As trusted economists and policy advisors to business and government leaders, the Council relies on sound, evidence-based analysis to inform its policy recommendations. Through diligent tracking of BC’s economic performance, we help identify the opportunities and challenges the province must navigate in order to reach its full potential.
Exports, Skills and Incomes
Small open economies depend heavily on trade to stimulate growth, provide employment and sustain incomes. The development of competitive export-oriented industries is particularly important for small regional economies that, by definition, aren’t able to reap the economic advantages associated with having large internal/domestic markets. British Columbia is a good case in point.
Update on the BC Government's Financial Health
This week’s release of the 2012-13 Public Accounts provides a timely opportunity to review the provincial government’s financial position and the underlying trends in the public finances. Produced by the Office of the Comptroller General, the Public Accounts cover the financial activities of all provincial Ministries and Crown agencies on a consolidated basis. It is the best available source to follow what is happening with the government’s activities in the area of spending, revenues, borrowing and debt management.
What does the new document show?
All Quiet on the Inflation Front
Statistics Canada’s latest update on the Consumer Price Index (CPI) confirms that inflation remains muted across the country and all but invisible here in British Columbia. This may come as a surprise to those convinced the cost of living is climbing, but an examination of the full array of consumer purchases indicates an absence of apparent upward pressure on the overall price level.
Mid-Year Update: BC Economy Slows in 2013, Rebounds in 2014
Against a subdued global backdrop and fairly soft domestic economic conditions, the near-term growth outlook for BC has been trimmed. We now expect real GDP to increase by a sub-par 1.6% in 2013, which is still a bit better than the BC government’s 1.4% projection in its recently tabled budget. At the start of the year we thought that a mid-year pick up in exports and some additional investment spending would lift the province’s GDP growth rate above the 2% mark. While an improved external economic setting will eventually translate into stronger growth for BC, the timing for this positive turn has been pushed back.
Finlayson: Get Ready for an Underperforming Canadian Economy (Troy Media)
It’s hard to believe, but true: Canada and the United States are now entering the fifth year of economic recovery from the recession that hit both countries over 2008-09.
In the United States, the downturn first took hold in late 2007 and extended through the next 18 months. After enduring its worst slump in 50 years, the American economy officially stopped shrinking in June 2009. Since then, the U.S. has enjoyed 15 consecutive quarters of growth in inflation-adjusted gross domestic product (GDP), although the expansion has been sluggish by historical standards. Indeed, America’s economy has been growing at barely half the pace typical of previous recession-recovery cycles. Moreover, per capita GDP has yet to return to its 2007 level, and employment remains well below its pre-recession peak.
Good News: Canada (and by extension BC) is Sustainably Competitive
Whether we like it or not, today the wealth of a nation is primarily measured by its Gross Domestic Product, which is an annual summation of the value-added of the goods and services produced within a country's borders in a specific time period. However, what about the value of things that are uncounted in GDP but still integral to the functioning of our economic, social and governance systems?
Surge in Cross Border Shopping Weighs on Retail Sales in BC
The additional consumer purchasing power stemming from the stronger Canadian dollar, recent increases in the duty-free exemptions, and the large gap between gas prices in Metro Vancouver and Washington state have all contributed to a recent jump in cross-border shopping.
British Columbia should continue to focus on Building Connections with Asia
More so than other jurisdictions in Canada, BC’s economy is being reshaped by Asia’s influence on the global stage. The sheer size of the population in the region suggests that BC should be doing everything it can to continue to leverage the economic benefits coming out of Asia.
Finlayson: The Education Wage Premium (Troy Media)
The past two years have witnessed considerable public and media interest in the issue of inequality, as evidenced by the emergence of the “Occupy Wall Street” movement in the United States and its counterparts in several other countries.
Many studies confirm that income inequality has grown in many affluent nations. The trend is especially pronounced in the United States, where the richest 10 per cent of households have almost six times as much income as the bottom 10 per cent. The ratio is lower in Canada, but income disparities have widened here as well. And in many advanced economies a rising share of all income seems to be accruing to the top 1 per cent of earners.
2013 Federal Budget: A Combination of Following Through, Fiscal Restraint and Some New Funding for Priority Areas
Against a backdrop of softer economic conditions, Finance Minister Jim Flaherty tabled a budget still centered around achieving the Conservative government’s 2015-16 balanced budget target. To meet that objective, the Budget imposes meaningful but not draconian spending restraint. In turn, this left little capacity for much in the way of new spending or tax relief. The Budget does, however, direct additional funding to a few priority areas such as skills training and infrastructure investment.
Submission: Letter to Vancouver City Council re Coal Export Expansion Motion
The Business Council is disappointed that a majority of Vancouver Council voted to adopt the motion on March 13. This submission outlines the views summarized during the Business Council's appearance before City Council's Transportaion, Planning and Environment Committee.
The Different Faces of Government Debt in British Columbia
Last month’s provincial budget provides updated projections of the government debt that has built up over time in British Columbia. Some media reports on the budget referred to the “accumulated government deficits,” while other reports mentioned the “tax-supported debt” or the “total provincial debt.” What do these different debt-related terms actually mean?
Pull Back in Resource Sectors Tempers Overall Capital Investment in BC
The release of Statistics Canada's annual Public and Private Investment survey indicates that capital investment in BC is poised to edge higher in 2013. In aggregate, businesses and government plan on investing $46.9 billion on new residential and non-residential structures, industrial sites, drilling activity, machinery and equipment and all other new capital outlays this year. This represents an increase of 0.9% over 2012. Looking at only the non-residential segment, planned investment is slated to fall slightly (by 0.4%) this year. Despite the slumping housing market, BC developers who responded to the survey reported that they intend to boost residential investment spending by 3.6% this year. There is probably some downside risk to this projection given the ongoing slowdown in housing market activity.
Finlayson: How we cope with Metro Vancouver's Pricey housing (Vancouver Sun)
“How can people possibly afford to live in Vancouver?” That was the question posed to me by an economist friend from Ottawa, following the latest release of the Royal Bank of Canada’s housing affordability report which — once again — revealed that Metro Vancouver easily ranks as the most expensive place in the country to own a home.
The bank’s number-crunchers measure the proportion of “median” pre-tax household income required to service a mortgage and cover property tax and utility charges on a standard two-storey home, a standard detached bungalow, and a standard condominium, all at current market prices. Here, the term “standard” implies a typical residence of modest space and quality, rather than any type of luxury accommodation. It is further assumed that the homeowner contributes a 25-per-cent down payment and takes out a 25-year mortgage at a fixed five-year rate.
Understanding Economic Development and Reconciliation with First Nations in BC: The Case for Accelerating Economic Engagement
Jurisdictions around the world have engaged in a wide variety of initiatives to reconcile the rights of indigenous peoples within post-colonial government and market economies.
As a province largely without ratified treaties, British Columbia has, by practical and legal necessity, developed a relatively unique set of public and private sector tools to facilitate natural resource development activity on the land base.
In this issue of Policy Perspectives, we highlight the diversity of initiatives underway in British Columbia to advance economic development on the land base. The paper makes the case that there is a promising, albeit challenging, opportunity to move progressively down a path of economic and social reconciliation that will provide tangible benefits to both First Nations and the province as a whole.
A 'Balanced' but "Challenging' Provincial Budget
In his inaugural budget, BC Finance Minister Mike de Jong delivered on the government’s long-standing promise to balance the operating budget by fiscal 2013-14. While some additional funding is provided for health care and a smattering of small-scale initiatives in support of the government’s Families First agenda, meeting the balanced budget target overshadowed all other aspects of the budget. Eliminating the fiscal shortfall of more than $1 billion on schedule required a combination of tax increases, provincial asset sales, and a hefty dose of spending restraint.
BCBC Acknowledges Government’s Commitment to Fiscal Prudence in 2013 Budget
-Province must renew focus on competitiveness to attract investment and create jobs as priority in post-HST context-
The Business Council acknowledges the province’s disciplined management of expenditures in the years leading up to the 2013 Budget and as projected in the new three year plan, and endorses the government’s efforts to maintain fiscal responsibility through challenging economic times.
“BC’s current fiscal situation is comparatively good – better than most other provinces like Alberta and Ontario, where governments have been less successful in controlling spending growth,” said Jock Finlayson, Executive Vice President and Chief Policy Officer, Business Council of British Columbia. “However, our support for this Budget is tempered by the government’s decision to hike taxes and fees in a number of areas. This is an inopportune time to be adding to the tax burden facing business and industry in British Columbia. We are concerned that this negative signal could become a trend. Further erosion of the province’s overall competiveness will have negative longer-term implications for jobs and the economy.”
BC Poised for Small Bounce in Economic Growth in 2013
In the latest BC Economic Review and Outlook, the Business Council of British Columbia upgrades our economic growth forecast for 2013 to 2.3%, projecting a stronger year than 2012 which is estimated to have grown at 1.9%.
Although the economy slowed in the latter part of 2012, we anticipate the provincial economy will gain some momentum in 2013 with positive economic growth projected for our major export markets including China and the United States and strong non-residential construction anticipated in British Columbia.
Jock Finlayson: Canada can't count on getting much of an economic lift from "abroad" (Troy Media)
As Canadian consumers and businesses gear up for 2013, they should be anxiously watching developments in the United States, Europe and Asia. Canada’s prospects over the next 12 months depend heavily on how events unfold in these regions, which account for the lion’s share of international economic activity.
Europe: Collectively, the 17 nations that comprise the eurozone, with its common currency and single monetary policy, are in recession and remain vulnerable to further flare-ups of the banking and sovereign debt crises that have plagued the region for more than two years. The biggest risks lie in Greece, Spain and Italy, which are all dealing with contracting economies and persistent worries over government debt. The United Kingdom, which is not part of the common currency but has extensive commercial linkages with the eurozone, is struggling to avoid a triple-dip recession. Since Europe as a whole drives more than one-fifth of global consumption, economic conditions there matter to other nations, including Canada.
Canada's Economic Immigration Program to be Transformed
The Conservative government is embarking on a major overhaul of Canada’s economic immigration program. The new approach will give employers a greatly elevated role in the immigration process and hopefully reduce lengthy delays that have long plagued the immigration system. If it runs as anticipated, the revamped program should help deliver skilled immigrants to sectors and regions of the country where they are needed – and do so faster.