B.C. supports people, boosts wildfire fight amid global challenges
Press Release
Sept. 10, 2024
VICTORIA – B.C.’s First Quarterly Report shows the Province supported growing communities while responding to a major wildfire season, high interest rates across the country and global economic challenges.
“In a challenging global economy, we’re building B.C. for a better tomorrow,” said Katrine Conroy, Minister of Finance. “Hiring new doctors, building new schools and hospitals, boosting wildfire response and training people for good jobs – these are the things that will keep B.C. growing and strong today, and for our kids and grandkids.”
The updated three-year forecast shows this year’s deficit will be $8.979 billion, which is $1.1 billion higher than forecast earlier this year, followed by $6.7 billion next year ($1.1-billion improvement) and $6.1 billion in 2026-27 ($193-million improvement).
In addition to lower corporate income tax revenue due to federal forecast changes, the biggest impact to this year’s fiscal plan is about working to keep people safe from wildfires. Fighting wildfires is forecast to cost $886 million this year, which is $653 million higher than forecast in the budget.
“I’ve seen the impacts of wildfires where I live in the Kootenays and am incredibly grateful for the firefighters who worked day and night to keep us safe,” Conroy said. “From moving the wildfire service to a year-round operation to implementing the recommendations of the Premier’s Expert Task Force, we are taking strong action to keep people safe now and in future years.”
B.C. continues to have one of the lowest debt-to-GDP ratios compared to other Canadian provinces and remains the only province with a triple-A rating from a credit rating agency.
Looking ahead to 2025-26 and 2026-27, the First Quarterly Report shows a brighter outlook and stronger revenue forecast compared to this year. The easing of interest rates expected next year will bolster economic growth in B.C., and natural resource and tax revenues are expected to increase.
“During hard times and slower economic growth around the world, some are saying they would make deep cuts and increase fees. That is the wrong approach,” Conroy said. “We are building a stronger economy and working to bring that strength to everyone by supporting people, building the communities our growing population needs, attracting investment and training so people can access good-paying jobs.”
B.C. will invest a projected $18 billion on infrastructure in the fiscal year. The quarterly update highlights 37 major projects approved for construction, including cancer centres, schools, student housing and highway upgrades.
B.C. is able to respond to unanticipated changes or expenses with $3.9 billion in contingencies this year.
Learn More:
To access the First Quarterly Report, visit: https://www2.gov.bc.ca/gov/content/governments/finances/reports/quarterly-reports
To access the PowerPoint presentation, visit: https://news.gov.bc.ca/files/FirstQuarterlyReport.pdf
A backgrounder follows.
Contact:
Ministry of Finance
Media Relations
778 405-3175
BACKGROUNDER
First Quarterly Report 2024-25
Economic highlights:
- B.C.’s economy is projected to see 1.0% real gross domestic product (GDP) growth in 2024, 2.0% growth in 2025, and return to solid annual growth of 2.3% from 2026 to 2028, similar to the Budget 2024 forecast.
- High interest rates and low energy prices continue to slow economic growth in the current fiscal year, impacting retail sales and exports. However, easing interest rates are expected to support better economic performance going forward.
- Employment is up by 2.6% year-to-date to August.
- B.C.’s unemployment rate was among the lowest in the country at 5.8% in August.
- Employment has exceeded expectations, with the First Quarterly report forecasting employment growth in 2024 at 2.3%, up from 0.9% at budget.
- B.C.’s population increased by 3.3% in April, the highest growth rate since 1972. This growth was due to strong international migration.
- New home construction is strong and forecast to increase in the years ahead. B.C. is expected to see 46,700 housing starts in 2024, above the 10-year historical average but down from 2023’s record as high interest rates impact projects.
Operating results:
- Revenue for 2024-25 is forecast to be $81.8 billion, $247 million above the Budget 2024 projection of $81.5 billion.
- Lower corporate income taxes and natural resource revenues are offset by higher personal income tax and investment earnings, as the population and economy grow.
- Corporate income tax revenue is forecast to be $638 million lower than budget after the federal government updated its outlook of national corporate taxable income.
- The updated forecast for natural resource revenues is down $299 million due to lower prices for natural gas, lumber and electricity, as well as water rentals due to drought.
- Revenue from electricity sales under the Columbia River Treaty is down $126 million due to an overall decrease in volume resulting from the new agreement-in-principle.
- Investment earnings are up $243 million from budget mainly due to higher interest income.
- Expenses are forecast to be $1.3 billion higher than budgeted:
- Wildfire response costs are expected to total $886 million this year, $653 million higher than budget.
- Debt servicing costs are forecast to be $344 million higher due to a higher opening debt balance, higher interest rates, and accelerated borrowing in the year to ensure continuity of services and capital projects through the election period.
- The remaining $318 million is mainly due to higher net spending by service delivery agencies that is funded in part by higher own-source revenues.
Capital spending:
- Taxpayer-supported capital spending on hospitals, cancer centres, housing, schools, transportation infrastructure and other projects is forecast to total $13.6 billion in 2024-25. This is $495 million lower than the budget primarily due to factors like scheduling, supply chain delays and labour shortages.
- Major taxpayer-supported capital projects approved for construction include:
- K-12 schools
- Mission Secondary school
- Olympic Village Elementary school
- Pitt Meadows Secondary school
- Post-secondary schools
- Student housing projects at University of British Columbia, Camosun College and Simon Fraser University
- Hospitals and long-term care facilities
- Acute-care tower at University Hospital of Northern British Columbia in Prince George
- Cancer centres in Kamloops and Nanaimo
- Long-term care facilities in Chilliwack and Squamish
- Transportation infrastructure
- Highway 1 Fraser Valley Corridor improvements
- Highway 1 bus-on-shoulder McKenzie to Colwood interchange
- K-12 schools
- Self-supported capital spending by Crown corporations is $234 million lower than at Budget 2024, mostly due to changing timelines for BC Hydro power generation and transmission projects.
Debt levels:
- Total provincial debt is projected at $128.6 billion by the end of the fiscal year.
- Debt-affordability metrics for the Province remain among the lowest in Canada, including the forecast for debt-to-GDP at 22%.
- B.C. continues to have some of the best credit ratings among provinces, including the only triple-A rating.
Contact:
Ministry of Finance
Media Relations
778 405-3175
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