In most any other year, the revelation that there will be years of provincial deficits ahead would be part of the path of a government certain to fall.
In the pandemic years, though, public opinion suggests the John Horgan government, like its counterparts, gets a pass on this news.
And in getting that pass, the B.C. NDP can use the window of opportunity to spend not only on our safety in the COVID era but a host of other issues it would have otherwise found difficult politically to finance.
Confusion is in no small supply if you’re searching for devils in the details. In the last week the province has announced a grand economic recovery plan insufficiently spelled out financially, then followed Tuesday with a provincial budget in which Finance Minister Selina Robinson proclaimed the economic recovery largely over.
Hey, which is it?
What one suspects is that last week’s recovery plan was really a guise for a public sector expansion plan awaiting tax dollars in years to come.
A clue on where the province will try to find the money: real estate, the goose and golden egg the government cannot quite kill despite best taxation efforts. The budget noted that the province collected four times its expected bounty from property transfer taxes, some $3.25 billion in the last year.
In the same way the province had little idea two months before the pandemic struck in 2020 how it would mend the imminent economic disruption – then-finance minister Carole James had no answer when I asked about it on budget day – it appears to have little idea two years into the pandemic how to predict its cash flow.
A year ago Robinson’s crew thought we’d be in the red nearly $9.7 billion for the fiscal year about to end, but the deficit will land at $483 million. It’s consolation that the numbers aren’t reversed, but that’s a big miss.
The better-than-expected financial results – owing mostly to a one-time federal (a.k.a. taxpayer) infusion – might be short-lived. Robinson is projecting this will be the best performance we can expect for at least four years, with projected deficits of $5.5 billion for the 2022-23 fiscal year, $4.2 billion in 2023-24 and $3.2 billion in 2024-25.
Let’s cross our fingers she is as wide of the mark regularly in the years ahead as a bad beer league hockey team.
The good news is that there were no new major taxes Tuesday, although it’s not a good time to plan for a natural gas furnace or to be leasing goods, services or software as a business.
And driving and smoking: not cheaper. Are they ever?
The bad news is that there were no new tax reductions or any signal that we can expect a serious examination of tax competitiveness. The clamour by business groups has been greeted with crickets for cricket-generations now.
As long as our scenery doesn’t burn to the ground or get washed away – and there is money set aside if it does, it is assumed – we will continue to pin our hopes on attracting people to British Columbia and taxing them in the upper echelon nationally. This, while on a path of public expansionism through non-private models for infrastructure, labour, child care and health care and an accelerated investment to mitigate the effects of climate change.
The full hit isn’t evident in the Tuesday document, but it will be a steadily enlarging spend.
British Columbian debt, a term that was not long ago subdued by surpluses, is now what Robinson calls “a concern we will monitor closely.” It should be more than monitored. Projected debt will have nearly doubled in a decade by 2024-25 to more than $125 billion, even if the debt-to-GDP ratio (an economist favourite measurement) is better here than elsewhere in Canada.
Again: in a pre-pandemic context, there would be much greater gnashing of teeth about this. But if governments have succeeded in what The New York Times has called the “anti-ambition” era, it is that public sentiment can be secured with the anesthetic of our own money.
This government may consider the economic recovery as pretty much mission accomplished. It pins its hopes on it, at least, because the pandemic interrupted its larger plans and every nickel will be needed for those in due course. Wait and see.
Kirk LaPointe is publisher and editor-in-chief of Business in Vancouver and vice-president, editorial, of Glacier Media.