Slumping resource revenues drive up BC’s record $9.4 billion deficit
A slumping natural resources sector, crying out for help from the provincial government, contributed to B.C.’s already-record-setting deficit this week.
Finance Minister Brenda Bailey revealed a $9.4 billion deficit, as part of a second-quarter financial update that was awash in concerning economic figures.
Among them, sharp declines in revenue from mining, forestry and natural gas, which cost the provincial treasury hundreds of millions of dollars.
Natural gas royalties are $181 million less than projected in January’s provincial budget. Forestry, which is being battered from all sides including an ongoing softwood lumber dispute, has seen a $106 million decline. And even mining, which Premier David Eby has thrown his support behind for critical minerals, has dropped eight million.
Bailey attributed the declining revenues to slowing commodity prices and global economic uncertainty caused, in part, by the threat of tariffs from incoming U.S. president Donald Trump. But she also tried to put a positive spin on the future.
“By unlocking the tremendous potential for growth in the mining and critical minerals industry, we will open up long term opportunities for our economy and bring tens of thousands of jobs for current and for future generations,” she said, citing 17 potential projects worth $35 billion by 2040.
Forestry reeling from Green-NDP call for another review
The sector has been complaining about long permitting times, which can take up to 11 years. Eby, and new Mines Minister Jagrup Brar, have promised to review that process and speed it up.
“There’s real work for us ahead to ensure that we can get things permitted in a timely way and attract these investments into British Columbia,” said Bailey. “And I’m excited to do that work.”
Still, the budget update landed at a concerning time for the natural resources sector.
The forest industry was left reeling after the BC NDP and BC Greens signed a new cooperative deal that committed the government to yet another forestry review, presumably with the goal of decreasing logging and increasing old growth protections as have been long advocated by the Greens.
“Another review of forest policy in BC should not be a priority right now,” said Linda Coady, president of the Council of Forest Industries.
“Another review of forest policy in BC should not be a priority right now.”
Linda Coady
“There is a lot to do and much at stake. Along with other resource industries in B.C., forestry is at the forefront of advancing Indigenous reconciliation through real, on-the-ground practices and partnerships. Implementation of new land use planning processes and initiatives on conservation financing have been at least two years in the making, and are still not happening at scale,” Coady said.
“B.C. is badly in need of a strategy for attracting investment in new goals for forest management and manufacturing.”
Opposition BC Conservative leader John Rustad called for the replacement of the forestry stumpage system, and resolution of the softwood lumber dispute with the United States, to help clear the forestry logjam.
“The cost structure in British Columbia and the permitting, and that is if you can even get access to the wood because of what they’ve done with the old growth and quite frankly their policies with First Nations, it’s making it almost impossible to get permits,” Rustad said on CKNW this week.
‘We need to get the economy firing on all cylinders’
A new federal cap on emissions from the oil and gas sector this week also threatens to curtail B.C.’s natural gas production and LNG export industry.
Within that backdrop, Business Council of B.C. announced a new marketing plan this week to push back on Alberta’s well-known “Alberta is Calling” ads that encourage people to leave this province for a better quality-of-life in Alberta.
The B.C. advertisements feature pictures of phones, with a contact called “Alberta” calling, and ask “thinking of answering?” before adding “living in B.C. shouldn’t be so hard.”
“The campaign is about keeping the spotlight on an importance of a strong economy,” said Laura Jones, BCBC president.
“The quarterly results, both provincially and also what we saw federally this week, highlight the need for a strong economy. We need to get the economy firing on all cylinders.
“Part of what’s contributing to the deficit is lower corporate income tax revenue, $1 billion lower than budgeted. That tells you the business community is not thriving here and we need the business community to thrive to help generate the revenue to deal with some of the challenges we have.”
“The business community is not thriving here and we need the business community to thrive.”
Laura Jones
Key to that is natural resources, said Jones.
“The natural resource sectors are really important to our prosperity so we need to look closely,” she said.
“That’s where faster permitting comes up a lot. We need to look very closely at what it will take to help those sectors succeed.”
In the meantime, B.C.’s budget keeps sinking deeper and deeper into the red. If economic growth is going to pull it back to balance one day, as Bailey and Eby claim, then a turnaround in natural resources will have to play a part.