The 2022 BC Budget analysis

The 2022 BC Budget fails to demonstrate the courage needed to recognize that the status quo is broken

February 22 was Budget day in BC, and Gen Squeeze was there to crunch the numbers.  If we want progress on housing, child care, climate, wellbeing and generational fairness, it needs to be in the Budget!

Budgets separate the wheat from the chaff.  Or in political terms, they show us what governments think are the real priorities, backed up with real money – versus other nice-to-have things that get the left overs.

Alas, BC’s Budget shows little urgency to invest in wellbeing, beyond fighting COVID and ramping up spending on medical care.  It doesn’t deliver promised child care funding increases. It doesn’t do enough to slow unhealthy home price increases. And it doesn’t invest enough to proactively fight climate change. 

The pandemic is a public health crisis, and it merits action and dollars.  But why aren’t we taking as seriously the child care unaffordability crisis, the housing unaffordability crisis, and the climate change crisis?  By failing to make these real priorities, the Budget doesn’t leave a fair legacy for younger and future generations.

 

Medical care is the Budget winner – but is this really cause for celebration?

Medical care spending will increase by $3 billion over the next three years – an increase that represents fully 2/3 of all new social spending over this period.  Even setting aside the pandemic, this isn’t a big surprise. Medical care has gobbled up the largest funding increases in BC Budgets for each of the last ten years.

A strong medical care system and resilient medical professionals are good things. But continual escalation of medical care spending neglects the mountain of evidence that shows health doesn’t start with health care.  It starts where we are born, grow, live, work and age – conditions largely shaped by social investments. 

When we put an ever larger share of public funds into medical care, it crowds out opportunities to invest in other important priorities, like child care, housing, poverty reduction, or education. That’s why all of these policy areas combined receive only 1/3 of all new social investments made by the BC government.

Disproportionate medical care spending increases also spark questions about what it means to treat generations fairly. Since we use more medical services as we age, the gap between medical budgets and budgets for child care, housing, education etc, gives rise to worrisome age patterns in provincial spending. For example, Budget 2022 allocates about $750 in new funding for every resident age 65+, with no increase in per person funding for those under age 45. All the while, climate change is putting the health and economic wellbeing of younger and future generations in jeopardy.

 

Child care – the federal government picks up the slack left by BC

Once again, the BC government did not deliver the child care funding it promised.  The NDP courted child care supporters in the 2020 election with promises of significant investments in $10 a day child care… but they’ve been jilted. Twice. 

Only 10% of the promised $1.25 billion in funding has materialized (about $147 million). The BC Budget is riding the coattails of federal investments, with Ottawa putting in another $482 million. Even counting these funds, the total is less than half of what the NDP committed.

It’s great that BC remains on a trajectory towards $10 a day child care – something that Gen Squeeze has championed for years to ensure child care no longer costs another rent or mortgage sized payment for BC families.  But the BC government is no longer leading on this issue.  It’s following, which is a far cry from what it promised in the last election.

 

Housing – still far too few (affordable) places to call home

The BC government has a 30-point plan to restore housing affordability, but the path it sets out isn’t leading us to solutions to the housing crisis.  We know what’s needed, but the political will remains lacking to get us there.  

Despite pandemic pressures, home prices are still spiraling out of control – with the contagion spreading from Metro Vancouver to communities across BC.  The gap between home prices and local earnings in growing in frightening ways.  Plus, the Budget confirms that the government will continue to miss the mark on the number of new homes promised in the last election.

Just as disturbing is how the Budget celebrates BC’s broken housing system. The government brags that “BC housing markets… reached record levels last year… Average sale price growth was strong across the province with each region seeing price growth above 10.0%” (see “Economic highlights” in Backgrounder 4, and p. 101 of the full budget).

No government should take pride in economic trends that undermine the wellbeing of so many.  In BC, it now takes 22 years of full-time work for the typical young person to save a 20% down payment on an average priced home – a staggering increase from the five years it took in 1976 when many of today’s aging population started out as adults. Since the NDP took office in 2017, three years of hard work have been added to this burden facing younger generations. 

It’s time for the BC government to concede that our housing system is designed – even if unintentionally – to tolerate home prices rising well beyond what locals earn.  The NDP’s efforts to inject incremental investments in new supply (especially rental and non-profit housing) are icing on a toxic cake. So long as the price of land and construction continues to rise, new investments will struggle to keep pace with inflated values – making it almost impossible to deliver affordable units at a scale required to ease the housing squeeze.

We need the BC government to reorient all housing policy in line with this goal: “To restore affordability for all, we need home prices to stall, so that earnings can catch up.” 

 

Misjudging risks – under investment in climate action

After frightening heat domes, fires and floods in 2021, many British Columbians likely expected bold action to address climate change in the 2022 Budget, to ward off further harm to our communities and economy.  But this expectation hasn’t been met.

The Budget adds $1 billion over the next three years to fight climate change through its CleanBC  plan. By a couple of different measures, this is a modest commitment.  It’s only 1/3 of the amount invested in health care – even though the World Health Organization identifies climate change as the greatest risk to human health in the 21st century. It’s also less than half of the $2.1 billion the Budget allocates for dealing with the damage caused by climate change after the fact.  Clearly climate commitments in the Budget are not guided by the principle that an ounce of prevention is worth a pound of cure.

 

Who is on the hook when we spend more than we collect?

Surprisingly, there is no expectation in Budget 2022 for the province to balance the books – even as far as three years from now, when we don’t expect to be in either a pandemic or a recession.  Legislation to mandate balanced budgets doesn’t make sense, as governments do need flexibility to respond to changing circumstances. But it seems equally questionable to lose sight altogether of the importance of balancing spending with revenue as a metric for responsible and fair governance.

When we continue to run up deficits to pay for the programs and services British Columbians want, but don’t engage residents in a conversation about how expanding costs will be covered, what is the predictable outcome? 

First and foremost, increased debt.  Everyone with their own personal budget knows costs exceeding income equals debt.  But it’s equally important to consider who’s on the hook for this debt. Ratcheting up spending without raising revenue kicks unpaid bills down the road for younger and future generations to deal with. Young British Columbians are inheriting far higher government debts than did today’s seniors when they became adults – and that’s on top of the massive climate debt that young people will have to shoulder.

The BC Budget perpetuates this generational unfairness with its one-sided discussion of spending increases, with little to no consideration of who and how we pay for them. 

 

The punchline: Propping up a problematic legacy

The legacy of the 2022 BC Budget – like many before it – is grounded in tolerance of the generational unfairness harming younger people.

While consistent with aspirations for the parents and grandparents we love to have healthy retirements, larger investments in medical care for our aging population aren’t balanced with urgent adaptations to address the crises facing the younger people they love – like unaffordable child care and housing and growing climate uncertainty.

The Budget includes no discussion of how the aging population will pay its fair share for the medical care it understandably wants.  The result is stalled investments for younger residents, and rising debt that they will inherit down the road.

While the Budget shows that British Columbians are short on revenue needed pay for services we want, the government is not brave enough to tax the outsized housing wealth windfalls many home owners have accrued simply because they bought homes decades ago. Instead, they are choosing to leave larger debts for younger residents, and higher housing costs. 

The Budget does not steward the things we hold sacred today so that future generations have the same choices and opportunities – things like a stable climate, a healthy childhood and a good home.  As a result, we’re not planning well for all generations.

Paul Kershaw
About
Dr. Paul Kershaw is a Professor in the University of British Columbia's School of Population and Public Health, and the Founder of Generation Squeeze.
The 2022 BC Budget analysis
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