VICTORIA: The BC division of the Canadian Taxpayers Federation (CTF) today presented its 2002 pre-budget submission to the Select Standing Committee on Finance and Government Services.

"Real incomes in the private sector declined over the past decade and British Columbians in their prime earning years started leaving the province in record numbers five years ago," said CTF-BC director Mark Milke. "The government must encourage economic growth or B.C. will have one day have the per capita earnings of Mexico."

Milke argued that to encourage economic growth, the government should continue with its plans to cut taxes in 2002, reduce regulation, and cut the size of government, which he argued was unaffordable at its present size. "Priority must now be given to private sector wealth creation and taxpayers in general. Government spending should be focused on core activities that truly cannot be performed by the private sector, not those areas that some simply wish to have monopolized by the public sector to the detriment of taxpayers, consumers, and the private sector in general."

Milke noted that the CTF supports a public sector that is professional, paid fairly and equivalent to the private sector, but he noted that the size of government in British Columbia relative to the economy is larger than in country's two other "have" provinces; that the cost of the public sector in British Columbia increased over the past decade while it decreased in every other province; that the average B.C. public sector salary in 2000 was over $4,300 higher than the average private sector salary; that public sector workers were - by the governments' own admission - more likely to be employed full-time than part-time; and that public sector employees were half as likely to experience unemployment in the past decade when compared with the private sector.

Points from the CTF pre-budget submission:

British Columbia's size of government is the largest among the 'have' provinces at 26% of provincial GDP, compared to 21% in Ontario and 20% in Alberta.

British Columbia was the only province where the cost of public sector wages and salaries rose in the 1990s (by +1.7%), compared to a Canadian decline of over 11% during that period, with some provinces, Alberta and Manitoba most notably, seeing declines of 21%.

The average provincial public sector wage in 2000 was over $4,300 higher than the average private sector wage: $37,499 compared to $33,128.

According to the B.C. government's own statistical agency, BC Stats, in the 1990s public sector workers were half as likely to experience unemployment in comparison with the private sector and were more likely to be employed full-time (90% in the public sector as opposed to 80% in the private sector).

B.C. has experienced unusually high net migration losses over the last several years, especially noticeable in the 25-54 age category, which has significant, negative implications for the provincial tax base.

The government must encourage economic growth for reasons of employment growth and wage growth, but also for the tax base: If B.C.'s unemployment rate was equal to that of Ontario, 26,000 more people would currently be working and their income, sales, property, and fuel taxes would contribute $147 million annually to the provincial treasury. If B.C. possessed Alberta's unemployment rate, 75,000 more people would be working, with an annual contribution to the tax base of $412 million - not including business taxes and miscellaneous taxes.

The proposed spending reduction of $2.7 billion over three years - $900 million annually - is equal to 7/10ths of one percent of BC's $125 billion economy in 2001.

CTF Recommendations:

That the government continue with its planned tax reduction in 2002 and the planned spending reductions over three years.

That the government conduct a full-scale review of salaries, wages and benefits - including both direct government ministries and Crown corporations - to determine which pay grids are comparable, higher, or lower, when compared with the private sector.

That the top two tax brackets be re-labeled as "surtax" brackets in keeping with the origin of the extra surtaxes imposed in 1991 and 1992, which those two top brackets are the result of.

That the province not fund an expansion of the Vancouver Trade and Convention Centre.

That the provincial government seek an agreement among the provinces for a ban on corporate welfare via legislation, similar to the existing Alberta law and the promised B.C. legislation.

That widespread privatization and public-private partnerships be used to promote competition, entrepreneurship, and efficient and cost-effective publicly desired services. The provincial government should attempt to 'steer' the economy not 'row' it via direct involvement.

That the provincial government draft a legal opinion on public-private partnerships for municipalities to counter erroneous opinions now circulating to municipal councils as it concerns trade agreements. Public-private partnerships will be an integral part of cost-saving measures for municipalities and they should be made aware of the correct interpretation of such agreements as it applies to municipalities and public-private partnerships.

That the government allow drilling for oil and gas on British Columbia's coast if it can be done in a safe manner.