The News Rundown

B.C. Budget 2023 bets focus on tax credits and rebates will work amid continued housing uncertainty

There may be a new leader, but the message from the B.C. NDP government in the first budget under premier David Eby remained much the same.
Finance Minister Katrine Conroy, delivering the province's $80 billion budget on Tuesday, which forecasts a $4.2 billion deficit, said: "We have focused on people since day 1, and budget 2023 builds on it. We're focused on finding a way back to balanced budgets but not at the expense of the services we all rely on."
Like previous NDP budgets, there were new targeted measures for less advantaged groups ($125 more to the monthly shelter rate) and broad-based tax credits tied to income (increasing the B.C. Family Benefit between $75 and $750), delivered under an inclusive soundbite and slogan — in this case a "Stronger B.C. for Everyone."
Like any budget, there was plenty one could focus on, from nearly a billion dollars over the next three years in mental health supports to the surge in infrastructure spending across the province. But nearly six years into this government, one of the biggest questions for some is whether rhetoric around affordability first developed in 2017 matches the realities of 2023.
The obvious example is the much-touted renters' rebate, finally delivered (in the modified form of a means-based tax credit) in this year's budget. Conroy said they had continued to hear from renters about the promise since it was first raised before the 2017 election, and finally decided, 6 years on to include it.
But when the NDP made the promise, the average monthly rent in Metro Vancouver was $1,236, according to the Canadian Housing and Mortgage Corporation. In 2022, it had risen to $1,675 — a $441 difference. In other words, the yearly $400 tax credit won't even cover a single month of the increases that have been seen for most renters since the NDP first promised it.
Housing advocates say it highlights how difficult it is to achieve affordability in a provincial budget when people's highest monthly expense takes up more and more of their personal budget.
Doug King, executive director of the Together Against Poverty Society says: "The best way to deliver affordability for everyone is to get the rent lowered. Unfortunately, there's nothing here in the budget that suggests to me that's going to happen. Certainly, the tax credits are good, but we're not getting to that core problem, which is rents are going up."
While economists are split on the merits of credits versus direct assistance depending on the program, Conroy expressed confidence in the province's approach. She referenced one of two one-time rebates the government has announced in recent months, and said: "I haven't heard anyone complain they got their $100 rebate on the power bill. Those are the kinds of things that make a difference in people's lives."
Sure, that's undoubtedly true. But whether British Columbians feel that it's enough — or the right strategy for dealing with affordability — is a question they will answer at the polls at some point in the next 18 months.
Eby’s first budget drew good notices from two of the leading rating agencies this week, making it likely that the New Democrats will retain the high credit ranking they inherited from the B.C. Liberals. The agencies did not overlook how the Eby government was taking the province back into three years of successive deficits after this year’s record-breaking surplus.
Moody’s Investors Services said “Despite projected deficits, large contingencies mask strength of B.C.’s budget. While the forecast of a return to modest deficits is credit negative, we note that the budget contains significant contingencies to the projections in excess of the annual deficits which is in line with B.C.’s cautious fiscal management. We view the budget plan as well-protected against expected fiscal and economic headwinds and more likely to be surpassed.”
Next day, DBRS Morningstar weighed in with a commentary that had B.C. “dipping back into deficits in the face of economic headwinds.
It said: “The budget plans include several layers of prudence which, if unused, would contribute to improvement in the bottom line and debt outlook.”
The most recent example of that aspect of B.C.-style budget-making came last year. The province projected a $5.5 billion deficit and ended up with what is now forecast to be a $3.6 billion surplus. The province could have been headed for a $7.3 billion surplus, judging from the latest update on provincial finances, released Tuesday with the 2023 budget.
However, Premier David Eby and his ministers have spent a lot of the surplus, reducing it to a still-hefty $3.6 billion, according to the budget documents, owing to the large number of spending announcements that have come in since Eby became premier.
DBRS acknowledged this year’s plans “for increased spending in priority areas, continued deficits, and rising debt amid a macroeconomic slowdown,” will reduce the government’s flexibility, fiscally speaking.
“However, the province’s prudent fiscal approach, consistent track record of outperformance, strong balance sheet and currently low debt burden will lend stability to its credit profile.”
The relatively low debt, also inherited from the B.C. Liberals, provide the province with some borrowing room, even in the face of higher interest rates. B.C. has long been ranked as one of the best provinces in terms of debt measured as a percentage of gross domestic product, revenue and debt-servicing costs.
Though New Democrats often discounted credit ratings in their Opposition days, they matter for several reasons. They ensure the best borrowing rates for the province and serve as a reply to critics of the government’s budget-making and fiscal policies. They also provide a favourable point of comparison to the NDP government of the 1990s, which, unlike this one, had successive credit downgrades.
At the end of the day though, the total provincial debt is expected to reach $93 billion in the fiscal year ending March 31 and $108 billion in the year beginning April 1. We will have to see if that is something that BC voters will be fine with or not, given the different trajectories of both the BC and Alberta governments. British Columbia and Alberta went into their 2023 budgets from a similarly strong position. The Western neighbours emerge heading in divergent fiscal directions.
The big, economically powerful provinces both tabled their new fiscal plans Tuesday, coming off stellar years in which they both banked enormous budget surpluses. Alberta’s $10.4-billion of black ink is the most in history, and B.C. 's $3.6-billion is the second-biggest surplus on record. Their resource- and export-heavy economies have benefited from strong commodity prices and the global economy’s rapid recovery from the COVID-19 pandemic.
Both boast the two lowest debt-to-GDP ratios in the country – less than half the levels of Ontario and Quebec. But what the two provinces definitely do not share is a political landscape. That’s apparent in the strikingly different paths they have chosen from their enviable financial position. Alberta’s United Conservative Party government sees the financial health as its chance to get off its boom-and-bust budgetary hamster wheel, and establish sustainably balanced budgets. For B.C.’s ruling New Democratic Party, it’s an invitation to ramp up spending, especially in critical areas such as health care and housing.
British Columbia is still a year and a half from the next vote. Premier David Eby is still working on living up to the NDP’s promises from the last election. The government has a bit of time to pursue the agenda for which it was elected, and is coming off a couple of good years that have given it the means to pay for it.
Regardless of the reasons, the different paths the two provinces will follow present quite the case study to witness in real time over the next few years. We’ll see the consequences of a big-spending government turning its fiscal muscle on the problems of today, versus a thrifty government determined to bulletproof its finances for the economic shocks and uncertainties of tomorrow.
Supplementals:

Finance Minister Travis Toews tabled the budget on February 28th. The budget confirmed that the current fiscal year would end with a $10b surplus.
The new budget aims to deliver a $2.4b surplus with spending increases to health and education, including post-secondary education.
In total the spending increases amount to about 4% year over year.
This is a direct dollars investment in healthcare which creates more doctors and grows the number of Alberta Health Services employees by almost 3,600 over the next year.
Academics and those in the healthcare industry know that more than just money is needed, structural reforms are needed.
But the fact that spending is up tells a tale of the coming spring election.
If the UCP signals that they are spending more, it does many things.
First, it dispels the notion that big ticket items like health or education could be on the chopping block when they are re-elected.
Second, it is good policy to look at re-investing in healthcare under the appropriate circumstances after the thrashing the system took over the past couple years.
Finally, it paints the NDP into a corner of having to campaign on even bigger spending increases and provide the fiscal plan to cover the costs of that spending - likely through tax increases or a PST.
While the budget is providing needed money, it’s also very clearly setting the table for the upcoming election.
Similar growth numbers in both infrastructure and personnel can be seen in Education with a new school promised for south-west Edmonton and new teachers on the hiring list.
Post-secondary tuition rates will also be capped at a 2% increase per year.
Under law and order the province wants to hire more Crown prosecutors and judges and provide “therapeutic living spaces” in jails where inmates can get treatment for addictions while incarcerated.
Municipalities can get money for establishing their own police services but there is no commitment to the Alberta police force or other ideas like the Alberta pension plan.
Investment in Calgary is also on focus with money for the Calgary Cancer Centre and redevelopment funding for the Peter Lougheed Care Unit and Lab, Rockyview General Hospital ICU/CCU/GI units, and $2m for the Foothills ICU. The North Calgary/Airdrie Regional Health Centre will receive $3 million for further planning.
Food banks will see $42 million over two years, plus the extension of the transit pass pilot program in Edmonton and Calgary.
We also mentioned that money was in place to hire more doctors but money is also in place for 20 more seats to be created for medical degrees at the University of Calgary in year 1, doubling each year until 2026.
There is also investment for Calgary’s Blue Line and a Deerfoot trail upgrade worth $187m.
The budget also sets the stage for balanced budgets into the future with word that a Bill will be tabled in the Spring session that would only let the province run a deficit if revenues drop sharply and suddenly.
This legislation would allow a government to post a year-end deficit if the cost of a disaster exceeds contingency funds, revenue is more than $500 million lower than expected, or the government is on the hook for a huge legal settlement.
The government also plans to limit yearly spending increases to less than the sum of inflation and population growth.
There will also be something created called the “Alberta Fund” which limits how surpluses can be spent. Half of any surplus would have to be dedicated to debt repayment and the rest would go to the Alberta fund and could be used to repay debt, could be deposited in the Heritage Savings Trust Fund or, put to one-time-initiatives.
This budget is a budget that the likes of Ed Stelmach, Allison Redford, or Peter Lougheed would have tabled. It’s also what a centrist NDP government could conceivably see as priorities.
Because of that it makes the NDPs response to this budget in the coming campaign all the more interesting. They will be forced to either accept it or drastically increase spending and show where they will raise extra revenue from to make up the difference.
In an alternate world as put by Senior Economist Tegan Hill of the Fraser Institute, the government could have lowered personal income taxes to a flat rate of 8%, it could have paid more of the debt off, or it could have saved more for a rainy day.
This budget does make the province more reliable in the short to medium term on the price of natural resources, so spending will have to come down eventually again.
But, the story at the end of the day is that Alberta right now has managed to balance the budget and spend like a centrist or even NDP government would, which should raise the eyebrows of any Liberal or NDP governments across the country.
Supplementals:

B.C. premier 'astonished' firm got Health Canada approval to make and sell cocaine

In BC this week, we had a story where a vaguely worded press release from a BC company led to a broad interpretation from the media, which led to a clickbait firestorm of pearl-clutching that ended up in both the Premier and Prime Minister weighing in on the story. How did such a masterclass in fake news end up making the airwaves? Well, as we've always seen before, if there is a low amount of news in a week, the media will tend to resort to just making things up, and this story is no different. To get the full picture of what happened, let's start at the beginning.
Adastra Labs, a small cannabis company located in BC, put out a press release on February 22nd that they had received Health Canada approval for an amendment to include cocaine under its 'Controlled Substances Dealer’s License'. While certain drugs are banned for public sale and consumption, companies are still able to acquire these licenses for scientific or research purposes.
The problem with this, is that in the press release, Adastra was vague as to what the license granted from Health Canada actually allowed them to do. In their words, it allows Adastra to "include cocaine as a substance that the Company can legally possess, produce, sell and distribute".
Adastra's CEO Michael Forbes was quoted as saying: "Harm reduction is a critically important and mainstream topic, and we are staying at the forefront of drug regulations across the board. We proactively pursued the amendment to our Dealer's License to include cocaine back in December 2022. We will evaluate how the commercialization of this substance fits in with our business model at Adastra in an effort to position ourselves to support the demand for a safe supply of cocaine."
Okay, fair enough. The press release and quote makes it sound like the government is allowing for the 'commercialization' of cocaine, allowing it either for harm reduction, or the usage of it in regards to the so-called safe supply. In other words, it sounded as if the government had allowed this company to sell cocaine to the public.
The issue is where in this press release or quote does it actually say that? The media covering the story clearly thought that there was something more there, as they did not do their due diligence and followed up with the company before running to the printing presses to spout off that Health Canada was allowing companies to sell a controlled substance to just anyone looking to get a hit.
This week, a news story, only attributed to "The Canadian Press" was released on many different platforms, including the CBC and CTV, and it originally ran with the headline "B.C. firm gets Health Canada approval to make and sell cocaine". Later, it was updated to "B.C. premier 'astonished' firm got Health Canada approval to make and sell cocaine" as David Eby and Justin Trudeau were both asked by reporters about this company being allowed to sell cocaine to the public. Understandably, they were both baffled by the claims, and vowed to get to the bottom of it.
Eby told a news conference on Thursday about funding for overdose prevention and mental health that, "if Health Canada did in fact do this," the federal agency did so without engaging the B.C. government or notifying the province. The premier said the province will be contacting Health Canada for answers, saying that this 'was not part of our provincial plan' to stem the overdose death rate, with an average of more than six people dying every day in B.C. in 2022.
Trudeau says he is "as surprised as" Eby after he was asked about Health Canada licence amendments to produce and sell cocaine. Trudeau said Friday the federal government was "working very quickly" with Adastra Labs "to correct the misunderstanding" caused by the company's statement saying it was looking at commercializing cocaine as part of its business model. He said Adastra did not have permission to sell cocaine on the "open market," while Health Canada said the firm could only sell to other licence holders, and its licence is for "scientific and medical purposes only."
Health Canada then wrote a statement: "Health Canada has contacted the company to reiterate the very narrow parameters of their licence. If the strict requirements are not being followed, Health Canada will not hesitate to take action, which may include revoking the licence."
The thing is, the original statement from Adastra never said they could sell to the public in the first place, the media stories just made up that part from extrapolating from the statement. Instead of clarifying with the company, the nebulous unnamed 'Canadian Press' writer rushed to make a story, in this era of outrage journalism that was guaranteed to get clicks and outrage.
In any case, Adastra ended up changing their statement, probably after being threatened by the federal government. On Friday afternoon, Adastra retracted its statements regarding the Health Canada approval. Their amended statement says: "The Dealer's Licence issued to Adastra Labs does not permit Adastra Labs to sell coca leaf, psilocybin or cocaine to the general public. For cocaine, and under the Dealer's Licence, Adastra Labs is only permitted to sell to other licensed dealers who have cocaine listed on their licence."
This comes as a second B.C. company says it has a licence related to cocaine and MDMA, also known as ecstasy. Victoria's Sunshine Earth Labs, a biosciences firm that "aims to bring a safer supply of drugs to the global market," says it obtained an amended Controlled Drug and Substances Dealer's Licence to include MDMA and cocaine last year. However, like Adastra, its licence is for authorized medical and research purposes only, and it is not permitted to sell these drugs to the general public.
For its part, Sunshine Labs said it "does not engage in promoting or launching safer supply initiatives" and defers the implementation of policy on decriminalized cocaine, opium and MDMA to experts.
And to cap off the story, this 'misunderstanding' shows that in a lot of cases, there's no such thing as bad publicity. As of Friday morning, Adastra Holdings Ltd. has seen its stock rise in excess of 70% on the Canadian Securities Exchange, and its stock is up more than 100% over the last five days.
Regardless of personal opinions on the overdose crisis, the legality of certain drugs or even federal and provincial government power struggles, it should be stated that we as the Canadian public should expect our media to do its due diligence and fact checking before reporting on a story, and that clickbait nonsense from un-attributed articles should be discouraged.
If, on a particular story, we can't trust companies, the government, or the media, then who can you trust to make sure that the news you're watching, reading or listening to is above board? Increasingly these days, it seems like only at Western Context can you get the news without all the bias and sensationalism that the mainstream media adds.
Supplementals:

Firing Line

Justin Trudeau blames racism for allegation that China helped Liberal MP get elected

The story of the election interference in nomination races by the People’s Republic of China continues this week where the government is denying that they knew about what exactly was going on.
The denials came when the PM said, "In a free democracy, it is not up to unelected security officials to dictate to political parties who can or cannot run.”
The denials and contradictions are giving Canada a black eye in the international intelligence community since what is effectively happening here is that CSIS had to leak the story in order for it to be taken seriously.
What’s being created is a web of problems that will need to be resolved and if they aren’t will raise questions regarding security intelligence going forward.
The denials look bad on paper and at their core are the government trying to save face when in reality there is a very small likelihood that the Chinese influence scheme did not happen.
As a further distraction and diversion from the topic the Prime Minister also has blamed racism for the allegation that China helped MP Han Dong get elected.
This past Monday at a stop in Mississauga, Trudeau said, “One of the things we’ve seen unfortunately over the past years is a rise in anti-Asian racism linked to the pandemic, and concerns being raised around people’s loyalties. I want to make everyone understand fully: Han Dong is an outstanding member of our team, and suggestions that he is somehow not loyal to Canada should not be entertained.”
He went on to say that the media reporting of the CSIS leak damaged people’s confidence in the democratic and political institutions.
At the stop he also tempered criticism of China and denounced “anti-Asian” racism following the pandemic and championed the integrity of the federal electoral system.
To get to the bottom of this the calls for a public inquiry have been growing but government sources and intel analysts have been saying that might not do much good if the topics are “secret”.
With that being said, the House of Commons Procedure and House Affairs committee met on Wednesday and voted on a non-binding motion to hold an inquiry.
The reason this happened was because we live in a Liberal minority government so the opposition controls a majority stake of the committee.
Whether or not the inquiry goes forward will largely be up to the government. The inquiry can bring new information forward, spur political change, and change public opinion. More on theatre later.
It was also revealed this week that the Pierre Elliot Trudeau foundation received a large lump sum of money from the Chinese communist party.
These donations started right at about the time Trudeau became leader and will now return the $200,000 donation to the donor from Beijing.
It is said that the Chinese donors who were funding the foundation wanted a statue of Pierre Trudeau and Mao Zedong together but just the statue of the elder Trudeau was built.
This means that China may have personally targeted Trudeau way back in 2014 after he became Liberal leader. These are also verified by looking at the donations to the Papineau riding association where Trudeau holds his seat.
Looking at donations over the years one can see donations from Chinese nationals living in the GTA or metro-Vancouver. These donations have very much been reported at the periphery this week but also show the alarming influence that has been happening since the beginning.
The ball going forward is in Jagmeet Singh’s court regarding whether or not Canadians will go to the polls over the election interference scandal.
So far the NDP under Jagmeet Singh have protected the Liberals under their confidence and supply agreement and have struggled to make waves and be an effective opposition.
It’s also not clear at this point if Canadians would be willing to have an election over this but a lot, in fact most if not all of what happens of consequence, will be reliant on the NDP.
We end this week with more and more information on the table showing what many including us here at Western Context have suspected since the very beginning.
The Chinese Communist Party seeks to influence and direct affairs in our country covertly and Canadians need to be aware of what is happening
Supplementals:

Quote of the Week

“One of the things we’ve seen unfortunately over the past years is a rise in anti-Asian racism linked to the pandemic, and concerns being raised around people’s loyalties. I want to make everyone understand fully: Han Dong is an outstanding member of our team, and suggestions that he is somehow not loyal to Canada should not be entertained.” - Justin Trudeau on why anti-Asian racism is the true concern this week.

Word of the Week

Influence - to affect or change someone or something in an indirect but usually important way

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Show Data

Episode Title: A Tale of Two Budgets

Teaser: BC’s 2023 budget returns to deficit spending, while Alberta sticks to surpluses. The media misrepresents a BC company’s controlled substance license, and we uncover more of the Chinese Communist Party’s influence in Canadian politics.

Recorded Date: March 4, 2023

Release Date: March 5, 2023

Duration: 1:02:27

Edit Notes: None

Podcast Summary Notes

Duration: XX:XX