A Budget That Avoids the Tough Decisions

Tuesday’s B.C. budget left the NDP government looking adrift, aware things have gone wrong but without any real idea what to do about it.

Instead, they kicked the problems down the road in the hope that something will miraculously happen that makes them go away.

Which works about as well for governments as it does for families sinking in debt.

The budget forecasts a record $13.3-billion deficit. Revenue is going to be basically flat — up one-half of one per cent this year.

And spending is going up 4.4 per cent.

There is nothing inherently wrong with deficits. When economic hard times hit, government spending can protect services and reduce the impact of the downturn. Borrowing money to invest in programs that will cut costs in future can be smart. Imagine the future savings in health care, policing and lost potential from a program aimed at slashing homelessness.

And the NDP governments have faced real pressures, from COVID to Trump’s trade wars to sudden federal immigration policy changes.

But from the 2023 fiscal year, with its $5-billion deficit, until the 2028 fiscal year, the government plans six big deficits totalling more than $60 billion.

That is, just like any debt, money that rings up interest charges each month. In 2023, the interest charges were 2.4 cents out of every dollar the government spent. The current fiscal plan plans for that to increase to 8.2 cents by 2028.

The other problem for the government is that all that spending hasn’t resulted in a better life for people. Hospitals are crowded and ERs are closed. Homelessness is worse and the government has failed to make any real progress on the toxic drug crisis. It’s hard to point to government successes in areas that people can see on a daily basis.

Finance Minister Brenda Bailey took great pains to stress that this wasn’t an “austerity budget,” one focused on cuts in response to the growing debt.

But it’s certainly flirting with austerity and setting the stage for a harsher approach in the next two years of the three-year plan.

The health budget, for example, is expected to increase 3.1 per cent in each of the next three years. That’s not enough to cover the wage increases under the new collective agreements and certainly not to address the current problems that have reduced essential care.

And post-secondary education and skills development will get a two per cent increase in this fiscal year and then effectively be frozen for the next two years. Again, that won’t cover mandated salary increases or provide schools with funding to deal with the crushing loss of revenue from international students.

The last two years of government fiscal plans tend to be sloppy. But these seem entirely based on the power of wishful thinking.

And if the budget numbers are wildly unrealistic, then so are the claims the deficits will shrink from $13.3 billion in this fiscal year to $11.5 billion two years from now. (Which is when the next election is scheduled.)

The government also said it would reduce the number of employees in the public sector, but not in any way that comes close to being an austerity measure. About 598,000 people work for the government. The job reductions amount to 2.5 per cent over three years.

The NDP government does deserve credit for breaking through the dogma that tax increases are politically impossible. The budget changes are modest and prudent and recognize that revenue is just as important as spending in moving toward a balanced budget.

And it has the great advantage of an Official Opposition with no clear approach to addressing the deficit challenges. Only 18 months ago, the B.C. Conservatives campaigned on a platform that would have pushed the deficit higher than the NDP was then proposing. Now the Conservatives are managing a crowded leadership race that seems focused on re-fighting feuds between federal Liberals and Conservatives and extreme social conservatives.

The NDP government bought some time with an uninspired and uninspiring budget.

Now we’ll see if they can develop real plans to reduce deficits and provide the services people need and deserve.