Feature: Prince Rupert benefits from budget’s focus on Asia-Pacific Gateway

Prince Rupert stands to benefit from many of the budget items meant to grow jobs by expanding trade with asia.

  • Feb. 25, 2012 6:00 a.m.

The provincial government has revealed its budget for 2012, and it was filled with cuts to services and taxes which the Liberals hope will bring BC back to having surplus budgets by 2014.

Over the past few months, the BC Liberals have been lauding trade with Asia through the Asia-Pacific Gateway as a crucial part of the job creation strategy. And job creation is the one place that the government is still willing to spend more money and give out tax breaks.

“We recognized in 2001—as we do today—that our prosperity is tied in part to the fast-growing markets of the Asia Pacific. That’s why we’ve worked with the private sector and the federal government to build the Pacific Gateway and focused on expanding our export markets. Now, with the strategy working, we are essentially accelerating it with the B.C. Jobs Plan,” said Finance Minister Kevin Falcon during the budget speech.

As a critical port in the Asia-Pacific Gateway, the budget items in the Liberal’s Job Plan will affect Prince Rupert more than most communities.




The one with the biggest effect is likely to be the decision to permanently cap the amount of property taxes that BC ports have to pay their municipality. These tax caps have been in place since 2004 and were set to expire in 2018, until now.

“Now we’re making the rate cap permanent—because it’s working. And we will continue to compensate affected local governments,” said Falcon.

Not Surprisingly, the Prince Rupert Port Authority has approved of the decision whole-heartedly saying that the money saved will make investing in infrastructure upgrades easier and provides a stable tax regime that will attract more industries and businesses to set up to set up shop at the port.

“The job growth associated with BC and Canada’s export industries are reliant on the continued expansion of port capacity on the west coast. This move will have a positive effect on the private investment required to build that capacity, and will allow the Port of Prince Rupert to attract new partners who value sustainable approaches to development, says the port authority’s CEO, Don Krusel.

The caps limits municipalities to only tax ports $27.50 for every $1,000 the property is assessed to be worth, while Prince Rupert’s major-industry tax rate in 2011 was $42.60 per $1,000. The province does compensate the city for the lost tax-revenue though. Every year the provincial governments pays out a base-payment of $1,490,251 to the City of Prince Rupert which is adjusted every year for inflation using the Consumer Prince Index.

So how much does the decision to make this scheme permanent affect the city’s financial planning? None at all, says the Chief Financial Officer for the City of Prince Rupert, Dan Rodin.

“We’re under the same regime we were last year so we didn’t expect anything else, so there’s no real change,” says Rodin.

Overall, says Rodin, the system works pretty well. Sometimes it works out in the city’s favour if the inflation adjustment is larger than a tax increase by the city would have been. The downside is that the payment amount doesn’t take into account the value of new additions to the port’s property since the cap was put in place.

“That is a bit of an aggravation ,” says Rodin, ”at the point when this thing came in there was only Ridley Terminals, Fairview Terminal and Prince Rupert Grain. . . Another property comes in such as Mahar Terminals which has made it even bigger, but they didn’t increase that payment at all.”

Rodin says any speculation on whether the city would be getting more money if they were allowed to tax the port the full rate than it does now would be completely hypothetical. But if the city was allowed to tax all of the port’s property as heavy-industry the city would probably get more money from the port than it does with the cap and the provincial payments in place.

“Having said that, the fact that there is a cap probably encourages existing industry to expand. So it’s really, really difficult; is it a good thing for the city? Is it a bad thing for the city? You can argue it both ways,” says Rodin.




The next budget item with a direct benefit to Prince Rupert is the extension of tax credits for businesses who take part in apprenticeship programs, of which there are more than a few in the city. The province is also creating new apprenticeship tax credits specifically for the ship building and ship repair industries.

Doug Mackereth is the owner of Broadwater Industries which, among other things, builds boats including the Port Authority’s new patrol boat the Charles Hays.

Mackereth says he hasn’t applied for tax credits like this before, but says the idea sounds good to him and hopes his current shipbuilding apprentice will qualify for it.

“Anything to help out on the apprenticeships, help the employer out because it’s a costly endeavour to take on an apprentice. If there’s a four year apprenticeship, there at least a couple of years where you don’t make any money on them. A lot of times when they complete their apprenticeship . . . they leave,” says Mackereth.




The budget also promises $3-million in new spending on the Small Business Venture Capital Program. Which the government says will encourage more investors to new start-ups.

“It encourages so-called “angel investors” to put their own capital directly into an eligible small business and offer strategic expertise to help it grow. The $3 million increase will allow for up to $10 million annually in additional equity financing for qualifying new businesses,” says Minister Falcon.

The Prince Rupert Northern View asked both Community Futures and the Hecate Strait Employment Development Agency for their opinions on this measure but neither organization had anyone available who could give their opinion on it.












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