Just days away from general voting in the BC 2020 Elections, many people have already cast their ballots, but polls show that others remain undecided.
In a continuation of our series to lay out where each of the three major parties stand on issues that matter most to you, our valuable readers, this article lays out what policies the BC Liberal, NDP, and Green parties plan to implement in order to boost economic recovery during the pandemic.
This platform breakdown is augmented by analysis from Rob Gillezeau, Assistant Professor of Economics at the University of Victoria.
According to Gillezeau, all three parties have come out with different ways to put money in people’s pockets and incentivize reinvesting cash back into the local economy — but some methods are more efficient than others.
The BC Liberal Party under the leadership of Andrew Wilkinson has built their platform on promises that revolve around economic recovery based on fiscally conservative strategies.
One of their biggest policy announcements was made early on in the campaign, towards the end of September: Wilkinson promised to scrap the Provincial Sales Tax for a year and then re-implement it at a reduced rate of 3 per cent the next year if elected.
“My initial reaction to that is that it’s really expensive,” said Gillezeau, referring to the nearly $7 billion price tag of implementing the PST cut in the first year alone.
“With the upfront PST reduction, you’ll get general reduction on prices of everyday goods that you buy so you’ll probably buy incrementally more.”
However, the bigger, cumulative impact will be felt by those who have the ability to “time-shift” their purchases to take advantage of the price cut.
“If you’re going to buy any large durable item with a large price tag, like a vehicle for example, if you have the liquid assets to be able to buy it now, you will probably move up that purchase,” he added.
According to Gillezeau, whether a PST cut will benefit British Columbians across the board is unknown as its efficacy depends on residents changing their spending behaviours as a result — how big this change will be is impossible to predict.
While a tax cut is one of the ways in which governments can boost spending in the economy during a downturn, Gillezeau says direct benefits are more effective and less costly to implement.
The PST cut does, however, incentivize spending in particular, as the benefit is only applied when a consumer buys a product.
The Liberal Party’s second major promise in their effort to “put money back in people’s pockets” was their plan to privatize B.C.’s auto insurance industry.
The party says their government would allow privatization of the industry to offer B.C. residents a choice of coverage through a tort system (where disputing parties determine fault) or through ICBC’s no-fault system.
“That model doesn’t make sense to me,” said Gillezeau in his evaluation of the party’s promise.
“What happens when you have that scenario is you get a selection of ‘good risk’ drivers that will go to the private sector and ‘high risk’ drivers will stay with the public sector which will then bleed money.”
The BC Liberals, however, argue that open competition would lead to consumers paying less for insurance coverage.
Check out this article for more details about the BC Liberal Party platform.
One of the biggest ways in which the provincial NDP plans to stimulate the economy is by offering residents a direct, one-time cash boost of up to $1,000.
This benefit would equal $1,000 for families that earn less than $125,000 per year, and $500 for single people who earn less than $62,000 per year.
Former Premier and NDP leader John Horgan has been criticized for unveiling this plan after calling an election and using it as a campaign tool, rather than providing it to British Columbians when they arguably needed it most at the height of the pandemic-induced lockdown.
Now that it’s been announced though, Gillezeau says it offers a better, if not the best, way to incentivize spending.
On one hand, the PST might induce British Columbians to spend more as the benefit only applies once good are purchased. But on the other hand, the tax cut is less conspicuous to the average spender than a cheque in the mail.
“I might not notice a PST cut but if I get a $1,000 cheque I might see that and want to spend it. It’s an open question as to which one is going to incentivize spending,” said Gillezeau.
One of the most appealing aspects of this type of benefit, compared to the Liberals’ PST cut, is its cost efficiency.
To implement the plan, government would only need to add $1 billion to the year-end deficit, rather than $7 billion.
“B.C. under both parties going back a decade now has been the most fiscally responsible province in the country. It is a time to spend, but you need to spend thoughtfully,” added Gillezeau.
“If you have to spend, don’t gut the province’s revenue streams so that the next time we have a big downturn, we can tackle it.”
Another major economic policy announcement was that if re-elected, the BC NDP would instate a freeze on rent increases until 2022, and limit rent increases after that point.
In a further promise to support renters, Horgan said the NDP would bring in an income-tested renters’ rebate of $400 per year for households earning up to $80,000 annually that are not already receiving other rental support.
This renter’s rebate was first promised by the party during their 2017 election campaign.
Both the NDP and the BC Green Party offered up promises to implement a renters’ rebate policy in their platforms — a move that Gillezeau applauds for more than one reason.
“This type of policy, if it’s income tested and targeted, is fine as a benefit that’s going to lower and middle-income folks,” he said.
But in addition, the application of the rebate would require tenants to report how much they pay for rent and that report is linked to their address, which in turn is rental pricing information that the government would have access to.
“What that lets government do is verify that landlords are declaring their income, allowing government to crack down on tax evasions by high-income individuals.”
According to Gillezeau, experts who work in tax law and public policy say that landlord tax evasion is a problem area in B.C. Addressing the issue would then boost revenue for the province.
Check out this article for more details about the BC NDP platform.
The BC Green Party were the last to announce their full campaign platform, just two weeks before general voting day on October 24.
One of their biggest economic policy promises is the claim that the party would move towards implementing basic income by making permanent the $300 crisis supplements through income and disability assistance.
“That’s not really a basic income transition. That’s a good policy but income assistance in B.C. is extremely low and while that top-up was definitely needed in crisis… trying to suggest that a much-needed increase in income assistance is a move towards basic income isn’t right,” said Gillezeau.
The supplements are still a step in the right direction, but not the party’s biggest offering in their economic recovery promises.
For him, the Green Party’s promise of reducing clawbacks on income assistance is an important and necessary measure to get the economy back on its feet.
“Reducing clawback is really important because it encourages people who are on income assistance who often want to work but they may end up with very little take-home pay. It’s consistent with helping people get back into the workforce,” he said.
Another plan to announced by party leader Sonia Furstenau in efforts to spur the economy would be to offer up to 25 hours of free early childhood education per week for 3 and 4-year-olds.
The Greens’ plan also pledges free childcare for working parents with children under 3 and, similar to the NDP’s platform earlier today, seeks to bring child care initiatives under the purview of the Ministry of Education.
Furstenau also offered a direct cash benefit of $500 per month to families with children under three years old who have a stay-at-home parent.
“Child care policies are good primarily because they help us close the labour force participation gap for parents, especially for women,” said Gillezeau, pointing to examples of where free or subsidized child care programs have worked.
“In Quebec, affordable child care programs allow a lot more parents, particularly women, to enter the workforce and that boosts the province’s GDP. Upfront, there are going to be high net costs but we’ve seen from Quebec that this program can really generate large returns.”
However, he adds that while the $500 benefit for stay-at-home parents is understandable from a perspective of wanting to value raising children as a productive service, it may be counterintuitive to the goal of prioritizing re-entry into the mainstream workforce.
“If we give [stay-at-home parents] $6,000 a year, we’re actively paying them to stay out of the workforce,” he said.
“We’ve done that during COVID-19 when we wanted people to physically distance, but in general we want people to work.”
Check out this article for more details about the BC Green Party platform.