BC Business Matters:
HST Era Food Services Receipts Rose and Fell, But Stronger Growth has Followed the Return to PST
BC reverted back the PST system on April 1st of this year. It is still too early to determine what specific impacts this important change in tax policy will have on BC’s economy. Economists and public finance scholars are virtually unanimous in believing that shifting back to the PST will have negative long-term consequences in key areas such as business investment, productivity and the growth of real wages. However, the picture is a bit less clear from a shorter-term perspective.
One sector where the return to the PST may have a favourable near-term impact is the food services industry. This is because the HST raised the tax-inclusive price of meals purchased from food services establishments, whereas restaurant meals are not subject to the PST – meaning the retail price is lower for consumers. While it is still early, data on restaurant sales receipts are available through July of this year, providing a full quarter of sales figures under the reinstated PST. The graph below shows the total value of all food services receipts in BC (full service and limited service food establishments, drinking places and special food services such as caterers). The data are seasonally adjusted to better show short-term changes and trends.
Four Observations on Local Government Finances in BC
This week’s Union of BC Municipalities (UBCM) convention showcased a major new report on local government finances authored by a UBCM committee. Entitled “Strong Futures: A Blueprint for Strengthening BC Local Governments’ Finance System,” the report argues that the current municipal financing model, which depends in large part on property taxes to fund local services, needs to be overhauled. In particular, the paper advances a case that municipalities in BC should have access to more revenue sources – including revenue streams that are closely linked to economic growth, such as sales tax and even income tax. Local governments in BC, the paper notes, are “heavily reliant on the property tax, which neither grows with the economy nor distributes costs fairly” (p. 6).
British Columbia's Resource Sectors are the Foundation of a Diversified Economy
A review of BC Business Magazine’s Top 100 list of British Columbia companies by revenue for 2012 reveals the province’s economic mosaic, showcasing diverse organizations such as Telus, HSBC Bank Canada and Finning International. It also reveals the extent to which the foundation for British Columbia’s economic prosperity is our natural resource sector. More than 20 of the top 50 private sector companies are directly involved in mining, forestry or natural gas, and there are dozens more throughout the list which act as service providers to these core industrial sectors.
The Gender Gap
This commentary has nothing to do with the environment, or maybe it does.
Despite making up 51% of the global population, women are under-represented in overall economic participation by 40% and by 80% in political participation. Canada ranks 21st out of 135 countries on all measures of gender equality and we fell by one position between 2011 and 2012. We are 20th out of 135 countries in the number of women compared to men who are in the labour force and a disappointing 35th in wage equality. Women still only earn 73% of what men do in Canada (adjusted for similar types of work).
Why electricity rates have to rise - and why little can be done to reduce the impacts
For 50 years BC Hydro has been the jewel of BC's Crown corporations. A source of pride and a foundational source for much of the province's prosperity, BC Hydro provides an array of benefits to British Columbians – from comparatively low electricity rates to significant revenues for government. The tremendous benefits BC Hydro delivers underscore what can happen when big infrastructure planning is done right. However, such legacy assets operating in a dynamic, growing region such as BC eventually must be upgraded and augmented by new sources of electricity to keep pace with economic development and other changes. Failure to do so will result in the erosion of legacy asset benefits and, over time, an unacceptable degradation of the system along with a growing reliance on imported electricity.
Employment up slightly in August but still waiting for a sustained improvement
The August employment report contained a bit of good news for BC, but not enough to materially change the generally muted labour market conditions in the province.
Working Age People Drive Inter-provincial Migration
After many years of a net inflow of people from other parts of Canada, BC is now in a period of net interprovincial outmigration. As the graph below depicts, net migration tends to cycle up and down, largely reflecting relative economic strength and job opportunities. This is the fourth period of negative interprovincial migration BC has experienced since 1970.
New Census and National Household Survey Highlight Key Demographic Trends in BC
Statistics Canada has started to release data drawn from its 2011 census and a major National Household Survey which the agency undertook at the same time. The results confirm what most people already know: the population is aging, with the front-end of the baby boom generation having reached 65 in 2011; Canada’s society is urbanizing, as more of us are living in large and mid-sized cities; there are more one-person households, reflecting the high incidence of divorce as well as longer life spans; and the workforce and population are becoming more multi-ethnic, as immigration continues to shape the nation’s demographic profile.
All of these national-level trends are certainly evident in British Columbia.
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.
The Skills to Pay the Bills
BC’s post secondary education system is a source of both pride and frustration; thinking about the system can prompt a sense of either optimism or pessimism about the future. On the positive side, BC has a great mix of world class research universities and regionally diverse colleges and technical institutes among today’s 25 publicly-funded post-secondary institutions. The University of BC is consistently ranked in the top 30 in the world (of over 17,000 universities), and BC consistently compares favourably among Canadian institutions on key metrics that measure the quality and effectiveness of its universities. Overall, our post-secondary system has many attractive and in some cases even world-class attributes.
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.
Sovereign Wealth Funds: A Double-Standard in Canada?
June 5th marked the closing of the three-day Canada-Asia 2013 conference, hosted by the Asia Pacific Foundation of Canada, in Vancouver. The conference featured an array of panel discussions, plenary sessions, and networking opportunities—all focusing on how Canada should position itself with the emerging Asian economies.
During the final panel discussion, panelist Professor Khee Giap Tan posed a challenging question which, because of time constraints, was unfortunately cut short. He was critical of the double-standard between developed and developing countries with respect to Sovereign Wealth Funds (SWFs). He drew attention to the contradiction of how developed countries want unfettered access to markets and investment opportunities in developing countries, yet when investment flows the other way, developed countries often limit and scrutinize market access.
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?
Building Stronger Relations with Asia - a Strategic Imperative for Canada
For the past 10 years the Asia Pacific Foundation has conducted a comprehensive opinion survey of Canadians to elicit their views about Asia across a variety of topics, primarily economic. With the growing importance of Asia in the global economic context and deeper trade relations developing between Canada and Asia, BC and the West in particular, this opinion research provides important insights for policy makers navigating through complex public views on economic relations with Asia.
This year's research points to some disconcerting trends for those who, believe that Canada and BC need to build closer relations with Asia and the key countries in the region. If we are to benefit significantly from the 'Asian Century,' Canada must forge constructive and more extensive economic, cultural and political linkages with Asia
Le Nord Pour Tous: Quebec Pushing the Boundaries of Mining Development
Those familiar with mining development in Canada are all too conversant with the tricky juggling act of resource extraction. The demand for social and environmental responsibility, government royalties, and maintaining global competitiveness can all pull in different directions. Government leaders across Canada often pride themselves in having fostered a mining sector that is one of “the most efficient, effective and competitive in the world,” backed by a “world-class environmental protection regime” (Natural Resources Canada, 2013). But despite this optimistic picture, mining development in Canada is often a hotly contested policy arena. Look no further than the Federal government’s push for the rapid development of Ontario’s ‘Ring of Fire’, or the recently rejected coal mine in Comox, to get a flavour for the tug of war between vested interests.
Jobs, Income and Post-secondary Education: Some Key Facts
The current tough job-market facing many freshly minted university and college graduates is causing some people to question whether it still makes economic sense for young adults to pursue a post-secondary education. For the most part the answer is “yes.” The data indicate that those with post-secondary credentials generally do better in the job market and also have higher incomes over the course of their working lives.
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.
Willingness to Pay
The conversation of late in BC has been about energy and resource development with a “hair on fire” commentary from many quarters and a whole tranche of people who think energy and mining are two evil incarnate activities. Energy and the products of mining produce a vast range of goods and services that we take for granted and that have enabled a rising standard of living for billions of people. We have created some amazing technology and the ability, for the most part, to live a life that is quite comfortable (at least in developed countries), primarily because we have been able to harness energy in its various forms to do work and create things.
The challenging reality of global carbon intensity trends
For policy junkies, politicians and citizens interested in global energy trends and climate change issues, there is one resource that should be on everyone’s required reading list – the reports from the International Energy Agency.
In a policy arena that sees the solution side of climate discussions frequently lost in either inaccessible scientific analyses or passionate values debates that substitute beliefs for fact-based dialogue, the IEA provides a welcome array of carefully calibrated data and analysis of energy production and consumption trends. Using relatively easy-to-understand facts on global energy supply and demand, the IEA grounds its climate change analysis through the lens of real carbon output measures, which are then assessed against carbon output trajectories and the policy pathways required for a transition to lower carbon energy systems.