The near-yawn that greeted Finance Minister Carole James’ announcement last week that B.C. will run a $12.8-billion deficit is a reminder of how much our political world has been turned on its head.
James first announced in July the deficit would exceed $12 billion, but the more-detailed quarterly financial update shows the books have gotten even worse since then and the collective shrug in public opinion – a giant “meh” – shows we’ve become almost inured against running up public debt.
For years, fierce political debates would take place every year about whether a budget was really balanced when the projected surplus was perhaps a few hundred million dollars. A balanced budget was the aim every year.
The days of a balanced government budget – at both the provincial and federal levels – are clearly in the rear-view mirror.
When the pandemic began and it was apparent the B.C. government budget was about to blow up, I joked with several NDP cabinet ministers that a large deficit would now cease to be a political liability.
The huge deficit is the result of shifts on both the revenue and spending side of the ledger. Revenues are down almost a whopping $5 billion and spending is up almost $8 billion.
Income tax revenue took the biggest hit as hundreds of thousands of people were suddenly thrown out of work. The next biggest loss was on sales tax revenue, as consumer spending dried up for a few months.
When it came to increased spending, it is pretty much all about responding to the pandemic through either financial relief measures or funding support in critical areas. The B.C. Emergency Benefit alone will cost $900 million.
Despite the incredibly bleak financial update there was little criticism heard about the current state of affairs. That is because the pandemic has changed the parameters of political debate on budgeting.
The BC Liberals, for example, are critical that money is not flowing out the door at an even faster rate to assist in economic recovery. No party wants to be seen demanding a big reduction in financial aid during this crisis.
Yet despite this incredibly bleak picture, James remains optimistic that the worst is over and that a recovery is closer than many think.
It is hard to picture that given the current surge of COVID-19 in this province right now. However, perhaps, as we learn to live with this virus, some economic normalcy does indeed return at a quicker rate.
We are all, for the most part, spending money on consumer items again. School is back in session.
But a balanced government budget? That will not be part of the “new normal” for a long time yet. What’s more, I suspect few people really care all that much.
Keith Baldrey is chief political reporter for Global BC