Federal government not alone in mismanaging finances—just look at British Columbia

While mismanagement of Canada’s federal finances has garnered considerable attention in recent months, some of the pitfalls in provincial budgets have gone under the radar. Just consider British Columbia’s increasingly reckless deficit spending and rising debt levels.

The Trudeau government claimed it delivered a “responsible economic plan” in its spring budget, but in reality it used the same irresponsible approach of ever-growing spending, large deficits and rapid debt accumulation that’s been a hallmark of the government’s time in office. Annual program spending (total spending minus debt charges) in 2024/25 is expected to be $25.7 billion (5.6 per cent) higher than 2023/24, which is driving a large deficit and substantially more debt.

But while the federal budget has garnered well-deserved criticism, eight of the 10 provinces are projected to run deficits in the 2024/25 year, and four have no timeline to return to a balanced budget. Taken together, the scale of these deficits rival that of the federal government—totalling an expected $30.5 billion in provincial deficit spending.

And while many provinces are not doing any better than the federal government in managing their finances, some are arguably worse.

For example, B.C. projects a $7.9 billion deficit this year and similarly large deficits of $7.8 billion and $6.3 billion the following two years. Measured as a share of the economy, B.C.’s deficits are expected to exceed the federal deficits in all three years from 2024/25 to 2026/27.

New spending drives these deficits. The Eby government plans to increase program spending by $5.4 billion this year—more than four times the increase planned in last year’s budget.

And large deficits are contributing to a historic rise in B.C.’s government debt. In 2016/17, the province’s net debt (total debt minus financial assets) was $39.4 billion, but by 2026/27 it will reach a projected $128.8 billion. In other words, the government expects to more than triple its debt in only a decade.

The Eby government’s disregard for responsible fiscal management is not without consequence, and international credit agencies have taken notice. Following the release of the 2024 budget, B.C. saw its credit rating downgraded for the third time in as many years, with rating agencies citing concerns with the province’s “current fiscal trajectory” and “lack of commitment to return to fiscal balance within a specified period.” Downgraded credit contributes to higher government debt interest costs, putting pressure on the government to further raise taxes on families.

The Trudeau government has maintained its reputation for financial mismanagement. However, Canadians should not forget that many provinces are also failing to properly manage their finances—just look at B.C.