B.C. taxpayers pick up the tab for public sector peace

The strike is over, but the real price of the deal is a heavier debt burden for years to come

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Let us raise a glass—not just in celebration, but in resignation. The British Columbia General Employees’ Union (BCGEU) has ended its eight-week strike, bringing liquor back to store shelves. But while the hospitality industry may be celebrating, taxpayers have far less to toast.

The dispute centred on wage increases amid rising inflation and cost-of-living pressures. The costly settlement will add billions to provincial spending, deepen the deficit and leave British Columbians footing the bill for years to come.

The hospitality industry was particularly hard hit when it could no longer assure customers of their favourite tipples. In B.C., the government controls liquor distribution, so the strike caused widespread shortages.

We can now plan for the holiday celebrations ahead—and that’s good news. Not so good, however, is the cost of the settlement to the B.C. government. It’s a bill all British Columbians will ultimately have to pay.

The government is preparing its next budget. Already deep in the red after years of deficits, one might have expected it to aim for a surplus, or at least balance the books, to slow its rising debt and mounting interest costs.

That’s not the case. Recognizing that deficits and the resulting debt are a problem, the best the government hoped for in its next budget was another shortfall of $10 billion to $12 billion. That plan would have allowed for a 3.5 per cent wage increase for civil servants over two years.

Public sector unions wanted more than double that, citing inflation and rising living costs. The settlement they won provides a 12 per cent increase over four years—now the benchmark for public sector bargaining in the province.

The deal covers about 33,000 government employees, making its financial impact significant. Civil servants and those who enjoy a drink are glad the strike is over, but those looking at the bigger picture have less to celebrate. The settlement will add $1.6 billion a year to government costs, reaching $6.4 billion by the end of the contract. Since B.C. is already in deficit and expects to remain so, this will all add to the provincial debt. Nor will citizens see any improvement in public services for the money. It’s simply paying existing civil servants to keep doing what they were already doing.

As individuals and families, we know that piling on debt can lead to trouble. But does government debt really matter? Perhaps not in the short term, when debts are manageable and credit ratings strong enough to keep interest rates low. Unfortunately, B.C., like so many other governments, passed that point long ago.

Governments, like any borrower, have to pay their debts; the only money they have comes from taxes. Instead of better health care, safer communities or improved infrastructure, more of our tax dollars are going to pay interest on old debt.

Interest costs rise as both debt and rates increase. As governments borrow more, their credit ratings fall, forcing them to pay even higher rates. It’s a downward spiral, diverting more and more public money from what citizens actually value to servicing the debt.

The options for fixing this are few and hardly cheerful. The government can raise taxes—never popular. It can cut spending, ideally while protecting core services. Or it can reduce its wage bill by laying off civil servants—an option public sector unions likely didn’t consider at the bargaining table.

British Columbians should be aware that the long-term costs of ending this strike far outweigh its short-term relief. Few of us expect our own wages to rise by 12 per cent over the next four years, nor did we see the 14 per cent increase public servants received in their last contract. Nevertheless, we’ll all be paying the price for this agreement long after the glasses are empty.

Dr. Roslyn Kunin is a respected Canadian economist known for her extensive work in economic forecasting, public policy, and labour market analysis. She has held various prominent roles, including serving as the regional director for the federal government’s Department of Employment and Immigration in British Columbia and Yukon and as an adjunct professor at the University of British Columbia. Dr. Kunin is also recognized for her contributions to economic development, particularly in Western Canada.