B.C. Director Jordan Bateman presented the CTF's 2017-18 budget recommendations to the bipartisan Legislative Committee on Finance and Government Services Oct. 6. Here is a transcript.

S. Hamilton (Chair): Next, we have Jordan Bateman, Canadian Taxpayers Federation. Mr. Bateman, good evening. I think you know the routine.

J. Bateman: Yes. Thank you for having me. I always follow your work on Hansard. I feel a little bit like this committee is like taking a drink from a fire hydrant, so on behalf of British Columbians, thank you for being willing to stick your face in the water and take a drink.

S. Hamilton (Chair): Well, thank you for that. On behalf of the committee, we appreciate hearing that once in a while. The floor is yours.

J. Bateman: All right. The Canadian Taxpayers Federation. We're a non-profit, non-partisan organization. We're dedicated to three things: lower taxes, less waste, more government accountability. So that's what frames all the work we do.

There are people like me all across the country. In fact, we finally became a truly national organization this year when we hired a new director in Quebec. That thrills the folks at Radio Canada, because now they don't have to listen to me talk in English. They can actually call him and talk in French.

We always appreciate the opportunity to present our views.

I tried to make the package a little bit smaller this year. The information. There's a number of outstanding recommendations from previous years, but I wanted to highlight three main points today.

The first has to do with the debt. For the past four years, despite all the operational budget surpluses, British Columbia has continued to slip further into debt. If you do the math, it looks like about a $4.7 billion surplus over the past four years. But the operational deficit from the term before that was $5.1 billion. So even just comparing that, we've slipped $400 million further into debt let alone all the capital borrowing that's gone on.

Debt in 2006 was only about $33 billion. It was trending in the right direction. Then the recession happened. Now today we're around $67 billion headed towards $70 billion. That's about $2.5 billion in interest payments.

One thing I wanted to talk about and one thing we've been talking about with our supporters a lot is that government debt is not like…. It often gets compared to homeowners having a mortgage. You know, we need to borrow money to have this wonderful infrastructure for the future. That's not actually the greatest analogy. Quite simply, homeowners need to borrow because — especially for those of us who live in the Lower Mainland — a home is several, often many, times our annual income. That of course is not the same with government. Government has a $45 billion a year budget. There is room for priorities and flexibility.

Likewise, homeowners have to make monthly payments. If any of us default on a payment on our home the bank starts calling; we default on two, they start really calling, and they often can foreclose, take away, the house. Government, of course, does not have that same problem. No one's coming to seize our hospitals or our roads or our schools if we don't pay that. So there is a big difference between government debt and household debt.

From our point of view…. We've surveyed our supporters every year. Their number one priority — even ahead of cutting taxes — is always pay down the debt. They just do not feel good about leaving government debt to the next generation — to their kids and grandkids — to have to deal with.

We hear more now about their concerns around flexibility. Future governments having the flexibility to react to what's going on at the time. When we take out government debt today we're actually making choices for future governments. Things may be different in the future. Lots has changed in the last 30 years, a lot more is going to change in the next 30. You don't want to tie the hands of future governments to be able to respond to the needs of tomorrow. So debt is our first thing.

The second. It'll come as no surprise to those of you poor souls who have been on this committee for years listening to me. The Medical Services premium tax. This is easily our most loathed tax at the Canadian Taxpayers Federation. We've been fighting this for a long time. I know there's been a lot of different views expressed on it.

In 2010, it cost me $114 a month. Every month, I write the cheque — or now I do the on-line banking — for my family for the MSP tax. Today it's $150. That's a 30 percent increase in just five or six years.

Last year we actually recommended a freeze to the carbon tax. It took the government a while, but they finally took our advice on that. Better late than never. Part of the reason we wanted to freeze last year was we wanted to dig in to more about the MSP, because it's one of those taxes that we don't get a lot of proactive information on. You'll hear lots about income tax and certainly lots about property transfer tax — where it's coming from. We don't really know a lot about where MSP is coming from.

Through some freedom-of-information requests, we uncovered a few interesting facts. First of all, 850,000 MSP payments are at least 31-days overdue. That, I think, is a sign that this is a tax that a lot of British Columbians find burdensome. It adds to the cost of living. And $340 million in bad MSP debt has been written off in the past five years. Again, that's money, now, that the government has tried to chase down and hasn't been able to collect.

Then, the cost to collect the MSP was $77 million in 2015. That's up nearly 40 percent in two years, and I wish I could tell you why. The truth is we have no idea why, because we don't get that kind of information through our FOI request. But those are some numbers that are concerning to us, because they show trend lines. More people are late. More people are defaulting. It's costing more and more to collect.

We've talked before about the unfairness of the tax. I'm not going to go through all that. Our big push, again, is to find a way to eliminate this separate tax system. Roll it back. It's expensive to collect. Obviously, right now the government is in surplus, so there is a little bit of financial flexibility.

Government itself is a huge payer of MSP on behalf of all its employees. We're not sure how much, because again, we don't get that disclosed to us. But there are some savings there. Not to mention….

We talk about different school boards. You've heard many of them talking about a funding crisis. What's the one thing they almost all complain about? MSP increases, and they don't get more money from government to cover them. That, again, would give them some financial flexibility — health regions as well. Municipal governments. Wouldn't it be great to give them one less reason to raise our property taxes every year, by not having to pay their MSP on their staff?

We think there are some opportunities there. With the CPP increase coming…. I know that's not a provincial program, but that's a big payroll tax that's going to increase. The ability to offset that with a decrease somewhere else would be good for employers.

Then the last thing. It's a little more nebulous. Essentially, it's beware the federal government spending spree. The federal government, obviously, is going into massive debt to address various things — some good, some bad.

But we felt it was important to have a recommendation in there to really examine every project that they come forward to fund. Not every project will align with British Columbia priorities. It's better to say no to a capital windfall if it's going to save you operational money down the road for something you don't really need.

I'm not confident. Certainly, the last federal government had a stimulus spree. Some of that money was not wisely spent. The same could happen with this federal government.

We're just encouraging every mayor we talk to, every politician at the provincial level we talk to…. Just because the federal government comes with a cheque doesn't mean you need to take it, if it's not for the right project or the right thing. Having a little bit of wisdom. Being smart about looking at their plans. Looking at the operational implications of staffing and running those facilities down the road.

That's pretty simple for this year. There are other things in the package. Last year, we presented you a report on food and beverage taxes, sugar taxes — how they're not all they're cracked up to be. That certainly is borne out with some of the newer research coming out of places like Denmark, which was the first country to bring in a sugar tax and the first country to get rid of it. If that pops up again, I'm happy to again provide you with that report through email or other means.

That's all I have, Mr. Chair.

S. Hamilton (Chair): Okay. Thank you very much for that.

I will go to questions and start with George, please.

G. Heyman: First of all, just to clarify for the record, at one point when you were talking about the MSP tax, you talked about the government finally freezing the carbon tax. I assume you meant MSP.

J. Bateman: I did mean MSP, yes. Carbon tax on the mind right now, Mr. Heyman.

G. Heyman: Apparently.

You said that the provincial government shouldn't go after federal infrastructure money unless it was the right infrastructure. My first question is: I'm interested in what you would consider to be right infrastructure, especially in light of your past activity with respect to the transit referendum.

My other question is to do with MSP. You talked about how government could be relieved of the responsibility to pay MSP premiums on behalf of employees. Arguably, that would depend how the replacement of that income was structured.

As I'm sure you're aware, a lot of employees — I think it's somewhere around 40 percent — have their premiums paid for by the employer. As I'm sure you're also aware, generally, when you get one benefit that can be monetized, you get it at the expense of another benefit, which is often wages.

Do you have any ideas about how, in any transition to a different kind of system, it can be fair for government, employers, individuals who pay it out of their pocket, as well as people who've paid it indirectly by receiving it as a benefit, as opposed to wages.

J. Bateman: On the federal infrastructure, really taking it project by project. I mean, the Conservative stimulus program was a bit of a mess. You know, really questionable projects that were funded — gazeboes come to mind, things like that — so making sure that it's actually a necessary project.

On the specific TransLink one, look, TransLink came and asked for a sales tax. The TransLink mayors asked for a sales tax. They weren't willing to put a single dollar of efficiency towards the $7½ billion plan. Now they've gotten their first round of funding. They've managed to do it by finding almost a quarter-billion dollars in savings — selling property they didn't need and using it to actually move people places, which I think is what we want the transit system to do.

We can talk about the mayors and how they should offset their property tax increase and stuff like that, but generally, much better than the first approach. You have to take…. I can't give a blanket: "This is a good project" and "This is a bad project." You have to take it project by project but making sure that the infrastructure money is actually being used for things that are necessary, not things that are designed to make Ottawa politicians look good.

On the second one, this is the big problem. You're right. We think it's 40 percent that are enrolled in an employer plan. We're not clear, though, how much of that 40 percent are government workers and how much are private sector workers. So again, there's a bit of an issue there. That is the biggest hurdle, I think, second to the collection contract, to get rid of the MSP.

For us, we'd suggest…. Look, MSP, I believe, is a taxable benefit. I don't get it, so I'm not sure if it's a taxable benefit or not, but we believe it's a taxable benefit. There would be some tax savings if people didn't get it. Maybe that can be used to offset. Certainly, things like that have to be negotiated out. I'm not even sure if some government contracts may actually anticipate something like that. But if a tax ceases to exist, you'll have to negotiate with the individual units to make it fair.

S. Hamilton (Chair): Thank you. We have time for one more question.

C. James (Deputy Chair): Just to follow up on that, Jordan, I wonder…. There are different models. In some provinces, it's done all through the tax system. Some provinces it's like a business payroll tax as well as individual income tax system. I just wondered if you'd looked at all at any of the models and was there a preference? Was there a direction that you'd take a position on?

J. Bateman: We would prefer it to be an all in the income tax system, with all of the corresponding savings taken off the top. We think that's probably the fairer route.

Payroll taxes are a drag on job creation, and so we need to be really careful about putting any more costs on employers, especially when you hear from other groups that want to increase minimum wage — and living wages and things like that. There has to be some sort of relief for the employers who are creating the jobs in this province.

S. Hamilton (Chair): Thank you. Any further questions? Seeing none, thank you very much, Mr. Bateman, once again. Appreciate you coming out. Have a good evening.