VANCOUVER, April 20, 2021 – The Chartered Professional Accountants of British Columbia (CPABC) commends the government for investing in our healthcare system in Budget 2021 as the province continues to address the COVID-19 pandemic.
“The new funding to support British Columbians’ health comes at a critical time as the province navigates the challenging final stretch of the pandemic. It also offers resources to address difficulties identified through the pandemic, including in long-term care and mental health,” said Lori Mathison, FCPA, FCGA, LLB, president and CEO of CPABC.
Budget 2021 also contains considerable investments to support economic recovery, including several new programs focused on skills-training, infrastructure investment, and business recovery and growth. Budget 2021 estimated that real GDP contracted by 5.3 per cent in 2020 but it is expected to improve this year, with a forecast GDP increase of 4.4 per cent in 2021.
“While B.C. is expected to rebound strongly, it is important to note that the rate of GDP decline in 2020 is twice that of the 2008 recession,” continued Mathison. “Given the challenges B.C. businesses and workers have faced over the past year and will continue to face going forward, Budget 2021’s investments will be critical to support our economy.”
The new $500 million InBC Strategic Investment Fund will help grow high-potential B.C. businesses with a focus on improving economic, environmental, and social outcomes. Budget 2021 also introduces funding to help train young and displaced workers in order to find new jobs in high-growth sectors such as health care. In addition, the StrongerBC Future Leaders program will help thousands of young British Columbians gain valuable job experience through internships, co-ops, and work integrated learning placements.
“Investments into B.C. businesses in high-growth, emerging sectors will improve the province’s productivity and enhance our economic trajectory. We are pleased to see that the government has listened to our recommendations to make skills-training a priority as we look towards recovery. Many British Columbian workers have struggled through the pandemic and it is important to help them retrain for in-demand jobs,” noted Mathison.
The large amount of financial support put in place over the past year has resulted in deficits that are expected to peak in 2021/22. The deficit in 2020/21 is forecast at $8.1 billion, increasing to $9.7 billion in 2021-22, before moderating to $4.3 billion by 2023/24. The government has committed to getting back to balance over the medium-term.
The capital allocated to major infrastructure projects across the province has also seen a boost in Budget 2021. In total, capital spending is expected to reach $13.5 in 2021/22, up from $10.1 billion in 2020/21. Over the fiscal plan, capital projects are expected to support 85,000 jobs. The capital expenditures will contribute to an increase in B.C.’s debt-to-GDP, which is forecast to reach 26.9 per cent by 2023/24 from 20.3 per cent in 2020/21.
“While this budget projects a sizeable increase to debt, B.C. has relatively low levels of debt compared to other Canadian jurisdictions. Still, the large increase is of concern and as we continue to recover it will be important to put in place a concrete strategy to establish a fiscal anchor and ensure debt is sustainable,” concluded Mathison.
About CPA British Columbia
The Chartered Professional Accountants of British Columbia (CPABC) is the training, governing, and regulatory body for over 37,000 CPA members and 5,500 CPA students and candidates. CPABC carries out its primary mission to protect the public by enforcing the highest professional and ethical standards and contributing to the advancement of public policy.
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In Other News
Last year, rapid inflation resulted in the fastest interest rate increase in a generation. While investment in the province remained resilient in 2022, there are signs high interest rates are slowing capital expenditures and weakening our economic outlook.
While inflation remains well above the Bank of Canada’s 2% target, it continues to slow both provincially and nationally. In March 2023, overall prices in BC rose by 4.7% in BC and 4.3% in Canada compared to March 2022, the slowest rate in BC since February 2022. In comparison, BC’s annual inflation rate was 6.2% to start this year and peaked at 8.1% last May.
According to BC Check-Up: Invest, an annual report by the Chartered Professional Accountants of British Columbia (CPABC) on investment trends across the province, there were 43,106 housing units started in 2022, down slightly from the 43,360 started in 2021.
Starting in early 2022, central banks around the world began to increase interest rates to combat inflation, resulting in significant and quick successions of interest rate increases. As of the writing of this article, the Bank of Canada’s (BoC) key interest rate stands at 4.5%, up from 0.25% at the start of 2022.