Setting the scene
British Columbia Finance Minister Brenda Bailey tabled her first budget as Finance Minister today, Standing Strong for B.C. This budget is a response to ongoing economic uncertainty, heightened by the March 4th imposition of 25% tariffs on Canadian exports and 10% tariffs on Canadian energy entering the United States. Just hours prior to Minister Bailey presenting the budget, Prime Minister Justin Trudeau announced the imposition of counter tariffs starting with $30 billion worth of goods immediately, and tariffs on the remaining $125 billion on American products in 21 days’ time.
At opening on March 4th, the S&P/TSX Composite Index and the general U.S. markets had taken a significant turn due to the uncertainty created by the Trump Administration’s comments on tariffs. When the bell rang at the close of markets on March 4th, the markets had lost upwards of $3.3 trillion in market value, wiping out gains made since President Trump was elected for his second term. As the first budget in Premier Eby’s renewed mandate and facing down four more years of a Donald Trump administration, Budget 2025 aims to bolster the province’s economic resilience while continuing investments in key public services and infrastructure.
As Budget Lock-Up began, attendees were ushered into the main auditorium of the Victoria Convention Centre for an unscheduled address by Premier Eby. The Premier emphasized that “all bets are off” following the imposition of across-the-board tariffs by the Trump administration. As a start, the Premier announced that B.C. will be removing liquor from all Republican led states from Liquor Stores across the provinces and highlighted that this is just the beginning.
In her remarks, Minister Bailey emphasized the importance of preparing B.C.’s economy for potential external shocks. She highlighted that while B.C.’s population continues to grow, economic headwinds such as slowing resource revenues and tariffs necessitate a proactive approach. The budget reflects a strategic balance between targeted investments and fiscal responsibility.
With uncertainty on the horizon, it is prudent to protect the essentials and prepare for what comes next by investing in our greatest resource – the people of British Columbia. While our economy is built to withstand the threat of U.S. President Donald Trump’s tariffs relatively better than most other provinces, the impact would still be significant. Our budget prepares us to carefully navigate these uncharted waters so we can put people first and support businesses as we build a stronger, more self-sufficient future.”
– Brenda Bailey, Minister of Finance
Budget 2025 commits $9.9 billion in new operating funding over the fiscal plan, including $7.7 billion in new funding for health care, education and social services and $45.9 billion in capital expenditures. The budget also includes $4 billion in annual contingencies to address unpredictable costs, including a new collective bargaining mandate, pressures on critical services and for emerging needs like tariff response measures.
Deficit and economic outlook
As of March 4, the direct economic impacts of U.S. tariffs are yet to be known. In the absence of tariffs, B.C. was expected to see modest economic growth with real GDP growth projected at 1.8% in 2025 and 1.9% in 2026. In her presentation, Minister Bailey stated that these numbers did factor in some economic uncertainty around the prospect of tariffs, but not the direct impacts.
Deficit spending is forecast to remain in the medium term, with taxpayer-supported debt projected to reach $166.5 billion by 2027/28. Deficits are forecast to decline over the fiscal plan period from $10.9 billion in 2025/26 to $9.9 billion in 2027/28. Budget 2025 presented an updated deficit of $9.1 billion for 2024-25, $273 million lower than forecast in the Fall 2024 economic and fiscal update. While promising to return to a balanced budget, the B.C. Government has framed their approach as a multi-year effort without establishing a specific target date.
The Debt-to-GDP ratio is forecast to increase from 22.9% in 2024/25 to 34.4% in 2027/28. Despite this increase, B.C.’s debt-to-GDP ratio remains one of the lowest in Canada and is currently below that of most provinces, including Ontario and Quebec.
Natural resource sector
Natural resource revenue is forecast to increase by 28.4 per cent in 2025/26 from 2024/25 due to significant increases expected in natural gas prices as well as increases in lumber prices, stumpage rates, electricity and coal production volumes. Despite a mandate letter commitment to increase timber harvest levels to 45 million cubic meters, Budget 2025 forecasts a decrease in harvest volumes from 31 million cubic meters in 2024/25 to 29 million cubic meters by 2027/28.
Natural gas royalties are expected to increase 59.7 per cent in 2025/26 mainly due to a 113 per cent increase in forecast natural gas prices, increased royalties from natural gas liquids, and high production volumes, partially offset by increased utilization of infrastructure and royalty program credits.
Mining and minerals revenue is forecast to increase 35.2 per cent in 2025/26 mainly due to higher production volumes as tax revenue reflecting a stronger US dollar. Revenue is projected to average 14.4 percent annual decline over the following two years due to a softened outlook for metallurgical coal prices reflecting global oversupply.
Key budget priorities
Budget 2025 aims to safeguard British Columbians against economic uncertainty through:
- Defending B.C. against the impact of U.S. tariffs.
- Strengthening health care and services people rely on.
- A strong, diversified economy for B.C.
- Lowering costs and providing affordable homes.
- Making communities stronger and safer.
Defending B.C. against the impact of U.S. tariffs – Strengthen, Diversity, and Respond
Budget 2025 is a reflection of the uncertain economic times, as British Columbia and Canada as a whole faces tariff threats from the United States. The uncertainty leading up to this point, as well as the unknown duration of the trade dispute and the direction of future retaliatory tariffs from the U.S. Administration, makes it difficult to predict the precise impact of tariffs. The budget tabled today looks to provide adequate room to respond to these uncertainties with what fiscal measures may be required to protect British Columbians and industry.
B.C. has reduced its reliance on the U.S. as a trading partner in recent decades. The share of B.C.’s goods exported to the U.S. dropped to 52.8% in 2024, compared to 65.8% in 2000. At the same time, B.C. has expanded its trade relationships with key Asian markets, including China and South Korea. In comparison, around 88% of Alberta’s goods exports and an average of 76.1% of Ontario and Quebec’s goods exports went to the U.S. in 2024. This places B.C. in a relatively stronger position than other provinces when it comes to mitigating the impacts of U.S. tariffs.
Budget 2025 provides a point-in-time scenario that projects the following potential impacts of U.S. tariffs on B.C.’s economy and finances: a $43 billion cumulative decrease to real GDP by 2029; 45,000 fewer jobs by 2029; unemployment rate increase to 6.4% in 2025, and 6.7% in 2026; $3.2 billion to $5 billion annual decline in corporate profits and up to $1.4 billion annual loss in revenue.
The Premier and Finance Minister both emphasized that the Province is ready to respond to any scenario with a three-part plan which includes: strengthening B.C.’s economy, by expediting projects and supporting industry and workers; diversifying trade markets for products so B.C. is less reliant on U.S. markets and customers; and responding to U.S. tariffs with tough counter-actions and outreach to American decision-makers.
As noted as part of the response, the Province is streamlining the reviewing and permitting process of major natural-resource projects that are ready to move forward. These projects are estimated to be worth $20 billion and to support approximately 8,000 jobs. The Province is bringing together a broad coalition of allies to strengthen B.C.’s economy, diversify our markets and respond as Team Canada, including a trade and economic security task force that brings together business, labour and Indigenous leadership.
A new Premier’s task force on agriculture and food economy is working on both short- and long-term solutions to help farmers find new markets in the face of tariff uncertainty, and aims to help British Columbians get reliable access to affordable and nutritious food.
Economic diversification
Following a three-year pilot, Budget 2025 invests $30 million over three years in the Integrated Marketplace Initiative to connect tech companies with commercial partners to test their products and services in real-world environments. To boost the success of the tech sector, Budget 2025 increases the Interactive digital media tax credit from 17.5% to 25% and makes the credit permanent. This aims to help companies attract the talent they need to grow their teams and compete for more contracts, strengthening a robust and sustainable industry.
Budget 2025 also encourages investment in B.C.’s small businesses, with an increase to the investment limit for individuals through its small business venture capital tax credit and a temporary $15 million increase to the program’s budget for 2025-27.
Incentive programs for B.C.’s film sector were also strengthened. Film Incentive B.C. credits for Canadian content productions increase from 35% to 40%, retroactive to Jan. 1, 2025. To support international projects made in B.C., the production services tax credit is increasing from 28% to 36%. Projects claiming the production services tax credit with B.C. production costs greater than $200 million are eligible for extra support, with a new 2% major production tax credit.
Healthcare investments
Budget 2025 provides $4.2 billion over three years to increase capacity in the health-care system, improve patient outcomes and support a growing demand for services. This includes $443 million to support the primary care strategy and more than $870 million toward the opening and operation of new facilities, including the new St. Paul’s Hospital in Vancouver, the Royal Columbian Hospital redevelopment in New Westminster, the Mills Memorial Hospital replacement in Terrace and Royal Inland Hospital enhancements in Kamloops.
$15.5 billion is allocated over three years in capital investments for new and upgraded acute care, long-term care and cancer care facilities across the province. Major projects include the construction of a new acute care tower at the University Hospital of Northern BC; the new Surrey Hospital and new facilities at Surrey Memorial, new long-term care facilities that are starting construction in Chilliwack, Kelowna and Squamish, and cancer centres in Nanaimo and Kamloops.
There is $500 million in new funding over three years for addictions treatment and recovery programs that are underway. These include Road to Recovery, Foundry, secure care, supports for children and youth and Indigenous-led treatment, recovery and aftercare services.
Education spending
$370 million over three years is earmarked for K-12 education. This includes hiring more teachers and supporting the growing number of children with special needs with funding for special education teachers, teacher psychologists and counsellors through the Classroom Enhancement Fund.
Capital investments in education will total $4.6 billion over three years, going towards building, renovating and seismically upgrading schools. Major projects include $392 million in prefabricated school projects that will create 6,485 new seats across 16 school districts; $203 million for the new 1,900- seat Smith Secondary school in Langley; and $151 million for the new 630-seat Olympic Village elementary school in Vancouver.
There is $45 million in new funding over three years for the First Peoples’ Cultural Council, nearly doubling the Province’s past annual investments for First Nation-led programming.
As part of previous budgets, B.C. has committed more than $700 million over three years through the StrongerBC: Future Ready Action Plan to improve access to post-secondary education while helping close the skills gaps that employers are facing.
Youth in care and disability supports
$821 million is allocated over three years to support children in government or alternative care arrangements. These programs include foster care and specialized homes, independent living programs, and programs supported by Indigenous Child and Family Service Agencies.
An additional $172 million is allocated over three years for children and youth who have been diagnosed with autism and families accessing medical benefits for children with severe disability or complex health care needs. New funding will provide supports to 2,700 more children, for an estimated total of nearly 30,400 children in youth in 2025-26.
To support the increased demand for income, disability and supplementary assistance, the budget provides $1.6 billion more over three years. Approximately 253,000 people receive assistance, including the financial, transportation and crisis supplements, as well as counselling and health supports in the province. Budget 2025 provides an additional $380 million over three years to Community Living BC to meet these growing demands.
Transportation and transit upgrades
$142 million over three years is being allocated to maintain highways, bridges and to support critical transit services to ensure the safe and efficient movement of goods and people. This includes: $95 million in additional funding for critical highway and bridge maintenance throughout the province; and $47 million toward BC Transit to ensure reliable bus and handyDART services in 130 communities outside the Lower Mainland.
Budget 2025 also includes $15.9 billion in capital funding to improve transportation networks throughout B.C. Examples include:
- $6 billion for the Surrey Langley SkyTrain;
- $5 billion for two phases of the Fraser Valley Highway 1 corridor improvement program;
- $4.2 billion for an eight-laned immersed tube tunnel to replace the George Massey Tunnel on Highway 99;
- $3 billion for the Broadway Subway project;
- $1.2 billion for upgrades to several sections of Highway 1 between Kamloops and Golden; and
- $538 million for two projects to restore access to critical road infrastructure in the Cariboo region damaged by landslides.
Housing and affordability
Introduced in 2024 with initial program funding of $198 million over three years, BC Builds is a housing program to speed up the development of new homes for middle-income earners. Six projects have begun construction. An additional 11 will be underway in 2025-26, representing nearly 1,400 rental units for middle-income people in communities, such as Abbotsford, Cowichan Nation/Duncan, Fernie, Gibsons, Lake Babine First Nation, North Vancouver, Prince Rupert, Tsawout First Nation and Whistler.
Budget 2025 looks to provide BC Builds with an additional $318 million over three years. The new funding will deliver more homes and contribute to the Province’s goal of thousands more new middle-income rental units.
The document also outlines increases to the speculation and vacancy tax rates. The rate for foreign owners and untaxed worldwide owners rises to 3% of their home’s value from 2%, and to 1% from 0.5% for Canadian citizens and permanent residents. The increase takes effect Jan. 1, 2026, and will generate an estimated additional $47 million in revenue for the province in 2027-28. This money will be invested back into housing in the 59 regions where the tax applies.
Budget 2025 increases monthly supports and nearly double the number of lower income working families eligible for help through the Rental Assistance Program. By raising the income threshold for the program from $40,000 to $60,000, nearly 6,000 families will be eligible for the program, up from 3,200. The average supplement families receive will increase from $400 to $700 per month. Up to 1,600 more seniors will benefit from the Shelter Aid for Elderly Renters program as Budget 2025 increases the income threshold from $37,240 to $40,000. The average supplement seniors receive will grow from $261 to $337, an increase of 30%.
To help people and businesses facing high costs, Budget 2025 provides a one-time relief rebate of $110. In total, the rebate is expected to return $410 million to personal and commercial policy holders.
Public safety
Budget 2025 invests $325 million in new funding over three years to provide housing options for people living outdoors and resolve encampments, to address public safety concerns about robbery, shoplifting and other property crimes, to provide more resources to law enforcement to fight crime, and to build capacity in the legal system to ensure timely access to justice and to continue to support other public safety programs.
An additional $90 million is allocated over three years to expand the Homeless Encampment Action Response Team (HEART) and Homeless Encampment Action Response Temporary Housing (HEARTH) programs into new communities. These programs work with local governments and First Nations, non-profit organizations and health-care providers to provide people living outdoors and in encampments with better access to support services, shelter and housing options so they can move inside, and encampments can close.
The Budget also contains $235 million in new investments in justice and public safety programs. New funding of $24 million will be aimed at improving timely access to justice, including improved capacity at the B.C. Supreme Court and enhanced security at the Vancouver Provincial Court at 222 Main St. in Vancouver. It will also continue the expansion of virtual bail, improving access to justice and community safety.
Budget 2025 also provides $15 million in new funding over three years to support assistance for victims, immediate family members and witnesses, as well as $24 million for the BC Coroners Service, electronic supervision under BC Corrections and increased fire inspections.
New funding for the Justice Institute of B.C. will expand police academy training capacity from 192 to 288 officers per year. $104 million over three years will go toward policing programs, including the First Nations and Inuit Policing Program, and for negotiated wage increases for provincial RCMP detachments. It will also support the National Body Worn Camera Program initiated in 2024 to improve transparency and accountability.
Looking to the future
Due to these extenuating circumstances, questions remain as to whether B.C.’s credit rating will be downgraded. B.C. is the only province in Canada with a triple-A credit rating and it remains sought-after by bond investors in Canada and abroad. Minister Bailey acknowledged she is working to flatten the growth of the Province’s debt-to-GDP ratio in the near term, and to bring it down in the long term.
B.C. has access to large markets outside of the United States, is home to abundant natural resources and skilled workers, though the imposition of sweeping U.S. tariffs poses an unprecedented threat to the financial resiliency of the Province. Budget 2025 is likely step one in a more wide-reaching response to the greatest economic shock brought on by a foreign power since the second world war.
Opposition responses
BC Conservative Party
B.C. Conservative leader John Rustad was on social media following the release of the budget to criticize the NDP government’s plan—or lack thereof according to Rustad—to get B.C. through the trade dispute with the U.S. Rustad focused his comments on the $10.9 billion deficit and the lack of any significant tax relief measures for British Columbians. Rustad noted he believes the Eby government has not done anything to help reduce interprovincial trade barriers, days after the B.C. Conservatives released their own plan to introduce the Free Trade and Mobility within Canada Act, 2025 in the Legislature.
In the response to the budget B.C. Conservative finance critic Peter Milobar focused on the government’s tariff response, criticizing the lack of a substantial response, and overall declining exports. The B.C. Conservatives also pointed to the expanding size and budget of the Premier’s Office during a public service hiring freeze and job losses in the agricultural sector.
BC Green Party
Jeremy Valeriote, Interim Leader of the BC Greens responded to the budget by applauding the government’s recognition of the urgent challenges facing B.C. The BC Greens also pushed the government to move beyond a reactionary agenda and towards a vision for B.C. that builds a more secure future
“For too long, reactive decisions have left B.C. vulnerable to global shocks like volatile markets and looming U.S. tariffs. Instead of scrambling to respond, we must build a diverse, innovative, and sustainable economy that centers community well-being, poverty reduction, and climate action”.
More information
For a full breakdown of Budget 2025:
- B.C. Budget 2025 Documents
- Finance Minister Brenda Bailey’s Budget Speech
- News Release: Standing strong for B.C.: Budget prepares to defend British Columbians
Insights in this piece contributed by Anita Zaenker, Bailey Stafford, Devon Hill, and Scott Andrews.
