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B.C. government sees need to spend big; $71 billion budget, $5.5 billion deficit

In its latest budget, the B.C. government has earmarked billions for infrastructure upgrades, health care, climate change, childcare and housing.
Attorney General David Eby, left, and Premier John Horgan look on as Finance Minister Selina Robinson delivers the budget speech in the legislative assembly at legislature in Victoria, B.C., on Tuesday, February 22, 2022. THE CANADIAN PRESS/Chad Hipolito

B.C. Finance Minister Selina Robinson delivered a budget Tuesday that emphasizes spending, on the heels of an economic forecast showing B.C. weathered the storms of the pandemic, fires and floods better than expected in 2021,

The budget calls for $71 billion of spending with a built-in deficit of $5.5 billion.

“We know that we are at our best when we work together and look out for each other,” Robinson said. “The scale of the problems we have seen recently — from the ongoing pandemic to the devastating effects of climate-related disasters — require government leadership and collective action.

“We know that the strength of our economy is intertwined with the well-being of people communities and the climate.”

The budget includes billions to address infrastructure upgrades, health care, climate change, child care and housing.

Robinson defended the massive change from a $483-million deficit in the 2021-22 fiscal year to a projected deficit of $5.5 billion in the coming year, saying while there were some improving revenue numbers, the province also received one-time federal relief funding that added to the bottom line.

Last fall, Robinson forecast a budget deficit of $1.7 billion for the 2021-22 fiscal year, down from an original projection of $9.7 billion.

For the coming year, the finance minister is forecasting four per cent economic growth.

She said expected increases in the public service reflect the need for more doctors, nurses, care workers, paramedics and wildfire fighters, and that the province needs new schools, hospitals, urgent care centres and a significant investment in aging transportation infrastructure that took the brunt of natural disasters last fall.

Robinson told reporters not only does the government have to repair the roads and bridges, it has to ensure they are built to withstand future disasters and climate change.

The budget includes $2.1 billion for disaster-recovery efforts and future response to the threats posed by wildfires, floods and heat waves.

Robinson said the budget does not include a total estimate of the recovery costs for last year’s natural disasters, but she included a $1.1-billion contingency fund to cover future costs.

New money is earmarked for surgeries, medical centres, paramedics and emergency dispatchers. An extra $3.2 billion is dedicated over three years to “build an even stronger” health and mental health-care system, said Robinson.

The budget announced $284 million to help cut average child care fees by 50 per cent to $20 a day by the end of 2022, and the average pre-school fee to $20 a day by September 2023. The budget also promised 30,000 new spaces for children under the age of six within five years, and 40,000 new licensed spaces in the next seven years.

It includes $633 million to address homelessness, primarily through providing more secure housing and support options for vulnerable people.

The province has earmarked $27.4 billion over three years for infrastructure improvements, which means thousands of jobs as new schools, hospitals, transit and roads are built and rebuilt.

There’s $185 million to help people affected by the deferral of old-growth logging, $289 million over the next five years to expand high-speed internet access, $67 million in skills and jobs training, and an accelerated $100 million to fund mixed-income rental housing.

The province has created a new Declaration Act Secretariat, with a $12-million budget for the next three years, to ensure provincial legislation is aligned with the United Nations Declaration on the Rights of Indigenous Peoples.

Robinson said reconciliation is a process that takes time and she hopes the secretariat and a new Land, Water and Resource Stewardship Ministry will support reconciliation and address how the province works with First Nations on land and water issues.

On the environmental front, the budget includes an additional $1 billion over three years to fight climate change and implement new initiatives, such as $9 million to expand the Low Carbon Fuel Standard and to develop a new emissions cap on natural gas utilities.

For the province’s drivers, there is a PST exemption for used zero-emission vehicles and a higher threshold for luxury surtax on passenger zero-emission vehicles up to $75,000, as well as $79 million to provide rebates for electric-vehicle charging systems, fund hydrogen refueling infrastructure and support commercial vehicle pilot projects.

Bryan Yu, chief economist with Central 1 Credit Union, said he was surprised that the operational deficit remains generally near levels from budget 2021, despite strong revenue projections reflecting the higher expenses that are incurred. Expenses are up about six per cent from that budget, he noted.

Yu said there are sufficient contingencies and forecast allowances built in to suggest that a balanced budget will still likely be achieved, given that budgets tend to employ conservative forecasts, though he added that it lacks a “clear economic plan” for boosting natural resources and increasing productivity.

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B.C. budget main numbers

• Deficit $5.5 billion in 2021-22; $4.1 billion in 2023-24

• GDP growth forecast of 4 per cent in 2022 and 2.5 per cent in 2023

• Total debt $91.55 billion in 2021-22, $105.4 billion in 2022-23

• Budget spending $71.01 billion in 2021-22 and $72.4 billion 2023-24

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B.C. budget climate initiatives

More than $1 billion in new funding for CleanBC and the Roadmap to 2030

• $9 million over the fiscal plan to expand the Low Carbon Fuel Standard and to develop a new emissions cap on natural gas utilities

• PST exemption for used zero-emission vehicles effective now until 2027, and a higher threshold for luxury surtax on passenger zero-emission vehicles, up to $75,000

• Motor fuel tax exemption for the use of hydrogen in internal combustion engines

• $79 million to provide rebates for electric-vehicle charging systems, fund hydrogen refueling infrastructure and support commercial vehicle pilot projects.

• Making grants totalling $30 million available to local governments to improve active transportation infrastructure

• Authorizing $249 million in Low Carbon Fuel Credits to continue light-duty zero-emission vehicle rebates

• $5 million over two years to continue the Heavy-Duty Vehicle Efficiency Program

• Introducing a Clean Buildings Tax Credit to encourage major retrofits for multi-unit residential and commercial buildings

• Introducing a PST exemption on heat pumps, paired with an increase to the PST on fossil fuel heating equipment to 12 per cent

• $310 million in industry incentives to de-carbonize to maintain competitiveness, while reducing emissions and preparing for requirements to be net zero by 2050

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B.C. budget initiatives to deal with homelessness

The budget includes $633 million to expand services to tackle homelessness:

• $35 million over the next three years to respond to the heightened risk of homelessness faced by former youth in care

• Starting in 2022-23, temporary housing and support arrangements that had been provided in 2020 will be made permanent

• $600-a-month rent supplements to be introduced for those in those temporary housing space

• A new $600-a-month rent supplements for more than 3,000 people over the next three years to help them become stably housed, with integrated wraparound supports. Details of that plan have yet to be mapped out.

• Doubling the current number of community integration specialists to help people experiencing homelessness navigate government programs and available supports in communities throughout the province.

• Expanding the Complex Care housing model to at least 20 more sites throughout B.C. through an investment of $164 million over three years; this will support up to 500 people with severe mental health, substance-use issues, or traumatic and acquired brain injuries

• $264 million over three years to ensure housing support continues for the up to 3,000 people who were temporarily housed in leased or purchased hotel and other spaces during the COVID-19 pandemic