British Columbia’s budget pays too little attention to the potential impacts of a slowing global economy and a shifting housing market, business leaders say.
Finance Minister Carole James is banking on continued strong economic growth to fund long-term social and economic programs amounting to $2 billion over the next three years, but that’s risky, B.C. Business Council president Greg D’Avignon said Wednesday.
He said the council, which represents many of the largest employers in the province, credits the government for the budget initiatives that support families and environment programs, but it should not take business for granted in a darkening economy.
“I would caution the government that to take the economy for granted is at their peril,” D’Avignon said. “There’s a complete absence of economic vision in the face of what we see are some increasing strong head winds facing the economy in B.C. and Canada.”
Recent economic data suggest Europe could be heading for recession, global trade is facing turmoil as the United States and China squabble and Canada is being hit by trade sanctions from the
U.S., he said. Recent U.S. tax cuts also impact the competitiveness of products from British Columbia, said D’Avignon.
The budget includes a $400-million Child Opportunity Benefit for families with children up to age 18. Interest on student loans was eliminated, social assistance payments increased by $50 per month and support payments for children of foster parents were increased.
WATCH: Coverage of the 2019 B.C. budget on Globalnews.ca
The budget introduced Tuesday included the minority New Democrat government’s $902-million Clean BC Fund to fight climate change.
“It’s almost as though the economy’s taken for granted,” D’Avignon said. “The consequence of that is we’re just not going to have the revenue or the means to support baked in, long-term costs when the economy starts softening as we’re seeing through a bunch of indices and anecdotes from the investors around our table.”
Real estate developer Jason Turcotte said the budget looks to tax revenue from home sales to help fund programs, but it hinders new property developments that create the wealth.
“There’s not a lot of incentive right now to move forward with projects and if that happens on any kind of mass scale we’re going to have a shortage of supply, which obviously doesn’t help affordability at all,” said Turcotte, vice-president at Metro Vancouver’s Cressey Development.
He said his company and others are delaying real estate projects.
The government introduced tax measures in last year’s budget to moderate B.C.’s real estate market.
The budget forecasts revenue from B.C. housing starts to drop almost 17 per cent this year and decline 6.4 per cent next year.
James said she expects the market to continue to moderate but does not foresee a crash because the province is considered a desirable place to live.
She downplayed the business concerns, saying B.C. is forecast to lead Canada in economic growth for the next two years and her budget has set aside more than $2.6 billion in contingency and allowance funds in the event of a downturn.
“We’ve built a very prudent budget that has caution built in and gives us the opportunity to continue to invest in the people of B.C. who continue to build that strong economy.”
Opposition Liberal Leader Andrew Wilkinson said the budget does nothing to stimulate the economy.
© 2019 The Canadian Press