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Nov 28, 2024
British Columbians got a first glimpse of the re-elected NDP government’s policy agenda with the appointment of a new cabinet (Executive Council). At this time, mandate letters are usually released publicly so that the government’s plans by ministry are fairly transparent. However, the NDP government is looking to the Green Party to shore up its razor-thin majority in the Legislature, so no mandate letters until January.
A productive NDP-Green alliance could herald progressive reforms in BC that would buck the trend to the hard right of the Trump administration and potentially in Ottawa after the 2025 federal election. For the foreseeable future, developments south of the border will hang over the BC economy, with large and unpredictable impacts on trade and migration, including Trump’s proposed 25% tariffs on all Canadian imports.
BC’s economy has been slowing through 2024, with unemployment at 5.8% in October (compared to an average of 5.2% last year). Recent and future interest rate cuts from the Bank of Canada may drive a rebound in 2025. While the headline inflation rate has come back down over 2024, this only means that prices have stopped rising as quickly as before, not that they have come back down. The high cost of housing and food, in particular, remain top of mind for many BC households.
A productive NDP-Green alliance could herald progressive reforms in BC.
Federal tightening of temporary immigration programs will also impact the BC economy. After a few years of exceptionally fast population growth in BC, the next two years will see much lower, and perhaps close to zero, population growth from international sources. This might ease pressure on housing and health care, but also undercuts aggregate demand and won’t address the underlying problems in these areas. In the post-secondary education sector, large reductions in the number of foreign students are driving major program and staffing cuts at BC colleges and universities, particularly those that most banked on the much-higher tuition fees paid by foreign students.
With challenging waters ahead, it matters a great deal what kind of government is at the rudder. In troubled times, the message from the right is that you’re on your own. Instead, we need to build strength and resilience by working together through the public sector. A year from now, BC may be a progressive island in a conservative North American ocean. And if we can get it right, BC could show the rest of North America a more compassionate, sustainable and just alternative pathway to that of the hard right.
Broad priorities
In the absence of mandate letters, let’s take a look at what the new cabinet picks and the reorganization of some key ministries tell us, in light of NDP and Green election promises. Ministers received an appointment letter outlining the same four broad priorities: reducing costs for families; strengthening health care; making neighbourhoods and communities safer; and building a sustainable, clean economy with good jobs.
Under “reducing costs for families,” new Finance Minister Brenda Bailey will deliver the NDP’s promised tax cut of $500 for individuals and $1,000 for households. The platform called for an increase in the basic personal amount (i.e., the threshold for paying income tax) by $10,000. This could worsen inequality in that many higher earners would receive the full benefit of the tax cut, whereas lower-income households pay little or no income tax to begin with.
Due to the time lag for a tax change, an interim rebate in 2025/26 will be used to get money more quickly into people’s hands. The rebate could cost almost $2 billion next year, adding to the baseline deficit for 2025/26 (see Alex Hemingway’s analysis here).
A more targeted approach aimed at low- to middle-income households could lower the fiscal cost. For example, the rebate should be designed as a refundable tax credit to benefit all low-income households and be capped or phased out to exclude the top 35% to 40% of earners.
A more-coherent approach could seize opportunities for progressive tax reforms.
A more coherent approach could also seize opportunities for progressive tax reforms. Some ideas from the Green platform are worth borrowing in this regard, including a full review of BC’s tax system with an eye toward reducing inequality, improving efficiency and fairness. More progressive property taxation and corporate tax reforms (including windfall profits taxes) could be considered as part of a tax system overhaul.
The commitment to “strengthening health care” falls to veteran minister Josie Osborne, who gets the Health portfolio after handling energy, mines and low-carbon innovation in the previous cabinet. She replaces the longest-serving Health minister in BC history, Adrian Dix. Both the COVID pandemic and the post-COVID population growth surge have led to a health care system under strain. The BC government has responded with boosted health care funding and a major focus on training and attracting health care professionals.
Access to primary care is a central challenge with one in five British Columbians not connected to a family doctor. The previous NDP government made substantial progress on primary care, but these reforms are incomplete. The Green Party call for a major expansion of community health centres as a central contact point for primary care should be firmly on the reform agenda.
Addictions and mental health remain underfunded challenges that are destroying lives daily. Alas, the new government’s preferred framing of “making neighbourhoods and communities safer” speaks more to cracking down on crime than developing more compassionate policy for people suffering from poverty, mental illness and addictions.
The standalone addictions and mental health ministry (since 2017) has been rolled back into the Ministry of Health. In practice, much of the programming and spending power had remained at Health, but hopefully, addictions and mental health issues do not get lost in the vast Health ministry. The controversial topic of involuntary care will rage over the coming years, and hopefully the government can step back and focus more on expanding harm reduction programs, voluntary treatment beds and affordable housing options.
Addictions and mental health remain underfunded challenges that are destroying lives daily.
Under “building a sustainable, clean economy with good jobs”, former Health minister Adrian Dix will head a newly amalgamated Ministry of Energy and Climate Solutions. Previously, climate and energy policy was split between the Ministry of Environment, which housed the Climate Action Secretariat that did policy work and set GHG targets and timelines but had little budget, while the programs and money were at Energy, Mines and Low-Carbon Innovation, including responsibility for BC Hydro and liquefied natural gas (LNG) expansion.
The new ministry can hopefully resolve BC’s contradictions on climate and energy policy, which has sought to reduce carbon emissions domestically while seeking to increase them globally through oil and gas exports.
A central challenge is the need for electrification of BC’s economy via BC Hydro, which notably provided stable electricity prices and consumer rebates during the inflation surge. The Crown corporation is now facing competing demand from new LNG and mining projects. Thus, a more coherent linkage between climate and energy may help BC live up to its good intentions on climate.
While not cracking the top four priorities, an overarching issue cited in the appointment letters is Indigenous Relations and Reconciliation, to be headed by Christine Boyle, a seasoned Vancouver city councillor but legislative rookie. British Columbia has made significant strides in acknowledging Indigenous rights and titles since 2017. Challenges remain when it comes to meaningful consultation, the sharing of economic benefits and addressing the systemic barriers Indigenous communities face. There is an important opportunity to move beyond symbolic gestures and deliver real, substantive change.
Shifting priorities in ministries
Reorganizations at the ministry level also point to shifts in focus.
Having moved energy alongside climate, Mining and Critical Minerals will be a new standalone ministry. Viewed as a growth sector for minerals needed for modern electronics and vehicles, addressing First Nations rights and title will loom large over this ministry, likely with frequent meetings with new Indigenous Relations and Reconciliation Minister Boyle. Forestry remains a standalone ministry but faces unprecedented challenges from mill closures and dwindling supplies of high-quality wood set against the urgent need to conserve intact ecosystems.
Transportation and infrastructure has been divided into a Ministry of Transportation and Transit—suggesting the elevation of public transit investments and projects—and a separate Ministry of Infrastructure for large capital projects and planning for schools, hospitals and other major facilities. Both the NDP and Greens cited transit investments in their platforms (many of which reflect our February 2024 Connecting BC report), including inter-community express bus services, North Shore rapid transit and new commuter rail connections.
The Ministry of Housing has been expanded to include Municipal Affairs, a signal that housing is more than just the buildings constructed, but must also consider impacts on physical infrastructure, like water and sewer pipes, as well as social infrastructure like libraries and community centres. This added responsibility looks like a reward for Minister Ravi Kahlon’s leadership on the housing file, including implementing major housing supply reforms, the new non-profit housing model of BC Builds and the Rental Protection Fund.
These actions require further fiscal and regulatory efforts, however, as we outline in our Building Equity report. In particular, a much bigger commitment to non-market housing is needed, something that the Green Party platform rightly focuses on with a call for 26,000 new units per year (we had recommended 25,000 per year) and expanding upzoning for non-market developments.
A major housing pledge from the NDP is for the BC government to back 40% of a mortgage for certain first-time homebuyers, to be repaid after 25 years. While innovative, the reality is that only about 5,000 home purchases per year would be supported in this manner, a relatively small dent in the overall housing market. Keeping the program focused (including income and asset testing) so that unintended profiteering does not occur will be a key design consideration.
What’s missing?
The big three challenges of housing, health care and affordability are well represented in the broader government agenda outlined in the appointment letters. Following are some missing pieces for BC that will hopefully be spelled out in the January mandate letters and funded in the upcoming BC budget (scheduled for March 4, 2025).
Expansion of the $10-a-day childcare program. The current program is both very popular and massively oversubscribed, as there simply are not very many of those affordable spaces available. The Green Party platform emphasized expanding child care investments and this also has broad popular appeal within the business community. Expansion would improve affordability for many families across BC and would have beneficial economic impacts through enhanced labour market participation for women.
Poverty reduction. The Green Party election commitment to eliminating poverty is perhaps more aspirational since BC is but one province within Canada and such a move would require federal participation. Still, raising social assistance to the poverty line would make a huge difference in people’s lives and would cost about as much as the government’s promised broad-based tax cut. Essentially all of that money would be spent in the local economy.
Resilience and adaptation. Extreme weather events are becoming more common, with the damages from the 2021 extreme weather events (heat dome, wildfires and landslides/flooding) estimated at between $10.6 and 16 billion. Since then BC has put money into clean-up and has engaged in various adaptation planning exercises. But no money has flowed to major projects that would improve resilience to similar future events, such as reinvesting in dikes in the Lower Mainland and other areas vulnerable to flood.
Seniors’ care. There are more than one million people in BC aged 65 and over in 2024. While most seniors are able to live independently, aging inevitably requires increasing amounts of support and care. Three important dimensions of seniors’ care are home health care (including home support nursing), assisted living and long-term care, all of which ideally form a continuum of housing and health care for seniors.
The challenges facing BC in 2025 are immense. In recent years, the BC government has made progress in key areas like housing affordability, climate change, Indigenous relations and health care. The government’s ability to deliver meaningful change will depend on its capacity to balance addressing short-term priorities with pragmatic, long-term planning. In a province that has long been a bellwether for progressive policies in Canada, the new government has an opportunity to define a path forward and emerge from this tumultuous period stronger, more unified and more resilient.
Topics: Election commentary
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The 2024 living wage for Metro Vancouver has risen to $27.05 per hour, a 5.3% increase from last year. This significant increase highlights the region’s deepening affordability crisis fuelled by sky-high housing costs.
Living wages are also going up across the province as our new report shows.
While inflation has eased from record highs, essential costs like rent and food continue to rise faster than general inflation.
Government initiatives such as increases to key income-tested government benefits, ongoing child care affordability improvements and the roll-out of the Canadian Dental Care Plan have provided some relief. The savings, however, have been entirely consumed by soaring prices—especially for housing and food—leaving many households struggling to make ends meet.
What is a living wage?
The living wage is the hourly rate that each of two parents working full-time must earn to support a family of four in Metro Vancouver. It ensures a family can afford necessities, support the healthy development of their children, escape severe financial stress and participate in the social, civic and cultural lives of their communities.
People who work for low wages face impossible choices—buy groceries or heat the house, keep up with bills or pay the rent on time. The result can be spiraling debt, constant anxiety and long-term health problems. In many cases it means working long hours, often at multiple jobs, just to pay for basic necessities. Parents end up having little time to spend with their family, much less to help their children with school work or participate in community activities and we are all poorer for it.
The living wage is a powerful tool to ensure paid work results in a decent standard of living and enables a life that is about more than a constant struggle to get by. For low-wage workers, earning a living wage is a game changer. It means freedom from constant financial stress and an opportunity to plan for the future.
Gap between living wage and minimum wage widens
A strikingly large gap exists between the 2024 Metro Vancouver living wage and BC’s current minimum wage of $17.40 per hour.
The Metro Vancouver living wage has always been higher than BC’s minimum wage, but the gap narrowed considerably between 2018 and 2021 thanks to policy changes such as substantial minimum wage increases, the elimination of Medical Services Plan (MSP) premiums, introduction of the BC Family Benefit and significant new federal and provincial child care investments.
However, since 2021, soaring costs of living—especially for housing—have outpaced these affordability improvements. The gap has widened again, leaving many families earning less than it takes to get by.
Recent increases to the minimum wage have been welcome, but clearly far from sufficient and more must be done urgently to better support the nearly half a million workers in Metro Vancouver who earn less than the living wage (37% of all paid employees in the region).
What about other family types?
While the Metro Vancouver living wage calculation is based on the needs of two-parent families with young children, it is also meant to support all workers so that young adults are not discouraged from having children because of low wages and older workers have extra income as they age. This was the case when the BC living wage methodology was originally developed in 2008.
However, as governments have taken important steps to better support families with children in the last eight years, questions have arisen about whether this wage is sufficient for other groups.
This year, we produced preliminary estimates of living wages for two additional family types: a single working-aged adult and a single parent with a young child. These preliminary estimates suggest that the living wage for Metro Vancouver may not be sufficient to support a single person (who would need a wage of $27.36) or a single parent ($30.63).
However, in other communities with a lower cost of living, the living wage may be sufficient for other family types. Over the next year, we will refine these calculations in consultation with community partners, academic and policy experts, low-wage workers, unions and living wage employers to ensure a more inclusive methodology.
Getting to a living wage for all BC workers
The living wage movement calls on employers to pay wages sufficient to support families. And a growing number of BC employers are stepping up. Over 450 employers, including many small businesses, 10 municipalities, three First Nation Councils and three school boards have committed to pay their employees and contractors a living wage. In 2022, YVR became Canada’s first living wage airport.
However, voluntary action alone cannot solve BC’s serious affordability crisis. Coordinated government efforts at all levels are needed to both lift wages and lower the cost pressures people face so that all workers can thrive.
As a start, the BC government should raise the minimum wage to $20 per hour to narrow the gap between the minimum wage and the living wage. This would benefit over 400,000 people of all ages, working in every region of the province.
In addition to higher minimum wages, BC workers need pay equity legislation, stronger protections from wage theft and other workplace rights violations and meaningful access to collective bargaining so they can exercise the right to come together to negotiate better wages and benefits if they so choose.
The provincial government should also establish a living wage policy for both its direct employees and contractors and encourage all public bodies to follow suit (e.g., universities, hospitals, school boards).
Affordability depends not only on our earnings, but also on the benefits and government income supports we receive and the public services we can access.
More-generous government transfers can put money directly into the pockets of low- and middle-income households, as provincial and federal child benefits do for families with children.
Government benefits could do more to moderate the increase in the living wage amid a sharply rising cost of living. Many benefits, however, are clawed back steeply or eliminated at family income levels close to the Metro Vancouver living wage ($85,000 to $100,000 per year), which is considered too high for government support, yet in reality can barely provide a decent standard of living in BC’s largest urban centre.
Provincial and the federal governments must review all low-income transfers and credits regularly to ensure they are not clawed back at income levels that leave many families struggling.
In addition to direct government transfers, accessible public services and infrastructure can reduce out-of-pocket costs for families and thus lower the wage needed to afford a decent standard of living. These include affordable housing, universal access to low-cost child care, free transit for youth 18 and under and an expansion of publicly funded pharmacare and mental health services.
Without urgent government action to address the affordability crisis, the living wage will continue to climb. This means many BC employers will be unable to pay their workers a living wage, leading to thousands trapped with low wages and earning less than it actually costs to live in our province.
A coordinated effort to raise wages, expand public services and adjust government supports is essential to ensuring all BC workers can thrive, not just survive.
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Topics: Economy, Employment & labour
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