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.
What will $48 Trillion get you?
The strong correlation between energy use, economic growth (GDP) and improving standards of living is well documented. All societies that have significantly improved quality of life have relied heavily on energy and energy systems to do so.
Finlayson: The New Canadian Pecking Order (Troy Media)
Canada’s economic pecking order is changing, at a pace that raises questions about the country’s economic future as well as the sustainability of current federal-provincial fiscal arrangements. The picture is summarized in the accompanying table. It shows where the six most affluent provinces rank on three common economic metrics: output or real gross domestic product (GDP) per person; average weekly earnings for people holding payroll jobs; and labour productivity in the business sector. Note that the data for the four bottom ranked provinces – Manitoba, Nova Scotia, New Brunswick, and PEI – are not reported in the table.
A Note on Business Tax Competitiveness in British Columbia
It’s slightly more than one year since BC scrapped the Harmonized Sales Tax (HST) and returned to the former Provincial Sales Tax (PST) as the main tax on “consumption” in British Columbia. Now is therefore an opportune time to step back and assess the broader business tax structure and its impact on BC’s attractiveness as a place to invest and do business. This issue of Policy Perspectives considers several features of the tax system that impinge on business investment, expansion, and job creation. We do not examine the taxes paid by households – the focus here is on taxes that apply to enterprises and business activity.
On the Size Rankings of National Economies – and Where Canada Stands
The World Bank has just released updated estimates of the size of all national economies for which reliable data could be collected. A much remarked finding of the Bank’s new report is that based on one set of projections, China will soon overtake the United States as the world’s biggest economy.
D'Avignon: Livelihoods, lifestyle depend on stable supply of industrial land (Vancouver Sun)
Economic forecasters predict an additional million people will live in the Metro Vancouver region by 2040. That’s a population 40 per cent larger than today, and the people will all need housing, goods, retail and other services as well as government-funded services such as education and health care.
Population growth means we need to plan now to have the investment, resulting jobs and infrastructure to support these additional families and enable the region’s economy to grow and generate the revenues required to pay for publicly funded services.
One key challenge is to institute better planning and co-ordinated action to support the efficient movement of goods important to our daily lives, as well as to the foreign customers to whom B.C. and other western Canadian provinces export resources and other products through the Greater Vancouver Gateway.
In 2013, BC's economy was stronger than estimated
According to figures recently released by Statistics Canada, BC’s economy grew by 2.0% in 2013. Considering that prior to the official data being released the consensus estimate was that economic growth would come in at 1.4% in 2013, the above-expectations 2% expansion looks pretty good. In a historical context and relative to other provinces, however, BC’s economic performance was more on the modest side. Over the past decade and a half, real GDP growth has averaged 2.4% so 2013’s gain was a little subpar. And in comparison to other provinces BC ranked fifth among the ten provinces.
Finlayson: Rebound in global trade augurs well for B.C.'s economy (Troy Media)
Economic growth has been tepid in B.C. in the past two years, with inflation-adjusted gross domestic product (GDP) eking out an average annual gain of barely 1.5 per cent. But the picture should brighten over 2014-15, as consumer spending strengthens, some momentum returns to the job market, and the province’s export shipments continue to expand.
The latter factor – stronger export growth – will be particularly important in creating a more positive economic environment. According to the latest forecast from the World Trade Organization (WTO), the volume of global trade is on track to increase by 4.7 per cent this year, followed by a 5.3 per cent jump in 2015. This represents a significant turnaround from the sluggish 2.2 per cent annual pace recorded during 2012-13. It’s also good news for the thousands of B.C. companies involved in selling various goods and services to foreign customers.
Should We "Green" Gross Domestic Product?
What exactly is GDP, or gross domestic product? Where did it come from? Why is it important? Does it measure what we want it to? How might it be improved to provide a more comprehensive measure of human well-being?
BC's growing orientation towards Asia
The ascent of China and other Asian countries more generally is transforming the global economy and reshaping trade patterns. The extent of this shift is exemplified by the fact that last year China overtook the United States to become the world’s largest trading country. This historic reorientation of trading patterns is certainly being felt here in British Columbia. BC’s merchandise exports to China have soared over the past decade, rising from just over $1 billion to $6.6 billion last year. Other Asian countries are also buying more BC products. Collectively, Asia Pacific countries now account for as big a share of BC’s exports as the United States, despite the natural trading advantages that BC has with the US – geographic proximity, a common language, similar institutions and business practices, a comprehensive free trade agreement (NAFTA) and a long history of close commercial and people-to-people ties.
Women, Work and the Economy
In Canada and British Columbia, males and females are more or less equally represented in the total population (50% to 49%), and the picture is broadly similar in the labour force (52% men and 48% women). However, females occupy a disproportionate percentage of part-time jobs, at 65%. At the same time, females now receive 60% of all post-secondary degrees, diplomas and certificates awarded by universities, colleges and technical institutes. Even so, on average women earn only ~68% of what male workers do, while having a life expectancy of 83 years – four years more than males. What does this say about the lost opportunity for the Canadian and BC economies?
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.
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.
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.
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.
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.
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?
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.
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.
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).
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.