Nearly two years after a global COVID-19 pandemic devastated British Columbia’s economy, the financial bounce back is almost complete.
The rosy economic picture, however, is expected to be short-lived due to an influx in pandemic-specific cash in the last year.
The forecast deficit for 2021/22 is now $483 million, a dramatic decrease from the $9.7 billion-projected deficit in last year’s budget. The one-year rebound is short-lived, with the province forecasting a deficit of $5.46 billion in 2022/23 and $4.18 billion in 2023/24.
“You can see the unusually high revenue for 2021/22. It doesn’t fully recover in the third year of the fiscal plan,” Finance Minister Selina Robinson said Tuesday.
Those high revenues are driven in part by the double-edged sword of housing.
Buying a home has become increasingly unaffordable while the increase in property transfer tax continues to support the province’s bottom line. Property transfer taxes accounted for $1.6 billion in revenues in 2019/20, $2.1 billion in 2020/21, and a staggering $3.25 billion in 2021/22.
The Insurance Corporation of British Columbia (ICBC) has also seen a significant financial rebound.
A shift to a no-fault system, fewer claims than expected and a better than expected return on investments has led the public insurer to make a $1.9 billion profit during this fiscal year.
A one-time boost in federal transfers, due largely to COVID-19 and flood relief, has also led to higher than expected revenues in 2021/22.
“There has been significant improvement,” Robinson said. “The large number of improvements are one-time in nature as our economy has significantly rebounded from the impact of the pandemic.
“We have been resilient. The main risk continues to be the uncertainty of the pandemic and the lasting impacts on B.C., across Canada and around the world.”
The average home sale price in the province increased by 18.7 per cent in 2021 over 2020, following an increase of 11.6 per cent from 2019 to 2020.
British Columbia’s economy grew by an estimated five per cent in 2021 and is expected to expand by four per cent in 2022.
“Over time, as this elevated response is no longer required our government will return to more balanced practice, but our decisions will still need to take into account the health, economic, business, environmental and social indicators that have guided this budget,” Robinson said.
The revenue boost is allowing the government to re-invest in key priorities outlined in the 2020 B.C. election campaign.
Due to a federal commitment, the province is allocated $284 million for child care. This will allow the province to reduce the average infant and toddler fees to approximately $20 per day — a reduction of about 50 per cent of current costs.
Preschool and before and after-school care costs are also expected to drop to less than $20 a day for the 2023-24 school year.
To support the rising demand for child care, the province has committed to fund 40,000 new spaces over the next seven years and to create 130 more early childhood educator training seats in post-secondary institutions per year.
“This is going to make a real difference. As we know providing child care services is not just a pillar of building a stronger society it also helps build a stronger, more resilient economy,” the finance minister said.
Child care advocate Sharon Gregson characterized Budget 2022 as a ‘good news budget’ for families with children. Gregson’s expectation is the province will reach the goal of $10-a-day child care by March 31, 2026.
“That is the commitment with the federal money but of course, we are pushing for that to happen sooner,” Gregson said.
The long-term economic picture is expected to be somewhat unpredictable due to the pandemic and the unknown impacts of natural disasters.
The province has earmarked $1.5 billion to respond to flooding events and rebuild destroyed infrastructure, including an additional $400 million for Emergency Management BC in 2022/23.
The BC Wildfire Service will be turned into a year-round service at a cost of $243 million. This added capacity will improve facilities to deal with wildfires.
There will also be an additional $210 million for community preparedness and wildfire prevention and Indigenous-led emergency management priorities.
The province has not put a price tag yet on how much a permanent Coquihalla Highway fix will cost. The federal government has already committed $5 billion to support the province’s rebuilding activities.
“We need to acknowledge a lot of the repair work has been done and that was tremendous heavy lifting by a lot of people to get this done as quickly as possible. Some would describe this as miraculous,” Robinson said.
“It is really important we understand what it will take and we do the assessment properly. We are optimistic we will have more done on the assessments in the coming weeks.”
WATCH FULL: B.C. Finance Minister Selina Robinson delivers the 2022 B.C. budget.