As British Columbia grapples with a deteriorating fiscal position, the provincial government is asking ministries to review their programs to ensure they “remain relevant, are efficient, grow the economy, and help keep costs low for British Columbians,” as outlined in all the ministries’ mandate letters.
It’s the right instinct. It’s also welcome news for all British Columbians that, at a time of economic uncertainty, the province is acknowledging the need for a spending review. For this desire to translate into real savings for British Columbians, though, it should look to one of Canada’s most successful reforms: the 1994-96 Program Review led by then-finance minister Paul Martin.
In the mid-90s, Canada faced a severe fiscal crisis. The federal government was drowning in deficits, with net debt skyrocketing from 15 per cent of GDP in 1980 to 70 per cent in 1995. Interest payments consumed nearly 30 cents of every dollar spent. As a result, Standard & Poor’s downgraded Canada’s credit rating, foreign lenders were losing confidence and The Wall Street Journal stated that Canada had become an “honorary member of the Third World.”
Ottawa responded with an ambitious, principles-based review of government spending. The Chrétien government introduced a rigorous six-question test to assess whether a program was necessary and how it could be delivered more efficiently.
The result? The budget was balanced in just three years, the debt-to-GDP ratio plummeted, and Canada regained its fiscal credibility, setting the country up for the prosperity it enjoyed in the early 2000s. This success was also aided by strong labour productivity growth and favourable demographics, advantages we don’t currently enjoy.
Fast forward to today, and B.C. is facing a fiscal reckoning of its own. Just last week, the province suffered its fourth credit downgrade in four years, on the back of annual deficits in the range of $12 billion on average over the next three years. Debt servicing costs are expected to reach $7.1 billion by 2027-28. If debt servicing was a ministry, it would be the fourth-largest. Even more concerning, B.C.’s debt-to-GDP ratio is set to more than double, from 15.1 per cent in 2022-23 to 34.4 per cent in 2027-28.
This isn’t a revenue problem; it’s a spending problem. In 2021-22, the government spent about $13,600 per British Columbian. For fiscal 2025-26, spending per capita is projected to balloon to $16,618—a staggering 22 per cent increase in just four years.
Unfortunately, the savings targets the government has set for itself do not go far enough. Budget 2025 includes “expenditure management targets” of $500 million per year, on average, over the next three years. To put that in perspective, provincial operating expenditures are around $95 billion per year, so the government’s savings plan amounts to an average of just 0.5 per cent of annual spending.
To deliver real savings for British Columbians, the province’s spending review must be guided by clear principles. The six-test framework used by the Chrétien government remains a useful blueprint. In that review, nearly all government programs were evaluated against six questions to determine their necessity and efficiency.
These six questions were designed to be addressed in order, with each serving as a prerequisite before moving to the next. Ultimately, a program had to meet all six criteria to justify its continuation. The B.C. government could use these tests to determine which programs and services need to be adjusted and refined:
Public interest – Does the program continue to serve a clear and significant public need?
Role of government – Is government the most appropriate provider, or could the private or non-profit sector take it on?
Appropriate level of government – Is this truly a provincial responsibility, or would it be better managed by municipalities or the federal government?
Partnership – Can collaboration with the private sector or alternative funding models achieve the same goals more efficiently?
Efficiency – Is there a more cost-effective way to deliver this program?
Affordability – Given fiscal constraints, is this program financially sustainable, or does it require trade-offs elsewhere?
Applying this playbook would allow the government to redirect funding toward high-impact programs while reducing inefficient, outdated or out-of-scope initiatives. More importantly, it would demonstrate fiscal discipline at a time when global investors, credit rating agencies and taxpayers alike are watching closely.
We need to live within our means. There is still time to correct course, but doing so will require more ambition, discipline, and a clear-eyed view of our fiscal reality. If B.C. truly wants to protect essential services, grow the economy, and keep costs low for British Columbians, it must adopt a rigorous, principle-driven approach to fiscal reform. The 1994–96 Program Review succeeded because it combined strong political leadership with a structured, transparent process, which is something B.C. must replicate. Anything less is just kicking the can down the road.
Jairo Yunis is director of policy at the Business Council of British Columbia.
