Philip Hochstein, of the Independent Contractors and Builders Association of B.C., supports the government's plan to spend $14 billion in infrastructure to stimulate the economy. (CBC)

B.C. Finance Minster Colin Hansen says the province has not escaped the global financial crisis, despite signs of recovery in the economy — and his new budget is still only getting cautious support from the business community.

"With this budget we are continuing to steer this province in the right direction. We are moving toward a new decade of growth and prosperity, said Hansen as he rose in the legislature to present his budget on Tuesday afternoon in Victoria.

His ministry still expects the B.C. economy to shrink by 2.9 per cent in 2009, Hansen told the legislature as he tabled his first budget update since the May election.

While critics reacted immediately to the budget, saying the government failed to spend enough to protect key services such as health care and education, many representatives of B.C.'s business community supported the government's efforts to rein in the deficit while stimulating the economy.

Mark Startup, the president of Retail B.C., said consumers will adapt to the Harmonized Sales Tax that will be rolled out in July 2010 as some items become more expensive, but overall prices will decline as businesses absorb the tax savings.

"We have a fairly steady recovery going on in B.C. since January of this year, and so if consumers understand that there will be more discretionary spending dollars in their pockets, that may mitigate some of the negative consequences of the HST," said Startup.

"Consumer confidence is the fuel that drives retail and this budget today should boost consumer confidence, so Retail B.C. gives it a thumbs up," said Startup.

Philip Hochstein, of the Independent Contractors and Builders Association of B.C., said he liked the plan to include more than $14-billion in infrastructure spending to stimulate the economy in upcoming years.

"The increased spending on infrastructure is very prudent by the government. They are going get tremendous value for their construction dollars," said Hochstein.

But Hochstein also felt the government could have done more to cut funding in other areas and bring down the deficit.

"There was a big fiscal crisis and I don't think the government used that opportunity to look more closely at all the services they provide, and looked for a way to make government smaller. They should have used the crisis to tighten their belt much more than they did," said Hochstein.

Maureen Bader, the B.C. director with the Canadian Taxpayers Federation said even with the HST, most taxpayers will see more money in their pockets as a result of the income tax cuts in the budget.

"The low income rebate on the HST is quite significant," said Bader. "Income tax reductions get government out of our pockets, leave us free to spend our own money how we choose, and improve the incentives to work, save and invest."

But Badder was also critical of the government for not cutting spending.

"The biggest problem with this budget is the deficit is spiralling out of control, and the reason for that is because the government is not bringing spending under control. Their spending is going up by about five per cent this year, and that's coupled with about a two per cent reduction in revenue," said Bader.

Deficit undermines credibility: Plecas

Former Social Credit deputy minister and political commentator Bob Plecas said the B.C. Liberal Party has undermined its political credentials by running the biggest deficit in the province's history.

"For years, they said that the NDP couldn't manage anything — that they were poor managers of the economy and government finances. And here we have got today the Liberals presenting a budget with a deficit of $2.8 billion," said Plecas.

"If you are really serious about balancing a budget, do you announce tax cuts, do you announce a new program for kindergarten?" said Plecas.

The deficit is now forecast to be more than five times larger than the half-billion deficit the Liberals promised during the provincial election campaign, Plecas pointed out.