P.E.I. election promises: Balancing the budget
Former P.E.I. finance minister Wes Sheridan promised for two years that the budget would be balanced in 2015. No one is promising that now.
| The province's total debt as of last April was $3.3 billion. When certain assets are accounted for a net debt of $2.1 billion is calculated. Auditor General Jane MacAdam says net debt is the widely-used measure of the financial position of a province. |
Government has estimated the budget deficit for the fiscal year that ended March 31, 2015 to be about $35 million.
Liberal Leader Wade MacLauchlan has now set the date for a balanced budget under a Liberal government for April 2016. The Progressive Conservative Leader Rob Lantz has said it will take another year, April 2017.
The province's net debt, as of the end of the fiscal year for 2013-14, was $2.1 billion. That number will continue to grow at least as long as P.E.I. governments continue to run deficit budgets.
Both the NDP and the Green platforms say the province needs to start living within its means. Green Party Leader Peter Bevan-Baker, however, is specific about when a deficit budget should be allowed, and that is only under exceptional circumstances such as a recession. He has proposed legislation requiring governments table balanced budgets. Other provinces have gone this route, but many have backtracked once the economic or political climate favoured a return to deficit budgets.
Tax cuts
All the parties are talking about relieving the tax burden on Prince Edward Islanders in some way.
One of the biggest commitments to reduce taxes has come from the Tories, who are promising to eliminate the nine per cent provincial portion of the HST from household electricity bills. The party says that would cost $7.2 million. That's in line with what government said in the past when it talked about the revenue it gains from HST on household electricity.
The announcement seemed to get under the Liberals skin. They shot back with a calculation that the Tory package of promises so far in the campaign would cost $130 million, suggesting it was irresponsible to offer the tax break. The Liberals said they'd work towards providing the same tax break once the financial situation improves.
| There is a limit to the value of rebates the federal government will administer on P.E.I.'s behalf. There is, however, nothing to prevent P.E.I. from exceeding that limit and administering its own rebates. Nova Scotia does this to rebate all forms of household energy. |
The NDP are proposing to exempt renewable energy from the HST. They haven't clarified exactly what that would entail, but say electricity would receive a partial rebate because some of the province's energy comes from wind. Other sources include the nuclear generating station at Point Lepreau, and fossil fuels.
The NDP say this initiative would cost $2.5 million.
The Liberal Party is promising an improved tax credit for the lowest-income Islanders, and a new credit for seniors. They said the credit would benefit 12,000 people, who would pay less provincial income tax, at a cost of $1.7 million to provincial revenues.
The NDP are promising to increase the basic personal exemption from $7,708 to $10,000. This would be the first increase since 2008. It would be a costly move, providing tax benefits to all Islanders who pay income tax, although the NDP say they would eventually phase out the exemption for the highest income earners. The promise comes with an $8 million price tag over the first year, according to the NDP's calculations.
The Green Party also says the basic personal exemption needs to increase. Bevan-Baker believes Islanders shouldn't pay any income tax on earnings until those earnings place them above the poverty line.
An economist's view
UPEI economist Jim Sentance has been looking at the party's promises, and shared some of his insights. He found problems with all the party's offerings.
Sentance noted the Tories cost their platform at $18 million in total, using an expected $12 increase in federal transfer payments to cut the cost down from $30 million. "Netting federal transfers out of your costing is juvenile foolishness," says Sentance (not one to mince words).
Looking at the Liberal platform, Sentance notes many capital commitments aren't costed because they were included in the capital budget tabled by government last fall. He says that raises "some questions in my mind about where they expect to be with the capital budget in a year or so." Former finance minister Wes Sheridan had planned to reduce the capital budget to the point where it was no longer placing the province further into debt, Sentance notes, wondering if that's still the Liberal plan.
Sentance says the NDP plan to increase the basic personal tax exemption is too costly, and not a well-targeted move to reduce poverty. He says he prefers the Liberal approach with a targeted tax cut to benefit the lowest income earners.
Sentence did not comment on Green Party costings because the party did not provide one. In Monday's televised debate Bevan-Baker said these projections are "inherently inaccurate and unsupportable."