Last week’s provincial throne speech laid out Premier David Eby’s vision for the year ahead. Increasing the supply of affordable housing, providing more accessible child care, strengthening health services and addressing the need for climate action were among the priorities listed.
It was, in every sense, an aggressive plan. Indeed, it reads very much like a pre-election manifesto, though Eby has committed to living with the four-year election cycle that runs until November 2024.
When it came to explaining how these projects were to be paid for, however, an element of mystery crept in.
We were told that the Finance Ministry projects a “multibillion-dollar surplus” in the fiscal year ending on March 31. No news there. The government’s own fiscal update in November predicted a $5.7-billion surplus in 2022.
Then came the mystery. The speech went on to say that because of a predicted global slowdown in the months ahead, “this year’s surplus won’t be there next year.”
So how is this expansive new agenda to be financed? We are told only that the government “will put this year’s surplus to work.”
Last week we learned what that meant. Eby announced he’s giving every community in the province a one-time “infrastructure grant,” at an all-in cost of $1 billion. The money will be distributed on a population basis, no questions asked.
The premier’s thinking might be that any unspent cash at year’s end goes to writing down the public debt. No votes there. So spend as much of the $5.7 billion as possible before the clock runs out.
But while that deals with this year’s surplus, what about next year?
Most of the commitments listed in the speech carry years-long implications. They will require significant injections of new funding into the foreseeable future.
If no surplus is forecast for next year, where is the money to be found?
Broadly speaking, there seem to be only two options. First, take largely symbolic steps toward the new agenda next year, in effect nodding in the right direction, but slow-walking actual progress.
Yet that approach appears foreclosed, at least to some extent, by the sweeping language employed in the speech.
Thus we read the government “will make record new investments to improve public health care.” And again: “In the months ahead, your government will make major new investments to increase housing and services near public transit hubs.”
And further, “B.C. will make record investments to support local governments in responding to the [population] growth they are seeing.”
None of that sounds like “slow-walking.”
The second option is to yield on fiscal discipline and run a large deficit in the year ahead. As the speech hints, there is some cover for that. The government can say its hands were tied by economic forces beyond its control.
Yet here, too, there are dangers.
During the 1990s, the NDP governments of Mike Harcourt and Glen Clark ran deficits nearly every year. The impression took hold that money management was not a priority.
If Eby burns through this year’s largely unearned surplus by splashing cash around, then finds himself with a deficit next year, what does that do to his chances of re-election?
We won’t have long to wait for more details. The upcoming budget is due to be delivered Feb. 28.
But Finance Minister Katrine Conroy has her work cut out for her. If she lives up to the expansive promises made in the throne speech, a lake of red ink might be the outcome.
Or she can trim her sails and risk disappointing the party’s core support.
Either way, Conroy has a very narrow line to walk.
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