B.C.'s Finance Minister Brenda Bailey says weakening exports abroad and rising expenses at home have increased the size of the projected provincial deficit by $429 million to a record high of $9.4 billion.
But Bailey also says that will not derail her government's plans to give a "grocery rebate" of $1,000 next year to 90 per cent of provincial households.
"It's going to take a bit of time for us to put that together, but (Premier David Eby) has been very clear that helping people address affordability is a priority for our government," Bailey said Tuesday (Dec. 17). She declined to give details when asked to rate the likelihood that government would have to borrow the money to finance the promise, and the connected pledge of making the rebate a permanent income tax cut in following years
"We will have more for you on that as we get close to Budget 2025," she said. Bailey later issued a more general statement when asked whether the government would walk back any promises made during the election campaign.
"Of course, promises made during an election period are to be delivered on during a mandate, a four-year time-frame, and you will see us do that work during that time-frame," she said.
The figures presented by Bailey cover the period from April to September 2024. They neither project the cost of the current federal tax holiday to provincial coffers, nor the potential savings of the temporary hiring freeze for administrative jobs in civil service. The figures also do not account for the potential costs of 25 per cent tariffs threatened by incoming U.S. president Donald Trump.
Bailey said there is "no doubt" the threatened tariffs "present a significant danger" to B.C.'s economy and added it is "imperative" Canada responds.
Bailey's appearance comes a day after her federal counterpart Chyrstia Freeland tendered her resignation following a dispute with Prime Minister Justin Trudeau over the size of Canada's budget deficit, with Freeland favouring less spending.
Freeland's resignation letter urges officials to prepare for the threatened tariffs by building up reserves. Bailey says her ministry is currently modelling different scenarios "should these tariffs, in fact, come to fruition." She adds she also plans to meet with government's economic forecast council next month to discuss the issue.
Bailey says the economy is "generally performing as expected" but adds that the province "faces challenges" in the current fiscal year, such as "high interest rates, elevated prices and uncertainty in regard to global trade."
Figures released Tuesday project declining natural resource revenues "mainly due to lower natural gas prices" as well as weakening labour demand and lower consumer spending. Overall revenues re expected to be down $322 million compared to the first quarter of 2024. Expenses, meanwhile, are heading up by $107 million due to higher net spending in the health authorities and other agencies.
B.C.'s Gross Domestic Product is expected to grow by 0.9 per cent in 2024 before rising to 1.9 per cent in 2025.
Eby said last week that B.C. would grow its way out of its fiscal hole while avoiding austerity measures. But at least one economist has already questioned whether It can achieve this goal without reining costs. Speaking on CKNW, David Williams, vice-president of policy with the Business Council of British Columbia, says the province won't be able to grow its way out of the current hole.
He says B.C.'s economy is doing better relative to the rest of Canada, but "this is about fiscal discipline, about controlling your spending"
He adds that research from the University of Calgary shows B.C. with the worst financial trajectory among provinces and questioned the long-term sustainability of B.C.'s fiscal approach.
Bailey, meanwhile, tried to ease concerns. She said the higher deficit has raised B.C.'s debt-to-GDP ratio to 22.3 per cent with interest rate payments rising to 4.3 cents per dollar of revenue from 4.2 cents "but this is still relatively low" compared to other jurisdictions like Quebec, whose debt-to-GDP ratio is 40 per cent.
She adds that B.C.'s economy "remains resilient" with the "debt manageable" compared to its peers. She pointed to her government's "twofold" strategy of spending resources "wisely and carefully" and growing the economy in "a number of different ways" including mining and the movie industry.
"We have a diverse economy, one of the lowest debt metrics in the country and contingencies — our approach is support people while growing a strong economy where everyone benefits."
Conservative MLA Peter Milobar (Kamloops-Centre) says the fiscal update shows the "economy is slowing down, our budget deficit is expanding and resource and business tax revenue is dropping."
He adds that the "update speaks itself" and questioned why Eby did not recall the legislature to discuss the update.
