Economists say the B.C. Conservatives’ election promises to cut taxes, shrink a record deficit and boost growth will require difficult trade-offs.
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Economists caution that it will be challenging for British Columbia’s next government to carry out election promises to cut taxes, reduce the deficit and grow the economy at the same time.
Werner Antweiler, a professor at the University of British Columbia, said cutting taxes while also fixing the budget is “contradictory.” He said voters have given Premier-designate Lorne Doerkson a mandate, but that plans may need revising after a financial assessment and that nothing should be ruled out.
Doerkson has promised to appoint a panel to review the province’s books before presenting the government’s first budget. Antweiler said there are “things we cannot do right away,” and that some changes may have to wait until economic conditions improve enough to enable them.
Antweiler also said voters would need to see some reduction in the public workforce, but noted the public service is heavily unionized. He said the government cannot cut back on health care, education or public safety without compromising quality, adding that many provincial expenditures are effectively “written in stone.”
Marc Lee, a senior economist with the Canadian Centre for Policy Alternatives, said the B.C. deficit and government spending have been contributing to economic growth. He pointed to the province’s trade, housing and immigration as key drivers, saying trade has been sputtering because of the trade war and the housing engine has been “completely dead” due to changes in immigration.
Lee said the B.C. budget has helped avoid a recession, arguing that if the province didn’t have that budget deficit, “we would probably be in a recession.” He said reducing the deficit would require either increasing tax or cutting spending.
Jairo Yunis, policy director with the Business Council of B.C., said the province has more of a spending problem than a revenue problem and that public sector cuts need to be a major part of any review of government spending. He said public sector employment grew by over 45 per cent since 2019 under the NDP, while private sector employment rose by about three per cent over the same period.
Yunis said the review should question whether the province still needs certain programs, whether there is duplication and whether services can be delivered differently, framing the goal as making “choices based on priorities and outcomes.” He said he believes the deficit could be halved as a result of such a review, alongside tighter discipline around the use of contingencies, economic growth and lower regulatory burdens.
The Conservatives’ platform includes a promise to raise British Columbia’s basic personal income tax exemption to $32,000, which the party said would amount to a $1,000 tax cut for most individual workers. For the deficit, the platform pledges to bring it down with forecast economic growth reaching 3.2 per cent in 2029, projecting an additional $2.62 billion without raising taxes.
Antweiler described the growth forecast as “lofty” and said it is not realistic. He and Lee both pointed to economic uncertainty, with Lee saying he does not know what will happen next even after the U.S. election and warning that a major stock market crash would change conditions.
Yunis said the Conservatives will face “hard choices,” including difficult decisions about what to cut. Antweiler agreed, saying shrinking the public service would have to be balanced against budget needs without triggering labour unrest.
All three economists said the incoming finance minister will be dealing with a difficult file as the new government prepares its first budget.
The Conservative platform notably omits detail on what might be cut to help make ends meet, according to the reporting.
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