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Economy

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.

 

Exportable Services: An Important Source of Job Growth for BC

More than three-quarters of all employed people in British Columbia are engaged in producing “services” rather than “goods.”  Services span a wide array of industry sectors, everything from retail and wholesale trade to professional services (engineering, law, accounting, architecture, etc.), scientific and technical services, transportation, financial services, accommodation and food services as well as services that are mainly delivered or at least largely funded by governments (public administration, education, and health and social services).   Many of these service industries loom large in the labour market.  Retail and wholesale trade, for example, together employ 350,000 British Columbians, another 200,000 or so toil in the broadly-defined education sector, 150,000 work in financial services, and 275,000 earn their livelihood by providing health-related services.

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Business Growth, Job Creation and Innovation

Canada ranks as one of the best places in the world to start a new business, according to an annual survey done by the World Bank. But the country does less well when it comes to encouraging enterprises to grow – and in fostering private sector innovation.

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Finlayson: Higher minimum wages not the best answer to reducing poverty (Troy Media and The Province)

Proposals to boost the minimum wage have been drawing attention on both sides of the Canada-U.S. border.

In January, U.S. President Barack Obama called for lifting the U.S. federal minimum wage to $10.10 an hour. Since 2011, several American states and cities have increased minimum wages in their jurisdictions.

In Canada, four provinces are raising their minimum wages in 2014 — Ontario, Quebec, Nova Scotia and Newfoundland. Ontario is taking the biggest step, hiking the minimum wage to $11 an hour and indexing it to the Consumer Price Index going forward.

Are higher statutory minimum wages an effective way to improve the economic well-being of low- to moderate-income workers and families? Will some businesses respond to escalating minimum wages by shedding jobs? These questions have been extensively studied by academic economists in the past decade. Overall, the research yields mixed results.

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Finlayson: Return to PST has hurt BC's competitiveness (Vancouver Sun)

April 1 marks the one-year anniversary of the return of the Provincial Sales Tax following B.C. voters’ decision in 2012 to scrap the Harmonized Sales Tax. It is a good time to reflect on the province’s competitive position in a world where many jurisdictions are aggressively seeking to attract private sector investment and the jobs and economic activity that come with it.

There can be no doubt switching back to the PST altered the business landscape in a way that left the province at a competitive disadvantage. That’s why virtually all economists supported the HST. The situation varies by sector, and not all industries have been hurt by restoring the PST. But most have been.

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Canada-South Korea Free Trade Agreement (CSKFTA) is Good News for BC

The conclusion of the protracted negotiations to establish a free trade agreement with South Korea is a positive step for British Columbia. South Korea is the fourth largest destination for BC’s merchandise exports (after the US, China and Japan), so improved access to its market will be helpful for a number of the province’s export industries. The agreement also lays the foundation for an expansion of services trade, business travel, and investment between the two countries.

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D'Avignon: British Columbians support resource exports (Vancouver Sun)

British Columbians, as well as potential investors, are too frequently confronted by headlines declaring B.C., and Metro Vancouver more specifically, are paralyzed by conflict over natural resource exports with supposedly profound opposition to development among a majority of citizens.

Is this really the case?

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BC's High Technology Exports: A Solid Base to Grow From

British Columbia is home to an economically significant and notably diversified high technology sector. A detailed overview of the sector is presented in the most recent British Columbia’s Technology Report Card 2012. It shows that the production of advanced technology goods and services now generates 6% of the province’s GDP and accounts for approximately 80,000 jobs. While this is lower than the GDP share in some other provinces, BC’s technology sector continues to expand faster than the economy in general. And it has been resilient in the wake of the 2008-09 recession and the rather sluggish economic recovery that followed in its wake.

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BC Needs to Encourage Small Businesses to Grow

Jock Finlayson's article, BC Needs to Encourage Small Businesses to Grow was published in this month's Chartered Professional Accountants of British Columbia publication CPABC in Focus.

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Investment Intentions in BC: A Pause Before the Boom?

Last week, Statistics Canada released its annual investment intentions survey results for the coming year (2014). Completed over the period of October through January, the survey gauges the near-term investment intentions of a large number of private and public sector organizations across the country, with a focus on planned investment activity in three areas: residential building, non-residential structures, and machinery and equipment (M&E).

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A Snapshot of Government Debt Across the Land

The start of the 2014 government budget season is an opportune moment to update the figures on accumulated public sector debt for Canada’s ten provinces as well as the national government.

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Presentation: Greg D'Avignon presentation to Social Sciences and Humanities Research Council Event: Imagining Canada's Future

Business Council president and ceo Greg D'Avignon joined with four other panelists to discuss the six future challenge areas identified through Social Sciences and Humanities Research Council's Imagining Canada’s Future initiative at The University of British Columbia on Tuesday, February 25, 2014.

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BC Budget 2014 - Balanced and Uneventful

Operating within a very tight fiscal framework, Finance Minister Mike de Jong tabled a budget on Tuesday that projects a small surplus for fiscal 2014-15, followed by larger surpluses in the two subsequent planning years. Given the limited fiscal maneuvering room, the Budget contained only a handful of modest spending measures and a few small tax initiatives. Notably, there was nothing major in the area of skills training.

While some commentators will be critical of the limited spending increases, we recognize the accomplishment of keeping the budget in the black without imposing significant tax increases – something few other provinces are managing to do. Running surpluses puts BC in a strong fiscal position, especially at this juncture of the business cycle.  The Business Council believes BC’s competitive position has eroded in recent years. Although fiscal circumstances prevented the government from cutting or restructuring taxes, this is an area the province will have to address in the future as some BC industries face challenges linked to the province’s move back to the antiquated Provincial Sales Tax (PST), while others are grappling with the steepest carbon tax in North America, skilled labour shortages, onerous municipal property taxes on industry, and steadily escalating electricity costs. 

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News Release: Business Council applauds budget for providing sound fiscal framework - Global competitiveness requires greater focus on skills training, efficient regulatory processes and effective tax structures

February 18, 2014 (Victoria, BC) – The Business Council of British Columbia applauds today’s provincial budget in which the government delivered on the commitment to keep the operating budget balanced and to manage the overall provincial debt, preserving BC’s Triple A credit rating. 

“As the province moves into surplus and focuses on realizing new economic opportunities, there will need to be definitive action taken to ensure both new development opportunities and ongoing business operations are more competitive,” said Greg D’Avignon, President and CEO of the Business Council of British Columbia. “This focus on competitiveness will need to encompass infrastructure, human resources, regulatory systems and taxation policies that enable success in a highly competitive world.” 

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Presentation: Greg D'Avignon Keynote Presentation to the North Vancouver Chamber of Commerce

The world has become more competitive since 2008-09 and BC is competing with countries all around the world to attract investment capital. Mr. D’Avignon gave an overview of BC’s economic reality and discussed why we need to start working more collaboratively, more effectively, and more competitively if we’re going to maintain the kind of lifestyle we want. - See more at: http://www.nvchamber.ca/events/Past_Event_Recap/keynote-breakfast-with-greg-davignon-bc-business-council-president-ceo#sthash.KmdOtLo7.dpuf

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Presentation: KPMG 2014 Federal Budget Presentation by Jock Finlayson

Jock Finlayson's annual post-Federal Budget presentation to KPMG and their clients.

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Federal Budget 2014 -
Following Through: No Surprises Federal Budget Moves to Surplus

Getting back to surplus remains the cornerstone of federal budgeting. With the deficit having swelled to more than $55 billion in the aftermath of the 2008-09 Great Recession and Financial Crisis, Finance Minister Jim Flaherty delivered a budget that has the government on the cusp of returning to the black. This is an admirable accomplishment, one achieved without any significant tax increases and involving a hefty dollop of restraint after spending had been ramped up during and after the recession.

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Finlayson: Three external developments that could affect Canada's economy
(Troy Media)

For Canada, what happens beyond our borders is often more important to our economic prospects than what transpires at home.  With that in mind, here are three things that Canadian forecasters and market analysts will be carefully tracking in 2014.

  • U.S. monetary policy: the end of quantitative easing
  • Europe returns to growth
  • Japan struggles to revive its economic engine

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BC Economy and Job Market to Gain Momentum Over 2014-2015

Against a more balanced and somewhat stronger global growth setting, BC’s economy should make progress in 2014, on the heels of a rather disappointing 2013. We expect the province’s real GDP to advance by 2.3% this year – solid, but not spectacular. By 2015, further improvements in the global economy and a substantial jump in capital spending in BC should push GDP growth above the 3% mark.

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News Release: BC's Economy and Job Market to Gain Momentum over 2014-2015
Broadly-based gains across many segments support growth in 2014,
LNG and related activity to fuel stronger growth in 2015

The Business Council of British Columbia today released its semi-annual BC Economic Review and Outlook publication for 2014, noting that it expects economic conditions to improve over the next two years.   This year, the Council forecasts that real (inflation-adjusted) gross domestic product (GDP) in BC will increase by 2.3%, a notable improvement from the 2013’s estimated 1.4% expansion.    In 2015, BC’s economy should accelerate further, with real GDP growing by more than 3%.

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The Upside of a Lower Dollar for BC

In early May last year the Canadian dollar was trading near parity with the US dollar. Between May and mid-October it fluctuated between 99 and 96 US cents per Canadian dollar.  In November the Loonie started on a more definitive downward trend and by early 2014 it had fallen sharply to about 91.5 US cents.  This relatively rapid decline hurts Canadian residents inclined to shop in the US, snowbirds and residents vacationing south of the border.  But on balance, the fall in the Loonie is good news for BC in an overall economic sense.

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