is larger than Canada's as a nation. We have Quebec which, obviously, I think all of us agree, spends money in very interesting and exciting ways, none of which are affordable long term.

Quebec has already put together hundreds of pages of documentation on equalization. They are leading the country in making their case. I don't see that same kind of stuff coming out of British Columbia. It might be, but we haven't seen it. Quebec's is including their budget briefs, and they're making the case for more of B.C.'s, more of Alberta's, more of Saskatchewan's money. We need to make a similar case saying enough is enough. Let's start talking about what equalization actually means constitutionally, and let's make sure that British Columbia's interests are protected.

So what Germany and these other countries have led now in Europe is a model. What happened now is the model, not what's happened in the past. It's one way of looking at the situation. The bottom line is we need to start getting research together in the province and make sure our case is being pled.

J. Les: Far be it for me to give you advice, but I would not use the European analogy. That story has not yet played out. And as far as equalization is concerned, there's one very simple prescription: forget about it. There is no constitutional necessity for an equalization program. Equalization is not fair to the donor provinces, nor is it actually fair to the receiving provinces because there is not any evidence that it helps their economy long term.

J. Bateman: Exactly. We 100 percent agree. We need to make sure British Columbia is producing that evidence to show the other provinces and the federal government.

B. Ralston: Thanks very much — always a lively presentation, Jordan.

I'm a little bit curious about some of the suggestions that you make in accumulative impact on the deficit. You say get rid of the MSP premiums. That's $2.1 billion. Get rid of the carbon tax. That's $1.2 billion. Sell off the liquor stores, which make about $900 million a year. So that's $4.2 billion. Add on the deficit of maybe $5.2…. So round it off at $5 billion. Yet you say you want to balance. So basically you're suggesting cutting over 10 percent of the provincial budget. Now, I'd be interested in your suggestions as to how that would be attained in one year.

J. Bateman: Sure. Carbon tax doesn't count because we say get rid of the revenue neutrality tools as well. So that takes that $1.2 billion off the table there. That's one of the reasons why….

B. Ralston: Okay, well, we're down to $4 billion, then.

J. Bateman: MSP we see as a longer-term priority. Ideally, this year what we'd see is a freeze in MSP rates. MSP is growing at a very difficult rate, three times the rate of inflation. That is very tough on families. I pay MSP. I know it's tough on families. You get that bill for $128 a month, and it's going to go up to $134 a month next year. That is a lot of money for a family to try to cope with.  Even a freeze on MSP would help.

Longer term, we need to look at: is the MSP program the best way to collect this money? Obviously, if you make $30,001 dollars or if you make Henrik Sedin money — $6 million a year — you pay the same in MSP premiums. That probably fails the test of fairness. These are the kind of things we need to talk about.

Some of the issues in here are short term, some are longer term. MSP would be long term. Ratcheting down, for example, government's reliance on Crown corporation revenues would also be a longer-term goal. The bottom line here is nothing happens in government without a long-term plan or strategy or goal set out, and we need to start talking about what those are.

D. Hayer: Thank you very much. A very good presentation, Jordan. My question is about balancing the budget. I understand when you're saying to maybe cut $4.2 billion in expenses in the revenue from carbon tax, that will balance itself, because you also cut the tax cuts we had received in the past.

The second part is from the MSP premiums. Some people in these hearings have suggested and also some of the people from the NDP have suggested maybe if you need more revenue, we should be increasing corporate income taxes and maybe taxes on people making $75,000 or $100,000 or more, etc.

Do you think if we increase the corporate income tax and the taxes on the people making more than $70,000 or so, that will generate more revenue to balance the budget, or will that have a negative effect overall on revenues of the provincial government? By increasing the tax, maybe the investment will go away? Or will more investment come in if we increase the taxes?

J. Bateman: The interesting thing about the corporate tax rate tied to the carbon tax is that it does anticipate an increase in corporate income tax from 10 percent to 10½ and then to 11 percent over the coming years. Government already is saying, "Okay, we need to make sure that we're extracting enough revenue in order to fund programs and whatnot." Government's already made that decision.

Scrapping the carbon tax and those neutral tools is obviously…. You're getting rid of one tax, but you're increasing, for the average person, two or three others. But still, the people we talk to, our supporters, say they feel they would be better off without the carbon tax and with those extra tax increases. But you wouldn't want to do both. You wouldn't want to get rid of the carbon tax and still increase taxes even further on top of that. You would slow economic growth.

We do believe, though, that if you got rid of the carbon tax, you would see benefits to the economy. As we know from the income tax cut in 2001, revenues do increase even after you cut taxes, because it does create economic growth. So there are possibilities there for sure.

D. Hayer: But some other people have said that cutting the 30 to 40 percent tax cut in 2001 and later on was too much. Maybe it's time to reverse it, go backward. If we go backward on those tax cuts, do you think that will be better for the economy or worse for economy?

J. Bateman: We are the Canadian Taxpayers Federation. We stand for lower taxes, so we would not approve of increasing taxes.

P. Pimm: Thanks, Jordan, for your presentation. I'm going to go to carbon tax a little bit. I come from a region of the province that kind of shares your thoughts on it. I think I read something about that the other day.

I want to know, when you're saying scrap the tax, increase the taxes back to the levels of 2008…. Is that what you're saying?

J. Bateman: We're saying take the three pages in the budget that outline the revenue neutrality tools, and take those out, essentially. That was a big debate, internally, for us.

P. Pimm: So that's the homeowners grant, for the northern residents. That's the low-income grant. That's the tax credit for schools. That's everything.

J. Bateman: Yeah. That's the industrial school tax credit. That's digital media. We've looked through it all, and our feeling is most people would be better off.

P. Pimm: One last point. Did you present to the Finance Minister on that issue?

J. Bateman: I did, and I anticipated this question, because I've been reading the notes.

I do have one concern about that whole process. It was very concerning when the Ministers of Environment and Finance both came out, with two weeks left, and told us that the tax was staying, no matter what. I would have liked to have at least let the public consultation process finish before we started making decisions about the future of the carbon tax.