If you're wondering why the B.C. government shows little interest in taking action to deal with Metro Vancouver's red-hot housing market, look no further than the most recent update of its fiscal situation.
Page 2 of the second quarterly financial report says it all: government revenues flowing from property transfer taxes are expected to be a whopping $350 million higher than expected by the end of this fiscal year.
The B.C. Liberals had originally forecast getting a little more than $900 million from the tax this year. Instead, they now expect to reap a record $1.3 billion, which is an amount greater than the entire budgets of 14 of 19 government ministries.
The first quarterly report back in September first showed the government that its dependable cash cow was generating record revenues. The November update revealed things were getting even more lucrative.
The revenues generated from the property transfer tax may prove to be critical to Finance Minister Mike de Jong, who has made a balanced operating budget the chief goal of government every year.
This year, he is still projecting a modest surplus of about $515 million, which includes a hefty $250 million forecast allowance. Given the overall budget is close to $46 billion, there is little margin of error when it comes to achieving that small a surplus.
Further illustrating what little room de Jong has to manoeuvre (and why no one should expect any big, new spending initiatives from government) is the steady decline of another once dependable cash cow: natural gas revenues.
The B.C. government used to reap well more than $1 billion a year from the natural gas sector. Those days appear to be long gone, as this year royalty estimates are now sitting at a near-record low of just $185 million.
And plummeting royalties aren't the only concern when it comes to the natural gas sector. The sale of drilling leases, which once brought in about $2.5 billion less than a decade ago, are now expected to amount to a paltry $14 million.
A combination of low natural gas prices and a glut in the North American supply of that resource have seen the bottom fall out of that industry, and it's not clear if a recovery is anywhere near in sight.
The B.C. Liberals much-heralded hopes for a new liquefied natural gas industry is still years in the future, if it materializes at all. Therefore, any revenues flowing to government from any LNG operation is a long ways off.
There are other worrisome signs in the fiscal update, which together underscore how precious that property transfer tax really is to government. For example, B.C. exports have flatlined, job creation numbers have stalled, and ICBC (also a one-time dependable cash cow) is bleeding losses from higher accident claims.
The good news is that B.C. is still expected to lead the country in economic growth and consumer spending seems to be strong (although personal debt levels continue to climb). Given that there is no sign of any significant increase in other forms of revenue, de Jong has to squeak by with what he's got right now.
And he has to hope Metro Vancouver's housing market doesn't cool off any time soon. His government needs its share of the proceeds.
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As the Paris climate change conference takes place this week, it's worth noting two remarkable developments concerning that issue that took place in Western Canada last week.
In Alberta and in B.C., prominent environmentalists partnered with various industries to reach a consensus on how to proceed to reduce greenhouse gas emissions in both provinces (the B.C. government has yet to say whether it will agree with its climate action panel that came up with the consensus).
At the heart of strategies in both provinces is the acceptance of a carbon tax that needs to increase, and a recognition that key industries be given protection from overly onerous sanctions against air emissions.
It may mark an important maturing of attitudes on two sides that have historically often been at each others' throats. Agreeing that the economy must be protected while changes are made to curb emissions may prove to be a watershed moment for both provinces, and for the industries that fuel their economies.
Keith Baldrey is chief political reporter for Global B.C.
