The incredible shrinking role of government in BC

Today, spending is just 18.4 per cent of BC’s total economic pie (GDP) on government programs and services compared to 21.1 per cent in 2000.
Today, spending is just 18.4 per cent of BC’s total economic pie (GDP) on government programs and services compared to 21.1 per cent in 2000.

During an election, pundits and political parties tend to focus on spending promises. But the attention on spending makes it easy to forget that we’ve actually witnessed an incredible shrinking of government’s role in BC over the past 15 years.

Unlike the strange mist that shrinks Scott Carey in the 1957 sci-fi classic, The Incredible Shrinking Man, the cause of BC’s shrinking public sector is not so mysterious.

Today, we are spending just 18.4 per cent of BC’s total economic pie (GDP) on government programs and services compared to 21.1 per cent in 2000. BC’s 2017 budget projects a further drop to 17.5 per cent by 2019.

That means that if we dedicate the same share of BC’s nearly $270 billion economy to public spending today as we did in 2000 we could make additional investments of approximately $7 billion annually.

Some celebrate this shrinking act, but many British Columbians understand its consequences: a housing affordability crisis, job growth concentrated in the Vancouver and Victoria regions, education and health systems stretched to their limits, damaging levels of poverty and inequality, and a deepening climate change emergency.

What do these challenges have in common?

In order to solve them, we must act on a societal level not just as individuals and families. CCPA research shows that tackling these challenges is well within our grasp and policy solutions are at our fingertips. All we need are political will and resources to be unleashed.

Failing to make these investments costs us enormously year after year. Our research shows that poverty costs the BC economy $8-9 billion annually – more than double the cost of a comprehensive poverty reduction plan. We have also shown that public, universal child care would largely pay for itself, providing relief to young families facing astronomical costs for both housing and child care.

Investing in a public universal pharmacare program would also benefit British Columbians whose drug costs are largely privatized. University of BC Professor Steve Morgan estimates that Canada will waste approximately $100 billion over the next decade compared to if we launched a universal program now.

Ironically, the shrinking role of government means we often end up wasting more money on a societal level by failing to make crucial public investments.

There is growing recognition of the need – and genuine possibility – for major reinvestment for public good. Even deeply conservative institutions like the International Monetary Fund highlight that inequality damages economic growth and mounting research shows how inequality tears at our social fabric.

There is also increasing understanding of the limits of an unfettered, unregulated marketplace. We’ve seen this lesson unfold dramatically in global financial crises, the climate change emergency, housing unaffordability, and inexcusable levels of poverty and inequality.

We need to rebuild BC’s public sector, not shrink it. We can make our tax system fair and pool our resources to meet the challenges we face. The alternative is to allow these problems to fester and watch our social fabric fray. 

Alex Hemingway is CCPA-BC’s Public Finance Policy Analyst. His work focuses on the state of BC’s public services, including education, healthcare, social services and regulation. He also investigates the taxation system and its relationship to inequality and the capacity of government to provide high-quality and accessible public services.

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