VANCOUVER (NEWS 1130) – With the governing NDP promising historic investments in housing and child care in the upcoming provincial budget, a new report from the Fraser Institute is suggesting a drastic boost in spending could threaten BC’s strong financial position.
The right-leaning policy group found that since 2001, BC governments have kept their average spending increases at a modest 3.5 per cent each year, well below provinces like Alberta and Quebec. But based on the NDP’s fall fiscal update, the report suggests program spending will nearly double in 2017/18 to 6.6 per cent.
“That means that more money, more taxpayer dollars would be going to service the government debt in the form of interest payments each year, and less going to the programs that British Columbians value,” says Charles Lammam, director of fiscal studies and co-author of the report.
“Right now BC can boast of having arguably the best finances in the country,” he adds, pointing to the previous four balanced budgets, “and all of this is premised on the last 15 years being one where the government has increased its spending in a modest fashion.”
The spending increase anticipated by the Fraser Institute does not include include the big-ticket policy changes promised in the 2015 election campaign, such as subsidized daycare.
Alex Hemingway, a public finance policy analyst with the Canadian Centre for Policy Alternatives (CCPA), counters that a lack of government spending in critical areas has contributed to various crises which are impacting British Columbians, as well as the provincial economy.
“Spending growth was low, we agree with that. But in fact, that meant failing to make crucial investments to address some crises we’ve been facing in BC in terms of housing and child care affordability, poverty, inequality, and the environment,” Hemingway says.
“If you’ve got a leak in your roof, it’s not fiscally prudent to save your money by not fixing it. That’s actually is going to end up costing you more in the long run, and it’s the same situation where we fail to make social investments in BC.”
The CCPA estimates that the lack of affordable child care shrinks the BC economy by keeping thousands of young parents out of the workforce, and high levels of poverty cost the economy about $8-9 billion a year.
Tuesday’s throne speech promised historic investments in both housing and child care. Specifics are set to be revealed when the 2018/19 provincial budget is released on Feb. 20.
Lammam argues the province is at a “crossroads”, and that British Columbians should closely examine how the NDP manages spending going forward.