B.C. to continue spending, deficits expected in coming budgets

B.C.'s provincial government is spending the 2022 surplus and despite a worsening economic outlook, says it will continue spending, likely right into deficit.

At a meal program for students Monday, Finance Minister Katrine Conroy acknowledged the province has been serving up a healthy dose of spending.

"We will be spending surplus dollars probably right up until March 31,"' she told reporters.

Since Friday, Premier David Eby announced money to speed up cancer care and $500 million to make sure BC Ferries fares don't rise too steeply. In the fall, the province projected a nearly $6 billion dollar surplus for 2022. Whatever isn't spent by year-end automatically goes towards paying down the debt. For the 2023 year, it appears the spending won’t stop even though an unexpected tax windfall which led to the surplus, won't repeat.

"We are thinking that that we will probably have some deficits in the coming years," added Conroy.

Stewart Prest, a Vancouver-based political scientist, called the decision to continue spending a calculated risk.

"Particularly after running surpluses. To go from a $6 billion surplus to a significant deficit in the space of a year, that that's more noticeable," he said.

Balanced budgets are something B.C. politics is particularly concerned with. Former premier Gordon Campbell brought in a law to make sure governments didn't spend more than was coming in.

And since coming to power in 2017, the NDP has been trying hard to be seen as good financial managers. With pressing and widespread issues like increased inflation, an ongoing housing crisis, and a struggling health-care system – Eby is signalling that his priority is to lend a helping hand.

Prest said while the effects of a health-care system in crisis are felt differently across the province, he thinks British Columbians may be okay with a deficit to address those issues – as long they see results.

"Health care is effectively part of the Canadian identity. And so when the health-care system isn't working, I think there is a greater tolerance for governments to go out on a limb to spend that money to build the system back," added Prest.

Eby's also promising a massive investment in homes for the middle class. That's something Andy Yan, director of the City Program at Simon Fraser University, is watching for.

"I think that this is again that initial down payment towards the government and public policy of Premier Eby," Yan said in an interview with CTV.

He also says the budget could foreshadow new laws and or new taxes when it comes to housing issues like regulating short-term rentals or preventing property flipping.

A flipping tax and plans to address short-term rentals are some of the promises Eby has made.

Yan added the three things that impact the real estate sector include supply, demand, and financing. He said factors like Bank of Canada interest rates, and inflation are beyond the province's control.

Yet he acknowledged, Eby was attempting to address supply. Still, he said those who are housing insecure may face additional challenges when the economy slows. Renters, for example, will need policies that protect them from bearing the brunt of a wider downturn, Yan said.

In a throne speech earlier this month, the government outlined its plan to introduce two new affordability measures targeting parents and lower-income residents. It's unclear if the NDP's long-promised renter's rebate will come to fruition.