Budget 2015 Analysis

Created 18 February 2015 13:02

Finance Minister Michael de Jong delivered the 2015/16 Budget on February 17, 2015 and there were few surprises in the Budget.

Budget 2015 continued the trend of no new core funding for post-secondary education. While wage increases set to take effect in the 2015/16 fiscal year are funded, the previously announced cuts in the 2014 Budget ensure that core university budgets are still lower than they were in fiscal 2013/14. When coupled with the actual cut of 2% in last year’s budget, the lack of inflation-indexed spending on post-secondary education means that there has been a close to 15% real dollar cut in core funding in the past twelve years.

This funding shortfall comes despite the province’s strong fiscal position. The Minister is projecting a surplus of $979 million for the 2014/15 fiscal year and surpluses in the next three years as follows:

•    $250 million in 2015/16
•    $350 million in 2016/17
•    $350 million in 2017/18

These surplus projections are independent of conservative contingency reserves and are regarded by most economists as extremely cautious projections.

The Minister is also projecting economic growth for the next three years as follows:

•     $2.3 % 2015
•     $2.4%  2016
•     $2.3%  2017

These latter projections are of interest to our members because the Economic Stability Mandate  is tied to growth above projection in real GDP as set by the Economic Forecast Council. The first potential adjustment in 2016 will be based on 2014 projections. Despite BC’s relative economic strength, the possibility of a dividend in 2016 remains remote because the robust projections make it unlikely that GDP growth will come in above forecast.

Also of note on the revenue side is the fact that the surtax on high income earners introduced in the 2013 Budget was eliminated. The cancellation of this tax amounts to over $200 million in annual forgone revenue. On the progressive side of the ledger, the Budget did end the highly regressive claw back of child support payments for those living on social assistance. This measure will cost the government $13 million in forgone revenue.

In summary then, there was very little of note in the Budget for our members. Though the PSEC mandated wage increases will be funded, the lack of actual new funding will continue to put BC’s research universities under real financial pressure.