B.C. Budget 2021: Big spending, big debt, but little new aid for businesses

B.C. Budget 2021: Big spending, big debt, but little new aid for businesses
Government of B.C.
Finance Minister Selina Robinson said the new budget will position the province for economic recovery from COVID-19 later this year, while still providing supports during the crisis.

B.C.’s NDP government tabled a big-spending pandemic budget Tuesday, with more money for core services like health care, relatively little immediate new aid for hard-hit businesses, and a high deficit and debt load for the future.

Finance Minister Selina Robinson said $3.25 billion in pandemic recovery funding this year will help prop up urgent health care needs, such as our ongoing mass vaccination program, and prepare B.C. for recovery later this year, as well as allow the NDP to fulfill an election promise for free BC Transit and TransLink passes for children under the age of 12.

Large tourism operators like Butchart Gardens will be able to access a new $100 million tourism aid fund for major attractions, but small businesses continue having so much difficulty applying for a $300 million recovery grant fund that the province had to push $195 million forward a year so it wouldn’t expire and be wasted.

Much of the province’s other new economic aid has been held back in reserve to see how the pandemic unfolds, with almost $3.1 billion in contingency funds, forecast allowances and unallocated funding that can be used as a rapid response to provide assistance where needed in the months ahead.

That may be cold comfort to the restaurant and hospitality sector, which has been calling for immediate help after a three-week ban on indoor dining that’s now extended to May 25, as well as new non-essential travel restrictions between health authorities. Robinson said more help is coming in the weeks ahead.

The government is also ramping up $3.5 billion in new capital spending over three years, to generate 85,000 jobs while building new roads, bridges, schools and hospitals.

“This moment calls for action and budget 2021 delivers for the people of British Columbia,” said Robinson.

“It responds to the impacts of the pandemic, today’s challenges and prepares us for the future challenges, by investing in health care, by strengthening the services we all count on and by building a bridge to recovery and the better days that are ahead. The pandemic will end, and when it does B.C. will be ready for the opportunities that come from recovery.”

But all the spending will come at a cost: A deficit of $9.7 billion in 2021/22 and an almost doubling of B.C.’s taxpayer-supported debt from pre-pandemic levels to $92.7 billion by 2023/24. And the province won’t be back to black for almost a decade.

“It is difficult to forecast exactly when we can return to balance,” said Robinson.

“Preliminary ministry of finance analysis suggests that this can happen in seven to nine years which is consistent with timelines presented by other provinces’ budget 2021 projections. But I must stress that there is significant uncertainty.”

Robinson said the debt is affordable due to low interest rates and is a prudent investment during a time of crisis. 

“The spending we have been doing is keeping people afloat, keeping businesses afloat and that’s really good for recovery,” she said.

The Opposition Liberals said the spending plan lacked direction or purpose.

“It was mostly a status quo budget aside from the fact we see huge spending and huge debt but no plan on how government is going to move forward,” said Liberal critic Mike Bernier. Opposition Green leader Sonia Furstenau said she was disappointed at the budget’s lack of ambition in tackling big problems like mental health, old growth logging, climate change, seniors’ care and green public transportation.

Robinson said there are signs of strong economic recovery in the province already, with a red-hot housing market that has already exceeded pre-pandemic levels and pumped almost $500 million more revenue into the budget through the property transfer tax than had been anticipated.

The NDP government used to criticize the previous Liberal government for profiting on skyrocketing housing prices, but Robinson denied the NDP are now following suit.

Retail sales are also up, as people spend money on consumer items. While some sectors like hospitality and tourism continue to face layoffs, the province’s overall unemployment rate and job numbers show almost a return to pre-pandemic levels as well.

“Compared to previous the budget, the 2021/22 budget is a little more celebratory about rising home prices again, and I think when we have the budget talk about how the economy is robust because home prices have increased so much over the pandemic, we risk actually eroding the earlier commitments the government has made to try and improve housing affordability,” said University of B.C. professor Paul Kershaw, founder of Generation Squeeze, an advocacy organization for affordability.

The province made incremental steps toward its 2017 election promise of $10-a-day child care, adding $233 million over three years to more than double the existing 2,500 spaces at 53 prototype sites already funded by Ottawa.

But it is $30 billion over five years announced in the federal budget on Monday that is likely to turn $10-a-day child care into an actual reality, with a flood of cash for the provinces to turn their programs into universal plans for parents.

“I’m excited about the newly announced federal funding, which will help us to go even further,” said Robinson.

B.C. will also add more money to bump up the salaries of early childhood educators to $23 an hour.

In addition to $100 million for major tourism attractions, B.C. added $20 million in new funding for community destination tourism grants and $6 million over three years for arts and culture groups hard hit by the pandemic.

However, Tuesday’s budget was also notable in what it did not fund.

There was no money set aside for a paid sick leave program for workers in either Tuesday’s B.C. budget or Monday’s federal budget.

Robinson said she was hopeful Ottawa would take the lead on that.

“I was disappointed that the federal government chose not to do that,” she said.

The Federation of Labour had urged B.C. to take the lead on a sick pay program, as a method to help curb the virus by not forcing people to go into work when sick.

The budget did allocate $900 million this year for health care, including the mass vaccination program and ongoing safety and screening at long-term care homes for seniors.

But a promise in the throne speech to “fix the cracks” found in seniors care homes in the pandemic only amounted to $68 million over three years to hire more staff.

Mental health received a funding boost, but mainly targeted to youth and the overdose crisis, and a far cry from the inclusion of mental health into the larger healthcare system called for by the B.C. Greens.

The budget added $500 million over three years for mental health, but only $146 million of that is set to arrive this year and then it is spread over new support teams in schools, substance-use treatment teams and recovery beds.

Some of the budget’s marquee items had already been announced by the province, including a hike to social assistance and disability rates, as well as $2 billion in new housing loans to property developers to boost thousands of new affordable rental and purchase units across the province.

The Greater Vancouver Board of Trade gave the budget a B- rating, saying it at least continues some previous aid programs and tries to look beyond the pandemic to recovery.

“A solid fiscal footing has allowed B.C. to take on substantial amounts of new debt while remaining ‘pandemic prudent,’ compared to other jurisdictions, said CEO Bridgitte Anderson.

“There are also significant amounts of unallocated funding that remains available to the government along with an improved economic outlook globally.

“However, we are still striving for a post-pandemic vision for the economy that attracts investment, creates good jobs and promotes opportunity. It’s not clear this budget puts B.C. on the fast track to thrive in an increasingly competitive world,” said Anderson.

Other advocates say the province missed a chance to be a leader in its budget.

“I do think this is a missed opportunity to find it, it’s not a lot of money in the larger scheme of things, and as you see, we’re tabling here some very modest deficits considering the situation that we’re in considering the needs,” said Iglika Ivanova, senior researcher at the B.C. Centre for Policy Alternatives.

“Overall, unfortunately, this budget misses the opportunity to become the most significant budget of a generation which I thought he would be. Yet it strangely seems like the 2018 budget was more ambitious and bolder, in many ways, in setting up new programs than this budget is in the end. I find that is sad, actually.”

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