British Columbia -- Budget '99
Ministry of Finance and Corporate Relations
Joy K. MacPhail, Minister

Budget News Release
This electronic version is for informational purposes only.
The printed version remains the official version.


VICTORIA — B.C.'s budget for 1999 increases health-care funding by $615 million, cuts the small business income tax rate to 5.5 per cent — lower than Alberta's — and provides funding for more teachers and school construction.

"This budget is about improving health care, with more beds, more nurses and shorter waits," said Finance Minister Joy MacPhail. "It's about improving education, to ensure our young people have the skills and knowledge they need to succeed in the new economy. And it's about cutting taxes for small businesses, so they can grow, create jobs and diversify B.C.'s economy.

"We believe health care is a fundamental right that must be protected. We believe every child deserves a quality education, regardless of their parents' income. And we believe in cutting taxes for small businesses to help create jobs for people," said MacPhail. "These are our priorities. These are our choices."

The budget increases operating funding for health care by 6.6 per cent, a boost of $478 million. The capital budget is increased by $137 million or 61.7 per cent. The increase includes $100 million to address Y2K.

In addition, on July 1, the corporate income tax rate for more than 40,000 small businesses will drop to 5.5 per cent. This 35-per-cent cut will save B.C. small businesses $63 million a year.

MacPhail also announced the extension of the corporate capital tax holiday to four years from two, for qualifying new investments made after March 31. As announced last year, the corporate capital tax threshold will rise to $3.5 million on January 1 and, by 2001, 90 per cent of B.C. businesses will pay no corporate capital tax. In total, the 1999/00 budget funds business tax cuts of $105 million.

"There's a strong consensus across the province that the future depends on the growth of small business," said MacPhail. "We want to make B.C. the best province in which to build a business."

MacPhail noted her ministry has built an unprecedented level of transparency into the budget, reflecting the advice of the Auditor General and others.

Core education funding increases $45 million, and the education capital budget is up 10.6 per cent to $468 million. Tuition fees are frozen for the fourth straight year. The budget also includes funding for 2,900 more post-secondary spaces.

$615 million to improve health care

"In B.C., health care is a right," said MacPhail. "We have maintained the highest level of per-capita health-care funding in Canada. This year, our dollars no longer have to offset federal cuts, so we have an opportunity to make improvements."

Reducing wait lists is the government's top health-care priority. This year's increase will fund 58,000 additional surgeries — a 13 per cent increase — and 480 long-term-care beds. The additional beds will free up acute-care beds currently occupied by long-term-care patients, making room for thousands of additional medical procedures.

Specifically, the government will reduce waiting times for children requiring pediatric care, as well as patients awaiting cancer treatments, bone-marrow transplants, breast-cancer screening, heart surgery, kidney dialysis, and hip and knee replacements. Additional funding is provided for:

The budget also provides $15 million to fund the hiring of 400 more nurses across the province, as part of a three-year commitment to hire 1,000 new nurses. MacPhail also committed the government to help hospitals and nurses to address workload issues, to encourage current and prospective nurses to work in the profession.

Helping small business create jobs and diversify the economy

"Small businesses are the most creative, most powerful entrepreneurial force in the province," said MacPhail. "And the best way to help them compete, create jobs and diversify our economy is to cut their taxes."

Last year, the government committed to reduce the small business income tax rate to eight per cent. Noting the government "can do better," MacPhail announced the rate would drop to 5.5 per cent on July 1.

"That rate is lower than Alberta's," said MacPhail. "And I will go further still. I'm committing today that B.C. will keep its rate lower than Alberta's. Any further reduction in Alberta's rate will be matched dollar for dollar by B.C."

Cutting red tape and introducing the business lens

The minister announced the government will accelerate its efforts to cut red tape, with the creation of a business lens and the continuing participation of the Business Task Force on Red Tape.

"Every new regulation will include a statement of its impact and affordability for business — something we're calling a business lens on regulation," said MacPhail. "This will go a long way toward improving the quality of our regulations — and the confidence British Columbians have in them."

To date, efforts of the Business Task Force have resulted in:

MacPhail cited the Forest Action Plan as an example of successful red-tape reduction. Working with individuals and local communities, the government has taken significant steps to create a more diverse and sustainable future for the forest sector.

Work to streamline B.C.'s liquor regulations is under way, with consultations on industry proposals now taking place. Actions could include reducing the number of liquor licences to two from 10, scrapping regulations that serve no health or safety purpose, and implementing a simpler approval process that takes six to 12 weeks, instead of up to 18 months. MacPhail also said the high-tech industry is now benefiting from changes to employment standards regulations that support its growth.

"The combination of a small business income tax cut and work to reduce red tape helps to make it easier for B.C. businesses to grow, thrive and create jobs," said MacPhail.

A strong commitment to education and youth opportunities

"One of our most important choices is our decision to support education," said MacPhail. "A good education is a door to a good job and a better future. And that's a door we want to keep open for every young British Columbian."

Budget '99 increases core provincial education funding by $45 million — $143 more per pupil — to nearly $6,000 for every pupil. The government will hire 300 new teachers this year as the first step in its commitment to hire up to 1,200 new teachers over three years.

"That means a child with a learning disorder can be identified and helped, because the teacher has more time. It means a child who's having trouble learning to read can get a little extra help. It means a child who's feeling down can get an encouraging word," said MacPhail.

This year, $341 million is earmarked to reduce overcrowding and eliminate nearly 560 portable classrooms. This will allow construction to begin on 13 new and replacement schools and 103 school additions, which will create 480 classrooms for K-3 students.

For post-secondary students, Budget '99 freezes tuition fees for the fourth year in a row, and provides funding for 2,900 new post-secondary spaces, including 700 dedicated to high tech. The government has created nearly 16,000 spaces since 1996. Student-loan funding, which B.C. has doubled since 1991, increases $7.7 million.

The budget also funds Youth Options BC, which helps young people with opportunities for jobs, training, work experience and post-secondary education. It includes such programs as Student Summer Works, the Environmental Youth Team and Youth Business & Entrepreneurship Training.

"This year, we are investing $34.5 milllion to help 17,000 young British Columbians," said MacPhail. "We are committed to ensuring the best possible start to the careers of B.C.'s young people — the generation that will drive our economy in the next century."

Lower personal income taxes for B.C. families and individuals

"The combined impact of our January 1999 income tax cut, and the tax cut in the federal budget, is a four-per-cent reduction in provincial personal income tax," said MacPhail. "This brings the total cut in provincial income tax to eight per cent since 1995. By 2000, that will mean $385 million back into the pockets of B.C. families each year."

Budget '99 also increases the benefit in the combined B.C. Family Bonus and National Child Benefit by two per cent, putting $8 million back into the pockets of B.C. families. This program is the most generous of its kind in Canada.

Renewing regional economies

Diversifying regional economies has been the focus of three Premier's Summits on Economic Opportunities since November 1997, in Prince George, the Southern Interior and the Kootenays. At each summit, local leaders and officials have focused on identifying strategies for regional economic development. Budget '99 commits $10 million to support communities in the development of their diversification strategies.

"This strategy will be community-driven, providing tools to support communities that have told us they need a strategy to help them strengthen and diversify," said MacPhail. "Local communities will shape the initiatives and provide the ideas and energy. We'll provide funding and advice, helping with programs identified by the community to strengthen and diversify the local economy."

The Northern Development Commissioner has identified the Internet as a vital tool currently inaccessible in many remote communities. Budget '99 will extend the Provincial Learning Network — a system of data communications, video conferencing and Internet access — to ensure all British Columbians participate in the communications revolution.

A green economy

Noting that British Columbians put a high premium on caring for the environment, MacPhail said the government would be looking at tax-reform measures that encourage environmentally-sound business practices.

"Over the next few months, we'll work with the public and B.C.'s many 'green entrepreneurs' to assemble a package of initiatives promoting B.C.'s leadership in environmental economic development," said MacPhail.

Housing opportunities

MacPhail expressed concern about B.C.'s residential construction industry, which has been hard hit by the economic slowdown.

"In the coming weeks, we will be working with the industry and with construction workers to develop new initiatives that will give a boost to housing construction and create new job opportunities," said MacPhail. "We will also be working with these partners to increase social housing by 1,200 homes over the next two years."

1999-2000 fiscal position

MacPhail announced that the budget forecasts a deficit of $890 million, reflecting the choices the government has made to improve health care, help small business create jobs and diversify the economy, and improve education and youth opportunities.

"This budget is about meeting the needs of British Columbians — patients, students, small-business owners, and working families," said MacPhail. "We're improving health care, helping small business through income tax cuts, and making sure our kids get the quality education they deserve. This is what British Columbians have told us they want. We've listened, and we're delivering.

"Unlike other provinces, we intend to grow our way out and not cut our way out," said MacPhail. "Let me be direct. Our fiscal situation is probably going to get worse before it gets better. But I believe these are the right choices for B.C. families. Deficits mean little to patients on wait lists.

"That's why we have increased spending in health care and education — two-thirds of the budget — and cut spending in eight other ministries by $120 million," said MacPhail.

"In drawing up the fiscal plan for this budget, I have chosen to adopt the policy, already in use at the federal level, of conservative revenue forecasting," said MacPhail. "I have increased the revenue reserve in this budget by $100 million, to $230 million, and based the budget on a forecast of 0.5 per cent growth in the B.C. economy. I have also chosen to draw down $120 million less than the full amount of one-time federal funding made available in Ottawa's recent budget."

For more information, contact (250) 356-2608 in Victoria, (604) 660-2421 in Vancouver, or 1-800-663-7867 elsewhere in B.C. Internet users can view the budget at


For more information, contact: Ministry of Finance and Corporate Relations (250) 387-3347.



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