Vaughn Palmer: However one chooses to measure government debt, B.C. indebtedness is soaring
VICTORIA — The New Democrats continued their reckless approach to the management of B.C. finances on Tuesday, with a budget and fiscal plan that proposes to push the provincial debt to $209 billion within three years.
The increase would be more than double the $90 billion debt in 2022, when John Horgan handed over the premier’s office to David Eby.
Yet the new budget had little in the way of new programs or improvements in existing ones, something many interest groups pointed out.
The government line was to blame all this debt-loading on Tuesday’s arrival of President Donald Trump’s unjustified 25 per cent tariffs on Canadian exports to the U.S.
David Eby emphasized that theme when he made a rare appearance (for a premier) in the budget lockup to deliver a stand-fast message in the tariff fight.
To that end, Eby announced that B.C. would again be evicting “red states” booze from government liquor stores.
For all the NDP efforts to blame their fiscal troubles exclusively on Trump and tariffs, their own budget documents tell a different story.
On Sept. 30 of last year, before Trump’s election and before he announced the tariffs, the New Democrats had already submerged the province deeply in red ink. They were forecasting a record $9.4 billion deficit with no help needed from the occupant of the White House.
Over the past three months of 2024, the province experienced an improvement in its fiscal fortunes. There was a $1.4 billion windfall on the revenue side from corporate taxes, ICBC, the employer health tax, fees and other sources.
The government also recorded $1.5 billion in savings from reduced transfer payments to service agencies and less of a take-up on refundable tax credits.
Had the New Democrats put those resources to good use, they could have reduced the forecast deficit for the year by almost $3 billion. But that is not the NDP way.
Instead, they increased spending in other areas by more than $2 billion. It left only a little less than $300 million to reduce the deficit down to $9.14 billion, still a record.
Finance Minister Brenda Bailey was asked in the budget news conference to square the soaring provincial debt with her claim that Budget 2025 represents “government’s efforts to return B.C. to fiscal sustainability.”
These things take time, she explained. This year’s budget and three-year fiscal plan were only the first step.
Yet her own documents showed that every debt metric — total debt, taxpayer supported debt, self-supporting debt, debt measured as a share of revenue, debt as a share of gross domestic product, the interest on the debt — were all headed in the wrong direction.
As first steps go, this one is poised to take the province down the fiscal equivalent of an elevator shaft.
Bailey claimed a hiring freeze was one way that the province will rein in spending. For the next three years, starting April 1, the budget imposes a cap of 38,900 full-time equivalent employees.
That’s for the year starting April 1. In the current year, which is not quite over, the New Democrats have already added almost 2,000 employees.
Indeed, Bailey herself would appear to be sneaking through a few more hires before the March 31 end of the financial year.
B.C. Conservative MLA Peter Milobar, the Opposition finance critic, challenged Bailey in question period Monday over 36 recent hires, 19 of them in her own Ministry of Finance. Total additional payroll, in excess of $4 million annually.
Nor were they front-line workers. The cabinet orders list the hires as mostly political and communications staffers in a government that is already top heavy with those positions.
Bailey said the ministry will be “sharpening our pencils” to rein in spending. The budget includes “expenditure management targets” of $300 million in the financial year beginning April 1 and $600 million in the following two years.
That’s a lot of pencil sharpening. But the budget provided no breakdown of when or where or how the $1.5 billion would be saved.
I asked Bailey how the public would be able to determine if she’d actually hit those targets, given the lack of detail. She said the plan was a work in progress and the amounts should be regarded as “placeholders.”
There you have the NDP plan for expenditure management — $1.5 billion worth of unspecified guesses.
At least the finance minister answered my question. She fobbed off several reporters by saying they should take it up with her technical staff. I don’t recall Carole James, finance minister in John Horgan’s first term of government, ever deflecting questions that way during a budget lockup.
True to the Eby government approach to budget-making, Bailey is budgeting for $30 billion worth of deficits over the coming three years, offset by $12 billion in unallocated contingency funds.
Not included are the full impact of the Trump tariffs or the likelihood that the carbon tax will be phased out, as both federal and provincial leaders have promised.
She also claims to be working on a plan to balance the budget “over time.” I’d file that under financial flights of fancy.