On Tuesday, the B.C. government presents its first full budget and it’s an opportunity to tackle significant crises of affordability, inequality, poverty and environmental degradation.
To do so in a meaningful way, the government must think big and be bold.
After 16 years of underfunding key programs and services, B.C. needs major new public investments to create a universal high-quality child care system, build tens of thousands of affordable homes, undertake ambitious action on climate change, strengthen education and health care and raise people out of poverty. To help make this happen, we must increase taxes on those who are amassing a greater and greater share of our province’s wealth.
Yet, we’ve grown accustomed to being told — and too often believing — that this type of change is not realistic or affordable.
In reality, what’s not affordable is to stick with the status quo.
Failing to act on the social, economic and environmental crises before us carries enormous costs for families, communities and our economy. B.C.’s shameful levels of poverty come at a huge price: our research shows between $8.1 billion and $9.2 billion is lost annually in economic output and other costs. Lack of affordable child care shrinks our economy by keeping thousands of young parents — mostly women — out of the workforce. And, B.C. wastes hundreds of millions of dollars annually on unnecessarily high drug costs instead of reaping the large cost savings that would come with universal Pharmacare.
And this is just the tip of the iceberg.
Lack of investment in affordable housing not only hits families in the wallet every month, it also affects quality of life and hurts the ability of businesses to recruit workers. Failure to invest adequately in public transit leaves our cities choked with traffic congestion, pollution and crashes — each hugely costly. And shortchanging public transit also means that instead of creating housing, parks, community and child care centres, valuable urban land is wasted making more room for transportation by private vehicles.
The good news is that B.C. has the economic and fiscal capacity to put our best values into action.
Consider how B.C.’s public spending compares to our total economic pie — a proxy measure of our collective capacity to pay for things. It’s a little known fact that provincial public spending as a percentage of GDP has declined substantially since the late 1990s.
B.C.’s economy generates $276 billion annually. If we dedicated the same share of our economy to public spending this fiscal year as we did in 2000, we could make additional investments of more than $6 billion per year.
Heck, even the bond rating agencies — typically cheerleaders for austerity and public sector cuts — admit that B.C. has room to raise more tax revenue while “remaining competitive with other jurisdictions.”
There are many options for raising revenue collectively. For example, B.C. just cut MSP premiums in half — a welcome move. But that lost revenue — more than $1.2 billion a year — should be fully replaced with fairer personal and business taxes. Our modelling shows how this can be done while leaving the vast majority of B.C. households with more money in their pockets.
We can also harness the huge increases in land values in B.C. — hundreds of billions of dollars over the past decade alone — through a progressive property surtax on the wealthiest landowners. And, more broadly, the time has come for a Fair Tax Commission to review the entire provincial tax system — including natural resource royalties — in discussion and consultation with British Columbians.
To be sure, bold action — no matter how sorely needed or economically sound — will be greeted by loud opposition from some of B.C.’s ‘forces of no’. But instead of being cowed, the B.C. government should reflect on a pattern emerging across the developed world. In countries like France, Germany, Greece and Spain, we’ve seen social democratic parties crushed at the ballot box when they tack to the mushy middle instead of advancing a fearless progressive agenda.
The resources are available for B.C. to have the bold, transformative change we need. The question is whether British Columbians — us and the government — are prepared to think big.
Alex Hemingway is CCPA-BC’s Public Finance Policy Analyst.