British Columbia Finance Minister Katrine Conroy delivered her first budget today, Stronger B.C., for everyone. Today’s budget comes on the heels of Premier David Eby’s first 100 days in office, which have been marked by a flurry of spending commitments amid a significant financial surplus.
Budget 2023 invests $8.7 billion more in operating funding across the three-year fiscal plan to support new priority measures.
B.C. is a great place to live, but people are facing real challenges – not only from global inflation and the pandemic, but from ongoing and systemic challenges. This year’s budget helps protect people who can’t afford today’s high prices and takes action on the issues people care about, like finding affordable housing and accessing health care,” said Katrine Conroy, minister of finance.
Premier Eby has also been signalling that, with potential global economic challenges ahead, the priority is investing in health care, housing and affordability–now.
Our government believes that there are other deficits other than just fiscal when we are talking about the future of the province.” – Premier Eby
This year’s budget has unprecedented spending for health care and capital expenditures, but economists have expressed concerns about the inflationary pressure this spending could exacerbate in a period of high interest rates and diminishing savings.
Spending of the surplus continues
B.C.’s quarterly fiscal update in November 2022 reported a likely $5.7 billion operating surplus. Today, that number was confirmed to be sitting at $3.6 billion, because of end-of-year spending to date.
In a pre-budget press conference on Monday, Minister Conroy said economic growth in B.C. is expected to be slow, but still growing. As a result, the government is likely going to be posting deficits for the next few years, stating, “things probably aren’t going to be quite as rosy as they are this year.” Premier Eby’s cabinet has pointed to this economic outlook as the reason for spending down this year’s surplus.
The government is tabling Supplementary Estimates to give themselves the legislative power to spend the surplus on pressing priorities ahead of the March 31 deadline. Minister Conroy has said surplus spending will continue until the end of the fiscal year, after which point remaining surplus money will be moved to debt payment. That spending includes:
- $1 billion for the Growing Communities Fund;
- $500 million to support BC Ferries fare affordability;
- $450 million for Critical Community Infrastructure funding;
- $160 million for food security initiatives will support British Columbians access an affordable supply of nutritious food with trusted community partners such as trusted community partners including United Way;
- $150 million for the BC Cancer Foundation;
- $150 million for local, Indigenous, and remote communities to get ready for Next Generation 911 services;
- $100 million for a Watershed Security Fund to enable projects that benefit a range of provincial priorities, including wild salmon health, clean drinking water, biodiversity, flood resilience, economic opportunities, and reconciliation with First Nations;
- $75 million to accelerate existing reconciliation agreements with First Nations; and
- $45 million for public libraries
Budget overview
Key highlights
- $1 billion in new funding to expand mental health and addictions services, with a focus on treatment and recovery;
- The introduction of free prescription contraceptives, beginning in April 2023 – making B.C. the first province to do so;
- An increase to the carbon tax and the introduction of an output-based pricing system for large emitters (e.g., pulp and paper mills, oil & gas operations, and large mines);
- Introduction of the long-awaited Renter’s Tax Credit, which will be an income-tested $400 tax credit for moderate and low-income renters, starting in 2024; and,
- Foreshadowing the $480 million Future Ready Skills Plan and a refreshed housing plan, both set to be released this spring.
Key numbers
- Forecast Deficit: Budget 2023’s three-year plan presents the following deficits: $4.2 billion in 2023-24, $3.8 billion in 2024-25, and $3.0 billion in 2025-26.
- Real GDP: The province’s economy expanded by an estimated 2.8% in 2022, and growth is expected to slow to 0.4% in 2023. Real GDP is expected to grow by 1.5% in 2024 and range between 2.2% and 2.4% annually over the medium-term (2025 to 2027).
- Capital spending: Taxpayer-supported capital spending over the fiscal plan is projected to be $37.5 billion.
- Revenue outlook: Total government revenue is forecast at $77.7 billion in 2023-24, $79.7 billion in 2024-25, and $82.2 billion in 2025-26.
- Debt: B.C.’s taxpayer-supported debt is projected to be $63.7 billion at the end of 2022-23. The taxpayer-supported debt-to-GDP ratio is expected to be approximately 18.9% in 2023-24, and remain below 25% over the fiscal plan.
- Contingencies: The government is setting aside $1 billion for pandemic recovery, and $750 million over the next two years to support continued recovery efforts from climate emergencies.
Budget details
Budget 2023 made the following announcements, presented by theme:
On affordability
Addressing affordability in B.C. has been a key commitment of the current government since the 2017 election. Premier Eby indicated before the budget release that measures to address cost of living, especially for the most vulnerable, would be prioritized. Affordability measures in Budget 2023 include:
- Another round of the BC Affordability Credit, in follow-up to the January 2023 credit;
- $214 million to expand existing K-12 school food programs;
- $119 million for free prescription contraception starting April 1, 2023;
- $151 million to increase student financial aid allowances;
- $558 million to increase financial supports for income and disability assistance clients, including raising the shelter rates by $125 per month;
- $264 million to increase financial supports for foster families and other caregivers;
- Enhancement to the BC Family Benefits starting in July; and,
- Freezing basic car insurance rates for another two years.
On conservation and natural resources
- $77 million to help speed up natural resource permitting and begin work to modernize the permitting service model;
- $6 million over three years to develop B.C. Critical Minerals Strategy; and,
- $100 million over three years for building active transportation networks.
On conservation, in 2022, the province started a path toward a new approach to sustainable forest management through the planned forestry paradigm shift to balance ecosystem health and community resiliency. As per the DRIPA Action Plan, the Budget outlined that “the future lies in a rights-based partnership approach to decisions respecting land, water and resource stewardship.”
In addition to the Watershed Security Fund, the Budget included the following conservation commitments:
- Commitments to implement an Indigenous Guardians training program under the Future Ready plan. The Plan will include funding to support Indigenous-led programs, such as a new Indigenous Guardian program that will be co-developed with Indigenous Peoples;
- $70 million in operating funding and $31 million in capital funding over three years for provincial parks and other outdoor recreation sites and trails; and,
- $21 million over three years to initiate eight more regional Forest Landscape Planning tables, expanding on the existing four.
On health care and mental health supports
Amid a national dialogue on health care, Budget 2023 has $6.4 billion in new investments over three years. Budgeted health care spending includes:
- $2.6 billion for health services, including $270 million more for cancer care;
- $1 billion over three years to support targeted investments the province’s health workforce strategy as announced in September 2022;
- $11.2 billion in capital spending on infrastructure in the health sector;
- $1.1 billion for the refreshed primary care strategy that focuses on attracting and retaining family practitioners, including a new compensation model;
- $875 million in 2023-24 for ongoing COVID-19 health response measures; and,
- $867 million in funding to support mental health, addictions and treatment services across the continuum of care, including:
- The expansion of treatment and recovery beds, the development of new recovery communities to support long-term recovery, Indigenous treatment centres, and wraparound services for youth;Expanding the Red Fish Healing Centre model of care to other regions of the province (allows people to receive complex mental health supports closer to home)
- Expansion of mobile response programs (also known as Car Programs) that combine police and health workers, and Peer Assisted Care Teams (PACT).
On climate and energy
- Beginning April 1, 2023, carbon tax rates are increased by $15 per tonne of CO2 equivalent emissions annually until reaching $170 per tonne in 2023;
- The Climate Action Tax Credit will also increase effective July 1, 2023
- Large emitters will be exempt from tax imposed under the Carbon Tax Act; instead, effective April 1, 2024, these operations will be subject to a made-in-BC output-based pricing system, under which they will pay for emissions that exceed performance-based emissions limits; and,
- Operations that don’t meet the threshold for being regulated under the OBPS will be able to opt in; and,
- Further policy development to finalize details of the OBPS will be conducted over 2023.
- $40 million for the CleanBC Go Electric Commercial Vehicle Pilots (CVP).
On reconciliation
The Declaration Act Action Plan was released on March 30, 2022. B.C. has committed to co-developing a new fiscal framework with Indigenous Peoples that recognizes Indigenous rights as outlined in the United Nations Declaration on the Rights of Indigenous Peoples. This approach was echoed in today’s budget:
“Funding decisions are underpinned by government’s commitment to tangible reconciliation through the implementation of the UN Declaration on the Rights of Indigenous Peoples by prioritizing opportunities for Indigenous Peoples to be full partners in the inclusive and sustainable province we are building together.”
Budget 2023 includes commitments to:
- Accelerate funding for First Nations agreements – Under supplementary estimates, nearly $75 million will be accelerated to support existing reconciliation initiatives with First Nations across B.C., including in natural resource and economic development, clean energy development, land purchases, community health and wellness programs, and emergency management.
- Effective on royal assent, Treaty First Nations and the Nisga’a Nation will have the ability to establish property tax exemptions for members, constituents and citizens for property on their lands.
On housing
The province has announced their intention to introduce a refreshed housing plan in spring 2023, backed by $4.2 billion in operating and capital funding over three years – what the government claims is the largest three-year housing investment in B.C. history. Budget 2023 spending on housing includes:
- $394 million for transit-oriented development
- The introduction of a new Renter’s Tax Credit,starting next year (2023 personal income taxes)
- The credit will be income-tested with a maximum amount of $400 per year for households with moderate and low incomes
- $91 million over three years for a new pilot program to provide financing incentives to encourage homeowners to develop secondary suites (hoping to have pilots running by next year)
- New property transfer tax incentive to encourage the construction of new purpose-built rentals
- $1.5 billion in operating and capital funding to help reduce homelessness, including more funding for modular homes, complex care and encampment response measures
On economic growth
The budget’s economic section focused primarily on the Future Ready Skills Plan, which is set to be released by Post-Secondary Education and Future Skills Minister Selina Robinson this spring. The budget included the following economic commitments:
- $480 million over three years to support the Future Ready Skills Plan. The plan is set to include:
- $39 million for new short-term skills training grant
- Funding to assist SMEs in finding and implementing practical solutions to current labour market challenges;More opportunities for Indigenous Peoples, including funding to support Indigenous-led programs, such as a new Guardian training program that will be co-developed with Indigenous Peoples;
- Further funding to increase number of trained early childhood educators, health care workers, and tech workers; and,
- $58 million to expand supports for newcomers and speed up foreign credential recognition
- Implementing the ‘ESG Framework for Capital’ as guidance and resources for provincial infrastructure project teams to achieve child-care, workforce, CleanBC, and mass timber objectives.
On climate-resilient communities
- $85 million over three years to increase emergency-management capacity;
- Funding will also support more cross-ministry coordination, including working collaboratively with local governments and First Nations
- $750 million (committed in Budget 2022) in operating funding for ongoing disaster response and recovery (including Disaster Financial Assistance program);
- $100 million to support repair or replacement of provincial public-sector infrastructure damaged from climate emergencies; and,
- $64 million over five years for firefighting equipment, building on the government’s move to year-round staffing of B.C.’s wildfire service.
On safe and inclusive communities
- $317 million for policing and enforcement programs, including launch of two new enforcement programs – Repeat Violent Offending Intervention Initiative and the Special Investigation & Targeted Enforcement (SITE) Program
- These programs will provide coordinated response teams made up of police, and dedicated prosecutors and probation officers, to respond to public safety concerns related to repeat, violent offenders in B.C. communities
- $25 million over the plan to support the first phase of modernization of the Police Act
- $21 million over three years to support cannabis operations, including licensing, compliance and enforcement
- $80 million over three years will be dedicated to improving access to justice, including:
- $44 million to expand the network of Indigenous Justice Centres to 15 locations and one virtual centre
- $16 million over the plan to help with virtual and after-hours bail hearings
- $9 million over three years to support government’s implementation of the Anti-racism Data Act established in 2022
Tax measures
- Effective April 1, 2023, carbon tax rates will increase by $15 per tonne of CO2 equivalent emissions and, accordingly, the climate action tax credit will increase July 1, 2023
- Effective April 1, 2024, large industrial operations will be exempt from the carbon tax and instead be subject to a new output-based pricing system
- Effective January 1, 2023, they will introduce a $400 income-tested renter’s tax credit, effective January 1, 2023
- An increase in the BC Family Benefit, effective July 1, 2023
- Extend farmers’ food donation tax credit, effective January 1, 2024
- Extend interactive digital media tax credit, effective September 1, 2023
- Effective January 1, 2024, purpose-built rental buildings will be exempt from the further 2% property transfer tax applied to transactions over $3 million
Capital spending
In Budget 2023, capital spending on schools, hospitals, roads, bridges, hydroelectric projects and other infrastructure around the province is expected to total $48.5 billion over the three-year period. This includes $37.5 billion in taxpayer-supported infrastructure spending, the highest level ever, according to the government.
This includes:
- $1.4 billion in new operating and capital funding to support inclusive economic development and climate resiliency;
- $567 million over three years for climate resiliency, including funding to support active transportation, CleanBC initiatives and for emergency management programs;
- $13.3 billion to create and maintain a safe, reliable and equitable transportation network;
- $100 million in capital funding over three years to support more active transportation investments across B.C;
- $35 million in operating funding and $14 million in capital funding to maintain and upgrade forest service roads;
- $100 million in capital funding in each year of the fiscal plan to support repair or replacement of provincial public-sector infrastructure damaged from climate emergencies;
- $3.4 billion over the next three years to build new schools to respond to enrolment growth; and,
- $5.5 billion in total capital spending over the next three years by post-secondary institutions throughout the province.
Opposition response
With an election on or before October 19, 2024 in British Columbia, the budget was also framed in terms of choices that other parties may not make.
BC Liberal Party
Earlier this week, B.C. Liberal Party Leader Kevin Falcon said the government is spending too much money in too many areas.
This was echoed in the party’s official response to the budget in the legislature. Kamloops-North Thompson MLA Peter Milobar, finance critic for the B.C. Liberals, accused the budget of being more of the same from the previous six budgets tabled by the NDP, saying “this is another budget full of glossy marketing and large promises, but short on deliverables and results that people can actually count on to improve their daily lives.”
Milobar identified record house prices and rents, a rising cost of living and the health care crisis as examples of the government’s failure to respond effectively to the pressures facing B.C. residents in the six years since the NDP took power.
The BC Liberal Party described the affordability measures in the budget. He described the renters’ rebate for housing as “too little, too late” and reminded the premier of his own words from earlier this year that, “you can’t tax your way to housing affordability,” despite maintaining 13 individual housing taxes.
On health care, and cancer care in particular, the BC Liberals said the budget includes nothing of substance to address the record wait times and bring meaningful changes to cancer care in the next 12 months.
Milobar and the B.C. Liberals also criticized the budget’s lack of focus on public safety and support for victims of crime. In Vancouver, where serious assaults and hate crimes have increased in recent years, it remains unclear if increases in policing as promised by the solicitor general, will be priced into this year’s budget, or the next.
B.C. Liberal Party Leader Kevin Falcon said after, “this budget may come with glossy new packaging, loud fanfare, many uses of the word “record” and a shiny new premier, but it isn’t fooling anyone. This is the same old NDP rhetoric and the same promised NDP priorities that have left our province in concurrent crises and with some of the worst results in the country.”
Green Party
B.C.’s Green Party has recently called for a tax break to help businesses shift to a four-day work week pilot project.
The Green Party also called for an increase in disability rates to above the poverty line and for psychologists fees to be covered by the Medical Services Plan, which was not featured in today’s budget.
For more information on today’s budget, see the links below:
