B.C. Finance Minister Brenda Bailey handed down a deficit and debt-laden budget Tuesday that was overshadowed and heavily shaped by U.S. President Donald Trump.
Bailey’s budget factors in a worst-case scenario of recession-inducing tariffs on Canadian exports to the U.S., as well as Canadian counter-tariffs, which went into effect today at 10 per cent for energy and 25 per cent for everything else.
The finance ministry projects a trade war with the U.S. could result in 45,000 job losses between now and 2029, unemployment rates of 6.4 per cent in 2025 -- rising to 6.7 per cent in 2026 -- a $43 billion impact on provincial GDP, and $3.2 billion to $5 billion in lower corporate profits.
Apart from the carbon tax, which goes up April 1 – adding $488 million to government coffers -- there are no major tax cuts or hikes in the budget.
Despite calls to rein in spending, the B.C. government is adding $10 billion in new operating spending over its three-year fiscal plan, including $7.7 billion in new spending on health care, and an additional $4 billion in capital spending.
The budget calls for $95 billion in spending in 2025-26, but anticipates revenue of only $84 billion, leaving a $10.9 billion shortfall in 2025-26.
That’s an increase of nearly $2 billion from the current deficit of $9.1 billion, which contributes to provincial debt increasing from the current $133 billion to $157 billion for 2024-25, and $208 billion in 2027-28.
By contrast, B.C.’s next-door-neighbour, Alberta, last week brought down a budget with a $5.8 billion surplus for 2024-25, but with a caveat that that surplus could quickly turn into a $5.2 billion deficit in budget 2025-26, thanks to tariffs, which could result in $4 billion in lost royalties from Alberta’s oil patch.
Budget 2025 has $4 billion in contingencies for each year of a three-year fiscal plan.
The budget includes $300 million in “expenditure management” for 2025 – money the government hopes to save through finding efficiencies within government.
“It’s an efficiency review,” Bailey said in a scrum with reporters prior to the budget. “That’s the work that’s ahead of us, and we’ll have more to say on it.”
As a result of continued deficit spending and debt, B.C.’s debt-to-GDP ratio will rise from the current 22.9 per cent to 26.7 per cent in 2025-26, and up to 34.4 per cent in the 2027-28 period.
“While our debt to GDP ratio is increasing slightly, it still is half of that for Ontario, for example,” Bailey said.
The government is forecasting real GDP growth of less than two per cent annually over the next three years – 1.8 per cent in 2025-26, rising to 1.9 per cent annually over the next two successive periods.
The budget contains little in the way of tax relief. The provincial carbon tax will increase April 1 from $95 per tonne to $125 per tonne, which will increase the price of gasoline, diesel and natural gas for home heating.
The carbon tax hike will increase government revenues by $488 million, from $2.6 billion in 2024-25, to $3 billion in 2025-26.
In a pre-budget speech briefing with reporters, Bailey confirmed that, if the federal carbon tax is scrapped, “we will do the same.”
Capital spending
Budget 2024-25 increases capital spending from $16 billion in 2024-25 to $20 billion in 2025-26.
This includes $15.5 billion in capital investments in health care for hospitals, long-term care and cancer care, and $15.9 billion for roads, bridges and transit.
In total, there is $45.9 billion in capital spending over the three-year spending plan.
Capital spending on roads, bridges and transit includes:
- $6 billion for the Surrey-Langley SkyTrain extension;
- $4.2 billion for the George Massey tunnel replacement project;
- $3 billion for the Broadway Subway project;
- $5 billion for the Fraser Valley Highway (Hwy 1) improvement project.
