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Provincial deficit projected at $1.7 billion … much lower than expected

Finance Minister Selina Robinson

Based on data until the end of September, B.C.’s deficit is projected at $1.7 billion – a substantial reduction from the $9.7-billion deficit originally estimated at Budget 2021, and the $4.8-billion deficit predicted in the First Quarterly Report.

As previously reflected in the first quarter, the reduced deficit is primarily attributed to higher-than-expected revenue from personal and corporate income taxes, increased activity in the retail and housing sectors, strong resource revenues and commercial Crown net income, while expenses remained stable.

“By putting people first, while being nimble and responsive to the challenges the pandemic has introduced, we’re continuing to see positive effects in our financial outlook and our economy,” said Selina Robinson, Minister of Finance. “That approach has helped to support people and businesses through the challenges we have seen so far, while putting us in a good place to be able to continue to provide the supports needed by those affected by the recent disaster.”

The Liberals, however, are blasting the NDP government for “missing their deficit forecast,” and for enjoying increased tax revenue during the pandemic.

“Today’s Q2 report shows the NDP is simply relying on increased tax revenue being paid by for everyday British Columbians who are already stretched to the limit,” said Mike Bernier, BC Liberal Critic for Finance. “Most concerningly (sic), the NDP has already made more than a billion dollars from the Property Transfer Tax this year while B.C. is in the midst of a housing crisis. This means the NDP government is actually making money from housing being unaffordable — and are patting themselves on the back for it. Additionally, many business supports still haven’t been paid out, despite there being no shortage of businesses in need. In fact, government is forecast to spend only $4 million of the $190 million set aside for the Increased Employment Incentive. With businesses facing increased costs and difficulty attracting labour, and northern B.C. still being under circuit breaker measures, it is inexcusable that government would let a fund like this flop.”

According to Robinson, there continues to be significant uncertainty about the rest of the year, especially considering still-to-be-determined impacts of flooding and extreme weather events and the ongoing COVID-19 pandemic as many areas of the world continue to experience outbreaks. Higher inflation, increased strain on supply chains and other associated pandemic impacts, which could be worsened by the recent flooding, will also continue to affect economic recovery.

“The future remains uncertain, and we will continue to do what is needed to support people through the challenges we face as a province, whether that is the continued effects of a global pandemic or the response and recovery from the recent extreme weather,” Robinson said. “As we move through the immediate response and look at our next steps, our focus remains on building resilience, not only in our budgets but also in our communities, services and economy now and for B.C.’s future.”

Although private-sector forecasters have lowered real gross domestic product (GDP) projections for all Canadian provinces since August, B.C. is still expected to be among the leaders for economic growth for 2021 and 2022. The province also saw a smaller decline in GDP in 2020 than other major provinces more deeply affected by the pandemic.

The Labour Force Survey for October solidifies B.C.’s position as leading Canada’s economic recovery with another 10,400 jobs added around the province that month, while consumer spending and exports remain strong. High vaccination rates and vaccinations for children five to 11 also signal optimism for B.C.’s future.




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