FINANCE
The B.C. economy and the Broadway Plan: an explainer
CONTENTS
May 12-19 / 2022
9
COVER
In Joe Ink’s Dance:Craft, Heather Dotto and Joey Matt interact with objects made of ceramic, glass, metal, wood, and fibre.
by Charlie Smith
By Charlie Smith Cover photo by Michael Slobodian
6
REAL ESTATE
Rising interest rates have coincided with a short-term decline in housing prices and the number of sales in East Vancouver. By Carlito Pablo
12
COMEDY
Roy Wood Jr. used to be known for his crazy prank calls, but in recent years, he’s been using comedy to shed light on serious social issues. By Steve Newton
Finance Minister Selina Robinson faces a monumental challenge in the wake of the pandemic: large annual deficits could create a fiscal mess if interest rates drive up debt-servicing costs.
T
he B.C. government is in a financial pinch and things may not get better for a while. This fiscal year, Finance Minister Selina Robinson has forecast a $5.5-billion deficit. That will be followed by a $4.2-billion shortfall in the following year and a $3.2-billion deficit in 2024-25. It adds up to B.C. being nearly $13 billion in the red over three years. That is, if everything goes according to plan. Over that period, the taxpayer-supported debt is anticipated to climb from $61.7 billion in 2021-22 to $90.9 billion by 2024-25. That, too, is based on everything going according to plan. “The Province’s debt-servicing costs remain at a historically low level due to prevailing low interest rates,” the 2022-23 budget document notes. In fact, rising interest rates have led the Finance Ministry to forecast unit home sales to fall by 22.2 percent this year, 7.1 percent next year, and then stay flat from 2024 to 2026. There are many reasons why the B.C. government is eager to have more homes built. Canada has a relatively low number of homes per capita in comparison with other OECD countries. There will be greater labour shortages as the population ages, which will need to be addressed through immigration. Most immigrants move to urban and suburban areas. Moreover, a growing supply of homes has the potential to temper the rising cost of ownership, which has become a political powder keg for the B.C. government. More rental stock is also necessary. If the province is going to be sinking billions of dollars into rapid-transit projects, it makes sense, environmentally, to have more people living near those stations. Creating compact communities results in a lower ecological footprint. But there’s another reason for the B.C. government to push for greater density, 2
THE GEORGIA STR AIGHT
which is rarely discussed. To put it simply, the province needs the money. Badly. Once upon a time, people said that for every dollar generated in B.C., 50 cents came from forestry. That’s far from the case today. B.C. government forests revenues clocked in at $1.85 billion in 2021-22, due to a short-term spike in the price of lumber. That is expected to fall to $1.12 billion in this fiscal year before plunging to $887 million in 2023-24. It’s a similar story with natural-gas revenues. They’re forecast at $911 million this year, falling to $691 million the next fiscal year, then dropping to $580 million by 2024-25. Fuel-, carbon-, and tobacco-tax revenues will remain flat. Medical-services premiums are now dependent on the health of the economy, because employers are paying the tab. And property-transfer-tax revenues are also not going to come close to the $3.25 billion generated in 2021-22. The best they’ll do over the following three years is $2.5 billion, according to the Finance Ministry. A massive home-building initiative offers a way out of the fiscal mess. First of all, most of this would be financed by the private sector. That ensures the B.C. government won’t have to add more to the ballooning taxpayer-supported debt. Secondly, when those homes are sold, it will fatten the provincial treasury through property-transfer taxes. One of the bright spots in the B.C. economy in recent years has been agriculture. But the breakdown of the hydrologic cycle—caused by a rising global temperature that creates more atmospheric rivers—is delivering a body blow to farmers. Heavier rainfalls are reaching deeper into B.C.’s mainland. The infrastructure there wasn’t built to withstand that. And we probably haven’t seen the worst of the runoffs from the mountains, which have potential to cause rivers, including the mighty
MAY 12 – 19 / 2022
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EDITOR Charlie Smith GENERAL MANAGER Sandra Oswald SECTION EDITORS Mike Usinger (ESports/Liquor/Music) Steve Newton SENIOR EDITOR Martin Dunphy STAFF WRITERS Carlito Pablo (Real Estate) SOLUTIONS ARCHITECT Jeff Li ART DEPARTMENT MANAGER Janet McDonald
Here’s what people are reading this week on Straight.com.
1 2 3 4 5
50 things to do in Vancouver this week, May 9 to 13. Justin Trudeau, Chrystia Freeland, and Mélanie Joly travel to Ukraine. Canada’s four biggest housing markets show early signs of softening demand. Second-degree-murder charge laid in connection with CRAB Park homicide. Rolling Stones will release Live at the El Mocambo on Friday (May 13). @GeorgiaStraight
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