Provincial budget looks to hold the line in the face of trade war with the US

The province released its Standing Strong for BC 2025 budget Tuesday in the face of unprecedented economic and political uncertainty ignited by US President Donald Trump’s implementation of a blanket 25% trade tariff on Canadian exports and his decision to cut military aid funding to Ukraine.

The two pose a compound challenge to the province’s priorities and economic outlook, neither of which were fully captured in the budget, though the uncertainty they have caused was.

By all accounts, this is a status-quo budget, said Finance Minister Brenda Bailey, without a lot of “flashy” new spending. “It’s a measured budget that allows us to respond and to take care of British Columbians.”

Premier David Eby made a surprise appearance at the budget announcement and was equally clear in his messaging about holding the line against the newly felt American aggression.

“What’s happening represents “a massive shift in global politics and is deeply disturbing to everyone who values freedom, democracy, sovereignty and the global order that has assured prosperity for so many people around the world for generations,” he said. “That order is under threat and has been betrayed.”

“These are conversations we never thought we’d be having. We’re having them today.”

Eby acknowledged that, after he and other provincial ministers had responded in good faith to Trump’s insistence that Canada curb the flow of fentanyl across the border, it was never about the drug. “We met those demands, and it did not matter. He wants something else. This president has repeated many times, he wants to make Canada the 51st state. We will never be the 51st state.”

Eby’s line was echoed in his finance minister’s speech to the legislature later in the day: “We are introducing a budget in the most consequential time in BC in generations. A time that few of us could have imagined months ago.”

Victoria Mayor Marianne Alto echoed this, saying in a release that “the financial reality in British Columbia, and across Canada, has changed dramatically since January and continues to change each day.”

She said Monday’s news about the confirmed US levies has shifted the conversation from theory to a stark truth.

“The US government has decided Canada is no longer an ally,” she said, following the budget reveal.

The budget also reflects a particular point in time—specifically, last month, when its authors were busy trying to calculate what the impacts of Trump's tariffs might mean to BC’s economy, communities, and families. The budget is not a true calculation of those impacts, though some of that pencil work has been done. The minister admitted that the numbers are based more on assumptions than fact.

What is apparent is that the tariffs, at whatever percentage they land on after a deal between the two national leaders is reached, will hurt. As of Wednesday afternoon, it appeared Trump was sticking to the 25% levy on all imports, but had asked for a one-month exemption on tariffs on any automobiles and parts coming through the United States-Mexico-Canada Agreement (USMCA).

Short-term and high-level impacts of the tariffs as they were projected by the BC government in February include:

·  $43B decrease to BC’s real GDP by 2029

·  $45K fewer jobs by 2029

·  Increased unemployment, rising from 6.4% in 2025 to 6.7% in 2026

·  $3.2B to $5B decline in annual corporate profits

·  $1.4B in lost revenue

CRD infrastructure projects already supported by the province

Many of the infrastructure projects around the CRD included in Budget 2025 were already on the province’s books. Some were already paid up in full.

Victoria received a $140M commitment from BC Housing in 2022 to fund 47 of the 205 non-market rental units being built at 926-930 Pandora. The CHRC is funding the remaining 158 affordable units, and the city is funding the community and child-care spaces that are part of the project design.

The Crosstown development at 584 Burnside East (the former Tally Ho site) received $72M in provincial funding and was completed in December. It will provide 154 mixed-use affordable and supportive housing units.

Provincial funding for the Belleville Terminal redevelopment project ($331M) was announced in June 2023. Before the upgrade, the Belleville terminal did not comply with the Canada-US Land, Rail, Marine, and Air Transport Preclearance Agreement (LRMA), and if it had not been approved, would have resulted in the removal of US Customs and Border Protection services from Vancouver Island and the shutdown of ferry operations there.

While he recognized that much of the funding in the budget for infrastructure was carry-over, Victoria Coun. Jeremy Caradonna said, “It’s still important to know those commitments remain. It’s not nothing for us. The Belleville commitment is probably the most important. That project has struggled to secure all the necessary funding from senior governments.”

The upgrade will improve service and safety for international travellers arriving in downtown Victoria by vessel. Phase 2 construction begins this year, and the anticipated completion date for the project is 2028.

The BC Transportation Financing Authority provided the eight-acre property at 2401 Burnside Road in View Royal for the new HandyDART Centre in 2019. It received additional funding from the feds in 2023 after project costs rose to $85M from $51M. It will get $84M to construct a new Victoria facility. The centre promises to double its low-carbon fleet capacity for the region as the population grows.

The province provided $64M in funding to add a six-storey addition to the University of Victoria Engineering and Computer Science Extension. That funding was announced in 2021.

The province still has the first low-carbon Cedar Hill Middle School on its books for $27M. The seismic replacement was approved by the city in 2022 and is slated for completion in 2025.

Royal Roads University’s Westshore Learning Centre, whose anticipated costs decreased to $108M from $112M, was launched last month. The new campus offers classes in three programs, including business and sustainability and environmental and social science.

The $19.5B in capital funding announced to improve transportation networks across BC is staying on the mainland.

Public Safety

Homeless Encampment Action Response Teams (HEART) and Homeless Encampment Action Response Temporary Housing (HEARTH) programs (already running in the CRD) will continue to be funded at $90M to resolve encampments and provide wraparound services to street-entrenched people. HEART team members collect and share information about local homelessness and address the mental health, physical, cultural, and social support needs of people living outdoors.

The enormity of the street crisis may be beyond what the province is offering.

“These are promising investments, and I will be watching closely to see how these programs are implemented and acted on, and how the City can collaborate, in the coming weeks and months. I am concerned about the budget’s commitments to address homelessness,” Alto said. “While there is increased funding dedicated to HEART and HEARTH agreements, I am not confident that the allocated funding is enough or adequate.”

The Community Safety and Targeted Enforcement initiative will receive $67M to address repeat minor crimes offenses and to expand police academy seats. VicPD recently asked the city for 20 to 30 recruits. Langford is looking to add at least five more officers to its department this year.

While violent crime was down in Victoria by four points from 2023, non-violent crime was up by seven. In Langford, non-violent was up nearly 30 points from 55 in 2022 to 82 in 2023. In Saanich, both types were up roughly eight points. Sidney saw a drastic reduction in violent crime from 270 to 136 points in 2023, but only a 10-point increase in non-violent crimes.

Justice programs, the courts, and public safety will receive $168M.

Of the investment, Aldo said “I am uneasy with the apparent de-coupling of community safety from wellbeing. We must continue to invest in upstream and wellbeing focused interventions to address our ongoing community safety concerns.”

Last year, Restorative Justice Victoria received $3M from the province, representing $550K that will be released over the next three years. Its programs facilitate direct or indirect communication between victims and offenders in a collaborative way that can mend the harm that was done and address the causes of the offence and often involve alternative-measures programs managed by a community corrections office.

Health Care

In their budget, the NDP government has committed $4.2B over three years to improving health-care services and to support their growing demand. The funding will provide support for a full range of health assistance, including primary and acute care.

The new hospital, set to open in Cowichan in 2027, is the last piece of provincially funded health infrastructure on tap for Vancouver Island. There is no additional funding for infrastructure in the region in Budget 2025.

The government says it will prioritize increasing access to family doctors through the recruitment and training of more health professionals. It says it will increase funding over a full range of health care, including acute and long-term care, community care, mental-health, and addiction services.

“We are getting more internationally trained medical professionals off the sidelines and into our hospitals, caring for patients,” Bailey said in her afternoon speech. Strategies the province introduced in 2022 (Health Human Resource Strategy) to attract and retain physicians and other health practitioners will continue, the budget said.

Funding for home and community care for seniors will increase from $45M in 2025 to $163M by 2027. The funding allows seniors to safely remain at home longer.

Mental-health care is forecast to grow modestly from $35M in 2026 to $36M through 2028. In 2023, the province committed $3M to Integrated Mobile Crisis Response Teams (IMCRTs). The teams can include nurses, counsellors, child and youth counsellors, and police.

The 2025 budget includes $500M in new spending over three years for addiction services and treatment and recovery. However, missing from its allocations was the much-talked-about involuntary care. That omission surprised Johnathan Morris of the Canadian Mental Health Association BC, who said “It’s a very expensive way to provide care because it requires a lot of staff and a lot of buildings.”

Morris was concerned to not see those allocations in this budget and said the association would urge the province to ensure quality and oversight, making sure accountability and quality is there if they were to move ahead with it.

None of the 26 substance-use treatment beds that Health Minister Josie Osborne announced in January was in the CRD. The province funds 248 treatment beds through the Mental Health Association and said, at that announcement, more would open this spring. Mayor Marianne Alto has repeatedly called on the province for additional services to address the ongoing opioid crisis.

Finally, the budget will provide adults living with developmental disabilities $2B in assistance. These supports provide greater independence for people with disabilities and include income security, enhanced well-being, and participation in the community.

Funding for home and community care for seniors will increase to $163M from $45M by 2026.

Housing

“Our government is taking action with the province’s most ambitious housing plan ever,” Bailey said on Tuesday.

“Our residents have told council that we must do all that we can to address housing availability and affordability, rising cost of living, and community safety and well-being concerns,” said Alto in response to the budget. “While this provincial budget does deliver on a few key initiatives, I will continue to advocate for more supports for local governments to help us use every tool at our disposal to deliver on the needs of Victorians.”

The province announced it is investing $75M more in 2025/26 and $150M in 2026/27 to strengthen rental support for lower-income families.

Fulfilling one of Eby’s campaign promises, the province is expanding the Speculation and Vacancy Tax to 3% for foreign owners and untaxed worldwide owners and 1% for Canadian citizens and permanent residents. During the election, Eby promised the rate for Canadians would be 1.5%. The reasoning for not increasing the tax on Canadian citizens, the province said, is because, as residents, they already pay federal income taxes. According to the premier, only 1% of BC residents would be subject to the tax.

The province has pledged to provide $318M for faster middle housing development over the next three years through BC Builds. The program was initially introduced in 2024 and funded at $198M over three years. Despite the accelerated growth in the CRD, Tsawout First Nation (Saanichton) was the only regional community on the list of six the province said would benefit from the additional funds.

The provincial Rental Assistance program will increase the income threshold to $60K from $40K and increase the family supplement payment to $700/month from $400.

Business and Employment

“We must take care of the economy so we can take care of people. That is what we’re doing,” Bailey said.

According to the results of a Leger poll released on Wednesday, 39% of Canadians are fearful they will lose their jobs within the next 12 months due to the tariff war with the US. This at a time when 44% say they are living paycheque to paycheque.

The province’s new Film Tax Credits will mean extra incentives to attract Canadian productions and support jobs in the sector.

Last year, the founder and CEO of Victoria-based production company Alpha Select Production Service, Brenda Dondale, announced her plans to launch the $240M Alpha Select Studio project on Malahat Nation land. The project, initially called Malahat Studios, was raised as early as 2020. At the time of publication, Dondale had not yet responded to Capital Daily’s query for an update.

The province made the Interactive Digital Media Tax Credit permanent. The tax will increase to 25% from 17% in 2025 with the goal of the tech industry in the region. The tax provides support for game developers, educational software creators, and VR/AR innovators across the province. Victoria is a major player in the video game development sector. The industry employs hundreds of people and builds on the legacy of Sanctuary Woods Inc., a successful multi-media developer that launched in 1996 and was ultimately bought by Disney Interactive.

UVic now offers the Unity® Game Development Specialist micro-certificate that offers a foundation in crafting content for virtual environments.

As of 2022, 34% of BC’s GDP was generated by small businesses. An increase to the Small Business Venture Capital Tax Credit will help small businesses throughout the CRD grow. From 2025 to 2027, the budget proposes to increase the program’s annual maximum budget for venture capital tax credits to $53.5M from $38.5M.

The province will continue to fund the Integrated Marketplace initiative, announced as part of the Stronger BC Plan launched in 2022, to accelerate innovation in the province.

Last month, the premier announced 18 resource-sector projects throughout BC—estimated to be worth $20B—would be accelerated in light of the looming tariff war.

Torrance Coste, the executive director of the Wilderness Committee, said he is worried that the fast-tracking of extractive projects will result in cutting corners on environmental assessments, something that he said would be devastating to the environment. Bailey was asked whether additional, complementary funding would be made available by the province to support rigorous environmental assessments on those projects, and she referred the question to her “technical team.”

Tariffs strengthen patriotism for Canada and BC

In the wake of Trump’s tariff, leaders spoke to the need for British Columbians to come together and focus across sectors.

Eby said "The silver lining [of the tariffs] is that it has brought out a sense of pride, a sense of courage and a sense of solidarity among Canadians we haven’t felt in a long time.”

“There is nowhere else in the world I would rather be than in Canada and in British Columbia to face this tariff threat,” the premier said. “Together, we will ensure that Canada remains the true north, strong and free.”

Toward the end of her speech, Bailey enthused, “We are so lucky to live in the best province in the greatest country in the world. “We are standing strong for BC, working with communities to strengthen our economy where everyone can thrive.”

“Canadians must come together, support local, and collaborate with all levels of government to find solutions,” said Alto. Canadians are strong and resilient, and we will draw on that resilience in the coming months to face these challenges.”