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Province of British Columbia
NEWS RELEASE
For Immediate Release
2020FIN0038-001283
July 14, 2020
Ministry of Finance
B.C.’s strong fiscal response, economic foundation support people

VICTORIA – The COVID-19 pandemic will mark British Columbians' lifetimes in ways never thought possible, and the Province is investing in people, businesses and communities to see them through the pandemic and build back better.

“B.C. has made extraordinary investments in people and businesses through B.C.’s COVID-19 Action Plan and we will continue to provide the supports people need as the pandemic and the economic impacts evolve,” said Carole James, Minister of Finance.

The B.C. government has released an economic and fiscal update for 2020-21 to provide a summary of COVID-19 investments to date, as well as a scenario of revenue and deficit projections.

Government has supported people and businesses with $6.26 billion in COVID-19 supports to date. That includes the $5 billion in supplementary spending for B.C.’s COVID-19 Action Plan supports, such as workers benefits, rent supplements, income and disability assistance supports and economic recovery funding. These are in addition to $1.26 billion in other tax and relief measures for people and businesses, including the one-time increase to the climate action tax credit and property tax reductions for businesses.

With the pandemic response for British Columbians, and a significant revenue decline due to the pandemic, the Province’s total operating deficit for 2020-21 could be $12.5 billion, based on projections developed by the Ministry of Finance.

“B.C.’s safe restart plan is creating signs of hope for our economy as consumer confidence increases. These results have only been possible because of our strong public health measures,” James said. “As we continue our work to create a strong recovery, we also have an opportunity to build a stronger B.C. that works for everyone in our province.”

British Columbia has made progress flattening the curve because of its strong health policy and a commitment to help keep each other safe. The Province is building an economic recovery plan that puts people first, with input from British Columbians, businesses and community organizations – so everyone has a good job and a secure future.

“The pandemic has exposed underlying gaps in our economy and society,” James said. “We have been reminded of the need for strong public services and supports, workplace safety and our collective responsibility to take care of each other, and I’m looking forward to putting people’s input into action as we move forward with the economic recovery of our province.”

As part of the COVID-19 Action Plan, $1.5 billion has been earmarked for economic recovery measures to be announced in September.

Quick Facts:

  • To date, more than 600,000 British Columbians have received the one-time, tax-free $1,000 BC Emergency Benefit for Workers.
  • More than 80% of B.C. families received an enhanced climate action tax credit in July – helping families with up to an additional $450, double the annual amount.
  • Over 200,000 people have benefited from the disability and income assistance crisis supplements.
  • More than 81,000 applications have been approved for the temporary rent relief supplement to date.
  • Over 250,000 eligible front-line workers will receive temporary pandemic pay, a lump-sum payment of about $4 per hour for a 16-week period.
  • Businesses are benefiting from an average 25% cut to property tax bills, deferred tax payments, BC Hydro rate reductions, eviction protection and rent relief.
  • On average, private sector forecasters expect B.C.’s real gross domestic product to decline by 5.4% in 2020 – better than the decline of 6.6% on average across Canada.

Learn More:

To read the B.C. Economic and Fiscal Update 2020-21, visit:
www2.gov.bc.ca/gov/content/governments/finances/reports/quarterly-reports

To participate in B.C.’s Economic Recovery public consultation, visit: gov.bc.ca/recoveryideas

For information about BC’s Restart Plan, visit: http://gov.bc.ca/restartbc

To learn more about the supports and services available for people, businesses and communities through the pandemic, visit: gov.bc.ca/covid19

For the latest medical updates, including case counts, prevention, risks and testing, visit: bccdc.ca/
Or follow the BC Centre for Disease Control on Twitter @CDCofBC

For the provincial health officer's orders, notices and guidance, visit: gov.bc.ca/phoguidance

For non-health related information, including travel, transportation and essential service information, call (toll-free) 1 888 COVID19 (1 888 268-4319) between 7:30 a.m. and 8 p.m. (Pacific time), seven days a week, or visit: gov.bc.ca/Covid19

A backgrounder follows.

 
Contact:
 
Ministry of Finance
Media Relations
250 213-7724
 

 
Province of British Columbia
BACKGROUNDER
For Immediate Release
2020FIN0038-001283
July 14, 2020
Ministry of Finance
B.C. Economic and Fiscal Update 2020-21

While B.C.’s economy has been significantly impacted by the COVID-19 pandemic, public health measures taken in B.C. have limited the spread of the virus and enabled a safe, cautious restart of the economy.

B.C. began easing restrictions in mid-May and is now in Phase 3 of the restart plan. This reopening, along with the relief measures and supports introduced by governments and the Bank of Canada, will support the economy along its recovery path. Elements of uncertainty that will influence the depth and duration of the economic slowdown include:

  • future outbreaks in B.C. and among B.C.’s trading partners;
  • the evolution of public health policies and medical technologies, such as development of treatments and vaccines;
  • the responses of the general public and impacts on consumer spending and confidence;
  • the responses of businesses with respect to investment decisions, impacts on confidence, supply chain and business model adaptations;
  • the success of relief measures and supports, as well as the evolution of policies enacted by governments to support corporate cash flow and personal income, maximize job retention and curb infection rates; and
  • the success and evolution of policies enacted by central banks to provide liquidity in the financial system and laying the foundation for the recovery via low interest rates.

Economic highlights

  • In the snapshot presented, B.C.’s real gross domestic product (GDP) could decline by 6.8% in 2020, and as the recovery begins, the economy could grow by 3.1% in 2021.
  • Job losses in the province have been significant, with 235,100 fewer jobs in June compared to February. Job losses are not expected to be fully recovered this year. Employment in the province could decline by 9.8% in 2020. As businesses resume and people go back to work, employment could increase by 4.4% in 2021, representing an annual gain of 102,000 jobs.
  • Retail sales may decline by 15.9% in 2020. As employment and income prospects improve, consumer spending is expected to pick up, with possible retail sales growth of 8.6% in 2021.
  • Housing market activity has been mixed. Homebuilding activity continues to be resilient. However, there has been a steep decline in home sales. The value of residential sales may decline by 27.6% in 2020, followed by possible growth of 9.3% in 2021.

Operating results

  • Total changes since Budget 2020 in February amount to $12.751 billion.
    • Government’s support for people and businesses is estimated at $6.262 billion in 2020-21. This includes:
      • $5.0 billion in Supplementary Estimates spending;
      • $762 million in other business relief and tax measures; and
      • $500 million for the one-time increase to the climate action tax credit.
    • Overall revenue for 2020-21 is estimated to decrease by $6.313 billion under the scenario.
    • Additional debt servicing costs are estimated at $176 million.
  • Budget 2020 forecasted an operating surplus of $227 million, which based on the scenario would result in an estimated operating deficit of $12.5 billion for 2020-21.

Capital spending

  • Budget 2020 included $22.9 billion in taxpayer-supported capital spending over the fiscal plan and included new investments to sustain and expand provincial infrastructure, including schools, post-secondary facilities, housing, transit, roads, bridges and hospitals.
  • Capital projects are proceeding, and the construction industry is ready to deliver the Province’s historic capital plan.

Debt levels

  • Governments, like the private sector, borrow to finance the building of long-lasting capital infrastructure, such as schools, hospitals and highways. Recently, B.C. has had among the best debt metrics and credit ratings compared to other Canadian provinces.
  • Taxpayer-supported debt levels may reach $61.9 billion at the end of 2020-21. In Budget 2020, the projection was $49.2 billion.
  • The taxpayer-supported debt-to-GDP ratio may increase to 22% in 2020-21, up from the Budget 2020 forecast of 15.5%.
  • Despite the need for increased borrowing and higher debt levels, B.C. will benefit from low interest rates.

On average, private sector forecasters expect B.C.'s real GDP to decline by 5.4% in 2020, which is better than the decline of 6.6% on average across Canada, and ranks B.C. fourth among provinces.

 
Contact:
 
Ministry of Finance
Media Relations
250 213-7724
 

 
Connect with the Province of B.C. at: news.gov.bc.ca/connect