The B.C. NDP government was first out of the gate among provinces in announcing their 2026 budget. Unfortunately, it was a truly terrible budget indeed. The government blamed everyone but themselves, as usual, and claimed because everyone hated the budget it must have struck the right balance. Not true. The province’s finances have been worsening significantly under the Eby government for years, but this budget struck a new low point in a number of respects.
The budget lowered the deficit projection for the 2025-26 fiscal year, from the previous estimate of $10.9 billion to $9.6 billion. Canadians are getting so accustomed to large government deficits – not a good thing – that $9.6 billion may not sound so bad. But accounting for the population of BC as compared to other jurisdictions, it is actually the largest per capita deficit in the country right now. Next year’s deficit is projected to be considerably higher at $13.3 billion despite tax increases and some planned cuts, with deficits dropping slightly in subsequent years but no path to a balanced budget in sight.
As is usual with all provinces, health, education and social service spending were the primary areas for spending growth. In B.C. as elsewhere in Canada, healthcare spending now occupies 40 to 50 per cent of all provincial spending. International studies show repeatedly that Canada is a very big spender on healthcare with worse results than countries who spend less per capita. Major structural change in healthcare is what is really needed, not more taxpayer dollars thrown at a broken system. No province as yet has shown the courage take a leadership role and demonstrate how things can be done better for less before our system collapses completely.
The B.C. budget also includes some areas of expenditure review to reduce some spending and promises public sector staff reductions in the order of 15,000 positions over three years. Despite these good intentions, experience shows these types of cuts are often forecast for future years but don’t actually materialize.
The budget also contained several tax increases in the form of increasing the lowest income tax bracket rate, a suspension of indexing tax brackets to inflation for several years, increasing school taxes for more expensive properties and broadening the Provincial Sales Tax base to some professional services. Although these are not huge tax increases, they will be added to already-high rates which are hampering Canada’s ability to attract businesses and high-income professionals such as doctors, engineers and entrepreneurs. Overall, this budget foresees revenues growing at eight per cent while expenditures increase by nine per cent.
Although many elements of B.C.’s financial situation are not that different from other provinces, a key distinguishing factor was that the previous NDP premier John Horgan actually ran balanced budgets prior to the pandemic. Horgan then got back to balance virtually as soon as the pandemic was over. Responsibility for B.C.’s rapidly deteriorating finances rests solely on the government of Eby, Horgan’s successor.
All provinces have been spending excessively in recent years after the major spendapalooza of the pandemic. Economic growth has been positive in most provinces during that time, although sluggish. Even so, a period of economic growth should always be used to bring down deficits so that when the inevitable tougher times come, a government is better equipped to handle it.
Other provinces will be coming out with their budgets over the next couple of months. None of them are in good financial shape, and prospects for economic growth and a boost to provincial revenues are not looking good for the next couple of years at least. If B.C. is viewed as an example of what will follow in other provincial budgets this year, Canada is sleepwalking toward another financial crisis such as that we faced in the mid-1990s, when our creditors would no longer lend to us until we cleaned up our financial act. Seems history is about to repeat itself yet again.
She has published numerous articles in journals, magazines & other media on issues such as free trade, finance, entrepreneurship & women business owners. Ms. Swift is a past President of the Empire Club of Canada, a former Director of the CD Howe Institute, the Canadian Youth Business Foundation, SOS Children’s Villages, past President of the International Small Business Congress and current Director of the Fraser Institute. She was cited in 2003 & 2012 as one of the most powerful women in Canada by the Women’s Executive Network & is a recipient of the Queen’s Silver & Gold Jubilee medals.
