DAVID WILLIAMS
BRITISH COLUMBIA – The Business Council of British Columbia (BCBC) has released a new report that underscores the pressing need to strengthen B.C.’s public finances. Titled B.C.’s Deteriorating Fiscal Position: Cause for Concern, the report details record deficits, rising debt levels, and repeated credit rating downgrades—signals that a shift toward greater fiscal responsibility is urgently needed.
The release of this report comes on the heels of the swearing-in of a new provincial cabinet, highlighting the significant challenges facing the new team as they take office.
The report reveals that B.C. is set to run the largest operating deficit relative to its economy among Canadian provinces in 2024/25, with a projected shortfall of 2.1 per cent of GDP—exceeding levels seen during the COVID-19 pandemic. The deficit, along with significant capital spending, will see taxpayer-supported debt climb to 28.8 per cent of GDP by 2026/27.
The cost of servicing provincial debt now consumes an amount equivalent to half of B.C.’s K-12 school education budget. By 2026/27, this burden is projected to cost approximately $600 per British Columbian annually.
“The new cabinet has a critical opportunity to address these issues head-on,” says David Williams, BCBC’s Vice President of Policy. “The choices made by the government will determine whether B.C. can regain a sustainable fiscal footing and secure its economic future.”
The Business Council is urging the provincial government to adopt a fiscal anchor—a clear framework to guide overall spending and borrowing decisions. Proposed anchors could include, within a defined timeframe:
- Returning to a balanced budget;
- Returning taxpayer-supported debt to no more than 20 per cent of GDP; or
- Reducing debt servicing costs to 3-4 per cent of total government expenditures.
BCBC hopes the province will adopt at least one of the proposed measures as a way to address the current fiscal situation and looks forward to working with the new finance minister in the months ahead.
“While B.C. is facing the largest deficit relative to the size of its economy and the fastest-rising debt levels in the country, this is a challenge we can overcome,” says Williams. “Turning around B.C.’s public finances is achievable, but it demands a sharp focus on disciplined spending and fostering economic growth.”
The report also highlights that addressing fiscal challenges will require policies that drive sustainable growth. Without stronger growth on a population-adjusted basis, the province could be forced to choose between raising taxes or reducing spending to prevent debt from spiraling higher.
“With the new cabinet in place, now is the time to implement a sustainable fiscal strategy that balances long-term growth with spending discipline,” Williams notes. “By focusing on policies that encourage investment and innovation, we can ensure B.C. is a place of opportunity for future generations.”
The full report can be found here: https://bit.ly/3CCBEsk
David Williams is BCBC’s Vice President of Policy
