Analysis of the 2021 BC Budget

Child care

The re-elected NDP government is delivering much less than it promised for child care in last fall’s campaign. Whereas its platform promised $1.25 billion in new operating funding for child care over the next two years, the 2021 budget promises just $233 million over three years.

Similarly, the capital budget to build new child care spaces is modest. Budget 2021 does not list child care space construction as priority by comparison with other capital projects.

Sure, the NDP has improved child care substantially by comparison with the previous government. But this big gap between the NDP’s election promise and its actual investments will mean too many BC families continue to be squeezed financially because child care costs another rent- or mortgage-sized payment on top of skyrocketing home prices.

It is not enough for the province to simply bank on the big child care announcement made in the federal budget.  Ottawa still requires an active provincial partner to bring about the $10aday child care vision.  BC Budget 2021 reveals that our government does not plan to be as active as it promised during the last election. That’s a shame.



The “Economic Highlights” in Budget 2021 brag that “The average home sale price in B.C. has increased by 11.6% in 2020 compared to 2019,” adding that “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.”

This is disturbing. If affordability is the goal, then skyrocketing housing prices reflect that the BC Governments 30-point housing plan is not up to the task.

No government should take pride in economic trends which now mean it takes 20 years of full-time work for the typical young British Columbian to save a 20% down payment on an average priced home. That’s more work than required at any other time in BC’s history, and a staggering increase from the five years it took in 1976 when many of today’s aging population started out as young people.

Yes, the NDP continues to inject incremental investments to add new supply, especially rental and non-profit housing.  But so long as the price of land and construction rise, then new provincial investments struggle to keep pace with inflated real estate values. The result is that it is very difficult to deliver affordable units at a scale required to ease the housing squeeze.

Given that a pandemic-induced recession has been unable to slow down home prices, it is time for the BC government to revise its 30-point plan. The plan needs to concede that our housing system is badly designed, even if unintentionally, to tolerate home prices rising well beyond what locals earn.  

To close the gap between home prices and earnings, we need the provincial government to commit to the idea that home prices are “healthy” when they stall or fall moderately relative to earnings.  This requires policy plans to:

  • Reduce the collateral damage to the housing market that comes from reliance on historically low interest rates to spur economic growth, because these rates are over-inflating home prices.
  • Reduce the collateral damage to the housing market caused by incentivizing people to treat housing as a way to get rich because we shelter high-value homes over $1 million from taxation like we don’t shelter windfall gains from other assets in the stock market. The NDP’s small surtax on homes over $3 million nudged in this direction a few years ago.  But current market trends signal it is necessary to go further now to discourage price escalation.  Additional revenue could then be used to:
  • Incentivize scaling up new supply of energy-efficient co-op and non-profit purpose-built rental homes with enough bedrooms for families to raise their kids.


Overlooking key health lessons from the pandemic

As the third wave of COVID-19 raises fears that patients may surpass hospital capacity, it’s not surprising that the provincial government has increased medical spending by nearly $2 billion this year compared to last year.  That’s is likely the biggest single year increase in BC history for what is already the largest line-item in the provincial budget.

Before we celebrate too much, it is important to acknowledge that this ongoing increase in medical spending risks crowding out other social spending – like the scale of investment required for child care, housing, poverty reduction or education. 

This is happening even though the pandemic has made apparent something that population health research has shown for decades.  Health doesn’t start with health care.  It starts where we are born, grow, live work and age. That’s why the risk of catching COVID-19 has been greater in disadvantaged neighbourhoods, in particular kinds of work sites, and among more marginalized groups of workers. We’ve also seen that the social distancing required to fight the spread of the virus has undermined many people’s livelihoods, housing security and access to education – which are key determinants of their health, and has caused deterioration in mental wellbeing for many.

Research shows that our budgets do better when they follow the motto that “an ounce of prevention is worth a pound of cure.” Social spending is prevention.  Medical spending cures illness – much of which we could prevent, and thereby save money for provincial coffers.

Disproportionate increases to medical care also generate generational tensions. Since we use so much more of our medical support when we are older, bigger budget increases for medical care compared to child care, housing, education and other social services give rise to worrisome age patterns in provincial spending. For example, Budget 2021 allocates this year approximately $1,100 in new provincial funding for every resident age 65+ compared to approximately $200 per person under age 45.

This age gap invites important questions about whether the BC government is budgeting fairly for young and old alike. We will once again bring these questions to the BC government as part of our ongoing work to encourage future budgets to do a better job on reporting about the age trends in public spending. Reporting these trends is key to ensuring that future budgets work well for all generations – the goal of Gen Squeeze.

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