A commentary by two senior economists at the B.C. office of the 91原创 Centre for Policy Alternatives.
British Columbia faces big social and environmental challenges ahead of Budget 2023: sky-high rents, health care under enormous strain, a toxic drugs crisis, climate disruption and the need to build and rebuild crucial but eroded public services (to name a few).
The good news is that B.C. has more than enough fiscal and economic capacity to increase critical public investments to address these crises, even with a possible recession on the horizon.
The province is closing out the current fiscal year (2022-23) with a multibillion-dollar budget surplus, much of which could be used to pre-fund priority investments under the new premier.
While the province’s most recent projections show modest deficits in the next two years, a closer look reveals that these are far more than offset by an estimated $14 billion in “fiscal padding” that is tucked away in the budget over that same period.
If the economy does turn south in 2023, the government must shift its mindset and not be afraid to run a budget deficit both to meet important social objectives and to help stabilize overall economic demand.
The government’s operating spending has declined substantially as a share of our total annual economic output or GDP over the past two decades. If we want to increase public spending to tackle big challenges, we have the economic capacity to do so.
Ambitious public investment can be funded in part by more robust taxes on high incomes, corporations and wealthy landowners, with the dual benefits of raising revenue and reducing extreme inequality.
A promising area for increased investment is housing, where we will be watching for the details of Premier David Eby’s promised B.C. Builds program. The key question will be whether its public and non-market housing construction targets and funding match the scale of the crisis, and whether they include enough deeply subsidized homes for those who are living in poverty.
Government efforts to address affordability to date have been modest and scattershot, including $110 per driver through ICBC and $100 per household through B.C. Hydro — both of which have gone to lower- and high-income households alike.
Only a couple of small one-time measures target those with lower incomes: $164 per adult and $41 per child receiving the Climate Action Tax Credit; and $175 per child for those receiving the B.C. Family Benefit.
The B.C. government needs to think bigger when it comes to addressing poverty in the province. This includes additional investments aimed at housing people living on the street or in parks, but also means raising shamefully low welfare and disability assistance rates to at least reach above the poverty line.
An area of impressive progress in recent years has been the unfolding public child-care system, which has seen an increase in $10-a-day spots and a huge across-the-board fee cut in 2022.
Budget 2023 needs to enhance wages for early childhood educators to support recruitment and retention and increase capital investment in badly needed new public child-care spaces.
Our health-care system is another area where staffing shortages need to be urgently addressed and public provision expanded in areas like primary care, seniors care and surgical capacity, rather than the encroachment of wasteful and inequitable corporate medicine.
The toxic, unregulated drug supply continues to drive accidental overdose and overdose deaths, killing six people a day. B.C. needs an immediate and drastic expansion of pharmaceutical- grade alternatives to the illegal drug supply (“safe supply”).
B.C. also needs to step up action on climate change. The government’s Clean B.C. plan lacks the urgency demanded by the times and stands in contradiction to B.C.’s LNG export plans. Accelerated timelines for action accompanied by higher levels of investment in buildings, transportation and clean technology should be a top priority.
Also needed are major infrastructure investments in dikes, fire suppression and other adaptation measures amid growing costs from severe climate events.
Failing to tackle the urgent challenges we face now would only weaken our economy in the years ahead.
It’s time for more robust public investment in the common good.
