The B.C. government has effectively scrapped its 2020 budget and plunged into multi-billion-dollar deficits to deal with ramped-up health care and other spending from the COVID-19 pandemic, while tax revenue falls off just as quickly.
A brief emergency session of the B.C. legislature has provided more than $50 billion in spending authority to the NDP government, whose authority was due to run out March 31. It is now extended to the fall, including a $5 billion contingency fund to cover cash payments to individuals, tax relief for businesses and an expected surge in health care and social services costs as thousands of people lose their jobs and many fall ill with the novel coronavirus.
The $5 billion fund includes deferred provincial sales tax, employer health tax and other payments due from businesses, as many have cut back or closed entirely due to COVID-19 infection controls.
With the projected $203 million surplus and string of balanced budgets already a distant memory, one of the first opposition questions for Finance Minister Carole James was, will $5 billion be enough?
“I think it is sufficient for now,” James replied, adding that it is just a first step as economic impact is still unfolding. “So I cannot commit to whether this would be sufficient for the next three months, the next six months, the next two months, depending on what kind of situation we’re facing.”
James and Premier John Horgan have been holding back details and applications as the federal government assistance evolves. Prime Minister Justin Trudeau announced a revised “emergency response benefit” March 25 that he says will provide $2,000 per month for up to four months, with applications available April 6.
The new federal benefit is a temporary bridge to Employment Insurance for the more than one million people who have applied for EI in recent weeks due to COVID-19 effects on business, child care and medical isolation rules.
B.C.’s promised $1,000-per-month package is similar, but James says it won’t be available until early May.
James stressed that B.C.’s “tax-free emergency payment” will not be income-tested, and will be available to people who are eligible for EI under Ottawa’s expanded eligibility rules for the emergency.
B.C. Liberal MLA Jas Johal urged help for businesses to keep people on their payrolls, citing British, Danish and New Zealand programs that backstop most or all of their salary demands. Johal noted that the Canadian Federation of Independent Business has advised: “A wage-subsidy program is our best protection against large-scale unemployment.”
B.C. Green MLA Adam Olsen questioned James about the large portion of the government package that defers business taxes.
“I think the tax deferrals help much larger businesses more than they assist small business,” Olsen said.