B.C.’s 2025 budget exposes the weak fiscal foundation from which the province will be forced to respond to the first round of Trump tariffs. That’s a shame, since last year’s budget held out hope that the Eby government was beginning to wrestle with the generational tensions at the root of our financial challenges. Last month that hope was extinguished. Younger British Columbians will pay the heaviest price.
The never-ending (deficit) story
The 2025 budget forecasts deficits of around $10 billion for the next three years. This fiscal hole follows the province’s already massive deficit of $9.1 billion in 2024—even though the economy was not in recession.
Some will attribute this poor fiscal position to decisions made by the incumbent NDP, and of course, the government does indeed shoulder responsibility. But we shouldn’t ignore the much bigger political-cultural problems driving the deficits.
The belief that cutting levies should spur economic prosperity to yield more revenue is sometimes correct, but not always—especially now that population aging dampens economic growth.
The massive deficits projected for B.C. through 2027 are a predictable reflection of the fact that both the NDP and Conservatives competed for votes in the recent provincial election by promising to spend more while taxing less. This political recipe is now common in elections across Canada. It regularly yields large deficits even outside of recessions, weakening provincial and national readiness to manage when times get tougher, as well as offloading today’s unpaid bills to our kids and future generations.
Voter demand for more spending and lower taxes is getting in the way of meaningfully responding to key risks that were present well before the trade war initiated by the U.S. Topping this list is that decades of provincial governments dropped the ball on planning to collect enough revenue to pay for the expensive medical care Boomers are consuming now that they have reached retirement.
What’s really driving B.C.’s financial weakness
Medical spending on British Columbians aged 65-plus increased by $8 billion in 2024 compared to the year before the NDP took office in 2017. That increase represents nearly 90 percent of the $9.1 billion deficit incurred last year.
It was encouraging that B.C.’s 2024 Strategic Plan made clear why this was happening:
“Continuing to provide high-quality medical care is one of the fastest growing costs facing us collectively, primarily due to our aging population,” explained the B.C. government. “In the 1970s, there were seven working-age adults for every retiree. Now, there are only three. That made it easier in decades past for the Province to cover the medical-care costs of our aging loved ones.”
Unfortunately, budget 2025 fails to address this theme at all—never mind act on its repercussions.
What about the youth?
It’s no surprise that rising deficits—and accompanying debt servicing costs, which are expected to rise by $4.5 billion by 2027Most of this increase has happened on Premier Eby’s watch.—leave less fiscal room for other investments. To get a sense of the scale of this unproductive spending, consider the following.
Increased debt servicing costs under Eby are:
- Four times larger than the increase in housing spending (up $1.2 billion)
- Four times larger than the increase for child care (up $1.0 billion)
- Twice as large as the increase for postsecondary education (up $2.4 billion)
- Twice as large as the increase for grade school (up $2.0 billion)
- Well above the increase for social services (up $3.3 billion)
By contrast, annual medical care spending is up nearly $13 billion since Eby took office. Nearly half of this spending is consumed by the 20 percent of B.C. residents age 65 and older.
The result is systemic ageism in provincial spending under Eby (continuing a pattern from his predecessors). Between 2021 (the year before Eby became premier) and the 2027 fiscal forecasts in this year’s budget, his government plans to deliver 65 percent more new provincial investment to seniors than to residents under age 45, after controlling for population size.
Higher debt servicing charges and lower levels of investment for younger residents compound a related problem—the intergenerational transfer of income taxes from younger to older British Columbians. According to the most recent data from Statistics Canada, the typical 35-year-old is already contributing 20-40 percent more in income taxes for Boomer’s healthy retirements by comparison with what Boomers paid towards seniors in the mid-1970s.
Privilege implies obligations
Voters who enjoy enough financial security must actively resist the idea that our politicians and province owe us more for less. If we want B.C. and Canada to be strong, we will best resist Trump’s threats by remembering President John F. Kennedy’s wisdom: “Ask not what your country can do for you—ask what you can do for your country.”
Statistics Canada recently published new data from the Survey of Financial Security showing that the net worth of the typical Canadian household increased by a third during the pandemic. In 2019, the median household had $381,100 of net wealth. By 2023, this had jumped to $519,700.
Inflation of housing values drove most of these gains, especially for the country’s top 40 percent of earners. They accounted for 60 percent of the appreciation in financial assets since 2019, according to the Royal Bank of Canada. Wealth gains were even larger in B.C. because home prices surged more there than in most other regions.
Conversely, it’s primarily lower- and middle-income renters who bear the brunt of rising home values that drive up rental costs and erode opportunities to save.
These insights sharpen our focus on who is best positioned to stand up and ask what they can do for B.C. and Canada. It won’t be reasonable to expect more of lower- and middle-income renters, for whom the burden of housing, grocery, and energy inflation is heaviest. Nor is it reasonable to continue to keep spending more than we’re willing to pay by leaving large deficits for younger and future generations.
It will be reasonable to expect more from those of us whose assets have appreciated, especially financially secure, older homeowners—the very demographic driving much of B.C.’s deficit spending. We must ready ourselves to protect B.C. in these challenging times by recognizing the relative privilege that owning a home provides to our personal finances, and acknowledging that this privilege implies obligations.
The 2025 B.C. budget does the opposite. When governments aren’t honest with British Columbians about the reasons why $10 billion deficits persist, they miss an opportunity to call on people to stand up for their province.
If Canada is to remain strong and free, Canadian politics can’t be “all about me.” The lesson of B.C.’s budget is that we all need to help politicians start talking about responsibility.
