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Vaughn Palmer: Eby doubles down on deficit after credit rating cut

The premier's popularity has slipped so much, one starts to wonder about an internal party revolt

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VICTORIA — Premier David Eby displayed not a flicker of contrition this week at the news that the province had sustained another downgrade to its credit rating and a “negative” outlook on its fiscal future.

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“With this budget, we had to make a decision,” Eby told reporters. “Were we going to make health care bear the brunt of cuts to be able to meet a credit rating? Or were we going to make sure we were doing all we can to deliver services to British Columbians?

Vaughn Palmer: Eby doubles down on deficit after credit rating cut Back to video

“We made a very clear choice,” continued the premier. “We’re prioritizing British Columbians. We’re prioritizing growing the economy.”

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Talk about doubling down on a bad bet.

Moody’s, one of the lead rating agencies, issued a downgrade saying it “reflects a marked deterioration in the province’s credit fundamentals … resulting in large structural deficits.”

“We expect sizable and entrenched deficits for the province over the next fiscal years,” the agency goes on to say in a report released Thursday.

“The negative outlook reflects the risk that the size and duration of planned deficits reduce the ability of the province to adjust to unanticipated shocks due to macroeconomic or trade uncertainty.”

Chances of a turnaround to an upgrade?

“Unlikely.” If the province continues on this trajectory, “the rating could be downgraded” again, warns Moody’s.

In response to this grim assessment, the premier says, in effect, ‘I meant to do that.’

He sounds half proud of the results.

Others in the government — including the head of the public service and the deputy minister of finance — have admitted publicly that the deficit is “structural” and “unsustainable.”

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Finance Minister Brenda Bailey is on record as saying that “nobody worries more about the deficit than I do.”

Good of her to devote some attention to the problem, since it would appear the premier never gives it a thought.

After the downgrade, one of the Opposition critics cited it as evidence that the NDP can’t manage government finances.

But NDP Premier John Horgan did a comparatively good job on that score, balancing budgets, maintaining the credit rating, and leaving behind a surplus.

“One of the myth-busting things we were able to do was end the narrative that the NDP can’t manage money,” wrote Horgan his memoir.

The current premier has reversed Horgan’s accomplishment since taking over in 2022, racking up record deficits, record debt and record interest payments.

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Vaughn Palmer: Eby doubles down on deficit after credit rating cut Columnists

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The downgrade is evidence of David Eby’s inability — make that unwillingness — to manage government finances.

Some of the strongest evidence played out during the recent bargaining round with the public sector unions.

The premier and cabinet approved what they called a “balanced” mandate, with a starting offer of 3.5 per cent over two years.

The premier stood behind it for a time, telling public sector workers that they’d been compensated generously in the previous round, but the government simply couldn’t afford more.

Eby abandoned the hard line last fall in a bid to shore up his own standing in a leadership vote at the NDP convention. The backdown has been credited with adding a half dozen or so percentage points to the premier’s result in the leadership vote.

At the same time, the revised public sector settlements of 12.2 per cent over four years have added billions to the government wage bill.

It also stands as the biggest obstacle to getting control of provincial finances because wages and benefits account for about 60 per cent of spending in the B.C. budget.

Yet for all Eby’s pride in the results of his fiscal handiwork, the results haven’t paid off in the opinion polls or either his party or himself.

The budget that, in his words, prioritized “delivering services to British Columbians” and “growing the economy,” has been the most unpopular in years.

Innovative Research, which has been polling the issue for 20 years, found a negative rating of 59 per cent for the 2026 budget. It was exceeded only by the minus 64 per cent for the 2010 Liberal budget, which brought in the short-lived harmonized sales tax.

Or as company founder Greg Lyle put it in a recent interview with Mike Smyth on CKNW radio: “We’ve been tracking budgets since 2006. What stood out was that this budget was almost as bad as Gordon Campbell’s HST budget, which led to his leaving office.”

Lyle’s poll found the New Democrats trailing the B.C. Conservatives by a surprising eight points among decided voters.

The premier himself took a hit in the latest Angus Reid poll of approval ratings for Canadian premiers.

Eby fell to the back of the pack with a 37 per cent approval rating, down 16 points from a year ago. He is trailed only by Ontario’s Doug Ford (31 per cent) and Quebec’s departing Francois Legault (26 per cent).

In short, the budget for which the premier sacrificed the province’s credit rating and the NDP’s nurtured-by-Horgan reputation for fiscal responsibility hasn’t helped either him or the party with the electorate.

If these results continue, you have to wonder how long before New Democrats are contemplating a political downgrade for David Eby.

vpalmer@postmedia.com

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