10/30/2026
British Columbians have given Lorne Doerkson’s BC Conservatives a majority government. While Premier Doerkson now has a mandate to govern for four years, he has a difficult task to rebuild the province’s fiscal and economic health after years of chronic deficits, tax increases and poor economic results.
Fortunately, Doerkson can learn how past B.C. governments have overcome similar circumstances. Specifically, he could look to the fiscal reforms implemented by Gordon Campbell’s government during the early 2000s.
When Campbell was first elected premier in 2001, he inherited a fiscal and economic mess. B.C. had suffered a decade of economic stagnation where living standards (measured by per-person GDP) barely budged. Moreover, the after-tax income per person in the province had dropped 5.9 per cent from 1990 to 2000.
The undisciplined fiscal policy approach of previous governments was the biggest contributing factor to this period of economic stagnation. Years of rapid spending increases, persistent deficits, substantial debt accumulation and high tax rates on businesses and workers led the province’s economy to a lost decade.
Soon after taking office, the Campbell government reduced the province’s business tax rate from 16.5 per cent to 13.5 per cent (and later cut it further to 12.0 per cent), lowered every personal income tax rate by an average of 25 per cent, and eliminated the economically damaging corporate capital tax. As a result, B.C. went from having the second-highest tax rates on businesses and high-skilled workers among the provinces to some of the lowest tax rates in the country.
While the government implemented these tax reforms, it simultaneously worked to balance the provincial budget. Premier Campbell slowed growth in program spending to below the rate of inflation plus population growth, and froze spending in the health and education ministries for three years while reducing spending in other departments.
This spending restraint allowed Victoria to balance the provincial budget in three years whilst delivering meaningful tax relief. The Campbell government was also able to string together five consecutive budget surpluses from 2004/05 to 2008/09.
*Due to a change in accounting methods, data from 1998/99 onward are not directly comparable with earlier years in Canada, Department of Finance (2025). However, these years are provided to illustrate the persistent nature of deficits during the 1990s.
Source: Canada, Department of Finance (2025)Get the dataDownload image
Altogether, these changes helped improve B.C.’s attractiveness to high-skilled workers, businesses, investment, and critically, entrepreneurship. And the economic fortunes of B.C. changed considerably.
The province shifted from having the lowest per-person GDP growth among the provinces between 1997 and 2001 to one of the fastest-growing economies in the country between 2002 and 2006. A study published by prominent economists Bev Dahlby and Ergete Ferede estimated that British Columbians would see their living standards (inflation-adjusted per-person GDP) increase by more than 25 per cent because of the tax cuts.
The Doerkson government is left with a major clean-up job today that resembles the minefield the Campbell government stepped into two-and-a-half decades ago. The B.C. economy has grinded to a halt with some of the slowest growth rates in the country. Statistics Canada estimates the province has lost more than 60,000 private-sector jobs this year alone and the typical B.C. worker is now poorer than workers in every U.S. state including the poorest states such as Mississippi and Louisiana.
Provincial finances are a colossal mess. Before the election, the Eby government projected it would run the province’s largest deficit on record this year at $13.8 billion. And the B.C. government is on track to accumulate debt faster than any other province or state in North America. Moreover, tax increases have taken money out of the wallets of B.C. families while the province is markedly uncompetitive on taxes for businesses and high-skilled professionals and entrepreneurs.
And while the BC Conservatives have promised to reduce personal income taxes by about $1,000 per British Columbian taxpayer by increasing the amount of income (from roughly $13,000 to $32,000) British Columbians can earn before they start paying provincial income tax, this proposed tax cut won’t solve the province’s competitiveness issues. All the current personal income tax rates will remain.
Given the similarities between B.C. today and B.C. during the early 2000s, the Doerkson government should emulate the fiscal reforms of the Campbell government. Specifically, it should reduce personal and business income tax rates, reform the provincial sales tax to avoid taxing investment, and rein in spending to balance the provincial budget within its four-year mandate.
Following the Campbell government’s playbook would inject money into the provincial economy, spurring innovation, creating jobs and increasing wages for workers. British Columbian families would keep more of their hard-earned money. And the province would become a more attractive destination for high-skilled workers such as doctors, engineers and entrepreneurs—all of whom contribute greatly to the economy. The Doerkson government must seize this opportunity if it wants to turn B.C.’s fortunes around.
This blog post is part of a post-election series outlining reform opportunities for the new British Columbia government.
