A $5-billion outlay by government isn’t as uncommon as it used to be, but it’s still hard to visualize. Premier John Horgan and Finance Minister Carole James committed that amount Monday to a COVID-19 action plan.
To give it some context, it helps to compare it to the provincial budget for the fiscal year starting next month.
“It seems inconceivable that just over a month ago, we tabled the balanced budget,” Horgan said.
That budget was delivered Feb. 18, and didn’t include the words pandemic or coronovirus in it. B.C. had only five cases at that point. There were tens of thousands of cases in China, but only about 90 cases in a dozen other countries.
The international case count started exploding soon after.
The $60-billion spending plan included $900 million in “fiscal prudence,” which is a tally of the projected surplus, the forecast allowance and contingency funds.
So in one move, the government has committed to spend or erase revenue worth five times the amount it set aside for emergencies and unexpected expenses.
For further context, the $5 billion is just the initial spend. Further outlays were virtually guaranteed by Horgan and James, who said it’s just a “first step.”
It’s badly needed, literally to keep society functioning. Even if huge sums already budgeted for other programs are shuffled and reallocated, the government will still be spending billions more this year.
The initial cost of the pandemic response is roughly equivalent to doubling B.C.’s post-secondary budget overnight.
But that’s only part of the enormity of what’s happening.
The other half is the revenue side. Just as happened during the banking collapse of 2007-2009, government revenues are vanishing, apart from the streams the government is voluntarily suspending.
A major share of the provincial economy is now still and silent. So the impact will be compounded over time. The province will spend or forgo billions while it is receiving billions less in revenue.
The waiving of tax revenues includes postponing next week’s scheduled carbon tax hike, freezing student loan payments, and allowing more deferrals of B.C. Hydro and ICBC bills.
In the same vein, large and mid-sized businesses (payroll over $500,000) can defer employer health tax payments until September. Deadlines for various other tax remittances are also extended.
The cost of just one small example — delaying the new tax on carbonated drinks — amounts to $27 million in the next year.
The government’s breakdown of the initial action plan sees $2.8 billion aimed at supporting people and services, and $2.2 billion focused on business and recovery. The latter moves meet most of the pleas from business groups made earlier for relief.
The initial provincial plan comes on top of the $82 billion in federal aid announced last week. To give that number some context, it’s 3% of the country’s gross domestic product.
Here’s a partial list of the avenues through which the emergency funding will be made available to British Columbians.
• A $1,000 tax-free emergency benefit will go to people whose ability to work has been affected by the pandemic. It’s a one-time payment to British Columbians getting either employment insurance or the new federal emergency benefit as a result of the pandemic. That includes parents with sick children, parents whose daycares close, and those with sick elderly parents.
• The climate action tax credit that is routinely disbursed to those eligible is being used as a vehicle to deliver up to $112 per family in additional benefits. The July cheque will be as much as $564 per family, or up to $218 per individual.
• B.C. has sent $10 million to Vancity Credit Union to boost the existing rent bank network for short term rental aid. The six largest banks in Canada are freezing mortgage payments for those in need.
• Some business and industry property classes will get school property tax cut in half for the 2020 tax year, which amounts to $500 million in relief.
• The federal child benefit will increase by $300 per child for the current year for families most in need.
The whole package and more passed in a surreal sitting of the house Monday, where just 14 MLAs gathered together, with “together” being the key phrase.