The sa国际传媒 government has big plans to grow the government, but no real plan to grow the economy.
That was how the Business Council of BC (BCBC) characterized the budget that sa国际传媒 Finance Minister Katrine Conroy handed down Tuesday.
While credit rating agency DBRS Morningstar continued to give sa国际传媒 a AA credit rating, following Tuesday's budget, which includes a projected $4.2 billion deficit, business groups in sa国际传媒 generally criticized Conroy’s plan for its deficits and lack of supports for businesses.
The budget is heavy on social spending and light on policies businesses feel are needed to keep sa国际传媒 competitive. And it bakes in deficits for the next three years at least.
About $2 billion of a $5.7 billion surplus projected at year’s end had already been claimed by Premier David Eby for a range of one-off spending announcements, leaving Conroy with a $3.6 billion surplus. Despite that surplus, Conroy handed down a budget Tuesday that will outspend government revenues by $4.2 billion.
“We are putting that surplus to work for people,” Conroy said Thursday in a post-budget debrief with the Greater Vancouver Board of Trade (GVBOT).
While the GVBOT and other business groups have generally welcomed some of the increased spending for things like health care, mental health and addictions and housing, businesses had hoped for some relief, like changes to the employer health tax that about 75 per cent of GVBOT members pay.
“I think our members would agree that there are necessary investments in health care, mental health, housing and training,” GVBOT CEO Bridgitte Anderson said in a question and answer with Conroy. “But really seeing some concern about the return to deficits and surge in provincial debt.”
“We didn’t see any relief. In fact, we saw a massive increase in the carbon tax," Anderson noted.
The carbon tax will increase by $15, bringing it to $65 per tonne, in April. That will increase government revenue by $600 million in 2023, bringing carbon tax revenues to $2.8 billion.The tax will continue to rise by $15 per tonne per year until it hits $170 per tonne in 2030.
Despite the fact a single large LNG project – LNG sa国际传媒 – has been estimated to generate $23 billion in benefits to the government over its lifetime, the nascent LNG industry barely gets a mention in the provincial budget.
The budget notes that anticipated increased export values in 2025-26 are partly attributable to LNG, otherwise anyone reading the budget could be forgiven for thinking sa国际传媒 has no LNG industry.
Asked about that silence, Conroy said it’s not a budget issue, but a permitting issue, and reiterated the NDP’s policy on LNG, which is that LNG projects might be approved, but only if they pass the NDP government’s litmus test, which includes fitting within the CleanBC carbon budget.
“Any new LNG projects will have to follow our five policies that we brought in around LNG,” Conroy said. “LNG sa国际传媒 has done that.”
Despite the fact LNG sa国际传媒 is expected to begin exporting LNG in 2025, Conroy’s budget doesn't appear to anticipate any increased revenues from it. In fact, it actually anticipates natural gas royalties will shrink to just $1.5 billion in 2025-26, compared to $2.2 billion in 2022.
One spending program in the budget that will benefit businesses is a $480 million Future Ready Plan, which Conroy said is designed “to close the immediate and long-term skills and labour supply gaps.”
“We have heard from businesses, across the sectors, that their biggest challenge right now is finding skilled workers,” Conroy said. “Our plan will help employers access the talent they need, including funding to assist small and medium-sized business.”
Details of the plan will be forthcoming later in the spring.
For heavy industry, one of the more significant policy changes with budget implications is a new output-based pricing mechanism for carbon pricing. The new carbon pricing mechanism for heavy emitters – i.e. pulp mills, smelters, cement plants, mines – won’t take effect until 2024, and details on how it will work are still being worked out.
An output-based pricing mechanism for carbon taxes is something the Mining Association of BC (MABC) has pushed for almost as long as sa国际传媒 has had a carbon tax. As long as competing jurisdictions didn’t have carbon pricing – including other Canadian provinces – it put sa国际传媒 pulp mills, cement plants and mines at a distinct competitive disadvantage.
The industrial carbon pricing mechanism will generally reward industries that can reduce emissions intensities with lower carbon tax rates.
But the devil will be in the details, said MABC CEO Michael Goehring, and so far there are no details on how the new output-based pricing mechanism will actually work.
“The introduction of a new carbon pricing model for sa国际传媒 mines and other industries in Budget 2023, that was a welcome and positive step,” Goehring said. "But more focus and resources are urgently required to speed mine permitting authorizations, build new mines and grow the economy for British Columbians."
