B.C. projects record deficit as budget builds on pandemic promises for recovery

VANCOUVER (NEWS 1130) – There’s not a whole lot in the way of new spending in B.C.’s latest budget, as uncertainty continues to loom amid the pandemic.

The B.C. NDP is touting its Budget 2021 as one that builds on spending previously announced by the government, with plans to continue supporting both British Columbians and businesses as they weather the third wave of the COVID-19 pandemic.

The budget is a direct response to the health crisis that has forced many out of work, businesses to shutter, and put British Columbians in uncertain times.

From emergency programs to a massive undertaking to get every British Columbian who wants a vaccine inoculated against COVID-19, getting through the pandemic, while supporting those most vulnerable, is at the top of the agenda in B.C.’s first proposed budget since this virus took hold.

#BREAKING B.C. projecting largest deficit in province's history ($9.7-billion) for 2021/22, after recording largest to date ($8.3-billion) in 2020/21. Province believes it could take seven to nine years before it's able to balance the budget. Listen for more @NEWS1130

— Martin MacMahon (@martinmacmahon) April 20, 2021

While the deficit was initially projected in December to hit $13.6 billion for the 2020/21 fiscal year, the province now says that number is closer to $8.1 billion, despite enormous spending.

“This $5.5 billion improvement is mainly thanks to higher revenues, but also somewhat lower spending and improved operating results in government organizations, including ICBC,” Finance Minister Selina Robinson said Tuesday.

“The fact that our forecast has shifted so much from only four months ago is a reminder that we’re still in the midst of a worldwide pandemic, which continues to make it rather difficult to predict how things will develop in the future,” she added.

The budget notes that “debt is expected to increase significantly to finance operating and capital investment needs of the province.”

Read more: Amid record deficit, B.C. doesn’t expect to balance budget for years

Looking ahead, the deficit for 2021/22 could hit a record $9.7 billion, with estimates suggesting B.C. will need seven to nine years before getting back to a balanced budget.

Robinson, who delivered her first provincial budget Tuesday, says this past year’s outlook improved as vaccines started to roll out and after there was stronger-than-expected economic activity in 2020.

However, the finance minister says Budget 2021 reflects the uncertainty we face, with no knowledge of when exactly the COVID-19 pandemic will end. There’s room to pivot, as needed, she adds.

Here are some of the highlights out of B.C. Budget 2021:

COVID-19: Supports and contingencies 

Budget 2021 proposes $8.7 billion in new investments across a three-year fiscal plan.

The budget maintains Pandemic and Recovery Contingencies of $3.25 billion for the upcoming 2021/22 fiscal year, with this money ensuring the province can continue to fund COVID-19 response and recovery measures. The B.C. NDP is also looking to allocate $1 billion in 2022/23, and $300 million in 2023/24 as part of these contingencies.

The plan also proposes to maintain ongoing supports for people and businesses through already-established programs, such as the B.C. Recovery Benefit and the Small and Medium Sized Businesses Recovery Grant. The B.C. Recovery Benefit was launched in December, with applications continuing to be accepted until June 30, 2021. It’s a one-time, tax-free payment of up to $500 per individual, and up to $1,000 for eligible families and single parents.

As a result of what it calls “gaps that were exposed or exacerbated by the pandemic,” Budget 2021 looks to address some areas that needed additional support.

That includes new, a $175 per month increase for income and disability assistance rates. Budget 2021 touts this as the largest-ever permanent increase.

It also includes a $50 increase to the Senior’s Supplement.

Health care

Improving care

The budget also proposes an additional $900 million for ongoing response, such as vaccination efforts, testing and contact tracing, and screening at long-term care.

But the budget also looks to make investments in other aspects of health care, such as a $585 million spending to train and hire health care workers, and $45 million to address systemic racism against Indigenous people in health care.

With the pandemic showing just how vulnerable seniors are, especially those in care, Budget 2021 also proposes $65 million to increase the number of care aides and providers to help seniors who are living at home and $12 million in funding to keep seniors who need complex supports home for longer.

Meanwhile, Budget 2021 plans to fund increases to capacity in diagnostic imaging and surgical care, as well as continue to build on previous work to address disruptions and wait times.

Mental health and addictions

The budget is looking to expand mental health and addiction services for British Columbians. Budget 2021 proposes $500 million in new funding to support the province’s strategy.

The NDP calls this the largest investment in mental health and addiction services in B.C. history.

The pandemic has exacerbated conditions like anxiety and depression for many in B.C., and it’s also had a significant impact on the ongoing overdose crisis, with 2020 marking a record year for deaths in this province.

In addition to funding already announced, Budget 2021 plans to increase support for children and youth in schools and the community, improving suicide prevention services and looks to expand culturally safe mental health and substance use services for Indigenous peoples.

Businesses

There’s little in the way of big, new, shining spending planned to support B.C.’s businesses, but the province plans to continue supporting them through many of the programs and plans brought in to help them amid the first, second, and third waves of the pandemic. In addition to keeping the Small and Medium Sized Businesses Recovery Grant going through the StrongerBC initiative, the budget notes that the program has been updated to streamline access and expand eligibility so more businesses can benefit.

The benefit can mean up to $30,000 in provincial grant funding for eligible businesses. That money can be used to support the business or help it adapt to the pandemic, such as by adding services, modifying spaces, or offsetting fixed costs.

Budget 2021 also sets aside $150 million for the Increased Employment Incentive tax credit, which provides a credit to private sector employers that “increase their payroll through hiring or compensation increases in the last quarter of 2020 compared to the previous quarter.”

A PST exemption on select equipment and machinery into the fall, as well as restaurants, bars, and tourism operators permanently being allowed to buy alcohol at wholesale prices are among the measures that will continue.

One of the hardest-hit industries has been the tourism sector. There are only modest new proposals for that sector, with Budget 2021 says the B.C. government has “reserved $100 million” to support recovery in the tourism industry.

The budget also looks to allocate $120 million in its 2021/22 Pandemic and Recovery Contingencies fund “for further tourism recovery and support.” That sum includes $20 million in funding to help community destinations enhance infrastructure through grants.

The province is promising to work with tourism and business stakeholders to ensure the sector is ready to welcome visitors back, when it is safe to do so.

Housing affordability

The B.C. NDP is also budgeting more than $375 million for homelessness response and affordable housing initiatives. In addition to continuing its investments into the Homes for B.C. Supportive Housing Fund, B.C. is looking to partner with the federal government to convert more existing buildings into supporting housing. It also hopes a partnership will help support modular housing plans to get more people off the streets. As part of the Homes for B.C. plan, the province aims to build 114,000 affordable homes over 10 years to give “more options to families, seniors, women and children fleeing violence,  students, and Indigenous peoples.”

Robinson notes that real estate has brought in billions of dollars, with the market heating up in previous months and properties selling for well over asking in many cases. The province has previously said it would not intervene to cool the market down, and it remains to be seen how this fits in with the B.C. NDPs affordability plans.

With record sales in 2020, a decrease in property transfer tax revenues, and seemingly no new measures to help with affordability, Robinson refuted suggestions that the B.C. NDP was going against its past promises.

“Absolutely not, we’ve been delivering on affordable housing from the moment we took office,” the finance minister, who was B.C.’s former housing minister, said. “Our 30-point plan, we’ve taken significant action to stem speculation. The speculation tax delivered 18,000 homes to British Columbians because of that tax. We’re making the biggest investment in subsidized housing and affordable housing in this province’s history, with 26,000 units already underway or in development, or, in fact, people living in them.”

She also points to the HousingHub projects, which the budget accounts for. (https://vancouver.citynews.ca/2021/04/15/bc-loans-developers-affordable-homes/)

Children and families

As part of Budget 2021, the B.C. NDP wants to increase access to affordable childcare, proposing to more that double the number of spaces for $10 a day care. However, that would only amount to about 3,750 new spaces in 75 additional centres across the province over three years, with Budget 2021 putting up $111 million to do it.

The B.C. NDP’s budget proposes improved access to early childhood educators training with an additional 110 post-secondary seats, with plans to double the current ECE wage top up from $2 to $4 an hour bringing the average wage to around $25 per hour. The province hopes this will help with recruitment and retention.

Budget 2021 also plans to make public transport free for all kids 12 years and under by the start of the new school year in the fall.

Read the full budget: