Historic deficits brought on by unchecked government spending will cause long-term damage to the provincial economy and imperil B.C.’s competitiveness, says the Independent Contractors and Businesses Association (ICBA), Canada’s largest construction association.
The B.C. Budget, released today by Finance Minister Katrine Conroy, projects $27.9 billion in cumulative operating deficits over four years, with no discernible path back to balance or surplus. Each of the four annual deficits ($5.9B in 2023/24, $7.9B in 2024/25, $7.8B in 2025/26, and $6.3B in 2026/27) is higher than the former B.C. record deficit of $5.5 billion – incurred during the worst of the COVID-19 pandemic.
“These operating deficits will severely limit British Columbia’s ability to respond to future economic shocks and pursue economic development opportunities,” said Jock Finlayson, ICBA Chief Economist. “Absent a recession – which the provincial government denies is here, despite B.C.’s per-capita GDP basically stagnating for seven years – there is no justification for covering government operating costs through borrowing.”
While the B.C. Government is increasing its total capital spending to $56.5B over three years, the updated list of under construction projects includes several with completion delays and cost overruns.
“The B.C. Government, by giving a monopoly on significant work to just the 15% of the construction industry represented by the traditional building trades unions, continues to grossly overpay for infrastructure,” said Chris Gardner, ICBA President. “At a time when we need more schools, hospitals, roads and transit, government should be using the power of fair, open, and competitive bidding to stretch taxpayer dollars as far as they can go.”
Some modest tax changes were announced, including raising the Employer Health Tax threshold to $1 million; directing BC Hydro to reduce rates for electricity; exempting new, purpose-built rental buildings from Property Transfer Tax (PTT); and offering higher PTT thresholds to first-time home buyers and new home purchasers.
However, the carbon tax – the centrepiece of the government’s CleanBC plan – will jump again from $65/tonne to $80/tonne in 2024, driving up the cost of gasoline, diesel, natural gas, and other energy and indirectly putting upward pressure on the cost of food and other goods produced in the province.
“While the EHT exemption lift will be welcomed by some small businesses, it’s a drop in the bucket compared to the costs government has added to job creators in recent years – which the Greater Vancouver Board of Trade recently pegged at more than $6 billion,” said Finlayson. “With the economy wobbling and many businesses struggling, now is not the time to increase business costs through CleanBC.”
Despite the province’s Economic Forecast Council of professional, private sector economists flagging the urgent need for the B.C. Government to focus on increasing productivity including in construction, the government took no action. And there was no plan or mention of how to replace $100 billion of investment as projects like Site C, Coastal GasLink, LNG Canada and TransMountain come to completion in 2024.
“The project approval process in British Columbia is painfully slow. As a result, investors are reluctant to commit the time, the energy, the capital, to make the investments required to fund major projects in B.C.,” said Gardner. “The government should commit to making current regulatory regimes for project development and day-to-day permtting more efficient and predictable. It should also be looking to provide incentives that broadcast that British Columbia is open for business. This budget fails again to do so, and BC’s future will be worse for it.”
