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Vaughn Palmer: Fiscal credibility shredded by Page 1 of B.C.'s 2026 budget

Opinion: Another budget, another proof that David Eby is not a fiscal manager of John Horgan's ilk

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VICTORIA — Finance Minister Brenda Bailey claimed in advance of this year’s budget that the New Democrats had gained sufficient mastery of provincial finances to ensure the deficit would “come down year over year.”

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Her fiscal credibility did not survive Tuesday’s release of Budget 2026. The truth about the deficit was there at the top of Page 1 in the budget book.

Deficit for the current financial year, the one ending March 31: a record $9.614 billion.

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Deficit for the year starting April 1: $13.303 billion and a new record.

Yes, the deficit that was supposed to be going down year over year will actually be increasing by almost $4 billion next year over this year.

Bailey was asked about this apparent contradiction at the outset of the budget news conference and she responded with a string of clumsy evasions.

This mainly consisted in pointing out that after the deficit soars to $13 billion in the coming year, it will then start going down to $12 billion the following year and $11 billion the year after. Albeit never going as low as the figure for the current year.

So there’s the secret of the David Eby government’s deficit reduction plan: First it increases the deficit by almost 40 per cent and only then does it begin nibbling away at it.

Diabolically clever these New Democrats. One imagines the glee among the spin doctors, book cookers and hacks in the inner circle when someone came up with that exercise in fiscal jiggery-pokery.

Alas for Bailey, the news conference was all downhill from there. She was like a general whose battle plan did not survive first contact in the field.

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In the run up to their 2026 budget, the New Democrats clearly discounted expectations of an austerity budget.

Those expectations were raised by Bailey’s recent comment to the Greater Vancouver Board of Trade that she would be “the least popular person in B.C.” when the budget came out. Also by deputy minister to the premier Shannon Salter saying the deficit was “unsustainable.”

In the end, the austerity naysayers were on the mark. The budget increased spending by $4 billion and staffing reductions were comparatively small and accomplished mainly through attrition.

While some ministries had to make do with flatlined funding for several years, any significant cuts were avoided or well hidden.

The one surprise in Tuesday’s budget was $2 billion in tax increases spread over three years.

As recently as Sunday, Bailey told reporters that she had rejected calls for her to raise taxes. Noted as another example of the finance minister as an unreliable narrator.

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Without the tax increases, revenue would actually be down slightly in the year ahead, which — combined with the spending increase — accounts for the $13 billion plus deficit.

Where all this leads is on display in painful detail in the budget documents released Tuesday.

The economy is slated to grow by 1.3 per cent this year, 1.8 per cent next year, and 1.9 per cent the year after. Meanwhile the provincial debt is growing at 14 per cent.

From a $90 billion total debt in John Horgan’s last year as premier, the debt is this year on track to hit $154 billion, then grow to $183 billion next year, then $209 billion, and $234 billion by 2029.

With soaring debt comes a corresponding increase in interest payments, now the fastest-growing item in the budget. From $3 billion in Horgan’s last year, interest payments have doubled in the current year and will approach $9 billion over the next three years.

Bailey herself flagged the concern in her speech to the Board of Trade.

She noted how, in dollar terms, interest payments account for a bigger drain on the provincial treasury than all but three ministries — health, education and social development. At this rate of growth, interest could move into the No. 3 or even the No. 2 spot before the decade is out.

This was the sort of thing that used to worry Horgan during his time as premier. Knowing that a significant share of the provincial debt was held elsewhere — back east, south of the border, overseas — he saw interest payments as a negative drain on provincial finances, unlike the stimulus of program or capital spending.

Still, when Bailey was pressed on the fallout from the NDP’s record setting deficits and debt, she professed that “no one worries more about the deficit than I do.”

If this budget is how she responds to a challenge that is keeping her awake at night, I’d hate to see her deal with an issue where she didn’t give a damn.

The end result of all her equivocations is a budget that is likely to please no one.

It merely locks the province into another year of the Eby government’s inability to manage spending coupled with a devil-may-care willingness to pile deficit atop debt.

To revive an old joke, perhaps in honour of the Eby government’s approach to fiscal management, the Steller’s Jay should be retired as the provincial bird and replaced with the image of a chicken coming home to roost.

vpalmer@postmedia.com 

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