On Feb. 20 the new B.C. provincial government will unveil their first full budget. Because their September budget update was largely a ‘wait for February’ memo, this is where we expect they’ll finally put their stamp on provincial finances.
Going in, we’re faced with the overarching reality that B.C. has the worst performing economy in Canada for younger residents. For many people, life has become devastatingly unaffordable.
Housing costs continue to soar out of reach of local earnings. And for those with young children, we face a double-whammy with child care costs equal to a second rent or mortgage payment.
The BC NDP have promised to make life more affordable for British Columbians. This was their platform foundation in the 2017 provincial election, it was underscored in their ministerial mandate letters, in their first Speech from the Throne, and it was the main theme in their September budget update.
But will they deliver? In the February budget, we’ll be looking for bold action in three key areas: housing, child care, and the age distribution of government spending.
There’s no silver bullet capable of recoupling housing costs with local incomes. What we need, and what the BC NDP have promised, is a “comprehensive housing plan” that “addresses all the levers.”
We’ll be looking for their plan to:
Adopt the fundamental principle of Homes First (investments second)
Flesh out additional first principles, e.g. as described in our Building Housing Common Ground report
- Address the three key levers of Supply, Demand, and Housing Wealth Taxation (see below)
At the end of the day, B.C. can’t simply spend and build its way toward making housing affordable for younger generations. So far, public investments won’t even add one per cent to the stock of existing homes. There is no silver bullet solution, so fixing this problem requires a comprehensive housing plan.
Encourage density, diversity and efficiency to increase the supply of suitable homes:
- Immediately incentivize urban areas to abandon outdated zoning policies that limit many lots to single homes
- Build much higher levels of density — especially purpose-built rental and so-called “missing middle” housing — around transit hubs and other public spaces
- Track the proportion of urban 3+ bedroom homes that are priced at or less than $500,000
Reduce harmful demand on the real estate market:
- Extend foreign buyers taxation to more municipalities, including the Capital Region
- Complement the FBT with a progressive property surtax that targets global capital
Give other municipalities the option to tax empty homes (like Vancouver)
Work with municipalities to restrict and properly tax the short-term rental market
Revise outdated tax policies that shelter housing wealth from taxation in inefficient ways:
Immediately begin investigating how we can efficiently and fairly tax things we want less of (unreasonable, unearned gains in real estate wealth/housing costs) and decrease taxes on things we want more of (income). Including:
- Finding a fair, efficient way of taxing the unearned “lottery winnings” created when land is re-zoned for new density
- Finding a fair, efficient way of taxing the “generational housing wealth” bestowed on predominantly older homeowners — we need our tax system to reflect that the primary source of wealth for our aging population is the primary source of debt for younger Canadians
- Try to tax net housing wealth, not just gross wealth
- Reduce income taxes, because incomes aren’t the primary driver of inequality — wealth is, and housing wealth is at the heart of this problem in B.C.
- Level the playing field between renters and owners through policy subsidies for renters that are in proportion to subsidies for homeowners
We support the $10aDay child care plan, which has roots in Gen Squeeze research and has the support of the Coalition of Child Care Advocates of BC
- While the BC NDP have highlighted actions to save residents money on bridge tolls, BC Hydro rates, and MSP premiums, we all need to be clear that a single month of child care fees often cost an entire year’s worth of those other expenses
- And while it was fair for the new government to take its time fine-tuning a new child care plan, we think warning bells should go off if the total funding increases for child care don’t keep pace with increases in medical care spending
Monitoring the age distribution in government spending
Without a breakdown in generational spending, it's too easy for politicians to resort to platitudes like “younger Canadians are our future”, while budgeting in ways that compromise our present and our future.
No younger citizen begrudges spending wisely and generously on our aging family members, but our parents and grandparents also want to leave a proud legacy. We therefore need annual government budgets to begin reporting the age distribution in spending so citizens can hold politicians accountable for finding the right balance between investing in young and old alike.
We have developed and published a methodology to perform this task annually, and can help governments with this monitoring. At present, governments spend a combined $33,000-$40,000 per person age 65+, compared to less than $12,000 per person under age 45.
Generation Squeeze asks the B.C. government to report the age gap in spending in their annual budgets and invest further in younger generations, while protecting spending on our aging parents and grandparents.
What’s coming up next
It can be easily argued that B.C.’s affordability crisis is what what led to last year’s change in government: the cost of housing and affordability issues were top election issues for voters, and it’s what all parties — especially the BC NDP — campaigned on last spring. Now that the BC NDP has had sufficient time to organize government, we’re eager to see meaningful progress in these key areas.
Generation Squeeze commits to breaking down the B.C. budget numbers on Feb. 20 so you understand how our new government is tackling the affordability crisis and investing in younger generations. We’re also going to host a special event in the capital city on budget day so you get a chance to ask key questions about the budget numbers, and uncover misconceptions around investments.
In the meantime, look for an upcoming blog series digging even further into our key areas of interest, with fresh research findings to illuminate the conversation.
B.C. budget issue briefings:
Do you have any questions about these topics, provincial budgets, or the upcoming B.C. budget? Leave a comment here, or send your question to [email protected]
 The typical 25-34 year old earns more than $9,000 less for full-time work by comparison with the same aged person in 1976 (after inflation), while home prices have risen hundreds of thousands of dollars. No other province reports a larger reduction in earnings, nor a greater increase in housing costs.
 The BC NDP’s 2017 election platform included promises to:
- Introduce an annual levy on vacant homes equal to 2 percent of the home value. If implemented, it’s expected to generate around $200 million per year in revenue. We don’t expect this policy proposal to meaningfully rein in home prices.
- The BC NDP also proposed a $400 annual credit for renters. While this change won’t fundamentally make rent more affordable in comparison with the past, it does recognize that renters don’t benefit from the tax break homeowners receive through the home owners grant.
The BC NDP embraced Gen Squeeze’s recommendation of $10/day child care. According to their platform, the BC NDP will invest $400 million more on child care by 2019/20 – an amount that is just over 25 per cent of the cost of our recommendation. It’s a decent start so long as the provincial government ramps up its spending more urgently thereafter.
In the September budget update:
- Funding was promised for 1,700 units targeted to low-income renters, and 2,000 modular housing units for the homeless. While these are needed investments, the additional units will barely add even a fraction of one per cent to the provincial supply of homes, and do little to disrupt the fundamental supply and demand factors that have driven home prices in recent years.
- The budget update reinforced previous commitments in the BC Liberal plan that will spend over $11,000 per retiree, by comparison with less than $7,500 per British Columbian under age 45. When federal spending is added to the mix, the figures are over $33,000 per retiree, and less than $12,000 per younger person.
- There were no child care funding updates in September.
 Why do we think warning bells should be going off? Two reasons:
1. Because while medical care benefits all British Columbians, it primarily benefits residents as they age, and unlike programs like the CPP, our medical care system is not prepaid. Meaning: Canadians of working age bear the brunt of the cost of medical care spending increases. It is profoundly unfair to ask younger Canadians of prime working age to bear the brunt of increased costs of our medical system while refusing to invest in programs like child care that are essential to many families actually earning income.
2. Because failing to invest in the social determinants of health, including child care, is known to increase social costs later on, including medical care costs.