The NDP government was in the dark like everyone else right up to the provincial budget’s press time about whether the U.S. tariff threat would actually take effect.
How they handled that is summed up in one phrase in the document: “Given the evolving and fluid situation, (it) is not incorporated into the budget.”
They decided to press on with a spending plan that assumed the U.S. northbound runaway train would stop short of the border.
The prospect of it crashing into the B.C. economy was instead addressed in a sidebar that updates an assessment from six weeks ago. The update is more optimistic than the first estimate, but still dire.
So when tariffs slammed into place Tuesday, the immediate impact was to shred most of the forecasts in the budget before it was even introduced. None of the revenue projections, economic assumptions or growth forecasts look to be relevant any more.
It’s the assessment of the tariff impact, separate and apart from the actual budget, that counts. Even freshened up with optimism — the employment-loss estimate is cut by almost two-thirds — it’s a grim read.
It projects a cumulative $43 billion hit to B.C. over four years, 45,000 fewer jobs, a bump in unemployment and billions less government revenues.
The new assessment uses the word “uncertainty” seven times in eight pages. It doesn’t include the impact of stacking other levies on lumber or metals. It warns: “If Canada retaliates, the U.S. may increase or expand the scope of tariffs.”
It looks like the elaborate economic planning that underpins all the plans for the next three years isn’t going to hold up well.
Premier David Eby appeared restrained. Compared to fire-breathing Ontario Premier Doug Ford — “If they want to annihilate Ontario, I will cut off their energy with a smile on my face” — Eby was low key in his initial response.
Removing booze produced in Republican states from government liquor stores is mild by comparison.
Current trade agreements dictate that the government has to consider U.S. bids on government procurement orders. But Eby is voiding that and ordered a new “Canadian first” directive.
That impact is not quantified. The off-loading of B.C. patients to Washington state hospitals for some treatments was not mentioned.
Eby opened by noting the U.S. just cancelled all military aid to Ukraine, suggesting B.C. isn’t as bad off as them.
“It does put into perspective the news Canadians woke up to this morning …”
The tariffs are a “betrayal” and are unmistakably part of the president’s repeated aim to make Canada the “51st state,” he said.
He quoted a woman whose advice was: “Don’t let the bastards grind you down.”
Eby renewed the appeal to avoid U.S. travel and buy Canadian, saying the B.C food sector is seeing a spike in sales.
“This is a moment for us to take an attack and turn it into a strength …”
With all the emphasis on uncertainty, the only sure bet in the budget is that B.C. will be plunging much further into debt, regardless of tariffs.
Finance Minister Brenda Bailey didn’t use the words “debt” or “deficit” in her budget speech.
But they are prominent in the documents.
The operating deficit for the coming year is forecast at $11 billion, $2 billion higher than the one racked up this year.
The NDP government took over in 2017 with zero operating debt, which is the accumulation of previous deficits. It incurred $8.7 billion during the pandemic, then paid it off.
But annual deficit budgets since then have pushed it to $22 billion. It is expected to rise to $50 billion by 2028.
Total provincial debt — $50 billion when the NDP took over in 2017 — is now $133 billion, and forecast to jump to $208 billion by 2028.
There is $4 billion in contingencies booked into each of the next three years of planning, so there is some cushion in the stark numbers.
In Tuesday’s vortex of a demented economic attack launched the same day a debt-ridden budget arrived, it’s easy for taxpayers to spin into apocalyptic scenarios.
It might not be that bad. The initial forecast of the economic impact of the pandemic was alarming. It turned out to be much less severe.
But even with all the reassurances larded through the budget about looking after people, it’s clear this is going to hurt.
