A major British Columbia business group is sounding a “wake-up call” over the provincial government’s money management.
B.C.’s latest fiscal update forecasts an $8.9 billion deficit for 2024, the province’s largest ever and something the Business Council of B.C. says is unsustainable.
“That’s larger than the deficit we ran during the COVID-19 pandemic,” said Business Council of B.C. vice-president of policy David Williams.
“We have the largest deficit relative to the size of our economy of any province, we’ve got rapidly rising indebtedness, and we’ve seen repeated credit rating downgrades.”
According to the council, the federal government is currently running a deficit of 1.3 per cent of GDP, Alberta’s is 1.1 per cent of GDP and Ontario’s is 0.9 per cent.
British Columbia’s deficit is 2.1 per cent of its GDP.
By 2026/27, Williams said the province will be spending $600 for every person in the province to service the costs of its growing debt.
He said newly-appointed Finance Minister Brenda Bailey needs to prioritize reining in the deficit while finding ways to speed up economic growth — whether that be through tax changes, streamlined regulations or reduced permitting times.
BC Conservative finance critic Peter Milobar said with big capital projects facing delays and ballooning budgets, that problem will only get worse.
“That chews away the ability to build other schools or other hospitals or other transit projects at the same time, and then it trickles down to that debt servicing cost which leads to those credit downgrades,” he said.
“It’s a downward spiral.”
Bailey, just days into her new role, said eliminating the provincial deficit will be job number one.
“It is the first thing I will work on, a plan to get back to balance,” she told Global News.
Bailey is slated to deliver her first budget in February 2025.