Repeat after me: We are better off than we thought we’d be. We are better off than we thought we’d be. We are better off than we thought we’d be.
Tuesday’s British Columbia budget has that it-could-have-been-worse-and-we-expected-it-would-be feeling to it. It expresses a promise-lower, deliver-higher sentiment. Oh, and a no-need-to-panic, we-expect-to-be-fine is thrown in for good measure.
Finance Minister Selina Robinson could in good conscience without losing any sleep over it provide these assurances as she presented a budget that has a deficit lower than anticipated, an economic decline less than projected and a forecast that has lots of padding in case of new pandemic perils.
What? She worry?
Her budget didn’t have the otherworldly ambition of Chrystia Freeland’s federal version a day earlier. There are no epic childcare-like programs in the hopper and no extraordinary $100 billion investments in social and economic activities. You’d almost think one level of government was angling for an election and another one had just conducted it.
Like earlier Horgan government budgets, Robinson’s is difficult to either get excited or anxious about. Time and again, the business community has a hard time blowing a gasket or throwing a party. Which must make the government gleeful.
As one would expect with an NDP government, the budget works better for those in some straits – with a $500 million spend over three years on new mental health and addiction initiatives, a $175 increase to income and disability assistance for 240,000 people, and free transit starting in September for the 340,000 children under 12 – than it does in generating growth or inspiring innovations.
There is plenty it doesn’t do, like reform the tax system to make it more competitive or prune the public sector to make it more affordable. Its housing commitment is tepid (10,000 units over three years) and appears to be bowing to the federal government to lead the way. And its $500 million InBC Investment Corp. idea to recruit and back big-league business still lacks sufficient definition to arouse optimism. There is $10 million set aside to develop policy on reducing the carbon intensity of fuel and development of the hydrogen economy, which sounds like a classic exercise in guessing what something will cost and what it might produce. There are contingency funds that might become slush funds if not minded properly.
The tale of the numbers, though, yes, could have been much worse. Only in the fall we were expecting a $13.6 billion deficit for the fiscal year ending March 31. Instead, it’ll come in at $8.1 billion, rise to $9.7 billion this fiscal year, then drop to $5.5 billion in 2022-23 and $4.3 billion in 2023-24.
Credit for this where credit is due: mostly elsewhere.
Federal business and individual support clearly buttressed the blues and picked up many pandemic tabs, while the real estate market reignited against the odds and delivered a lot of found money to the treasury. About $3.5 billion arrived that wasn’t expected, about $956 million wasn’t spent, and $1 billion in contingency wasn’t needed. Largely what the provincial government had to do was bookkeeping.
But it’s not as if there is no reason to be discouraged. The most dispiriting element of the provincial economy remains the deceptive employment statistics. Sure, the employment level is recovering from its April 2020 crater – there are only about 15,100 more British Columbians out of work than a year ago – but the raw numbers do not properly tell the tale of woe.
Buried on page 81 of the 172-pager is the jarring statistic that one-third of those unemployed have been without work for more than 27 weeks, the highest total in 36 years. A year earlier, those long-term unemployed were merely 12.8% of the total.
“Long-term unemployment is associated with the risks of skill erosion and labour market detachment,” the devil in the details reads. Which means a very hard road remains for those already worn out by it.
There may not be a giant gap between pre-pandemic and current employment levels, but young women account for more than half of that gap. Visible minorities have persistently higher unemployment rates than other British Columbians. These issues have to serve as priorities for the province, but the budget has no particular elixir in store.
What is also in store is rather low growth – after dropping 5.3% in 2020-21, a 4.4% rebound is predicted this year, then 3.8% to bring us back better than 2019. After that, though, it’s meagre growth of 2.2%, 2.1% and 2.3% in 2023 through 2025.
This is in part because the government is expecting interest rates to rise and suppress the superheated housing market. But Tuesday didn’t develop or deliver any particular plan to generate prosperity. It was more a safety-first, repair and restore document.
(Side note: It’s been a bad couple of days for smokers. Between the officials in Ottawa and in Victoria, they’ve slapped $10 in extra tax on a carton.)
Perhaps the aftermath of a shellacking is not the appropriate juncture to build the provincial economy, but the tone of the document is surprisingly conservative when compared to its federal spendthrift companion. Either there isn’t clarity within the government about how to fuel the economy or the appetite to do so now.
Here we remain after two budgets on two days, with a Liberal government to the left of an NDP one.
Kirk LaPointe is publisher and editor-in-chief of Business in Vancouver and vice-president, editorial, of Glacier Media.