B.C. Budget 2021: Social spending, COVID recovery yields $9.6b deficit

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The B.C. government’s first budget since the start of the pandemic included significant spending on mental-health and addiction services, housing and supports for seniors. But critics decried a lack of major spending to prop up businesses struggling with the fallout of the pandemic and little support for workers without a provincial paid sick leave program.

Finance Minister Selina Robinson tried to strike a balance between continuing to support people and businesses during COVID-19’s crushing third wave and post-pandemic economic recovery. The budget, unveiled Tuesday, calls for spending of up to $67.6 billion in fiscal 2021-22 with an estimated $9.7-billion deficit. There were no new major taxes.

It did include $120 million over three years to prop up the tourism sector. It also followed through on an election promise to make transit free for children under 12, which will cost taxpayers $26 million.

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Iglika Ivanova, senior economist with the B.C. office of the Canadian Centre for Policy Alternatives, said considering the crisis created by the pandemic, the NDP government went with “a surprisingly status quo budget.” She said the government relied on a continuation of its 10-year plans for child care, housing and climate change announced in the 2018 budget but delivered few new social initiatives.

“Unfortunately, this budget misses the opportunity to become … the most significant budget of the generation, which I thought it would be,” Ivanova said. “Considering the significant, very deep, gender and racial inequalities that the pandemic spotlighted, I would have liked to see a lot more ongoing investments in speeding up some of those programs on affordable housing and child care, and on addressing their urgent climate emergency.”

Noticeably absent from the budget was a paid sick leave program, which the B.C. Federation of Labour has said is crucial to stopping the spread of COVID-19 by ensuring people don’t go into work sick. Labour groups have said the federal government’s Canada Recovery Sickness Benefit, which pays $500 a week for anyone sick with COVID-19, is an inadequate measure that doesn’t replace a worker’s full wages.

Robinson told reporters she was disappointed the federal government did not include a paid sick leave program in its budget released Monday. She did not say why B.C. did not fund its own program.

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The budget, Robinson said “responds to the pandemic — and prepares us for future challenges — by investing in health care. It strengthens the services we all depend on. And it builds a bridge to recovery and the better days that are ahead.”

The government was slammed for a lack of new programs to support small and medium businesses foundering amid stop-and-start pandemic restrictions. It rolled over $195 million of the $300 million announced last year for the small and medium business recovery grant program which business owners have struggled to qualify for.

“I have to say how disappointing it was for anybody that was looking for this budget to give them any hope for the future,” said B.C. Liberal finance critic Mike Bernier. The budget produced huge spending and a huge debt load but no clear plan, he said. The party also noted that despite the worst public health crisis in a generation, the New Democrats cut $1.1 billion in funding for health authorities compared to last year and  slashed $53 million from school district budgets.

“It’s quite unfortunate to see that in the middle of one of the worst pandemics ever, that the government failed to recognize the needs of British Columbians and what they’re asking for right now to help get through and what’s going to happen afterwards and how we’ll rebuild.”

The government will spend $2.6 billion over three years to fund new health-care programs, including $585 million to train and hire up to 3,000 people in health-care support roles. Robinson said that will build capacity in long-term care facilities and help people who lost jobs in other sectors to the pandemic. Another $68 million over three years will increase the number of care aides and community care providers to provide help to seniors living at home.

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Robinson acknowledged “the pandemic has taken a significant toll on the mental well-being of British Columbians.” As a result, she said the government promised a “record” half-billion in spending over three years to address the opioid crisis and improve mental health and addiction services.

Of that funding, $330 million will be earmarked for addiction treatment and recovery services, part of which will create 195 new substance-use treatment and recovery beds.

B.C. Green Leader Sonia Furstenau said the government missed an opportunity to develop a pilot project to cover mental health services under the province’s medical services plan so that people would not have to pay out of pocket for a visit with a counsellor or psychologist.

This funding also includes $152 million for opioid treatment such as overdose prevention supports. Furstenau said she was disappointed that the budget did not include funding to expand the province’s safe supply program, which provides safe prescription opioids to reduce the reliance on toxic street drugs.

The budget also includes a pandemic contingency fund of $3.25 billion for the current fiscal year, $900 million of which will be used to pay for COVID-19-related health measures including the vaccine rollout, testing and screening measures and personal protective equipment for front-line health-care workers.

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The tourism sector will be buoyed by $120 million over three years to fund community infrastructure grants, supports for “anchor” attractions and measures to promote domestic and international travel to B.C. when health restrictions are lifted.

On housing, the budget included a previously announced $2-billion top-up to the HousingHub program, which provides low-cost loans to developers and non-profit housing providers to build market or below-market housing to help thousands of families with an average annual household income of $75,000.

Kris Sims, B.C. director of the Canadian Taxpayers Federation said she was pleased to see no major tax increases. However, she’s concerned that the provincial debt will soar from $87.4 billion in 2020-21 to $127 billion in 2023-24, a 45 per cent increase. Sims said the government’s spending on infrastructure amounts to “using our kids’ credit cards” to finance those projects.

Robinson projected it will take seven to nine years for the province to return to balanced budgets. She said the provincial debt is manageable due to low interest rates.

The budget sets out $26.4 billion over three years for infrastructure projects, including $7.8 billion on new health construction projects including the new Surrey hospital and cancer centre and the new St. Paul’s Hospital, as well as new hospitals in the Cowichan District, Dawson Creek and District, Terrace and Stuart Lake.

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The government will spend $7.6 billion over three years on transportation investments however there was no new money for the George Massey Tunnel project. Horgan has previously said the province will tap into federal cash for help on that project.

Critics said the government did not spend enough on the life sciences sector to ensure the province can produce vaccines and do medical research to prepare for the next pandemic. Premier John Horgan has consistently lamented the dearth of Canadian-based vaccine supply which forces the province to rely on inconsistent vaccine imports.

Robinson said the $500 million over three years for the InBC Investment Corporation will support the life sciences sector through investments that will incentivize innovative businesses to stay in B.C. and create jobs. However, Sims is concerned the program amounts to a taxpayer-funded corporate welfare program. A better way to attract companies, she said, is to cut the corporate tax rate.

The projected $13.6-billion deficit projected for the fiscal year ending March 31 has shrunk to an $8.1-billion deficit thanks to higher-than-expected revenues, including tax revenue as a result of activities such as a strong housing market, robust retail sales and moderately lower spending. The government also projects a $279-million increase in the net income for commercial Crown corporations’ as a result of higher revenue coming into the Insurance Corp. of B.C.

kderosa@postmedia.com