Financial Post: B.C. Budget 2023: What the $4.2 billion deficit funds — and what it doesn't

March 2, 2023
Alison Grant

With an economic downturn on the horizon, the government is forecasting deficits over the coming years

David Eby’s first budget as premier will run a $4.2 billion deficit to pay for the long-promised $400 renters’ rebate, provide free contraception, build new housing, and expand mental health and addiction services in B.C.

B.C. Liberal Leader Kevin Falcon, however, said the “measly” renters rebate isn’t enough to offset the highest rents in Canada. That, he said, should leave British Columbians asking: “Do you feel better off than you were six years ago?”

Small businesses and unions representing teachers and nurses were disappointed the 2023-24 budget didn’t do more to address staffing shortages plaguing those sectors. And B.C.’s seniors advocate said there wasn’t enough to support the province’s aging population.

Finance Minister Katrine Conroy, who presented the budget Tuesday, said that despite an economic downturn on the horizon, the government is supporting people squeezed by inflation by boosting tax credits for low- and middle-income families and lifting the shelter rate for people on income and disability assistance.

“It’s just not the right time to start making cuts,” Conroy said Tuesday. “It’s not the right time to start making people pay out of pocket for services they expect.”

The government made good on its 2017 election promise to provide $400 a year to renters, or $33 a month, starting in 2024. Offered through an income-tested tax credit rather than a cash rebate, the government said it will benefit 80 per cent of renters, including seniors, people with disabilities and low-income British Columbians who already receive rental supports.

“I think renters have been left behind, to be honest, for many years, including the government I was part of,” said Falcon, a former cabinet minister under the Gordon Campbell and Christy Clark Liberal governments.

The province’s mental health and addictions treatment system, plagued with long waiting lists, will get a $867 million cash injection over three years, or $200 million this year, which Conroy called the largest spending on mental health services in B.C.’s history.

The bulk of that funding will add 190 new treatment and recovery beds and develop new “recovery communities” to support people after they leave treatment. The new money will also expand the Red Fish Healing Centre model — a much-lauded addictions and mental health treatment centre on the former site of the Riverview Hospital in Coquitlam — to other areas of the province.

Jonny Morris, CEO of the Canadian Mental Health Association’s B.C. branch said “historic” mental health funding could address the regional disparities that leaves people living in rural and remote parts of the province behind.

“We want to move beyond a post code lottery for mental health and substance use care in this province,” he said. “Where you live should not dictate the kind of care that you receive.”

Morris was disappointed the government did not remove user fees for all mental health and substance use treatment beds, currently in the range of $45 a day, which he said is a significant barrier to access.

Conroy said the government will remove user fees only on the 190 new treatment spaces but not on existing treatment beds, which was slammed by Falcon.

Morris also said there’s no commitment to providing better waiting list data for treatment beds, something B.C.’s Chief Coroner Lisa Lapointe has called for.

The government delivered on its promise to provide free prescription contraception effective April 1, making it the first jurisdiction in Canada to do so. The program, which will cost $39 million this year, covers oral contraception, injections, intrauterine devices, subdermal implants and emergency contraceptives, such as Plan B.

For people who pay an average of $25 a month for contraception, the government said free coverage could save them $10,000 over their lifetime.

Starting in July, people with disabilities or on income assistance will get $125 a month more to pay for shelter, something advocates had seeking to support vulnerable people as costs soar. That will bring the shelter rate to $500 a month, which will cost the government $147 million this year.

Right now a single person on income assistance receives a total of $935 a month and people with disabilities receive $1,358 a month, so these will rise to reflect the added shelter amount.

The government will also spend $88 million this year to boost financial support for care providers such as foster families and $59 million to expand school food programs.

The budget earmarks an additional $2.3 billion this year to prop up B.C.’s flagging health-care system, which has left many people without a family doctor and led to overcrowded emergency rooms and burned out health care staff. The $6 billion over 10 years in additional health-care cash promised by the federal government is not included in the budget.

The government’s plan for recruiting new health care staff and retaining existing staff, announced by Health Minister Adrian Dix in September, will cost $273 million this year. Another $400 million this year will pay for the previously announced compensation plan for family doctors and incentives to attract recent graduates into family medicine.

The government does not cover psychological services under the Medical Services Plan, something B.C. psychologists had been pushing for as a way to help people with mental health challenges before they show up at overstretched emergency rooms in crisis.

Bridgitte Anderson, CEO of the Greater Vancouver Board of Trade, gave the budget a C-, saying she was disappointed to see very scant measures to support small-business owners or tax incentives to spur economic growth. The Board of Trade and the B.C. Chamber of Commerce had been calling for the employer health tax threshold to be lifted to businesses with a payroll of $1.5 million or more. The tax, which currently applies to businesses with a payroll of at least $500,000 a year.

With an economic downturn on the horizon, the government is forecasting deficits over the coming years: The province’s books will be in the red by $3.8 billion in 2024-25 and $3 billion in 2025-26.

Ken Peacock, chief economist at the B.C. Business Council, said it would have been prudent to post a small deficit or a modest surplus given the economic challenges ahead. The current deficit is 1.1 per cent of GDP which “seems ill-advised.”

Alex Hemingway, an economist with the Canadian Centre for Policy Alternatives’ B.C. branch, disagreed, saying the government hit the right balance in making new spending in health care, housing and capital spending.

“Running a moderate deficit is far preferable to shortchanging really critical services and infrastructure investments that are badly needed,” he said.

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