THE DOCTOR IN THE HOUSE

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					THE DOCTOR IN THE HOUSE
 Democratic Reform BC Economic Plan




          POSITION PAPER
             May 2005




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            THE DOCTOR IN THE HOUSE
                Democratic Reform BC Economic Plan
                             May 2005
         When it comes to economics, there is little difference, in broad terms, between the Liberals and the NDP.
Neither party has announced any plans to reverse the tax cuts to the wealthy, or address the disparity between the
rich and poor.

                Whether the NDP or the Liberals form the government, the top one to 5 percent of taxpayers in this
 province will continue to reap the disproportionate rewards of lowered top marginal tax rates implemented by the
Liberals. The elite will continue to enjoy exceptional incomes, and the rest of us will be left behind to pay the debt.

         Under either an NDP or Liberal government, we can ultimately expect an increase in public debt. The
Liberal Plan for the next three years will see total provincial per capita debt rise from 36 billion in 2001/02 (when
they took power) to almost 40 billion by 2007-2008. The NDP call for modestly higher increases in debt from their
2004-05 forecasts. The Greens to date have not released an economic plan.

         But what if a radical electoral shift occurred and DR BC formed the government, the opposition, or held
the balance of power? How would we keep our promises? What would they cost? Who would pay? How would
British Columbia benefit from having the “Doctor in the House”?

          First let’s debunk some myths. The Campbell Liberals would have us believe that their prudent financial
management has given the province a projected $1.4 to $1.7 billion dollar surplus for fiscal 2004/5. If we take a
closer look however we see the fallacy. The surplus can be attributed primarily to a $1.6 billion increase in federal
transfer payments, $1 billion of which results from our status as a have-not province.




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          Precipitated by the reckless 25 percent income tax cut that disproportionately benefited the wealthiest
British Columbians, as the preceding chart shows the poor and the middle classes were asked to compensate with
regressive social services, fuel and tobacco taxes, increased medical services premiums, motor vehicle licenses and
tuition fees.

         At the same time the government slashed services and became increasingly reliant on gambling revenues--
the social costs of which must be accounted for. We have a burgeoning crime rate and an under-funded judicial
system. Teacher student ratios have increased. Librarians, support staff and special needs are under-supported. Our
children are a risk from schools that fail to meet seismic standards. We have crisis in health, and one in five British
Columbia children is being raised in poverty. Our circumstances are not surprising. We now have the lowest
spending on social services as a percent of GDP in decades.

         The government’s claim of fiscal responsibility is equally put in question by its own declining investment
revenues which have fallen by half a billion dollars, from $1.3 billion in 2001/02 to a projected $782 million in
fiscal 2004/05.




        What alternative course could we follow that would improve services, decrease or mitigate regressive
premiums and fees, while decreasing per capita provincial debt and reliance on gaming revenue? How could we
improve our social environment with timely and effective healthcare? How could we effectively reduce
homelessness, child poverty, and begin to heal social inequities?




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         The answer is simple: Introduce more proportional taxation, which increases the top tax rates paid on six
figure plus incomes, and assuages the burden on the majority of citizens. In other words tax the rich in greater
proportion to the benefit they receive from the economic system, and raise revenues from the rest of society more
in proportion to their ability to pay.

          Under the Democratic Reform BC economic plan we would do just that. We would increase revenues,
through a system of more proportional taxation, targeted industrial levies and enhanced cost recoveries to add about
$1.5 billion dollars per annum to Provincial revenues over three years, while permitting most middle and all lower
income families to keep the Liberal’s planned tax relief measures.

         In other words we would reclaim much of the $5 billion withdrawn from the public sector economy by the
Campbell Liberals through tax breaks to the wealthy. We would apply about 1.5 billion over three years to
reducing projected debt. We would invest 25 percent of anticipated oil and gas revenues over the next four years
into a Heritage Trust Fund, which with anticipated energy price buoyancy, should grow to about 1.7 billion dollars
by 2008. We would build a solid future financial base, and we would reinvest in British Columbia’s social fabric.

         How realistic is this? First let’s debunk some other Liberal myths. The Liberals ask us to believe that by
disproportionately reducing taxes they have produced economic growth. While it is true government projections for
fiscal 2004/55, suggest a modest increase in GDP into the 3 percent range, from the 2.5 percent increase achieved
in 2003. These figures are considerably lower than the historic 4.6 percent recorded in 2000. The Liberals proclaim
that they have spent more on education and health, but as the following chart shows (adjusted for inflation and
population), education and health expenditures have remained relatively flat, while everything else, has declined.




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         For some people, BC now boasts some of the lowest combined federal and provincial tax rates in the
country, but Campbell’s tax cut pie has been very unevenly sliced. The 0.4 per cent of the population earning more
than $250,000 per year has received 15.2 per cent of total tax cut dollars. If you are an unattached individual
earning $80,000 in BC, you can expect that combined provincial income, property, sales, and fuel taxes plus health
care premiums will cost you $8,060 in $2005. If you were in Quebec you would expect to pay $18,848, about
$10,788 more than in BC.

        But let’s look at the other end of the scale—the two-income family of four with $30,000. Such a lower
income family in Quebec could expect to pay $2617 less in direct provincial taxes, than they would in BC. Quebec
has made a commitment to invest in children and families and social services. The Campbell Liberals have chosen
the opposite course. But what would be the result, if the electorate decided to reverse the trend, and put a DR BC
government in the Legislature. What would we achieve?

          Quality of life would be improved for all people, business and labour, rich and poor, would benefit from
having better transportation options, less crime, less poverty, homelessness, and addiction, better access to health
care, better education opportunities, better water treatment, safer schools and a healthy environment. The price is a
re-invigorated but affordable public sector and restored social investment.


    DR BC’s TOP PRIORITIES for BC Social Renewal

    1.   We would eliminate homelessness, and provide affordable housing to 13,000 at-risk households.
         How? A Democratic Reform government would invest one third of projected property transfer taxes in
         social housing. With this investment we will eliminate the current 13,000 household wait list for social
         housing within four years. The plan will provide $200 million in the first year and about $140 million each
         year thereafter to regional districts to implement social housing development. By comparison the NDP
         would provide just $33 million for 2005/06, while the Liberals, who gutted social housing budgets, plan
         only $36 million in total by 2008. Under either the Liberals or the NDP we will continue to have homeless
         in our streets, seniors, low-income families, and persons with disabilities at risk. Neither is serious about
         addressing social housing. Our plan would also provide more affordable housing for post secondary
         students who must live away from home during their education, and supported living for seniors.


    2.   We would reinvigorate education with more teachers and support staff.
         DR BC concurs with the NDP plan to add 1,500 new educators and support staff to K-12 education
         budgets commencing 2005/06. Under Liberal cutbacks the teaching jobs eliminated far exceeded the
         decline in enrolments. We would also adjust transfers to schools boards to preserve our rural schools and
         reduce the rural/urban educational inequities and address social differences. Our plan would add another
         $170 million to school board budgets in 2005/06 about $8 million less than the NDP, but still substantially
         more than the Liberals.

         Within this we would provide another $30 million for special needs funding to ensure special needs
         children benefit from early intervention and effective programming. We would provide $50 million in
         rural adjustment grants, ensuring recruitment support for specialized teachers, allowing school boards to
         re-adopt 5-day school weeks, and giving all children equitable access to resources. We would triple the
         budget for school-linked apprenticeship programs. But we would hold the line on increased administrative
         costs projected by the NDP, ensuring that resources went into student services, rather than top-heavy
         administration. And by adjusting taxation to a fairer system, we would ensure that smaller class sizes and
         adequate resources are maintained into 2006/07 and beyond. New resources would also allow us to invest
         in other top priorities—school safety and early childhood development. .

    3.   We would fast track seismic upgrading to schools, completing the work in 5 years rather than 15 as
         the Liberals propose. A Democratic Reform government would fast-track seismic upgrading in our
         schools by investing $300 million per year in upgrades completing the upgrades in five years, not the 10 to
         15 years proposed by the NDP or Liberals. Children should not have to wait for another generation to be
         safe in school.



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4.   Commencing in 2006/07 DR BC would allocate $170 million to early childhood development so that
     all children can get a head start on school preparedness. Our comprehensive approach to early childhood
     development which will take into account the need for prenatal and preschool care, neighborhood safety,
     family income support, and appropriate daycare. Daycare would be integrated into a program of universal
     family care that acknowledges the value of both at-home and communal child-care, and will build on the
     some $600 million pending in federal provincial commitments over 5 years. .

5.   School Lunches—In addition, commencing in 2006/07, $3.5 million would be injected into the education
     system for school lunch programs and nutrition education. Poverty will no longer be a barrier to a healthy
     start in life. No child will go to school hungry, and the health system will be protected from the costs of
     preventable disease.

6.   Adult basic education and ESL—DR BC government would increase post secondary education budgets
     to provide some $20 million for adult basic education and ESL programs in our community colleges over
     the next four years.

7.   Fully forgivable student loans—The NDP calls for a freeze on post-secondary tuition fees, that would
     add $60 million this year and more in future years to provincially supported costs for post-secondary
     education. Our approach to the $300 million in student loans the BC government offers each year is
     radical. We suggest the provincial loan forgiveness program be enhanced, so that not just targeted
     professions, such doctors and nurses would be offered loan forgiveness, but all students provided they
     graduate, work and stay in BC for five years be offered the same advantages. This would increase the
     liability of the provincial treasury for post secondary education, but it should be affordable if marginal tax
     rates are returned to historic levels.

8.   Aboriginal Education Enhancement—Working in consultation with First Nations, a Democratic Reform
     BC government will develop aboriginal education enhancement initiatives to improve high school
     completion and academic success rates for First Nations’ students. The target will be to provide $5 million
     annually to fund mutually agreed upon programs.

9.   More Accountable Government—We would reduce the number of cabinet ministers from 27 to 15,
     saving the province 7 million in excess administrative costs, but we would redirect that into strengthening
     the oversight offices of Legislature and government. A Democratic Reform Government would enhance
     the offices of the Ombudsman and Auditor General, establish a Human Rights Commission, de-politicize
     public prosecutions now under the Attorney-General with new Office of Public Prosecution, strengthen
     employment standards enforcement and women’s equality, child advocacy, and residential tenancy
     services. Without additional net cost to the taxpayer we will ensure the public trust and human, social and
     democratic rights are protected. In addition without jeopardizing public access to essential information.
     DR BC projects a $10 million reduction in advertising expenditures.

10. Legal, Policing and Court Services—We would work to reduce the crime rate and family violence by
    increasing funding for administration of justice and legal aid. And we would enhance programs for early
    intervention and the protection for the victims of crime. Neither the Liberals nor the NDP have made a
    commitment to fully restore legal aid. DR BC by contrast would inject $40 million annually back into
    Family Legal Services, through a dedicated legal services tax fund that would ensure justice is not only
    reserved for those with the ability to pay. And we would inject and additional $21 million over four years
    into enhancing judicial services so that an adequate number of appropriately compensated judges and
    crown attorneys are available and delays, diversions, understaffing and under-compensation do not inhibit
    criminal prosecutions. To ensure that BC is getting the best value for its policing dollars we would set
    aside $4 million dollars for a one time comprehensive review of the RCMP and municipal police forces
    prior to the expiration of the current federal-provincial agreements over RCMP services. The review
    would be empowered to create a strategic plan for providing adequate police resources to address
    increasing crime, and would evaluate whether BC would be better served by a regional delivered,
    provincial police force.




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11. Addiction Services—The NDP propose doubling some addiction services. We would do more. As a
    component of our social housing strategy, we would provide triple the beds currently available, and
    provide safe, extended residential addiction programs of up-to six months sufficient duration--sufficient to
    prevent relapse and lead addicts on the road to recovery. There would be fewer addicts in our streets, and
    we’d be on our way to a safer, healthier and more compassionate society.

12. Medical Services Plan Enhancements—We will restore eye-care, physiotherapy and chiropractic
    benefits to the medical system, and enhance coverage for alternative medical practitioners, and we will
    build incentives into medical system that will reward the physically fit. Those meeting a rigorous,
    scientifically measurable fitness standard would be rewarded with the equivalent of up to 43 percent
    savings in MSP premiums. A pilot program similar to ICBC safer driver discounts would be phased in and
    evaluated for various age groups over a two-year period with the initial goal of enhancing fitness levels
    among 50 to 65 years olds by three to six percent.

13. Forestry Renewal—A DR BC government would implement differential stumpage regime to encourage
    harvesting and reforestation of pine beetle infested stands. And we would address the backlog of
    unsatisfactorily reforested lands, brought on by four years of Liberal forest mismanagement, by applying a
    forest health and revitalization charge to stumpage rates for prime timber. Just as the current government
    has neglected social services they have similarly neglected natural resource development and the
    environment. Public commitments to natural resources and economic development have decreased by
    about $300 million per year compared 2001/02. We suggest doubling the Liberal government’s $85
    million commitment this year, and extending that through 2007/08. We would conduct a comprehensive
    review of Forest Investment Trust Account that has funneled tens of millions of dollars of public money
    into private companies for forest renewal that is lagging behind. We would implement measures for
    environmental cost recovery, and we would put our silvaculture industry to work building healthy
    resource communities. With added resources we would establish a intensive forest management program
    to prompt reforestation, stand tending, commercial thinning, fertilization and a program of advanced
    research which would benefit both industry and resource communities. We would also reinvest in a
    provincial seed harvest and seed-stock program as essential to ensuring the continuing bio-diversity and
    integrity of our native forest stocks. We would provide transitional funding to support the decentralization
    of the Ministry of Forests and strengthen staff support in the resource communities. We would put the
    eyes and ears of the Crown back in the forest protecting our environment.

14. Environmental Protection—Enhanced funding for environmental protection will be achieved through a
    combination of cost recovery programs for government services, the reduction of incentives to institutions,
    firms and individuals that engage in environmentally unfriendly activities, and environmental levies. We
    will conduct a review of all government subsidies and incentives with a view to eliminating those that
    provide inappropriate support to firms responsible for perceived long-term environmental degradation.
         A Democratic Reform government will provide inspection services on a full cost recovery basis, so
    those who potentially endanger the environment are not subsidized through general revenues. As an
    incentive for compliance, enhanced civil liability legislation will provide for the full recovery of clean-up
    costs associated with spills and other escapes of toxic substances while expanded civil liability remedies
    will aim to compensate the public for harm done to the environment. Incremental emissions charges will
    be used to discourage waste discharges, even where they may be allowed through permits under the Waste
    Management Act. Emission charges should be applied to polluters in proportion to the volume of their
    discharges.
         The net benefit to the provincial treasury should be about $50 million, permitting ameliorative
    environmental initiatives in addition to those already announced by the Liberal budget plan. A Democratic
    Reform government will devote $10 million to establish a Professional Scientific Council empowered to
    create comprehensive inventories of rare and threatened species and indigenous sub-species, to designate
    habitat areas for species at risk based on sound science. The result, in connection with a new BC Species-
    at-Risk Act should be to end the current piecemeal approach to habitat protection, to provide greater
    security for species-at-risk and generate clarity for resource developers. We will invest in programs, which
    will encourage the use of ethanol and biomass energy sources, building jobs for British Columbians while
    conserving non-renewable oil and gas reserves. We will provide information, education, training and
    technical assistance to individuals, municipal governments, Crown agencies, institutions and business


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    firms in implementing pollution, waste prevention and global warming response programs. As a part of
    these initiatives we will fund pollution prevention and waste management demonstration projects to raise
    awareness in high-priority sectors.
         We will give renewed emphasis to maintaining adequate levels of professional staff within the
    ministries responsible for water, air, land, and the environment, and we provide additional funding for
    environmental assessment review to ensure adequate consultation with communities and First Nations. We
    will invigorate citizen stewardship of the environment by supporting the work of local environmental
    groups. We will provide programs of financial assistance to publicly funded research facilities to develop
    clean technology, assist economically disadvantaged firms and institutions that are cleaning up operations,
    and support tax rebate schemes for environmentally friendly automobiles.

15. BC Rail—A DEMOCRATIC REFORM government will immediately launch a full public inquiry and
    audit. The $5 million cost is justified by the matters of public trust associated the billion-dollar BC Rail
    deal.

16. Excellence in Preventative Health Care—A DEMOCRATIC REFORM BC government working in co-
    ordination with public health officers, the medical profession and university-based research facilities will
    develop a British Columbia centre of excellence in preventive health care. $2 million in seed funding will
    be allocated in fiscal $2006/07.

17. Tourism—Democratic Reform BC will support the tourism industry by dedicating a provincial sales tax
    surcharge on hotel room revenues to marketing initiatives and skills training programs aimed at promoting
    BC tourism and re-invigorating staffed tourism bureaus throughout British Columbia helping to facilitate
    tourists with maps, RV camping locations and reservation services. In addition we will add $5 million
    annually to programs in BC Parks, and dedicate one million dollars in new funding for community arts.

18. Close the Long-term care gap in four years—The Campbell Liberals approach to long term beds for
    seniors is reminiscent of their approach to crime. As rising crime rates gave BC the ignominious title as
    the property crime capital of Canada, the Liberals chose to close prisons and courts, and reduce judicial
    services. With the population of seniors 75 years and older forecast to increase by 68 per cent over the
    next 20 years, they chose to close long term care beds and increased wait lists, cut home supports, and put
    undue pressure on crowded emergency and acute care resources. A Democratic Reform BC government
    will commit $188 million in new public capital financing and will leverage public, private and non-profit
    commitments to reverse the trend and overcome current 6,000-bed shortage within four years.

19. No Cuts to Business Services or Announced Public Projects—Unlike the NDP we would not reduce
    corporate service to the energy and mining industry, but we would ensure increases in service were
    accounted for in fuller cost recovery, saving the government $1.6 million dollars. At the same time we
    would maintain the announced $186 million dollar budget for executive support services to the small
    business sector—programs that would be chopped under the NDP. DR BC does not anticipate canceling
    public projects announced by the Campbell administration. Even though many of these were announced in
    a questionable pre-election blitz, they also represent the expectations of many people who have worked
    hard to see these projects approved. The NDP are expected to cancel or defer half the projects recently
    announced by the Campbell administration.

20. Transportation—A DR BC government will increase projected budgets for public transportation by $15
    million annually as support for green transportation. At the same time we recognize fuel tax increases in
    the short term have created an unsustainable burden on the trucking industry and the general population.
    We will lower fuel taxes by $100 million over 4 years.

21. Gambling—Under the NDP’s current budget proposal, an NDP government would forego an estimated
    $22 million in revenues by canceling BC Lotteries online gaming initiatives. But that $22 million is
    minimal compared to the Liberal forecast of $850 million in net gaming revenues for 2004-2005, and the
    government’s goal of nearly $1 billion by fiscal 2006-2007. Neither party proposes significantly reducing
    government dependence on gambling revenues, or addressing the social costs. The government applies
    only $4 million (or about one half of one percent of revenues) to harm reduction and amelioration. DR BC


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    will double that in current year and apply $2 million to an audit of the costs and benefits including impacts
    on medical services, mental health, lost productivity, workplace absenteeism, divorce, family breakdown,
    bankruptcy, social welfare, crime and legal problems, and the social environment in communities. Results
    of the audit will guide future planning, but currently we project lower reliance on gaming revenues, by
    holding gaming revenues to no more than $850 million by 2006/07. We will achieve this by re-instating
    eliminated caps on betting, removing ATMs from casinos, controlling promotional advertising, placing
    quotas on slot machines and gaming tables, and limiting the number and size of gaming establishments.

22. Agriculture—DR BC has an aggressive plan for agricultural reform which is expected to permit a further
    $2 billion reduction in provincial debt by 2008, through reform of the Agricultural Land Reserve system,
    based on the 1994/5 recommendations of the Auditor General. Small parcels of two acres or less, not in
    agricultural production would lose current tax subsidies, phased in over four years. Farmers in active
    production would receive the benefits of a greatly increased $538 million dollar provincial budget for
    agriculture, in part by accessing federal programs ignored by the current administration. ALR reform, by
    taking into account the value of developments rights, would ultimately bring hundreds of thousands of
    hectares of unused ALR land into production, and protect family farm succession. As the resultant benefits
    to the provincial treasury are realized they will result not only lowered debt, but also lower provincial
    sales taxes.

23. A Two- percent reduction in provincial sales taxes—A DR BC government will retain the current
    planned reduction in provincial sales taxes, and has the goal of completely eliminating these regressive
    taxes. Staged reductions should lower the tax to 5 percent by 2008.




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