For Immediate Release
April 20, 2021
VANCOUVER, B.C. —“This year has been incredibly challenging for everyone and unlike anything we’ve ever experienced. We welcome the continued investment of initiatives announced in the fall to support businesses affected by the pandemic as well as additional support to those affected by recent health orders, including tourism and hospitality,” said Bridgitte Anderson, President and CEO of the Greater Vancouver Board of Trade.
“A solid fiscal footing has allowed B.C. to take on substantial amounts of new debt while remaining “pandemic prudent”, compared to other jurisdictions. There are also significant amounts of unallocated funding that remains available to the government along with an improved economic outlook globally,” said Anderson.
“However, we are still striving for a post-pandemic vision for the economy that attracts investment, creates good jobs and promotes opportunity. It’s not clear this budget puts B.C. on the fast track to thrive in an increasingly competitive world,” said Anderson.
On behalf of thousands of businesses across the Lower Mainland, the Greater Vancouver Board of Trade has given the 2021-22 Provincial Budget an overall grade of B-.
Importantly, the budget also provides additional funding for child care, new supports for workforce training, and continued investments to promote our low-carbon economy through its CleanBC.
“We are pleased to see continued investments in transportation throughout Greater Vancouver as these important projects will create jobs today and form the basis for future prosperity. While there was mention of a new George Massey Crossing, we continue to wait for news from government before the project can move forward,” concluded Anderson.
2021 REPORT CARD RESULTS
The Chair of the Board of Trade’s Government Budget and Finance Committee and senior GVBOT staff attended the provincial budget lockup, where they received an advance copy of the budget and assessed it on three criteria: Economic Recovery; Fiscal Sustainability; and Competitiveness.
Economic Recovery: B
B.C.’s economy has performed relatively well compared to other provinces in Canada, having recovered pre-pandemic employment levels. However, the unemployment rate across the province remains substantially higher at 6.9% and is higher in Greater Vancouver. Moreover, the private sector continues to lag the public sector in employment recovery. Additionally, many businesses, especially small businesses have taken on substantial amounts of new debt.
Over one year into the pandemic, the government primarily re-announced measures from their StrongerBC plan, announced last fall. There were no measures announced in response to the new public health orders announced this week but significant amounts of funding in the budget remain unallocated. Significantly, the government estimates $800 million in previously announced measures that either result in lost revenues or increased spending.
Two sectors, tourism and the arts, did receive specific supports. $120 million in 2021/22 from the Pandemic and Recovery Contingencies for further tourism recovery and to support B.C. in remaining a globally competitive destination. The budget also doubled the budget for the Arts Infrastructure Program by providing $6 million over three years to support recovery to arts and culture organizations.
The government has continued its investment in its Childcare BC initiative. Budget 2021 advances the ChildcareBC strategy by investing $233 million more over the fiscal plan to create more new spaces and continue to make child care more affordable. B.C. is well-positioned to take advantage of the federal government’s recently announced investments.
The budget also confirmed previously announced funding of $44 million for digital marketing training and the Launch Online program which has supported thousands of B.C. businesses to create or improve their e-commerce presence.
Fiscal Sustainability: B
Like all provinces, British Columbia has taken on substantial amounts of new debt. Overall the budget is “pandemic prudent” and it is likely that B.C. will outperform budgetary projections in growth and revenue.
It is estimated that the B.C. economy contracted by 5.3% in 2020 and that it will expand by 4.4% in 2021 and then 3.8% in 2022. Over the medium-term (2023 to 2025), growth is expected to range between 2.1% and 2.5% annually.
The Government projects the 2021/22 deficit to be $9.7 billion followed by $5.5 billion in 2022/23 and $4.3 billion in 2023/24. This is on top of the 2020/21 deficit, which has been revised lower to $8.1 billion. A return to balanced budgets is expected within the next seven to nine years (the period of 2028/29 - 2030/31).
Total prudence measures included in the budget are substantial. Totalling $5.25 billion in 2021/22, $4.05 billion in 2022/23 and declining to $3.4 billion by 2023/24. Those contingencies are substantial and represent 6% of budgeted expenses in 2021/22 and 2022/23 and 5% in 2023/24. Given that and the very conservative economic forecast, it is expected that B.C. will outperform budgetary projections.
The debt-to-GDP ratio is projected to remain below 30% in all years of the fiscal plan at 22.8% in 2021/22, 25.0% in 2022/23 and 26.9% by 2023/24. However, debt-to-revenue is expected to increase substantially, beginning at 125.9% in 2021/22, 135.4% in 2022/23, and rising to 147.5% in 2023/24. Taxpayer supported debt-to-revenue will increase 56% over the next three years.
The province has adopted “fiscal guardrails” to guide financial decisions including: year-over-year declining deficits, targeted spending criteria, increased levels of prudence and new pandemic and recovery contingencies, “Best in Class” Debt Metrics and Debt Affordability.
Debt servicing costs remain low due to low interest rates. The taxpayer-supported interest costs as a percentage of provincial government revenue continues to remain lower than it has been historically, forecast at 3.4% in 2021/22 and 3.6% by 2023/24.
Budget 2021 builds off a host of measures that have increased the cost of doing business, such as the increase to the corporate tax rate, the introduction of the EHT, and other measures. In addition, personal tax increases for professionals, which are now among the highest in the OECD.
A notable exception was the InBC Fund, which was previously announced but was given more detail today. It will invest $500 million over three years to attract and anchor high-growth businesses, talent, and good jobs in B.C.
There was also an additional $100 million set aside for skills training and youth employment initiatives.
Budget 2021 includes $7.6 billion in transportation investments over the next three years. An ambitious and noteworthy capital plan. While there was mention of the George Massey Crossing there appeared to be little in the budget to actually move the project forward. Funding for the full Surrey-Langley SkyTrain is expected but still to come.
We are pleased to see an additional $94 million in Go Electric program rebates for purchases of zero-emissions vehicles, charging stations and supports the commercialization of heavy-duty vehicles
There were few notable taxation measures announced aside from making electric bicycles and tricycles exempt from provincial sales tax.
Recognizing the toll of the pandemic, mental health and addictions services received significant new funding of $500 million.
The government will provide up to $2 billion in low-cost financing to expand the HousingHub program to facilitate the creation of approximately 9,000 units of affordable rental housing.
Continued investment in CleanBC was found in the budget. Included was $60 million to support the Centre for Innovation and Clean Energy and for cleantech investments to expand partnership opportunities with the federal government.
About the Greater Vancouver Board of Trade:
Since its inception in 1887, the Greater Vancouver Board of Trade has been recognized as Pacific Canada’s leading business association, engaging members to impact public policy at all levels of government and to succeed and prosper in the global economy. With a Membership whose employees comprise one-third of B.C.’s workforce, we are the largest business association between Victoria and Toronto. We leverage this collective strength, facilitating networking opportunities, and providing professional development through four unique Signature Programs. In addition, we operate one of the largest events programs in the country, providing a platform for national and international thought leaders to enlighten B.C.’s business leaders.