Economists warn federal budget may be harder to copy in B.C., despite Doerkson’s praise

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British Columbia premier-designate Lorne Doerkson said he was encouraged by this week’s federal budget and called it “encouraging and ambitious,” including measures focused on resource industries and growth-oriented tax changes.

In an exchange with reporters on Thursday, Doerkson was asked whether the federal plan was an “approximation” of what his provincial budget would look like. He said the Conservatives are committed to growing B.C.’s economy and said his government would be “looking to improve our revenue from forestry, LNG” while “contemplating all of that going forward.”

However, two economists said B.C. may not be able to replicate Ottawa’s approach. Marc Lee, a senior economist with the Canadian Centre for Policy Alternatives, said B.C. faces greater urgency than Liberal Prime Minister Mark Carney to address deficit problems, adding that the province “can't continue to run large deficits” year after year.

Lee said Ottawa has more fiscal flexibility because it is the federal government, while B.C. has primary responsibility for health, education and other social services, where residents would notice cuts.

Lee and Jairo Yunis, policy director at the Business Council of B.C., both said the province has more direct program spending than Ottawa. Yunis noted that the size of B.C.’s public sector has grown by 44 per cent since 2019, compared with three per cent growth in the private sector.

Yunis said Doerkson’s government will face constraints tied to campaign commitments, last year’s public sector wage settlements, and rising debt-servicing costs, which he described as the fastest-growing line item in the budget.

On Thursday, Doerkson praised a federal provision aimed at boosting investment through faster write-offs for eligible assets. The budget includes a so-called productivity mega deduction that allows companies to immediately and fully expense certain assets such as machinery.

Doerkson said the federal measure would “dovetail” with the Conservatives’ plan to exempt some machinery, equipment and business software from the Provincial Sales Tax for three years, saying “Together, they can supercharge investment in this province and create jobs right here.”

Lee said the tax exemption would be “hugely beneficial” to the oil and gas industry, but he warned it would put B.C. in the wrong direction on climate change. He also said cuts to public services could contribute to a recession and said he was not sure tax changes would generate more revenue, adding that politicians have mostly “pushed all the buttons” on growth.

Yunis said he was more optimistic but acknowledged challenges ahead for B.C., adding, “I don't envy the next finance minister.”