In her third full Budget, Finance Minister Carole James delivered an underwhelming effort containing few surprises. Budget 2020 continues the NDP government’s focus on incrementally strengthening social programs, expanding the supply of non-market housing, and bolstering childcare services. In contrast to her earlier budgets, spending increases were modest.
With the economy gearing down, Minister James found herself with little maneuvering room. There are very few new spending announcements, instead Budget 2020 is tilted toward reiterating previously announced spending commitments. While all governments follow this practice, Budget 2020 is chock full of reannouncements. The new funding that’s been made available is liberally sprinkled in small drops across a wide array of program areas. Working within a more constrained fiscal framework, Minister James did manage to forecast skinny operating surpluses over the three-year fiscal plan. However, B.C.’s tax-supported debt is climbing steeply owing to a stepped-up pace of spending on infrastructure and other capital projects.
The Business Council is supportive of sound management of the province’s finances. But we are concerned about what was not in the Budget. For some time, we have argued that policy-makers in Victoria have been underplaying the need to improve B.C.’s fraying competitive position in a fast-changing world – a world in which Canada has been losing ground on many key performance metrics. Regrettably, Budget 2020 fails to tackle the weaknesses that threaten the foundations of the province’s long-term economic prosperity. It ignores the problems of rising business costs, the difficulty of advancing significant projects, and the uncertainty facing investors and firms looking to expand in B.C.
Of particular concern is that the Budget does nothing to address the high and rising costs that B.C.’s leading export sectors are grappling with due to the province’s carbon pricing system. For more than a year, the Business Council has worked with the province to develop a plan that reduces greenhouse gas emissions while also keeping B.C.’s natural resource, manufacturing and transportation industries reasonably competitive. Disappointingly, Budget 2020 does nothing to bolster B.C.’s industrial competitiveness to ensure that our natural resource and manufacturing industries continue to invest in and refurbish operations.
Many of B.C.’s biggest leading export products and commodities have half the carbon intensity of competing jurisdictions. Yet these industries -- vital to middle class jobs in rural and urban regions of B.C. – currently are at a unique economic disadvantage relative to North American and other global competitors. That is because of the absence of any provincial measures to mitigate the impact of escalating tax-inclusive energy costs on the economic viability of industrial operations in B.C.
THE BOTTOM LINE: Overall, Budget 2020 is a disappointment. It contains little that will strengthen the province’s economic fundamentals or improve its competitive position over the medium-term. There are no meaningful tax or regulatory initiatives directed at accelerating productivity growth (the essential precondition for higher wages), supporting the scaling up of B.C. companies, fostering economic diversification, or creating a more competitive environment for our export-oriented industries. It is hard to see how this Budget will contribute to attracting top talent, driving innovation, or retaining and growing head offices in the province.