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a re-elected premier david eby can be expected to continue spending spree
vaughn palmer: finance minister katrine conroy says it'll be up to her successor to craft a plan to balance the provincial budget
aug 23 2024
4 minute read
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victoria — the new democrats closed the books thursday on the first full year of government under premier david eby, confirming another, extraordinary spending spree.
eby inherited a projected budget surplus of $5.7 billion when he took over from his comparatively more prudent predecessor, john horgan, in november 2022.
eby promptly diverted most of the billions into increased program spending and no-strings-attached funds for housing, infrastructure, transportation services and the like.
the frantic effort to shovel the money out the door before the march 31 end of the financial year produced some farcical moments in the legislature as ministers tried to explain what they intended to do with the blank cheques handed to them by the premier.
when the financial calendar ran out, horgan’s projected budget was reduced to a mere $700 million. in the space of four months, eby and his colleagues had spent an additional $5 billion.
for his own first budget, the premier plunged b.c. back into a sea of red ink, with a projected deficit of $4.2 billion. the amount looked extreme, being exceeded only by the deficit racked up in the first year of the pandemic.
the province had recovered from the covid-19-driven recession more quickly than expected. hence the tentative windfall that horgan left behind for eby.
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it seemed reasonable to assume that eby’s $4.2 billion deficit was a placeholder that he intended to outperform in a pre-election show of fiscal prudence.
but that assumption overlooked eby’s ambitious vow to “show results” before the election on housing affordability, access to health care, public safety, and reducing the cost of living.
the public accounts — audited financial statements — for the financial year ending march 31, 2024, released thursday, recorded a deficit of $5.035 billion, 20 per cent or $800 million larger than the already hefty one that eby announced at the outset.
even $4.2 billion wasn’t enough to satisfy eby’s fervour to spend.
in a news conference at the legislature thursday, finance minister katrine conroy tried to justify the overrun, starting with the outlay of $2 billion in emergency spending to fight wildfires and floods.
she also blamed slower growth than expected, never acknowledging the possible role of ndp policies in shaping an underperforming economy.
even with the slowdown, the provincial treasury collected an additional $2 billion in revenue, enough to offset the emergency spending.
had eby, conroy and company been able to hold the line on other spending increases, they could have lived within eby’s deficit target, which was itself anything but prudent.
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the finance minister also boasted how b.c. continues to outperform other canadian provinces on debt measured as a share of gdp and interest payments as a share of annual revenues.
she touted the province’s still favourable credit rating, though lately that has been frayed by several downgrades from the leading rating agencies.
it is hard to believe there won’t be more downgrades to come if b.c. were to keep spending, borrowing and racking up deficits on the current track.
the trend underscores one of the strongest differences between the horgan- and eby-led ndp governments.
horgan and his finance minister carole james, shaped as they were by the backlash against the financially reckless ndp government of the 1990s, took budget balancing more seriously.
james, in her first budget, paid down the direct provincial debt the ndp inherited from the b.c. liberals. her second budget was a surplus. not until the pandemic struck did she resort to deficit-financing — with good reason.
the timing of this year’s release of the public accounts vindicated another of horgan’s decisions, that of moving the electoral cycle to the fall, separating it from the spring budget and fiscal cycle.
as a result, voters will have time to digest eby’s fiscal performance before casting their ballots in october.
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in addition to the public accounts for the past year, conroy will soon be releasing the preliminary update for the first three months (april-june) of the current financial year.
conroy, who is retiring this election, has the distinction of being the only finance minister in modern times to have failed to take a stab at producing a plan (however fanciful) to someday balance the budget.
when i asked her about that lapse, she said that eby does believe strongly in the importance of balancing the budget and the ndp does have a plan to do so at some unspecified time in the future.
but with retirement looming, she suggested it would be up to her successor to produce one.
believe it when you see it.
the ndp’s key justification for the overspending was as unapologetic as it was hollow.
“with a slower world economy and a growing population, we cannot afford to have a deficit of services. when we provide the services and support people need to have a good life, it makes our economy stronger and more resilient.”
if eby is re-elected, his record to date provides no basis to assume that he would rein in his propensity to spend, spend, spend and instead deliver a credible plan to bring b.c. finances back into balance.
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