Transcript
Speaker: Hello and welcome to today's episode of Red Eye. I'm Jane Williams. On the podcast today, I speak with Alex Hemingway of the Canadian Centre for Policy Alternatives about the spending increases in the 2023 BC budget and what they mean for British Columbians.
Speaker: B .C.'s first budget under Premier David Eby was released on Tuesday. It includes funding increases in housing, health care, income supports and cost of living tax credits, and allocates a record level of investment toward capital infrastructure.
Speaker: To find out more about the details, I'm joined by Alex Hemingway, the Senior Economist and Public Finance Policy Analyst at the Canadian Centre for Policy Alternatives BC office. Hello, Alex. Hi, Jane.
Speaker: Now, a couple of weeks ago, you and Mark Lee wrote a blog post for the CCPA saying that BC has enough money to tackle some of the big social and environmental challenges facing the province. There's sky -high rents, healthcare, of course, under enormous strain, the toxic drug emergency. There's actually quite a long list. How far does this budget go to meeting those needs?
Speaker: Well, it goes some way. There is a real observable shift here in this budget, some quite substantial funding increases in a number of areas, particularly healthcare and housing. There are a lot of smaller pieces of good news.
Speaker: some real gaps remain. But I think it's encouraging to see, you know, both rhetorically and to a certain extent in the funding, the government prioritizing investment over austerity, you know, even, you know, willing to go into deficit projecting deficits over the next few years, which is entirely appropriate, but may come with some political flack. So I'm encouraged
Speaker: In that sense, of course, the challenges we face are so large that no one budget is going to solve them, and there's more we would have liked to see here as well. There's no question about that. And I guess it's encouraging in the context of austerity being the name of the game for so many governments, you know, in Canada and internationally.
Speaker: Well, exactly. Yeah, that's right. And, you know, we're headed into an economic slowdown. We don't know yet how severe that's going to be. And from just simply from a macroeconomic point of view, it's entirely appropriate to be running a deficit under these circumstances. But more importantly, it's far preferable to run a deficit than to shortchange really critical investments in public services and infrastructure, which we simply need to address in
Speaker: which failing to address would actually cost us more in the long run. I understand that the government closed out the year with a multi -billion dollar budget surplus. Does the new funding that was announced on Tuesday represent the full amount of that surplus?
Speaker: Well, so yeah, what we're seeing here is, you know, as of a few weeks ago, we were hearing of nearly $6 billion surplus for this current fiscal year. That's down to about $3 .6 billion in the projection and the budget documents that we saw this week.
Speaker: Now there's been several announcements in recent weeks spending some of that surplus money for the fairy systems are rental housing acquisition fund among many others but they still haven't actually spent down that entire surplus there was indication during the budget lock up and in comments to media that.
Speaker: they are still planning to have additional announcements that would be spent out of that current surplus funds before the end of March, which is when that fiscal year comes to an end. So I'm hopeful that they'll keep on pushing to get that money out the door because there's no shortage of things to invest it in right now. Now you've spoken about, and you and I have actually spoken about the issue of fiscal padding and BC's long running, overly cautious budget. Does this budget signal an end to that practice?
Speaker: Not an end to it. It does, in a sense, moderate that practice the way that we're seeing that actually. So there are still multi -billion dollar contingency funds of various kinds built into the budget in the years ahead, but they're allocated with a bit more specificity than in previous years. Some of it is earmarked, for example, for the remaining contract settlements with public sector workers.
Speaker: So much of that is likely to get spent. There's some earmarked for climate, but there's still some pretty large general contingency funds, a billion dollars, $1 .5 billion each in the next couple of years. So that remains an issue and that may well end up offsetting, more than offsetting the projected small deficits over the next few years. On the other hand, if the government takes the approach it has in recent months,
Speaker: I would hope that they'll actually go ahead and spend that money at year -end recognizing how many areas badly need increased funding. I guess we'll see that over the coming month.
Speaker: Yeah, both for this fiscal year and then I'm thinking ahead to those next couple of years as well, you know, with those contingency funds built in, hoping that they get spent as well. Because of course, as we've talked about previously, if they're not spent in the fiscal year, they automatically under a BC liberal era law go towards paying down the debt, which is fine, except for the fact that we've been through this long period of chronic underinvestment in the public sector, where that money is needed much more urgently than it is to pay down the debt.
Speaker: Let's look a little more into some of the details of the specific areas that I mentioned in my introduction. What is there in the budget for renters?
Speaker: There are a number of things on the housing front. I guess one of the biggest headline grabbers is that we're actually seeing the long promised renters rebate in this budget. That ends up coming in the form of an income tested refundable tax credit, which essentially means for households with incomes up to $60 ,000, you're going to get that full value $400 a year renter rebate that was promised several years ago now.
Speaker: and for households up to $80 ,000, there'll be a partial credit. So, you know, that's welcome. It is a bit of a band -aid approach, but we do need band -aids in a housing crisis this severe. There is also a significant increase in investment in housing, capital and operating investment, $4 .2 billion over three years. Some of that going towards new homes through the Building BC program to supportive housing,
Speaker: to what they're calling multidisciplinary teams to address encampments. But on the housing front, one thing to note out of the budget is that we still have to wait and see. The minister said this on budget day, that the details of the housing plan are still to come. They'll be announced by the housing minister, Ravi Kalan, later this spring. So we do see a funding outlay, but there's a lot of question marks about the details of the plan itself. So it's a little bit hard to judge
Speaker: It's good to see a significant funding increase, but I suspect it's not going to be enough, but that depends in part with what other policies the government has up its sleeve and that we'll see in the next few months. Now, one of the important new programs was free prescription contraception, making BC the first province to fully cover that. What else was there in the budget for healthcare?
Speaker: Yeah, it was a big health care budget as well. That was the other biggest increase, $6 .4 billion in new health spending over the next three years. That comes in a number of forms we had heard prior to the budget. The announcement of new cancer care funding, that's a big one, $270 million over three years.
Speaker: There's also funding to deal with the workforce issues in healthcare, to recruit, retain, and train new healthcare workers. We know there's big staffing shortages. There's also funding for the new payment model for family doctors, which was announced late last year. You know, a change to that model was needed. A shortcoming, though, there is that this payment model is very doctor -centric. It's not really geared towards facilitating the expansion of community health centers, which is really
Speaker: what should be the linchpin of a strong primary care system. I really recommend for folks interested in that to read the work of
Speaker: Andrew Longhurst, who's a CCPA research associate and has written about this. And there was also, just to round out the healthcare side of things, there's funding for mental health addictions and treatment services, which we'd heard signaled in the media, expanding treatment beds, rolling out what they're calling a new model of seamless care. But one thing that's really missing here, there is a little bit of funding for the existing prescribed safe supply model, but we know that
Speaker: model is not reaching everyone who needs it by any stretch. So there's still a desperate need for a serious expansion of pharmaceutical grade alternatives to illegal drugs that, you know, full fledged safe supply program, which is critical to preventing the deaths that we're seeing every day.
Speaker: Income and disability rates haven't been raised. Despite the fact that people who rely on these programs were living well below the poverty line, even before the current cost of living crisis, what is there in the budget in terms of income supports?
Speaker: Well, in a sense they have, but there's an important caveat to that. So there was actually $125 per month increase to the shelter allowance for people on income assistance and disability.
Speaker: That shelter rate had been, folks may remember, at $375 a month, which had become just an embarrassment given the levels of rents in this province. So $125 increase there. That will go to, from what the ministry staff told me, the large majority of recipients of income assistance and disability.
Speaker: there will be people left out of that because it didn't go to the overall rates and went to the shelter allowance. That means people who are unhoused, they actually don't get the shelter allowance because it really is earmarked for people paying for housing costs, which is, you know, it seems like an absurd situation to begin with. So they won't get that increase. And some folks in subsidized housing won't
Speaker: get that increase either a beyond that there you know the range of other cost of living measures in the budget we talked about the renters rebate there is also a significant increase to the climate action tax credit so that for adults that's gonna more than double this year and it'll continue to increase along with.
Speaker: the carbon taxes, that ramps up in years to come in line with federal policy. And there's also increases to the BC family benefit, both to everyone who gets the benefit and in particular a larger increase for single parents. So they're going to see a $500 a year increase in that BC family benefit. For those who are eligible, these are all income targeted benefits in various ways.
Speaker: The budget is allocating a record level of investment towards capital infrastructure. Now, much of it already announced prior to the budget. How much of an increase is there?
Speaker: Yeah, this is an interesting one. Often each and every budget, they'll say it's a record level of capital spending or a record level of spending in a given area. And often that doesn't mean very much, but here it does. There is actually a big bump in the capital budget. I believe it amounts to about an additional $10 billion over three years.
Speaker: so that's really good to see and that that's going to mean we're pushing a lot of infrastructure projects through the pipeline over the next few years and you know that's going to be interesting to see how that plays out because often actually what happens with the capital budget is that a lot of it gets deferred the spending comes in at year end less than you expected as as projects get delayed and and you know we know there are
Speaker: some labor issues, you know, it's a tight labor market. So I'm hopeful that they'll be pushing hard to get move these projects forward, but it'll be interesting to check back in at year end. Now you mentioned that thinking about what's missing from this budget, you mentioned funding for a safe supply. What else do you think? What other big pieces do you think are missing?
Speaker: Yeah, safe supply is one. Another is, despite the increase to the shelter rate, we still have income assistance and disability rates that are shamefully low and don't reach the poverty line. That's a problem. A bit of good news on that front is that things like the renter's rebate will stack on top of those increases, so income assistance recipients will be eligible for those.
Speaker: And I think some other aspects relate to scale. I talked about a big increase in investment in housing, but the backlog of need is so large and it's been neglected for so long that we're going to have to go further than we've gone. So it's a good step there.
Speaker: The budget was interesting. The document itself was surprisingly quiet on childcare. There was no new childcare announcements, but the silver lining there is that that's largely because of major funding increases and fee reductions.
Speaker: over multiple years were announced in last year's budget, so I guess they decided not to repeat it here. But there's still some big challenges there, particularly on the workforce front and ensuring that early childhood educators are paid well, that they have a clear province -wide wage grid that can actually help recruit and retain workers in that sector, because we know we desperately need to expand spaces. Even as fees are coming down, access to spaces is scarce in many, many parts of the province.
Speaker: Well, thanks so much for talking with me today, Alex. I really appreciate it. Thank you, Jane. I've been speaking with Alex Hemingway, a senior economist and public finance policy analyst at the Canadian Centre for Policy Alternatives, BC office.
Speaker: The Red Eye Collective is based in Vancouver. You can check us out at coopradio .org slash redeye.
