New figures from the B.C. government show that last year's deficit was almost 20 per cent higher than budgeted thanks to lower revenues from resources and higher spending on social services and fighting wildfires.
Finance Minister Katrine Conroy Thursday (Aug. 22) revealed this increase as she presented the province's final financial statements for the fiscal year of 2023-24. They show a final deficit of $5.035 billion — $819 million higher than the budget presented in Feb. 2023.
Conroy said B.C. spent nearly $1.1 billion in responding to one of the worst wildfire seasons in B.C. history, adding it also spent an additional $401 million on responding to flooding.
"With growing communities, the province saw higher demand for services, including health care and education, and higher wages for people providing those services," she said. "Through the economic slowdown, global inflation and high interest rates, we chose to protect the services that people rely on. We know people can't afford cuts to services."
Conroy framed this choice as a long-term investment into B.C.'s physical and social infrastructure that will eventually pay off.
"When we support people and protect the services they count on, the make the economy stronger and more resilient," she said.
On the revenue side, provincial royalties from natural gas revenues dropped thanks mainly to a 68.2 per cent decline in natural gas prices. Royalties from oil also dropped thanks to a 17.2 per cent decline in oil prices.
Thursday's figures come with at least one bright spot. They could have been worse, as the actual deficit was below the final forecast of $5.9 billion.
Critics of the government seized on these figures as evidence of economic incompetence. B.C. United Peter Milobar said the report shows that the B.C. NDP knows how to spend without getting value for it.
"It's simply not sustainable to keep spending the way they are and keep getting-ever worsening results in health care, in crime and safety," he said. "We need more thoughtful spending."
Milobar also rejected the argument that the additional spending protected services, eventually paying off.
"Why are we having ERs close everywhere if money was the sole problem?" he asked. "They are spending money like they never have been before in health care and we can't keep emergency rooms open." He also expressed concerns about the lack of large economic projects coming online to help grow the economy.
Milobar said his party would deliver projects on budget and on time as part of a larger economic agenda that would cut red tape, promote mining and revive the forestry industry. "It's really about a multi-pronged approach," he said.
Conroy tried to preempt that criticism by pointing to various figures designed to show the strength of the provincial economy during the early portion of her remarks.
While B.C. saw various challenges, it has one of the strongest economies in Canada, Conroy said. Its GDP growth of 1.6 per cent exceeded the national average and tied for second place, she added. B.C.'s unemployment rate in 2023 was 5.2 per cent and remains the only province with a Triple-A credit rating she said.
"Our debt-to-GDP ratio is 18.5 per cent, the second-lowest among provinces," she added. (B.C. maintains a Triple-A rating with Moody's Investors, but that same company also downgraded B.C.'s credit worthiness on the same day as Standard and Poor lowered its assessment of B.C.)
Conroy presented these figures shortly after B.C. United had presented a proposal to cut the provincial income tax by $5.4 billion — a proposal hailed by the British Columbia Business Council as a signal toward reviving the economy.
Conroy said her government is prepared to put its record against what other opposition parties, including B.C. United, are proposing.
"Our budget is manageable, our deficit is manageable, we have one of the best GDP-to-debt ratios in the country, we have one of the lowest interest rate bites," she said. She added that B.C. continues to attract investment.
Meanwhile, the current budget was passed with a deficit of nearly $8 billion, the largest in provincial history. If the actual deficit of last year's budget is almost 20 per cent higher, what can the public expect for this year's?
Part of the answer will emerge next month, when Conroy will have presented figures for the first quarter of the current fiscal year.
"I'm not going to present Q1 here today, but what I will say is that we are still facing some challenges in the province, similarly to what I have been talking about for the last few years," she said. While interest rates have gone down, they will have to go down further to make a difference, she added. "I will talk more about that (the outlook for the current fiscal year) in my Q1 update."
