 Good morning everyone. Welcome to budget lock-up experience 2017. Good to see you in the front and those of you who have joined from various organizations. Taking time out of your day, thank you for coming. What follows is a summary of some of the points that I think are worthy of attention in the budget that will be tabled formally in a few hours in the legislative assembly. And I think you know the format. You'll have an opportunity then to further digest some of what you've been presented with and what I have to say. And then I'll come back shortly thereafter and try to answer some of your questions. As I frequently do, I'm going to begin by giving you an update on where we are, sort of a third quarter update for the fiscal year that we are in. We'll start right there. And a few details about this. Starting on the left, starting on the left you'll see where the anticipated surplus was for the second quarter report. Some of the changes I can tell you that higher taxation is slightly higher personal income tax, slightly higher corporate income tax, and slightly higher property transfer tax than was anticipated when I did the update in November. Some of you still have, many people have an interest in the property transfer tax and the additional tax. I think at the time in November I suggested to you that we were anticipating the foreign transfer tax to come in at, a number of 50 million, though I said then I thought it was going to be a little bit higher. We're now forecasting for the fiscal year 100 million for the property transfer tax, the extra part of the property transfer tax that applies to foreign purchases. Lower commercial net crown income is virtually all attributable to ICBC and continuing increases in claims costs offset marginally by better revenues than anticipated revenues from the lottery corporation and liquor distribution branch. The biggest change is statutory spending for the year and I'll come to that here in a moment. I don't really have a lot to say, but the bottom line for the present fiscal year is 2.24. Now we're anticipating to be just under 1.5 in terms of surplus for the existing, for the fiscal year that ends on at the end of March. In terms of the changes in that statutory spending they relate to four areas, emergency management preparedness, flood control accounts for 50 million dollars, forest rehabilitation work is, you may recall the announcement from last week relating to the transfer of funds to the forest enhancement society to do more preparatory work and try to do more in the way of preventing fire seasons. It wasn't our worst season last year, but they are happening, the ferociousness of forest fires are happening yearly now and we are trying to get ahead of that and do more in the way of preparation and rehab work in the forest. Housing and shelters, hear more about this in a moment, in addition to the 500 million dollars that was announced last year, additional monies that have been spent in terms of housing and shelter activities and the fourth item there, infrastructure investments, you will see those of you who are looking at the budget documents, just over 300 million and that relates to ongoing discussions we are having with the federal government about some additional shared infrastructure spending that we are hopeful will be able to conclude in the next number of weeks and that is funds that have been set aside for that purpose. In terms of the forecast for 2016, I guess the best thing I can tell you is that we saw steady improvement through the year from when the budget was tabled just over a year ago. That of course will have positive consequences for employees for whom we have the growth dividend in place where we help perform our economic forecast and the forecast of the forecast council and you can see we are, for 2017, they are predicting growth at 3.1 and we at 3.0. Beyond that, in terms of the years ahead, you can see that we are forecasting continued solid stable growth but at lower levels and I'll give you a comparative look at how that stacks us up with other parts of the country but you can see for the year that we are in now, calendar year 2017, the forecast council is pegging growth in BC at 2.3. The other thing I'll emphasize about this is once again you will see that as is our practice, we have included prudence by downgrading for budgeting purposes what we anticipate the level of growth to be to 2.1. That has served us well in the past and we will continue to follow that practice. In terms of how we compare with other parts of Canada, we have been the leaders and we remain at or near the top for the year ahead. 15 and 16 we led the country, we believe we will certainly be the leader in 2016. We'll see where we end up in 17. It's the first time I'm told since the early 1960s that British Columbia has led the country two years running so we're proud of that fact. But you can see that we continue to chug along and are anticipated to chug along ahead of the national average and sort of fighting it out with Ontario. Alberta is bouncing back from negative numbers and I'm sure they will be pleased to see themselves back in positive territory. That's probably good news for the rest of the country as well. What accounts for our record and it has been in terms of growth in enviable one and I frequently comment on the fact that we are distinguishable from other jurisdictions in Canada in a number of ways but two important ones economically is our diversified domestic economy and later I'll talk about our diversified trade portfolio which you see here just how diversified we are and how that benefits us when one sector of the economy encounters headwinds or troubles and frequently and sometimes at a gathering like this people will ask me well you're only in good shape or you're only balancing the budget or you're only posting surpluses because of X, because of the construction sector or before that it was because of something else and in point of fact one of the things that helps us tremendously is this diversification so when coal prices are down, commodity prices are down our tech sector has and continues to enjoy tremendous growth or our agri-food sector, our aerospace sector and we enjoy the benefit of that to a far greater extent in virtually any other province you can see our dependency on natural resources at 7% compared to I think in Alberta 46%, or sorry 29% and so we are able to capitalize on the fact that one part of our economy is struggling, another part we hope is able to pick up the slack and we have seen ample evidence of that going forward in terms of the indicators of our economic performance I'll go through them relatively quickly for you this has been a dramatic improvement from I recall coming to talk to you in these years and saying our objective is to do better than 0.8 or 0.9% we have over the last number of years done considerably better and last year alone over 70,000 jobs created in BC and that leading the nation by a very wide margin a 3.2% increase as it were and unemployment below where we thought it would be it's at 6% in 2016 which was down from 6.2 in 2015 on the retail sales side you can see continued strong growth growth in excess of 6.5% we are budgeting or forecasting growth going forward just below 4% our retail sales have consistently outperformed our forecast we'll see if that happens again I thought you might like to see where some of that activity is taking place good year for the car dealers and no I have not visited one lately the furnishings, building materials, I think a reflection of what's going on in the construction sector the last time we did this the one that was in negative territory was gas stations and they seem to have perked up above the line anyway you see it's a broad swath of positive numbers on the retail side indicating I think a reflection of yes consumer confidence but less cross-border shopping, significant increases in tourism there's more people in BC and there's more people working and all of that's going to translate into healthy retail sales numbers for the province on the housing front we have been tracking it well above our historic average of 29,000 new home starts many of you follow this and some of you come from agencies who do that on a daily basis the one thing I thought I could add for you is a little bit of a breakdown and if people want this we can get it to you so in Vancouver for the period 2007 and 2015 so 07 to 15 the average was just under 18,000 for 2016 28,000 almost 28,000 home starts in Victoria just below 1800 was the average for that those years in 2016 it was almost 3,000 so you get the idea similar in Kelowna from the Eastern Fraser, Central Eastern Fraser Valley all well above historic averages in terms of home construction multiple dwelling construction, multiple family dwellings leading the way in that respect exports now some of you will recall in 2016 when we were last year in this period and I was very very troubled by this because our dependency in British Columbia on trade and continuing to send products to other markets is significant and it's as I said earlier in my view largely responsible for the success we've had so when this started to flatten out you may recall I pointed to that as a potentially very troubling sign now what's happened it has rocketed upward at levels that we really didn't anticipate that we would see almost 13% in fact so you're I'm probably guilty of some of you will say crying wolf the problem right now is for reasons that I'll talk about and you're aware what's going on in the US I hope this isn't a temporary blip and we see that line come down just as sharply it's a good number but I am concerned about the rising tide of protectionism the winds that are blowing particularly south of the border in terms of a breakdown by some of the leading commodities I can tell you that for coal for example the the volume and the price and the value of our exports was up but I am told and advised that the there is anticipations of the price of coal will come back down there were supply issues in other parts of the world Australia that are being rectified and so we may have to anticipate a decrease in the coal price copper although the copper was down in terms of volume and price but we see the prices coming back somewhat going forward natural gas volumes were up price was down but overall value was up as a result of the price being slightly up and lumber maybe the trickiest of them all to forecast today overall values of exports were up overall volumes of exports were up and the price was up the question is how long is that going to continue particularly with respect to the North American market and many of you heard what the Canadian ambassador to Washington and Mr. Emerson had to say last week and yes we are tracking that very very carefully now what is in terms of strategizing around that I do take a measure of pride in the government does in pointing out just how dramatically different our exposure to the US is versus other provinces in Canada Alberta and Ontario but we are still exposed we shouldn't get ourselves it's still the biggest part of our market and if that trade gets interrupted it's going to have an impact it's going to have an impact on us now we've taken some steps to address that the lumber sector should be very proud of having led the way in terms of opening up new markets in places like China the number I saw for a year or two ago was that 65 just how dramatically over the span of 15 years our lumber shipments to China have increased and that's good news good news for us we account for the number I saw was not 50 but close to 60% of Canada's softwood lumber shipments to the US so having other markets we're seeing progress in India 6 million in 2016 which was up from 100,000 dollars worth of softwood lumber so we're starting to make some inroads got a long ways got a long ways to go there quickly just in terms of the overall outlook for the economy the line I tend to focus on for this one is here so you know you've got the US what was being forecast in January of last year for growth in 2017 what was being forecast in August of last year and what was being forecast last month as you go through the list of jurisdictions US, Canada, China, Japan virtually all of them are either going down or stagnant Japan shows some very modest improvement but they didn't have a lot a lot of room to go down much further but there's not a lot of optimism out there in the jurisdictions that we call customers and so we have to be alive to that in terms of planning, strategizing and the forecasting that we do and you know the US a bit of a wild card right now in terms of what's going to happen to their economy and what's going to happen at the border and you've all seen the same reports that I have in that respect so let's carry on then to how that translates into a budget going forward in terms of the bottom line I told you about how we get to 1.45 for the fiscal year soon to end going forward we are anticipating a fifth consecutive surplus budget and surpluses that again I would characterize as modest but plausible I've always thought that we should be planning and targeting in excess of 200 million that's another I suppose degree or layer of prudence that I try to work into the budgeting process but that's what we have going forward I can tell you that there are in addition to the forecast allowance allowances contingencies of 400 million and then 300 million in the out years that form part of the fiscal plan in terms of some of the things that you'll be looking and I'd want to highlight our operating debt you can see continues to decline and we are now at the end of the fiscal plan if we adhere to the targets that we have set for ourselves and we have a pretty good record of achieving those targets we will have the lowest operating debt at any time since 1982 and within our grasp is the total elimination of the operating debt for the first time since 1975 and it's an achievement to be sure if we go to the other traditional measurements of debt affordability you can see the debt to GDP ratio which is tracking along at very comfortable this is where we were back in the 15-16 budget and we had targeted getting to 15.9 we are getting there earlier than we thought we would so that's good news on the debt to revenue front you'll see that is tracking upwards I will say this that is probably the top end of where we're going to allow ourselves or want to allow ourselves to get in terms of the debt to revenue matrix because beyond beyond 95 we begin to put our AAA credit rating at risk and we have no intention of doing that and so you will see us paying particularly close attention to the debt to revenue numbers in terms of growth in spending and expenses you can see that the solid line continues to flow above the dotted line which is a good place to be growth revenue tracking at 2.3 expense at the moment 2.4 and you can see the bump here by the way in the fiscal year that we were just in the midst of closing out healthy infrastructure spending in the fiscal plan in terms of taxpayer supported infrastructure almost 14 billion over the life of the plan you can see from the chart how it is parceled out some of you may have questions and there's material in the budget about some of the projects that that includes there's a table in there the over 50 million dollar table I can't remember which one it is but you can track and there are some new projects that have been added to that list things like the Royal Inland Hospital and others when you roll in when you roll in the self-supported capital investment that number becomes 24.5 billion over the life of the fiscal plan and that includes BC Hydro obviously site C and would also include the George Massey bridge project once you roll in the self-supported capital investment that is taking place it is certainly record levels of capital investment how does that translate on the the overall debt front for taxpayer supported debt you see a couple of things in this chart first of all contrary to what a lot of people may have thought or think you'll see that for 1617 taxpayer supported debt in total is actually decreasing year over year from where it was you see in the red the direct operating debt continuing to reduce to where it will be at the end of the the fiscal plan and our expectation that in the following year it will disappear all together and in terms of how that positions us vis-a-vis other jurisdictions in Canada I would say this and I do emphasize this we track this very carefully and we're proud of how we compare to other jurisdictions I got a some data the other day if I had put if I had put Alberta beside us which as you know for many many years boasted the fact that they were at virtually zero by next year we will be virtually identical Alberta's rapid rapidly rising and ours is stable and continuing to drop marginally so we're well positioned the other the other thing that I try to emphasize to British Columbians and others and it relates to this next bit you can see I mean we are squarely now the along with Canada the the triple a outlier and people they only I know you always say that the young the reason I say it is because if we had Ontario's debt to GDP ratio for our economy and if we had their credit rating you could take over two billion dollars out of the budget and send it to the banks because that's what our debt servicing costs would be so it is not just for bragging rights it is because we get to make way more positive choices by hanging on to our triple a credit rating and trying to manage as responsibly as we can imagine what the budget would look like with two billion dollars more than two billion dollars ripped out of it and dedicated to to debt servicing costs okay in terms of the the budget the budget itself I would summarize and characterize it this way folks we are endeavoring to marshal that fiscal strength that I've described to you we are trying to ensure that we are providing the funding and the support necessary to families to government services particularly in areas where the need is greatest and where there has been some pressure as well we are endeavoring to return some of that fiscal some of the benefits of that fiscal strength to be see families themselves so you see here in terms of children families and those in need the investments that are taking place the education sector the education K-12 ministry I'll come back to this in a moment almost three quarters of a billion dollars additional on the home home support home housing affordability front significant ongoing investment there the BC tech strategy tech having been just a tremendous success story for all of British Columbia but here we are in southern Vancouver Island and particularly true here and additional monies for parks and parks and environmental protection strategies if we go to the first of those categories you see the breakdown for support services for vulnerable youth special needs you heard on Friday about the increase to disability rates that is included in the budget to take effect on on April the first of this year we want to ensure that there is sufficient fiscal wherewithal within the the relevant social ministries to deal with increased caseload pressures yes we are seeing more people coming to BC from parts of the country that are not enjoying the same level of economic prosperity and that is putting pressure on putting pressure on caseloads and as well an investment to create an additional 2000 home care spaces to add to the the 13,000 that we have targeted earlier as part of our as part of our plan initiative around home care on the K to 12 education front you will see that we are including additional monies to protect and maintain rural schools to ensure that people don't have to pay for the busing that their children need to get to school in more rural areas of the province the one I really want to focus on though because I expect there would be questions so what you will see in the budget documents as a line item is over the life of the fiscal plan the cost associated with the interim agreement that has been reached with the BCTF that is not a final agreement we understand that I understand that there is money within the the budget to address the the ongoing negotiations that are taking place but it is a negotiation and I will say again I I thought it would be inappropriate for me to stand here and tell you while those negotiations are ongoing that here's how much it's going to cost the cost will be determined by the negotiation I'm told that the discussions are productive at the moment and the parties are hopeful about reaching a settlement and there will be there are monies in the fiscal plan to ensure that that final settlement can be can be financed on the housing affordability front you know about the unprecedented level of investment that has taken place thus far and it really is unprecedented over over 5,000 units of housing for a wide range in partnership with with groups and different agencies some the private sector some governmental and as well the BC home partnership that is already providing dramatic support significant support to first-time home buyers looking to get into the the market we think it'll be upwards of 42,000 families that first-time home buyers that benefit and as well I can tell you today that for first-time home buyers additional relief with respect to the property transfer tax the threshold for exemption total exemption was 475 it is now going up to $500,000 to be totally exempt from the payment of the property transfer tax on for a new purchase by first-time purchase by a family health when I got here in 94 and remember what the health budget was in 94 6 billion in the relatively short time that I have been around here I mean by the end of the fiscal plan it'll be 20 billion so I I mean I I only offer that because there are lots of things to be critical of the choices we make but please don't anyone tell me the health care budgets being cut it's on its way to 20 billion now what I can tell you about this budget is in addition if we took if we took the budget amount for the health ministry for 2016 and did a calculation of cumulative in fact impact of what is being added in for the three next years of the fiscal plan that would represent an additional 4.2 billion dollars to be fair last year's fiscal plan included increases it wasn't going to be the same amount for three years but the increase has been increased so in addition to the increases that were included in last year's fiscal plan for 2017-18-18-19 there is an additional 900 million dollars added to that increase for health in this in this fiscal plan but there you go it's it is a huge part of the budget this year 41% oh I should say this some of you may not have heard me say this when the agreement was signed with Ottawa on Friday the the revenues associated with that are not in your budget documents they had been printed quite frankly by then so when we do the or that's a little bit presumptuous when there is a first quarter update this summer the the results of that agreement of the fiscal consequences of that agreement will be built into the the plan it's obviously upside upside adjustments in a variety of areas we are seeking to allocate and target additional funding in mental health particularly with respect to to young people and you see the the investments that are budgeted for going forward with respect to with respect to mental health which then takes us to the the part of the budget I suppose that garnered a lot of attention and that is the question of giving back and what mechanism would the government choose to do so having made the decision to return some some funds some revenues to taxpayers or I guess more to the point leave it with them in the first place and the the instrument the mechanism we have chosen is medical services plan premiums and by now most of you will have leafed through your material and know that we are instituting a dramatic cut in in premiums as part of a strategy to ultimately eliminate them all together and that is the objective what we can afford to do today is to cut in half the premiums that households earning less than $120,000 are paying two million British Columbians won't pay any MSP another two million will have their premiums cut in half and in virtually all instances save and accept one and the examples are contained in your budget book in a chart people families will be paying rates that are comparable to those that were set in 1992 the the two charts I have for you relate to the impact of this decision and by the way yes it starts on January the 1st of 2018 for the individual learning 25,000 here she will no longer pay any MSP premiums for the person earning 30,000 there's will be reduced by over $200 I mean you can go through it until the person in the in the 60 to $120,000 range sees their rates cut in half from 900 to $450 for a family with a couple of kids all the way up to $35,000 they're not paying any MSP premiums any longer and you see the savings at the various income levels along the way until you get to the point where that family and there are many of them will be saving $900 so the cumulative impact of that coupled with the fact that for the remaining households who earn excess of 120,000 we have frozen the rates translates into foregone revenue or monies that remain with British Columbians of over a billion dollars and that is the the instrument by which mechanism by which we have chosen to return to British Columbians the benefits of our strong economy and strong balance sheet some of you will recall that we commissioned the tax commission on competitiveness in the past year they came back with some recommendations most of which related to some of which related good chunk of which related to the the PST one of those recommendations highlighted the fact that British Columbia was the only province charging PST on electricity we have decided to address that in in this budget and over in a two phase two step approach will be reducing and ultimately eliminating the PST chargeable on electricity it's about 164 million dollars in foregone revenue it breaks out small business about 50 million larger businesses about 51 million and large industrial users just under 50 million there's a actually a positive impact for the government itself to around that as well the small business corporate income tax rate will drop by half a point to 2% we will have the second lowest corporate small business corporate income tax rate in the country after Manitoba whose rate is zero beyond that a variety of a few more initiatives that I I thought I would I thought I would highlight for you in terms of economic development and rural rural support and initiatives connectivity remains a priority the some additional funding for economic development on Vancouver Island the six million dollars for the by local program will become a permanent feature of the agriculture budget we are as part of our strategy around market diversification continuing to aggressively promote our presence in partnership with the private sector particularly in in Asia and ASEAN and South Asian countries and you see the the reference here and in the past you have heard me talk about our supports and partnerships with the aerospace and shipping sector and that will continue into the the future in terms of the environment we the the park strategy including the hiring of more park rangers the establishment of 1900 more campsites the mines and energy energy and mines ministry receiving additional resources money to hire the people they need for additional permitting and oversight capacity caribou recovery program this is a part of the environmental landscape that continues to to struggle and providing additional resources there we thought was important invasive plant management it's someone asked me about the about the SPCA I couldn't decide where to put that one so no anyone be confused or offended but we have a partnership that has been I think well received to ensure that communities have the reasonable facilities via the SPCA to look after look after animals and on the climate leadership plan you see the I mentioned earlier the forest enhancement society work the clean energy vehicle program the forest carbon initiative all funded as part of part of this budget so finally I'll and where I think I began which is by saying we are proud of the fact that BC has led Canada that our balance sheet is the envy of the nation and our economic performance is the envy of the nation and we have sought to ensure that British Columbians realize the benefits of that because they're the ones that made it happen and we wanted to ensure that we were funding the services that British Columbians need certainly health care but also in other areas like child protection to address some of the areas of pressure to ensure that Grand Chief Ed John's recommendations are are acted upon we want to do that and are pleased that we can without developing or creating a deficit for our kids and grandkids to inherit we wanted to reduce the burden facing British Columbia families and have done so by addressing an instrument that attracted a lot of has attracted a lot of negative comment by virtue of the fact that we were the only province with an MSP in the form that we had in BC and we also want to ensure that we continue to construct the infrastructure that are growing economy nation leading economy requires to to go forward and all of that we wanted to do whilst at the same time maintaining a responsible balance sheet and our debt metrics and preserving our triple A credit rating and we are optimistic and believe that we have accomplished those objectives and I thank you for your attention and we'll return for some of your questions momentarily. Thank you.