British Columbia will maintain its budget surplus over the next few years as long as the province keeps cost growth under control, the Conference Board of Canada announced August 6.
According to the board’s British Columbia Fiscal Snapshot report, however, this is going to be difficult.
Specifically, costs in the areas of health and education must be kept in check, according to the report.
“As noted in the February budget, spending on health care is set to rise by an annual average rate of 2.6% over the 2014-15 to 2016-17 period,” the board said in the report.
“While constraining health care spending growth is necessary to maintain balanced budgets without drastic cuts in other program areas, the province will face a difficult task in capping spending at an average of 2.6% per year over the next three fiscal years.”
The Conference Board projects that the cost of health care will actually increase by by 4.3% to keep up with inflation and demographic change. New products and services would cause this number to increase further.
“…it is evident that health care will require significant efficiency gains or reforms to maintain service levels without substantial increases in spending,” said the report.
As well, education costs will prove to be a challenge when balancing the budget. The provincial government projects annual growth in this area to be around 0.6%. However, the Conference Board said that when taking into account average real spending per student, enrolment projections and inflation, the growth rate will be 2.7% - which will mean education costs will be $1.6 billion higher for the next three fiscal years than the government forecasts.
