CALGARY, AB – The Government of British Columbia demonstrates in its 2016 budget the continued fiscal discipline needed to improve the lives of its residents over the long term.
It has produced the fourth balanced budget in a row at a time when external conditions, such as low commodity prices and delays in LNG investment, mean the province will realize less revenue than it hoped.
The strategy of continuing to pay down the province’s $65-billion in debt is already paying dividends and will continue to do so. Last year, $1,098 of what an average B.C. taxpayer contributed delivered no services but instead went to service the debt (calculated from StatsCan data). This budget reflects a continuing discipline to conquer this waste of money.
The budget should also be applauded for ensuring everyone benefits from improved circumstances, with strong new gains for families, especially those with children.
The budget could have gone further, however, in supporting private investment, essential to generating revenue in the long term. Issues such as housing affordability and growing indigenous consultation rights are affecting the attractiveness of B.C. to external investors. The government is addressing affordability through a property transfer tax exemption on homes below $750,000, but these issues remain largely outside government’s control. B.C. should be moving aggressively to counteract these challenges by ensuring the province is competitive in areas that can be controlled, such as tax competitiveness.
The government is beginning to hedge its strategy on liquefied natural gas investment, which has been a singular focus in recent years. This opens up room for investment in the growing agri-food, international shipping and aerospace sectors, and expanding international markets.
Such efforts to maintain a diversified economy will insulate the province from the revenue swings associated with changes in commodity prices. This will provide B.C. with the stability needed to attract new business investment and ultimately do more to improve the lives of all British Columbians.
B.C. is demonstrating the virtuous circle where fiscal discipline yields more money to invest in people which, in turn, yields even more revenue to improve the lives of the people of this province. This budget shows that sometimes virtue is its own reward.
Senior Economist Janice Plumstead is available for interviews.
The Canada West Foundation focuses on the policies that shape the West’s quality of life. For more than 40 years, we have been a passionate advocate for western Canada.