A Picture of Provincial Debt: Part 2, British Columbia
The fiscal year in B.C. was a busy one this year. They held a referendum on the Harmonized Sales Tax (HST) and they saw the seats of both their Premier and Minister of Finance change hands. This meant a number of budgets that were only up for a matter of months, and emergency fiscal updates were required as new policymakers needed to make adjustments. Now, the province has a new fiscal plan that accounts for new revenue within the province, and takes into account the uncertainty of the global economy.
Because many of B.C.’s biggest exports are sent to the Asian-Pacific market, and not the United States, this province was even less severely hit by the recession in the United States than any other province in Canada. However, B.C. has still had its fair share of problems. Both job creation and retail trade were both significantly lower than the national average. This has been enough to worry the province into taking off a few tenths of a percentage point off the private sector. These areas of growth are expected to be 1.8% for the coming year, and 2.2% and 2.5% for the upcoming two years, respectively. Meanwhile, even though the price of natural gas is expected to remain steady, B.C. is expecting double the growth here over the next three years, one huge area for hope.
One area in which the province has quite a bit of control is on their saving. Here they’ve made real progress, cutting back spending in health care to just under 3%, which is far less than the 7% they had been spending in the year prior to the recession. Education has also been an area to receive cutbacks, with wage freezes already in place for many B.C. teachers, and reducing the amount of discretionary spending on things such as travel in the post-secondary sector. These cuts have made an even bigger difference than the cuts made to health care, as they’ve been reduced by 1% in the budget.
But provinces have to spend some money some of the time, and B.C. has chosen the right areas to spend it in. The provincial government here has introduced approximately half a dozen tax credits that help seniors and families, as well as first-time homebuyers who are looking for their first home. While these measures will have an affect on the province’s bottom line, it won’t be nearly as much as the $1.6 billion they had to pay back the federal government for transition funding with the HST program, which is no longer in place in B.C.
The provincial government also has plans to sell some of its assets within the next three years. While there was no real breakdown of what equipment and assets would be sold, it was estimated that these sales would bring in an additional $700 million for the province.
But these surpluses only really deal with the province’s deficit. What about its debt?
The debt in B.C. this past March was $46.7 billion; today it stands at $51 billion. And the end of this fiscal year it’s estimated that debt will stand at about $57.6 billion, and that in two years it will be $66.4 billion. And all of this is even with all the spending cuts and budgets showing surplus that were shown above. And it’s not just provincial debt that’s the worry, either.
A new report published by TransUnion shows that the amount of debt carried by any average person in British Columbia now totals $39,000 – the highest in the country for a province that doesn’t have nearly the amount of people as other provinces such as Ontario and Quebec. And not only is it the highest in the country, it’s also 6.2 per cent higher than it was a year ago. This shows that those in British Columbia are doing nothing to tame and control their debt.
“It probably has to do with the economy and the economic situation in B.C. with higher incomes and a lot of growth over the last many years,” says Thomas Higgins, vice president of analytics with TransUnion. “But it does provide a concern for people in B.C., that numbers are growing at that rate, almost 50 per cent higher than what’s happening on average in the rest of Canada.”
The biggest cities in British Columbia are:
Later, we’ll investigate all of them, and take a deeper look into each city’s debt.