Future budgets need monitoring framework to ensure the promise is kept

British Columbians want to preserve a healthy childhood, home and planet so we all leave a proud legacy. But protecting this legacy is getting harder — something the government’s Strategic Plan (p. 3) formally acknowledges for the first time, citing research from the Generation Squeeze Lab at UBC.

In response, Budget 2024 makes an historic commitment to intergenerational fairness. “Our government is determined to make BC work for all generations... We are committed to planning for all ages, investing wisely in wellbeing from the early years onwards” (Strategic Plan, p. 2).

BC is the first government in Canada to promise to anchor its priority-setting in commitments to intergenerational solidarity and long-term thinking. As we explain here, this is a pivotal step for the province to meet its responsibility to budget fairly for all generations.

Now that the Eby government has made this commitment, how do the spending commitments in Budget 2024 line-up? Read on to find out.

The age gap in spending has been dramatically reduced

The BC government is evening out investments in older and younger residents.

Budget 2024 still adds funding for older residents 50% faster than for younger residents. But this age gap has shrunk significantly relative to previous administrations. Under Premier Clark, for example, new money for retirees was added 270% faster than for residents under age 45.

The province acknowledges the role of population aging in driving fiscal pressures

For the first time, BC is being transparent about what’s driving the ongoing age gap in provincial spending — the failure of past governments to plan adequately for the medical care required by the large cohort of aging baby boomers.

Page 3 of the Strategic Plan states: “Continuing to provide high-quality medical care is one of the fastest growing costs facing us collectively, primarily due to our aging population. In the 1970s, there were seven working-age adults for every retiree. Now, there are only three. That made it easier in decades past for the Province to cover the medical care costs of our aging loved ones.”

The first step in solving any problem is acknowledging you have one. Yet no previous provincial government has been brave enough to acknowledge this issue. Now we need to get to the hard work of fixing it.

Medical care gets the largest single-year increase in BC history

The budget increases spending on medical care by more than any other year — $4.5 billion in 2024, growing to $6 billion more by 2026. About half of this new money will be used by residents aged 65+. It’s also worth noting that  BC now has more doctors than ever, and the most doctors per capita of any province, including the most family physicians.

Together, these trends put the province in a good position to broaden the focus in future budgets from growing medical care, to investing more urgently to strengthen the building blocks for a healthy society.

The budget affirms what health science has long told us: health doesn’t begin with medical care

Budget 2024 is clear about a key lesson from health science. “We know that health goes well beyond the clinic or hospital. It starts when we invest in affordable homes, livable incomes, affordable child care, healthy communities and a clean environment” (Strategic Plan, p. 3).

Despite this acknowledgement:

  • Housing spending goes down

    The historic increase in medical spending may help to explain why annual operating investments in housing will drop from $2.4 billion in 2022 to $1.9 billion by 2026/27. While this budget trend is surprising given the level of housing unaffordability in BC, the government can brag that home prices did not rise last year. That’s a big accomplishment for a province that had lost control of home values for decades.

  • Child care funding is on the rise — but mostly thanks to federal contributions

    Budget 2024 forecasts investments in child care of $2 billion in 2026, up from $1.6 billion last year. This increase is driven almost entirely by new federal money.

    The NDP government has not yet allocated the full $750 million in new annual provincial funding that it promised in the 2020 election. Wages for child care professionals are collateral damage, which slows the pace by which the sector can attract enough workers to scale up $10/day spaces to improve access for parents.

  • Other social and education spending is up, but by less than medical care

    BC’s education system will see another $0.8 billion for K-12, and another $1.3 billion for postsecondary. Social services (excluding child care) will receive $1.2 billion.

A monitoring framework for future budgets is needed

Given these budget trends, we need the Premier and Cabinet to carefully monitor age patterns in spending and revenue, along with the ratio of new investments in the building blocks for a healthy society relative to new medical spending.

So long as British Columbians can’t earn living wages, or access affordable homes, quality child care, and a stable environment, the evidence is clear that medical care will never be enough to prevent people from getting injured, falling sick or dying early. More urgent investment in the conditions in which we are born, grow, live, work and play will not only reduce cost of living pressures, it will also slow the flow of sickness that is demoralizing our health professionals and overcrowding our clinics and hospitals.

Revenue isn’t keeping pace with spending — the predictable results: big deficits

Bringing a generational fairness lens to analyze new spending is just one half of the equation. We also need to apply this lens to decisions about how we generate funds to pay for the things we want and expect. The fact that Budget 2024 doesn’t do this is its biggest weakness.

Premier Eby proposes an $8 billion deficit this year, which is only forecasted to fall to $6 billion by 2026. That’s larger than deficits run during the pandemic, when the economy was shut down.

There’s a big cost to this debt. Debt servicing charges were $3.3 billion last year, and will grow to $5.7 billion by 2026. That’s more than the BC will spend on child care and housing combined in 2026.

By recognizing the decades-long failure of previous governments to raise enough revenue to protect healthy retirements for aging boomers, the current government correctly acknowledges that it has inherited a structural deficit. Now we need the Premier to be brave enough to engage British Columbians (including affluent boomers) in a hard truth conversation about fixing these past failures and restoring a healthy balance of spending and revenue.

Without this hard conversation, the deficits we choose to tolerate become unpaid bills left for younger and future generations to pay.

BC can take steps to get deficits under control

Budget 2024 acknowledges that housing has been a major source of wealth for many home owners. That’s why it proposes a home flipping tax, to discourage investors and speculators from extracting even more wealth from our housing system in future years.

Discouraging flipping is good policy — but such measures don’t address the wealth already accumulated by many regular homeowners, especially those who are older and have been in the housing market for decades. This potential source of revenue should receive more attention if we want to restore revenue resiliency without cutting the medical care that our aging family members deserve, or squeezing the investments in child care, housing, poverty reduction and a stable climate that our kids and grandchildren need.