What could be and what should be in today’s provincial budget are two different questions and economists themselves are divided.
Marc Lee, senior economist with the Canadian Centre for Policy Alternatives, said he doesn’t have high expectations for the budget, but will be paying close attention to three policy areas: housing, addictions and mental health, and climate change and related energy issues.
“We would love to see much more provincial emphasis in spurring the development of non-market housing,” Lee said, adding government has already announced many of its housing-related legislation, the last major piece being a flipping tax.
Lee added that BC Builds strikes him as “fairly modest,” mostly re-purposing the BC Housing Hub.
Government also needs to do more to support people looking for treatment, he said, pointing to the crisis of addiction and mental health linked to homelessness and poverty in B.C.’s major cities.
“Even in rural areas around the province, this has become a really major problem,” he said. “We have seen a patchwork of measures brought forward, but the simple thing of funding treatment beds needs to be the top priority.”
Lee will also pay attention to measures to fight climate change.
“(We) are still very far away from the trajectory we need to be on in order to meet the legislated greenhouse emission reduction targets that we have.”
With the carbon tax set to rise on April 1 by $15 to $80 per tonne, Lee would like to see all of the additional money go toward the fight against climate change, including a higher climate action tax credit for low-to-middle-income earners.
Lee said he does not expect any major changes in other areas such as health care and social services.
“They need to grow by about 6 or 7 per cent per year just to stay level with population growth and population aging,” he said. “So that’s almost baked into the budget.”
When asked for an issue where spending money is both good politics and policy, Lee called for additional investments in transit.
“We need to do it because of our greenhouse gas emissions, we need to do it because we are planning to add a lot more people in the big cities and across the province and we need people to get around. (We) can’t double or triple the number of cars on the road because it’s already a major gridlock situation.”
Reducing the number of cars would also save families thousands of dollars, he added.
Lee also disagrees with economists, who have expressed concern about B.C.’s debt level heading into the budget.
“B.C.’s overall debt-to-GDP ratio is 17 per cent as of the second quarter, that’s probably one of the lowest in the country,” he said. “That’s very servicable,” he said.
Ultimately, Lee expects a document that is both a statement of financial facts and an election promise.
”It gives you an economic projection and a fiscal projection, but yes, we are in an election year and that matters,” he said. “So really it’s more around the psychology within the NDP.”
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Ken Peacock, senior vice president and chief economist at Business Council of British Columbia, said the government faces a lot of pressure to spend.
“They have already housing announcements, so they will solidify that,” he said. “There will be more spending for health care, but that is almost to be expected. The fact that it is a pre-election budget suggests to me that they will be spending rather freely.”
This said, the realities of a global economic slow down will challenge government, Peacock said. The economy slowed down in 2023 and will slow down even more in 2024. Ultimately, a slower economy both at home and abroad means diminished revenues for government just as it faces more demand for additional pre-election spending, he added.
“That’s going to be challenge for them,” Peacock said in predicting another deficit this year, something Finance Minister Katrine Conroy confirmed Tuesday.
“It would be a pleasant surprise if they had indicated that there was some sort of fiscal anchor and may be a clear pathway back to a balanced budget. I think that’s important, especially as provincial debt continues to accumulate.”
Peacock added he expects more capital spending to be announced against the backdrop of what he called “very, very large increases” in capital spending on schools, hospitals and some transportation infrastructure. “(Which) will add to the debt further,” he said, adding that he will be looking closely at the debt-to-GDP ratio in the face of rising interest rates.
Peacock said BCBC would very much like see “some strong signals and even some tax reductions” to improve B.C.’s economic competitiveness. “The cost of doing business is getting very, very onerous here in B.C.,” he said in pointing to what he considers to be high taxes in various areas.
“We might some movement on the Employers’ Health Tax to increase the (tax exemption) threshold,” Peacock said. “I don’t think it would cost much money and it would add some relief.”
Peacock, a critic of the provincial carbon tax and a proponent of natural resource projects, would also like to see government re-calibrate the climate policy agenda.
“It’s going to be destructive and very difficult for capital investment as the carbon tax continues to rise,” he said.
When asked for an issue where spending money is both good politics and policy, Peacock said the housing situation needs to be addressed. While is it difficult, if not impossible, to lower housing costs by increasing supply, more has to be built, Peacock said.
“Obviously, zero (new housing) is not the right number,” he said. “More needs to be done.”
He also pointed to investments in transportation infrastructure with the emphasis on highways but also some spending on rapid transit.
