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.
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.
Thinking Through the Economic Consequences of Higher Taxes
As policy-makers in various jurisdictions consider options to generate more revenue by raising tax rates, instituting new taxes, or modifying existing tax rules, it may be useful to re-consider the economic consequences of following this path.
A Decade by Decade Review of British Columbia's Economic Performance
By historical accident, the last two new governments to take power in British Columbia did so at the start of new decades: the NDP in 1991, and the Liberals in 2001. Not surprisingly, it’s become popular to argue that one party’s ability to manage the economy was shown to be better than another’s, based on which decade apparently produced the best overall economic outcomes. The Business Council of British Columbia has prepared an analysis of key economic indicators in British Columbia over the 1980’s, 1990’s and 2000’s to provide more data and gain greater insights into longer-term trends. Also, and of particular importance, we examine per-capita measures of economic activity, which take account of changes in population. Lastly, in this report we compare BC’s economic record to that of Canada as a whole. Because world economic conditions tend to affect BC and Canada similarly, determining how BC did relative to the rest of the country can provide a better sense of the extent to which the province capitalized on the global economic conditions of the day.
Submission: 2013 Provincial Pre-Budget Submission
The Business Council of British Columbia submits preliminary advice on the 2013 provincial budget to the legislature's Select Standing Committee on Finance and Government Services.
Advisory Council Announced for the BC Agenda for Shared Prosperity -
12 civic leaders from across British Columbia's social and economic sectors to guide process
October 11, 2012 (Vancouver, BC) - The Business Council of British Columbia and the BC Chamber of Commerce announced today that a group of 12 respected and civic-minded British Columbians have agreed to sit as members of an Advisory Council to the recently announced BC Agenda for Shared Prosperity. The Council will play an important oversight and commentary role within the BC Agenda initiative which aims to establish greater connectivity between the province’s economic developments and the interests and opportunities of British Columbians.
Quarterly Update: Impact of Slowdown in Asia Showing UP in BC Exports
In our summer 2012 economic update, we held our forecast for BC’s economy to grow by 2% for the year, citing the fact that a slight improvement in the domestic economy would likely offset the impact of a somewhat weaker global economy on the province’s export sector. While recent developments in the housing market prompt some concern about the resilience of the domestic side of the BC economy, elevated activity in non-residential construction is providing a boost to overall spending. Recent data also paint a mixed picture for BC’s exports. The slowdown in Asia is already showing up in BC’s exports, but shipments to the US are gradually recovering.
While it is a close call, as shifting domestic and external growth drivers are largely offsetting, the softer economic outlook for Asia has convinced us to trim our BC GDP growth forecast this year to 1.9% from 2%. Having already cut the outlook for 2013, and anticipating that China’s stimulus efforts will have some traction, we are leaving next year’s growth projection for BC unchanged at 2.2%.
Key factors in impacting BC’s economic outlook:
- The value of BC’s exports to China is down 3.7% year to date
- Excluding natural gas, exports to the US are growing at their fastest pace in seven years
- Retail spending in BC is up 3.9% year to date
- The number of homes in BC sold through the MLS system is down 25% from year-ago levels, average price of a home sold is off by 9%
- Non-residential construction is back to peak, pre-recession levels seen in 2006/2007
A Snapshot of British Columbia's International Exports: Commodities (Still) Rule
The latest issue of the Business Council’s economic newsletter, Policy Perspectives, provides a snapshot of British Columbia’s international exports over the last decade. Resource based products as a share of total exports have increased from 76% in 2002 to 80% in 2011.
- Metallic minerals and energy products more than doubled their share of the composition of BC’s exports with coal, equal to one fifth of the province’s merchandise exports, being a significant contributor to the overall increase
- The value of BC”s wood product exports dropped from $9.3 billion in 2002 to $5.7 billion last year, however with a US housing recovery and the development of new offshore markets in Asia, wood products are set to rebound in dollar terms
- With 80% of BC’s workforce in the service industry, the export of services to international markets is often overlooked. Canada ranks among the top ten global service exports and while there are significant limitations in the available data on services trade at the provincial level, estimates suggest that this could be as high as 20-25% of BC’s international exports
Maintaining a competitive environment for investment and economic development across our key resource sectors – and primary export industries - is critical to BC’s future economic well-being.
Finlayson: Emerging markets the defining characteristic of our age
At a time of slowing global growth and considerable uncertainty about the economic outlook, it is easy to lose sight of the longer-term trends that are re-defining the international marketplace. The most far-reaching such trend is the rise of emerging markets in the world economy. Emerging economies include all of Africa and Latin America, and Asia apart from Japan, Singapore, South Korea, Australia and New Zealand. Most of the states that comprised the former Soviet Union are also classified as emerging economies, along with Turkey and the Middle East (except Israel). Emerging markets currently account for 45 per cent of world consumption – a proportion that continues to edge higher – and they have driven the lion’s share of global economic growth for the past decade. By 2030, upward of 60 per cent of total world-wide spending will be occurring in countries now labeled as emerging markets.
Business Council of BC and BC Chamber of Commerce Launch New Policy Initiative: BC Agenda for Shared Prosperity
The BC Chamber of Commerce and the Business Council of British Columbia have launched an innovative new policy initiative designed to take a fresh look at the economic and social development issues affecting the prosperity of British Columbians called the BC Agenda for Shared Prosperity.
D'Avignon & Winter: BC Agenda for Shared Prosperity
Too often when British Columbians hear the term 'prosperity', the belief is that the rich are simply getting richer and the poor poorer. In fact, in a recent survey commissioned by the Business Council of British Columbia found 84% of British Columbians believed this to be true. While the reality may not be quite this stark, there is no question that many BC families have accumulated higher levels of debt and are under increasing financial pressure in their day-to-day lives. Why should BC businesses care about this widely held sentiment in BC?
Jock Finlayson: Time for a reality check on financial market returns
For investors and savers, today’s financial environment must rank among the least rewarding in half a century, if not longer. In the major advanced economies – the US, Canada, Japan, the UK, and most of continental Europe – the “policy” interest rates set by central banks are at or near all-time lows. This translates into almost non-existent returns for savers who squirrel away money in bank accounts, GICs, and money market funds.
The same is true for the buyers of government bonds – ten-year government bond yields in Canada and the US now hover under 2 percent. With inflation projected to be at or above 2 percent, this means investors in government bonds who hold to maturity are on track for negative real (that is, after-inflation) returns. Despite this counterintuitive picture, there is no lack of demand for the sovereign debt of credit-worthy issuers.
BC More Than Holding Its Own Amid Global Economic Turbulence
At a time of pronounced global uncertainty, BC's economy continues to grow at a decent pace and to outperform many other North American provinces and states. Although there are significant downside risks, BC's economy remains quite resilient with a rapidly shrinking deficit, an increasingly diversified export sector and steady population growth.
Over the 2010-2011 period, BC’s real economic growth averaged 3% - the fourth strongest in Canada and among the top jurisdictions in North America. Although growth will ease over the coming 18 months, this resilience will help to sustain provincial economic activity and keep BC in a relatively strong position even in the face of weaker international conditions.
The Business Council's mid year economic review and outlook anticipates that BC’s economy will grow by 2.0% for 2012 and 2.2% for 2013. Relative to our January outlook there is no change in the forecast for this year, but we have trimmed our growth projection for 2013 due to global turbulence and a slower local housing market.