The British Columbia government is forecasting a growing budget surplus and economic growth that will lead Canada in the coming year despite dropping real estate tax revenues and declining property sales.
The latest budget update released Friday forecasts a budget surplus of $669 million, which is $450 million higher than was projected in February’s budget. Finance Minister Carole James said B.C.’s economic growth projections of 2.2 per cent this year and 1.8 per cent in 2019 are among the highest in Canada.
James said she welcomed the most recent Finance Ministry data showing reduced revenues from property transfer taxes and sales declines since April.
“I truly believe B.C. has to move away from an economy that is built on speculation in real estate to a more sustainable approach,” she said at a news conference.
The financial update for the first three months of the fiscal year includes a decline in property transfer tax revenue of $250 million as property sales dropped by 19.4 per cent from April to June.
Opposition Liberal Leader Andrew Wilkinson said he sees jobs losses and a sputtering economy in the near future.
“Carole James is admitting that the only NDP plan is to shrink the real estate part of the economy, reduce the value of peoples houses and have a dramatic drop in the construction sector, and nothing is going to change in terms of affordability because prices are staying where they’ve been,” he said.
James said the most recent numbers do not show declines in property prices.
“The biggest risk to B.C.’s economic growth right now, one of the biggest risks, is the issue of unaffordable housing,” she said. “We aren’t able to attract employees. We aren’t able to retain people in business because of the increasing price in housing.”
Last February, the province’s minority NDP government tried to ease the province’s housing crisis with a budget that introduced a new tax on property speculators, higher taxes on foreign home buyers and plans to create 114,000 affordable housing units over the next decade.
James said the government doesn’t control all the factors that relate to housing, including interest rates and mortgages rules, but it does want property prices to moderate and vacancy rates to increase.
The latest financial results “show that the housing market is moderating and we’re seeing strong growth and we’re continuing to see surpluses and we’re continuing to balance the budget,” she said.