Tuesday’s provincial budget was perhaps the most fateful in recent years. The past 24 months have seen unprecedented fiscal, economic and social wreckage as the COVID outbreak upended every aspect of our lives.
The question going into this budget was whether the government has a plan to return public services to normalcy.
How hard it will be to chart that path is now apparent.
Financially speaking, the road ahead looks rocky. After deficits of $5.5 billion in 2020, an unprecedented figure, and just half a billion last year, this budget projects a deficit in the region of $5 billion in 2022, falling just slightly to $4 billion next year.
Of course the key word here is “projects.” No one knows what might lie ahead if COVID makes a fighting return.
Nevertheless, these deficit numbers are worryingly high, especially since they represent a backward slide from last year’s result.
Finance Minister Selina Robinson has made combatting climate change her leading priority, and with the severe flooding we saw last year, that makes sense.
But after that, just how bare the cupboard is can be seen in the limited funding lifts for key social ministries.
The Ministry of Health’s budget rises from $23.9 billion last year, to $25.4 billion, an increase of just six per cent, sufficient to cover inflation and population growth, but nothing like enough to rebuild a health-care system that everyone admits is broken.
Likewise, funding for K-12 education and post-secondary institutions rises just five per cent. This comes nowhere near meeting the recent upsurge in K-12 pupil numbers, plus the government’s commitment in the throne speech to radically expand trade school places.
There are increases beyond inflation in child care services, and capital spending for rebuilding roads and bridges.
However, against this, debt levels climb to near record levels, a source of concern if, as expected, interest rates rise.
The unavoidable conclusion is that we are still spending well beyond the levels that could be supported by normal revenue growth and projected economic recovery.
While contingency funds are set aside, and these may reduce the deficit numbers if all goes well, how will the government manage when large-scale borrowing becomes no longer viable?
In particular, what lies ahead for the major social services — health, education and child care — which together make up more than half the budget?
All of these, health care in particular, have suffered years of financial duress, as spending has not kept up with demand.
This is not a problem confined to British Columbia. All of the provinces, plus the federal government, are living beyond their present means.
While this made sense during the COVID crisis, a return to sustainable spending levels is nowhere in sight.
Adding to the concern, budget 2022 projects flat-lined revenues. Personal income tax revenues in particular take a hit.
Given the economic stress caused by the COVID pandemic, this was to be expected.
But the projections going forward barely keep up.
The reality is this. We’re scarcely keeping our heads above water as things stand. And even then only by borrowing at levels far beyond anything in our province’s history.
This is not a sustainable path on which to remain. Nor is it a realistic to attempt to come to grips with what will become a systemic fiscal crisis if nothing is done.
For this was likely the last year in which serious corrective measures could have been taken. With the next provincial election in 2024, and the 2023 budget no doubt planned as a good-news package, this was the year to turn the ship around.
That’s why we’re calling this a fateful budget. The steps needed to create a secure future have not been taken.
