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Robinson tables provincial budget

Finance Minister Selina Robinson. Province of B.C. photo

Finance Minister Selina Robinson presented the provincial budget Tuesday which, she said, focuses on protecting people’s health and livelihoods through the pandemic.

“Through the adversity we have faced in the last year, we have witnessed the resilience of British Columbians time and again as communities rose to the challenge of COVID-19,” she said. “As we continue to roll out the largest vaccination effort in our province’s history, we can see the light at the end of the tunnel. We know a recovery won’t happen overnight, but by focusing on the things that matter most to people, we can ensure there are better days ahead for everyone.”

The world has changed dramatically since the province released its last budget. B.C.’s real gross domestic product (GDP) is estimated to have declined by 5.3 per cent in 2020. As the recovery continues, B.C.’s real GDP is forecast to grow by 4.4 per cent in 2021 and 3.8 per cent in 2022, reaching pre-pandemic levels by next year. A steadily declining deficit is projected over the next three years, beginning in 2021-22.

Health care

* $900 million in new funding for testing, contact tracing, personal protective equipment and the largest vaccine rollout in B.C.’s history.

* Helping patients get faster access to surgeries and shorter wait times for diagnostic imaging.

* Better care for seniors, including thousands of new staff in long-term care facilities and improved home care.

* More mental health supports in schools, more Foundry centres, quadrupling the number of integrated child and youth support teams, and expanding the response to the overdose crisis – the largest investment in mental health and addictions services in B.C.’s history.

* Providing better care closer to home by building hospitals, including the new Surrey hospital and cancer centre, and new urgent and primary care centres in communities around B.C.

* Addressing systemic racism in health care and ensuring Indigenous peoples have access to culturally appropriate care.

Supporting people and businesses

* Saving families up to $672 a year per child with free public transportation for children 12 years and under.

* Making it easier to find affordable, quality child care by doubling the number of $10-a-day child care spaces, doubling the wage enhancement for early childhood educators, and continuing to build and expand spaces.

* Creating 400 more spaces through the Aboriginal Head Start program that provides culturally relevant child care for Indigenous families.

* Continuing to fund the BC Recovery Benefit, which has helped over 2.5 million British Columbians to date and provides up to $1,000 to families and single parents, and up to $500 for individuals.

* Helping 80,000 low-income seniors by increasing the Senior’s Supplement for the first time ever.

* Helping those who are struggling most by delivering the largest-ever permanent increase to income assistance and disability assistance rates, a 53 per cent increase to income assistance since 2017.

* Supporting the resilience of B.C. businesses with a suite of grants and funding, some already introduced in response to urgent needs, to help businesses adapt and grow.

* Helping ensure tourism businesses and communities make it through the pandemic and are ready to thrive when visitors can safely return.

* Improving campgrounds and trails, while adding up to 100 new campsites throughout the province every year, starting in 2022.

Economic recovery

* Creating an estimated 85,000 jobs and strengthening communities around B.C. with record infrastructure investments – an increase of $3.5 billion in this budget.

* Helping thousands of people find new jobs in sectors like health care through investments in post-secondary education and skills training programs.

* Ensuring more than 5,000 young people land jobs, internships and co-ops through the StrongerBC Future Leaders program, and 3,000 students benefit from new work integrated learning placements.

* Building 9,000 new homes for middle-income families with $2 billion in development financing.

* Supporting tourism businesses and communities with $120 million, including grants to help prepare for future visitors through new tourism infrastructure like trails and airport improvements.

* Reducing emissions, protecting communities, expanding the economy and creating careers through an additional $506 million in CleanBC investments.

* Making annual funding permanent to improve connectivity across B.C.

* Helping high-potential businesses grow in B.C. through funding provided by InBC, a new $500-million strategic investment fund that will deliver economic, environmental and social returns.

“From the time the pandemic hit, we delivered a broad range of supports for British Columbians who were reeling from how quickly all of our lives were turned upside down,” Robinson said. “Budget 2021 is built from everything we have learned in the last year to continue helping people now, while laying the foundation for people and businesses in our province to seize the opportunities that recovery will offer.”

Like the rest of the world, British Columbia’s economy has faced an unprecedented year of challenges with the COVID-19 pandemic, but there are already strong signs of economic recovery.

Budget 2021 includes an updated forecast deficit of $8.1 billion for 2020-21, down from the 2020 Fall Economic and Fiscal Update projection of $13.6 billion. This decrease is because of higher-than-expected revenues, including tax revenue as a result of activities such as strong housing and retail sales, and moderately lower spending. Government is focused on continuing to support people, businesses and communities for a stronger, more resilient economic future for B.C.

Economic highlights

* Both retail and home sales were above pre-pandemic levels by mid-2020, supported by low interest rates and a consumer pivot toward goods purchases while services were disrupted, among other factors.

* Retail sales had their largest monthly decline on record in April 2020; however, retail sales rebounded and were 15.3 per cent higher in January 2021 than a year ago.

* Housing market activity has been resilient despite the pandemic, and monthly home sales reached record levels in late 2020 and have continued to grow in 2021.

* The average home sale price in B.C. has increased by 11.6 per cent in 2020 compared to 2019.

* B.C. lost an unprecedented number of jobs following the onset of the pandemic. As of March 2021, total employment in B.C. surpassed pre-pandemic levels, the highest job recovery rate among provinces; however, some sectors are struggling and not everyone has been affected in the same way.

* Like the rest of Canada, B.C. experienced high unemployment rates at the beginning of the pandemic in March and April 2020. B.C.’s unemployment rate averaged 8.9% in 2020 and the unemployment rate for March 2021 was 6.9 per cent.

* B.C. was tied with Manitoba for the second-lowest unemployment rate in Canada when the pandemic hit and currently has the third lowest unemployment rate in Canada.

Operating results

* The Third Quarterly Report projects an operating deficit of $8.1 billion in 2020-21.

* Total revenue forecast is $61 billion, and total expense forecast is $69.1 billion.

* Budget 2021’s three-year fiscal plan presents declining deficits, with a $9.7 billion deficit in 2021-22, $5.5 billion in 2022-23 and $4.3 billion in 2023-24.

* $8.7 billion in new base budget investments across the three-year fiscal plan will help people stay safe and healthy through the pandemic and create new opportunities for an economic recovery that includes everyone.

* The fiscal plan projections include significant prudence given the continuing health and economic uncertainty, which includes:
* A Pandemic and Recovery Contingencies allocation of $3.25 billion in 2021-22, $1 billion in 2022-23 and $300 million in 2023-24 to continue to fund short-term initiatives to address health or economic recovery needs related to the pandemic.

* General Programs Contingencies allocation of $1 billion in 2021-22, $800 million in 2022-23 and $700 million in 2023-24 to help manage unexpected pressures.

* Annual forecast allowances of $1 billion in 2021-22, $750 million in 2022-23 and $400 million in 2023-24 to guard against volatility, such as revenue changes.

* Notional allocations of $1.5 billion in 2022-23 and $2 billion in 2023-24 for caseload pressures and priority initiatives that may require funding in future budgets.

* A forecast for B.C.’s real GDP growth that is lower than the outlook provided by the Economic Forecast Council (0.5 percentage points lower in both 2021 and 2022, and 0.2 percentage points lower in both 2023 and 2024).

COVID-19 spending

* Budget 2021 focuses on health and safety, supports for people and business and preparing B.C. for longer-term economic recovery with $8.7 billion in budget increases and $4.6 billion in Pandemic and Recovery Contingencies over the fiscal plan.

* The $3.25 billion in Pandemic and Recovery Contingencies for 2021-22 supports programs and services with:
* $900 million for health-related COVID-19 management.

* $1.05 billion for supports for people and businesses.

* $200 million to prepare for economic recovery.

* $1.1 billion in reserve to support any unanticipated and urgent health or recovery measures.

* In 2020-21, the Province invested over $10 billion in COVID-19 relief and recovery measures. This included:
* $6.7 billion in Pandemic Response and Economic Recovery Contingencies to support critical services, provide financial supports and support economic recovery.

* $810 million in provincial contributions toward federal and provincial cost-shared Restart initiatives for transit and municipalities.

* $3 billion for other response and temporary relief measures, including tax credits and reductions.

Capital spending

* Total taxpayer-supported capital spending is projected to be $26.4 billion over the fiscal plan. The capital plan is well positioned to support the recovery with investments in existing projects so that people can get back to work right away and also includes investments to build the foundation of long-term recovery.

* Budget 2021 projected spending over three years is $3.5 billion higher than the three-year plan outlined in Budget 2020 and is expected to create over 85,000 jobs over the fiscal plan period.

Debt levels

* Debt is expected to increase significantly to finance the investments needed to ensure continued support for British Columbians who need it and a strong economic recovery for B.C.

* B.C.’s taxpayer-supported debt is projected to be $71.6 billion at the end of fiscal year 2021-22, $82.8 billion in 2022-23, and $92.7 billion at the end of 2023-24.

* The taxpayer-supported debt-to-GDP ratio, a key metric used by credit rating agencies, is expected to remain below 30% throughout the fiscal plan, reaching 26.9% by 2023-24.

* Despite a significant increase in borrowing and higher debt levels, B.C. has benefited from low interest rates partially due to the Province’s good credit rating.

* As a result, the Province’s debt remains affordable, enabling government to invest now to support people and businesses through the pandemic and encourage a strong recovery.

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