After former premier John Horgan had to unexpectedly step away from his role in 2022, David Eby was sworn in as premier of British Columbia. During his time in office, Premier Eby has taken his new position and ran with it by significantly increasing spending and debt accumulation compared to his (elected) predecessor’s plan. Unfortunately, Eby’s fiscal decisions come with big consequences for British Columbians.
According to the Eby government’s budget, program spending will be $9.8 billion higher in 2023-24, and $14.4 billion higher in 2024-25 than Horgan’s last budget in 2022, which is equivalent to a 14-per-cent and 20-per-cent increase, respectively. Spending will be higher in all major areas including health care, education and social services. And remember, per-person (inflation-adjusted) program spending was already at record highs under the Horgan government in 2020 and 2021—the highest level on record, even excluding COVID-related spending.
Correspondingly, after factoring in capital expenditures on long-term spending (e.g. highways and schools) the government’s net debt (total debt minus financial assets) will be higher than originally projected in the 2022 budget—reaching a projected $92.6 billion in 2024-25.
Of course, this debt accumulation comes at significant cost to B.C. taxpayers who are responsible for financing government debt. Indeed, the government’s debt interest costs this fiscal year have increased from a projected $3.6 billion in Horgan’s last budget in 2022 to a projected $4.1 billion in the latest Eby budget. In 2024-25, debt interest costs will reach a projected $723 per British Columbian. While part of the increase reflects the higher interest rate environment, Eby’s higher spending and massive debt accumulation are also to blame.
To be clear, this high spending might be justified if it improved programs and services for British Columbians—but it hasn’t. In fact, according to a new study published by the Fraser Institute, despite substantial increases in spending by the B.C. government in recent years, the province’s health-care wait times have increased and student test scores have declined. Put differently, according to key indicators, B.C.’s performance on health care and education—the two largest areas of government spending—have worsened despite higher spending. That suggests the government should seriously rethink its approach, not double down on record high spending.
Simply put, the decisions of B.C.’s premier—who didn’t run as premier in the last election—include a significant ramp up in spending and higher debt accumulation which will inflict big costs on British Columbians with little if any benefit.
Tegan Hill is an economist with the Fraser Institute.
