The spectacular and unprecedented implosion of the B.C. Conservative caucus that forced its leader to resign overshadowed another seismic event last week.
That would be the release of the government’s first quarterly financial report, which served as a reminder that the province’s fiscal situation continues to deteriorate.
The budget deficit continues to balloon in size and will likely come close to exceeding $14 billion when all the bills are paid. This, even though income tax revenues climbed almost $1 billion higher than expected.
A combination of a $300 million forecast error of natural gas revenues and another expensive ($600 million) wildfire season offset that tax revenue gain. Plus, slumping natural gas prices – this commodity is increasingly a big part of the government’s economic strategy – combined with a sluggish real estate market do not bode will for future budgets.
Meanwhile, the provincial debt continues to soar to record heights. It currently sits at $183 billion and will grow to $235 billion by the end of the current three-year fiscal plan.
When the NDP took office in 2017 the debt was $65 billion and when Premier David Eby assumed the helm it stood at $107 billion so it will have more than doubled on his watch (presuming he is still premier two years from now).
But while all these numbers are somewhat mindboggling, there is no simple solution or clear path out of this situation.
Almost no one, other than the far left, talks about significantly raising taxes to greatly increase government revenues. It would take a gargantuan lift in both personal income and business taxes to have any impact, and no politician from any electable political party will advocate that approach.
There is a louder cry to reduce government spending, but this is where things get contradictory and even hypocritical.
More than 60 per cent of tax dollars are spent on two areas alone: health and education. Another 10 per cent pay for social services.
The NDP government has long seized on this fact to defend its spending plans, betting that the electorate will take debt and deficits over spending cuts in health care and education.
They are also betting that infrastructure spending on hospitals, schools and highways – the main contributors to the increasing debt — are more popular than forgoing that kind of spending in favor of holding the line on debt levels.
And given that Prime Minister Mark Carney himself is on a massive spending spree with huge increases in government debt and continues to soar in popularity, the NDP government may be correct in its assessment of voters’ attitudes.
Huge deficits and massive debt levels will be with a long time it seems. Whether they become pivotal election issues at either the federal or provincial levels remains to be seen, but right now both the B.C. and Ottawa governments are betting they will not be.
Keith Baldrey is Global BC’s legislature bureau chief.
Keith.Baldrey@globalnews.ca
