The B.C. government’s per-person spending hit the highest point ever in fiscal 2022–23, eclipsing the previous high set during the height of the COVID-19 pandemic, a new study shows.
The study by the Fraser Institute, published Feb. 21, says the NDP government’s program spending in 2022–23 reached $14,275 per person. This is the highest point on record in provincial history, surpassing the previous high of $13,899 set during the pandemic in 2020–21.
The study examined B.C.’s per-person spending between fiscal years 1999–2000 and 2022–23, adjusting for inflation and population using Statistics Canada data.
The analysis indicated that B.C.’s per-person spending in 2022–23, the latest year of available data, was almost 20 percent higher than that in 2019–20, said the news release, noting that this was despite the end of the pandemic. Specifically, fiscal years 2020–21 and 2021–22 were significantly affected by emergency spending related to the COVID-19 pandemic and the recession, the report said.
“Many British Columbians would be surprised to learn that the provincial government spent more on a per-person basis last year than it spent during the height of COVID,” study co-author Ben Eisen, a senior fellow at the Fraser Institute, said in the news release.
“It’s difficult to overstate how much the B.C. government has changed course from nearly two decades of restrained spending to record-high spending levels as measured by per-person spending adjusted for inflation.”
Spending ‘Substantially Accelerated’
The study noted that B.C. “substantially accelerated” the rate of spending following the election of John Horgan’s NDP government in 2017.
Per-person spending increased by 35.5 percent between 2016–17 and 2022–23. And spending grew at a compounded yearly rate of 4.7 percent during that seven-year period, excluding COVID-related spending in 2020–21 and 2021–22. This dwarfed the 0.8 percent growth rate from 2000–21 to 2016–17, the study said.
B.C.’s spending growth rate of 35.5 percent was also the largest among Canada’s 10 provinces for that seven-year period.
“This was substantially more than the next largest increases, which occurred in Quebec (23.1 percent) and Nova Scotia (21.2 percent),” the study said.
Alberta, on the other hand, has reduced its spending (-14.4 percent) since 2016–17, the authors found, adding that Ontario (4.5 percent) and Saskatchewan (6.1 percent) saw much smaller spending increases during that period.
The study also pointed to the B.C. government’s deficit forecast in its most recent fiscal update available prior to release of the study’s report. The second quarterly report for 2023–24, issued November 2023, projected a $5.6 billion budget deficit for the year.
“But if it had simply held per-person spending (inflation-adjusted) to 2019–20 levels in recent years, overall spending would now be $8 billion lower than it is, and the province would be in a surplus rather than a deficit,” said the think tank in the news release.
With the announcement of B.C.’s Budget 2024 on Feb. 22, a day after the Fraser Institute report was published, the forecasts have changed. Premier David Eby’s government updated the deficit projections to $5.9 billion for 2023–24 and $7.9 billion in 2024–25, and said the deficit is expected to decline to $7.8 billion in 2025–26 and $6.3 billion in 2026–27.
‘Substantial New Debt’
Basing its figures on those from the November 2023 fiscal update, the think tank authors noted that B.C. also expected an overall growth in net debt of $16.4 billion in 2023–24, followed by additional debt increases of $13.1 and $13.2 billion in the two following fiscal years.If these forecasts materialize, the province’s real, per-person debt burden, in 2023 dollars, will increase by 44.8 percent from $11,854 in 2022–23 to $17,169 2025–26, they said.
“This would represent a cumulative increase in the province’s debt-to-GDP ratio of 8.2 percentage points for a total of 23.6 percent.”
This debt trajectory is “thanks in large measure to record spending levels,” the authors wrote, noting that B.C. had gradually reduced its debt-to-GDP ratio from 18.4 percent in 1999–2000 to 14.4 percent in 2016–17.
Mr. Eisen said another big spending budget by the Eby government would put the province in more red ink.
“As a result of rapid spending growth, the government is set to incur large deficits and accumulate substantial new debt,” he said in the news release.
