B.C. has lost it’s economic bragging rights.
New forecasts by the TD and RBC banks put B.C. at the very bottom of economic growth. People have slowed their spending, businesses are not investing and the construction and manufacturing sectors are in free fall decline.
So what’s happening to cause this?
British Columbians have slowed spending as the cost of living in B.C. has skyrocketed. Once called the “sunshine tax,” residents can no longer afford the highest real estate costs in Canada, the highest grocery costs, the (second highest) inflation in Canada (in May), or the “made-in-B.C.” carbon tax that is costing the most of any province in Canada, and giving the least back.
Yes, interest rates have had an effect, but not as much as the rental rates or inflation.
What are people doing? Leaving B.C. The outward migration from B.C. is the highest it has been in a decade. In Q2 and Q3 of 2022, over 23,000 people left B.C. and went to Alberta. This is not about jobs. Our unemployment rate is very low.
But a concerning pattern has emerged, private sector job creation in B.C. is languishing while public sector (government) payrolls continue to expand rapidly.
This situation paints a disconcerting picture for the future of our province's fiscal sustainability. Without a thriving and growing private sector, maintaining a burgeoning public sector becomes an untenable proposition.
And this is not just since COVID. This imbalance between private and public sector job growth is not a recent anomaly.
Between 2019 and the first quarter of 2023, private sector employment in B.C. saw a pitiful growth of only 1.2%, while the rest of Canada enjoyed a more robust increase of 6.6%.
So why aren’t businesses hiring or investing more? Some would contend that because the government has expanded so greatly, there are less people available to work in the private sector. The growth of the government public sector is massive in B.C. While government has grown by 30% over the last years, have government services increased or become more efficient by 30%?
That’s a rhetorical question because we all know the answer.
Others would look to the incredible pressures that B.C. businesses are under including: substantial hikes in payroll taxes like Employer Health Tax, increased corporate tax rates, a continually escalating carbon tax, and significant minimum wage increases.
It is possible that these tax and cost increases, mandated by government policy, are now curbing private sector hiring activity. Furthermore, we have seen a shift in government policy.
The government has forecast a 30% decrease in the forestry sector, which shows in the latest job numbers.
Manufacturing is plunging. These job losses are in direct response to government policy and have, so far, not been replaced by the private sector in other areas.
And that is why RBC puts our growth at last in the country. People are leaving, businesses are no longer investing, and costs have skyrocketed.
We stand at a critical juncture in B.C.'s economic journey.
Addressing these issues is not a task for the faint-hearted. It requires thoughtful analysis, proactive policy changes, and a commitment to nurturing a balanced economy that allows both public and private sectors to flourish.
You don’t have to look past your street to see the richness of BC. Our resources are growing all around us. Furthermore, we are entrepreneurial and innovative. But we have lost that edge.
If we don’t get it back, our economy will continue to shrink.
My question this week:
How do you think the we should turn around our shrinking BC economy?
I love hearing from you and I read every email. Please email me at [email protected] or call the office at 250-712-3620.
Renee Merrifield is the BC United MLA for Kelowna-Mission.
This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.