Mixed reviews for NDP platform among B.C. business groups

Some NDP policies welcomed, but unfunded costs of party’s promises raise concerns
BC NDP Leader John Horgan says the potential costs of his party’s election promises have been tallied, but critics warn that some campaign planks would rapidly raise B.C.’s debt load | Nelson Bennett

Should John Horgan’s NDP win the May 9 provincial election, some businesses in B.C. – notably building contractors – could benefit from government spending on affordable housing and public capital works projects.

The NDP is promising 96,000 construction jobs over five years through public-sector construction of schools, hospitals, roads and rapid transit.

NDP campaign planks are also favourable to the forestry sector and independent power producers. They’re less favourable to fish farming and the oil and gas sector.

Stewart Muir, executive director for Resource Works, said the NDP’s climate policies, which include new greenhouse gas (GHG) reduction targets and carbon tax increases, could prevent a nascent liquefied natural gas (LNG) industry from developing.

“The LNG question is moot since the NDP also promises a 40% GHG reduction target by 2030,” Muir said. “In other words, the carbon tax will have to rise by $10 each year starting in 2018 until it hits $160 in 2030. LNG is basically dead under that scenario.”

On forestry, the NDP platform includes a review of B.C.’s raw-log export policies and a plan to “maximize” the use of B.C.-made wood products in the many homes and public buildings the party has promised to build if elected.

On mining, the NDP promises to streamline the approval process for new mines, while  instituting new land-use planning modelled on that of the Great Bear Rainforest.

“Promising to speed up approvals for mining while at the same time implementing a system that will more likely stall than speed any and all investment on the land base is a fundamental contradiction,” Muir said.

The NDP says it will implement Cohen Commission fish farming recommendations, which include a moratorium on new fish farm licences in the Discovery Islands.

The party is also promising incentives to move open-net fish farms to land-based closed containment.

The NDP’s platform promises help for B.C.’s high-tech sector, including $100 million to expand technology programs and develop partnerships with universities and colleges to create innovation centres.

As for transportation issues – one of the top concerns for B.C. businesses – the Greater Vancouver Board of Trade (GVBOT) generally likes the NDP’s spending plans for public transit. But it takes a dim view of the NDP’s silence on the George Massey Tunnel replacement project.

“It is extremely disappointing that the NDP platform makes no mention of the Massey tunnel replacement, a project critical to the movement of people and goods in Greater Vancouver,” GVBOT says in its analysis of the three parties’ platforms.

Greg D’Avignon, president of the Business Council of British Columbia, said he likes the NDP’s focus on education and training to address skilled-labour shortages. But he added that its tax hikes could make B.C. uncompetitive.

He also wonders how the NDP plans to make up the lost revenue from scrapping bridge tolls.

“By eliminating tolls on the existing infrastructure, it’s probably a $500 million stranded capital that’s going to have to be serviced,” he said.

Business cost would rise

Overall, the cost of doing business in B.C. would increase under an NDP government.

The NDP would raise corporate taxes to 12% from 11% – but shave half a percentage point off the small-business tax – and increase the minimum wage to $15 per hour by 2021 from the current $10.85.

Jordan Bateman, B.C. director for the Canadian Taxpayers Federation, said the NDP’s policies are almost guaranteed to put curbs on economic growth.

“When you’re raising corporate income tax, when you’re raising the income tax on higher earners, when you raise the minimum wage and you grow the government bureaucracy – any one of those things would slow economic growth. You’re doing four of them. You’re going to slow the economic growth numbers way down.”

But Rhys Kesselman, a professor of Simon Fraser University’s School of Public Policy, doesn’t think the NDP’s taxation proposals are all that onerous.

“Those are well in line with what other provinces have and, in fact, are below the provinces.”

However, Kesselman added that he’s not sure all of the NDP’s promises are fully costed. For example, the party’s platform has not calculated the implications of a freeze on ICBC and BC Hydro rates.

Big-ticket spending items in the NDP plan include universal daycare – a program estimated to cost $1.5 billion annually, once fully implemented – giving all renters a $400 rebate ($265 million) and building 114,000 units of affordable and rental housing over a 10-year period.

While the latter would be good for the construction sector, Bateman wonders how an NDP government would pay for its promises. He said it typically costs about $200,000 per unit for affordable housing.

Finance Minister Mike de Jong last week warned that the NDP’s affordable housing program would add $4.7 billion to government debt in the first four years alone.

Horgan insists an NDP government could produce balanced budgets and said his campaign planks are costed out, based on the Liberal government’s own budgeting. But Bateman said an NDP government that stuck to its campaign promises would be in a deficit within two years.

That’s not necessarily a bad thing, Kesselman said, adding that it’s not the size of the deficit that’s important, it’s the debt-to-GDP ratio. As long as the economy is growing and government revenue is increasing, deficit spending does not necessarily lead to deeper debt.

“We could have a substantial ongoing deficit and it still could be that the debt associated with it is declining relative to the economy.”

That said, Kesselman’s not sold on the NDP’s claims that its universal daycare will more than pay for itself.

Under the NDP plan, full-time daycare for children two and under would cost all parents $10 per day. Part-time daycare would cost $7 per day, and it would be free for parents earning less than $40,000 a year.

The program would pay for itself, the NDP platform maintains, by raising labour force participation among working parents who otherwise would take time off work.

“Even three years out, in 2020, the plan would bring in $112 million more than it would cost,” the NDP platform states.

“I think that is probably a stretch,” Kesselman said. “We know that Quebec, after many years, has not been able to deliver. They put a fortune into it.”

As for carbon taxes, the NDP is promising to start raising them to the federally mandated level of $50 per tonne by 2022, starting in 2020.

The NDP appears to be adhering, at least in part, to the Liberal government’s policy of keeping the tax revenue-neutral. The NDP plans to give most of the additional revenue raised through carbon tax increases as rebates to 80% of British Columbians. 


Could NDP halt Trans Mountain pipeline?

When Kinder Morgan (NYSE:KMP) holds its annual shareholders meeting May 10 in Houston, Texas, it’s a sure bet those attending will be checking their news feeds to see what happened the night before in British Columbia.

Should John Horgan’s NDP form government after the May 9 provincial election, the company’s $7.4 billion Trans Mountain pipeline expansion could suddenly face a hostile provincial government.

Horgan has vowed to use every tool at his disposal to halt the expansion, which the project’s supporters say would generate $1.15 billion in construction spending, $25 million to $50 million annually in B.C. government revenue sharing (on top of the $5.7 billion in provincial taxes over the life of the project) and – according to the BC Building Trades – 10,000 to 11,000 construction jobs over the two-year peak construction period. (A 2014 Simon Fraser University study disputes the company’s estimates of the project’s economic benefits.)

However, while Horgan’s promise to halt the expansion might give Kinder Morgan’s shareholders pause when the company makes a final investment decision later this year, Horgan has few legal tools to make good on that commitment, according to Robin Junger, partner and national co-chairman on environmental and aboriginal law groups and oil and gas with McMillan LLP.

“The province has limited constitutional authority over these matters,” Junger said.

“They’re federally regulated undertakings, and they’re protected by our Constitution and division of powers.

“The law is that the province cannot lock or stop a federally regulated undertaking like an interprovincial pipeline. It can impose conditions, but those conditions cannot be unduly onerous.

“It’s also important to note that the provincial decision has already been made. I don’t think it’s open to anyone to revisit that.”

The National Energy Board approved the expansion with 157 conditions. After a court challenge, the B.C. government was forced to conduct its own environmental assessment, and when it issued a certificate, it added another 37 conditions.

“The conditions have already been set under the environmental assessment approval process,” Junger said, “and I don’t think it’s open under the existing statute for government to unilaterally amend those conditions.”

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