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GenSqueeeze responds to BC's Budget announcement
By Paul Kershaw
For younger British Columbians, BC's budget is built on fantasy.
Secure a great job. Own a home. Keep more of our hard-earned money. That’s the promise of BC according to the Premier and Finance Minister. Problem is, that promise is becoming a fairy tale, since B.C. is now the worst performing economy in Canada for younger generations.
My UBC Gen Squeeze lab gathered the full story from Statistics Canada, etc. Our lab isn’t running for office. We don’t care how people vote. We want people well-informed.
1. Great jobs are harder to secure
Full-time earnings have fallen more in B.C. than any other province since 1976-80. It’s particularly bad for residents age 25-44 who annually earn $8,000 to $10,000 less (after inflation). Young residents have lost $1,200 since Premier Clark took office. Today’s budget does little to change course.
2. Home ownership is leaving many behind
B.C. has lost control of home prices more than any province. It took five years of full-time work to save a 20 per cent down-payment on an average home in 1976-80. It was eight years when the BC Liberals came to power in 2001. Now it takes 19 years! The housing policy changes made in recent months are “too little, too late” and today’s budget doesn’t adapt urgently enough to bring home costs back in reach.
3. Young residents can’t keep as much hard earned money
We have to work years more to save a down payment; months more each year to pay the mortgage on an average priced home; or an extra month to pay rent on a 3-bedroom apartment.
Whether in Prince George, Kamloops, Kelowna, Victoria, or all the burbs around Vancouver and beyond, hard work pays off less for young British Columbians than it used to. Data show the problem is so bad in Metro Vancouver that for every year Ms. Clark has served as Premier, young residents have fallen a year behind in terms of saving for a home! Tax cuts announced today in her election-budget can’t compensate, and interest-free loans for first-time homebuyers exacerbate the problem.
The Premier and Finance Minister will counter with evidence that B.C. has the best economic growth in the country, strong job creation, and modest public debt.
But what’s good about growth that compromises the standard of living for British Columbians in our 20s, 30s and 40s, along with our children?
Why tolerate earnings that fall more for young people in B.C. than anywhere else, while home prices surge more than elsewhere?
Sure, government likes rising home prices because the property transfer tax is a major source of additional revenue to grow health care spending for an aging population – which again received the largest increase in government spending in the 2017 budget.
Older residents also benefit directly from rising real estate prices, because the typical person age 55+ has gained hundreds of thousands in wealth, while taking on little extra debt.
By contrast, the provincial government’s approach to the economy imposes alarming amounts of personal debt on younger British Columbians compared to the national average.
In addition to high home costs, postsecondary tuition increased more in BC than in any other province since B.C. Liberals took office, and childcare now costs double university tuition.
In terms of government debt, B.C. is better than some other provinces, but not as strong as it implies. Although debt is smaller by comparison with the size of our economy, each British Columbian shoulders more provincial debt today than when the BC NDP were last in office in 2001.
All of these financial debt problems come on top of the environmental debt. While B.C. was a climate leader by introducing our carbon tax, Quebec, Ontario and PEI all report lower greenhouse gas emissions per person. There has been no reduction in B.C.’s carbon footprint since Premier Clark took office.
So as people evaluate today’s budget, it’s time to ask “Growth for what?” Let’s judge the economic plan in terms of whether it requires more, or less, work from citizens to cover our major costs of living, and whether it is sustainable. On these terms, B.C. has failed its younger citizens. Failure will continue so long as governments budget based more on fantasy than fact.
Paul Kershaw, PhD, is a professor at UBC and the founder of GenSqueeze.