Is British Columbia Going Broke?

British Columbia is not going to receive a bankruptcy notice in the mail. A province does not go broke in the same way as a household or small business. It can borrow, raise taxes and continue rolling debt forward in ways that an individual cannot.

That distinction should not make the province’s fiscal position feel less serious. British Columbia is projecting deficits measured in the tens of billions of dollars, taxpayer-supported debt is rising rapidly, and the cost of servicing that debt will consume money that could otherwise support health care, housing, education or tax relief.

I wanted to ask Rob Shaw whether the language of a fiscal crisis was exaggerated. Shaw has covered provincial budgets through recessions, political transitions and periods of austerity. His answer was unusually direct: the province may not literally become insolvent, but its finances are in worse condition than at any point he has covered.

When I asked whether British Columbia was going broke, Shaw replied:

“Yes. It’s hard to get around that.”

He immediately qualified the point. The province will not suddenly become unable to pay every bill. Governments have access to taxation and borrowing powers that households do not. But the practical consequences of deteriorating finances are real.

Credit-rating downgrades make borrowing more expensive. Higher interest costs reduce the revenue available for programs. New borrowing then compounds the problem, particularly when deficits are caused not by a temporary emergency but by an ongoing mismatch between revenue and spending.

Shaw described that mismatch plainly:

“It’s stuck in what we call a structural deficit where its spending has outpaced its revenue.”

A temporary deficit can be justified during a recession, natural disaster or public health emergency. A structural deficit is different. It means the government’s normal commitments cost more than the revenue it normally collects. Unless revenue rises substantially, the government must eventually increase taxes, reduce spending or accept continuing debt accumulation.

Shaw has covered British Columbia politics for more than twenty years, including the global financial crisis and the deficits that followed. Even against that experience, he described the current outlook in stark terms.

“It’s the bleakest financial picture I’ve seen.”

The government argues that investments in infrastructure, housing, health care and economic development can strengthen the province over time. There is a legitimate case for borrowing to build assets that will serve future generations. A hospital, school or electrical project can produce value long after its original cost is incurred.

The complication is that not all borrowing is capital investment. When operating spending consistently exceeds revenue, debt is being used to sustain the current level of services and compensation. That is harder to defend as an investment in the future.

Shaw also noted that proposed economic gains from mining, liquefied natural gas and other major projects may take years to materialize. Those projects could improve the fiscal position, but they do not eliminate the immediate gap.

“I don’t know how this government gets out of it.”

Shaw was not claiming there is no solution. He was emphasizing that every available solution carries political costs. Raise taxes during an affordability crisis and households or businesses may feel further squeezed. Cut spending and services may deteriorate. Delay action and the eventual correction becomes more severe.

The debate becomes more complicated when the conversation turns from the size of the deficit to who should bear the cost of fixing it.

One option is to raise taxes on high-income earners or wealthy households. That approach is popular with voters who believe the gains of recent decades have been distributed unfairly. Critics respond that higher taxes can reduce investment, discourage entrepreneurship or drive mobile capital elsewhere.

But Shaw identified a deeper conflict that extends beyond billionaires. Many older British Columbians bought homes when prices were far lower, paid down their mortgages and accumulated substantial wealth through real estate. They may be asset-rich while still viewing themselves as ordinary middle-class retirees.

Younger people face a different market. They may earn strong incomes and still be unable to purchase a modest home near their work. They are also being asked to finance public services for an aging population while carrying the future burden of today’s debt.

“I feel like that is the fight of our time that’s about to happen.”

This is not simply a dispute between rich and poor. It is a conflict over whether accumulated housing wealth should be taxed more heavily, whether inheritances should carry greater obligations and whether governments should transfer more support toward people who entered the economy later.

The politics will be difficult because few people see themselves as the appropriate target.

“People don’t consider themselves the problem.”

A family with a second property may see it as retirement security rather than speculation. A homeowner benefiting from rapid appreciation may feel they simply made a responsible decision. A young renter may see the same situation as evidence that public policy protected one generation at the expense of another.

Shaw’s warning was not directed only at the current NDP government. Whoever governs next will inherit the same arithmetic.

“It’s a bad hand to whoever inherits this next.”

A Conservative government promising lower taxes and fiscal discipline would still need to identify what it would cut, how quickly it would reduce the deficit and how it would protect essential services. Another NDP government would need to explain whether it intends to raise revenue, restrain spending or continue borrowing in the expectation that future growth will close the gap.

The risk is that both sides avoid the difficult choices until an election is near. Governments can produce optimistic forecasts, delay major decisions and rely on temporary revenue improvements. But a structural deficit cannot be solved permanently through presentation.

So, is British Columbia going broke?

Not in the literal sense. The province will continue collecting taxes, borrowing money and delivering services. But Shaw’s argument is that this should not reassure us. The fiscal problem is already narrowing future choices, raising borrowing costs and transferring obligations to people who had no role in creating them.

What remains uncertain is which combination of taxes, spending restraint and economic growth British Columbians will accept—and which generation will be asked to sacrifice most.

Watch or listen to the full interview with Rob Shaw, and consider the question: what would a fair plan to repair British Columbia’s finances actually look like?