FINANCIAL
Catching up
B.C.'s economy has come a long way but we're not out of the woods yet
by Richard Rees, FCA
When the economy is on a roll it's easy to forget where we started from. Looking back on BC Check-Up reports from the late 1990s and early 2000s shows us a very different economic picture than what we're seeing right now. B.C. was not an economic leader, and often was not even a contender.
For three consecutive years-from 1998 to 2000-the province bled people, something that had not been equalled in the preceding 40 years. The low unemployment rate was not attributed to job creation (B.C.'s employment gains were the worst in the comparison), but to slowing population growth. While taxes were being lowered and incomes were going up in other jurisdictions, B.C.'s taxes rose and disposable income went down. Head offices fled for greener pastures and corporate profits were the worst in the study.
Fast forward seven years-people are coming back to the province and personal and corporate income taxes are among the lowest in the country. And in the 2007 BC Check-Up, B.C.'s growth statistics were at or near the top of the pack for disposable income, educational attainment, unemployment rate, real wages, job creation, R&D spending, employment in the sciences, and after-tax corporate profits.
However, while this year's Check-Up is mainly a good news story, we had a big hole to climb out of, and, in a number of key areas-like disposable income, educational attainment, R&D spending, and corporate profits, we remain below the national average:
|
BC |
CAN |
| Real personal disposable income per capita |
$25,194 |
$25,624 |
| Percentage of labour force with a post-secondary certificate/diploma or higher |
61.0% |
63.9% |
| Ratio of R&D spending to GDP |
1.24% |
1.68% |
| After tax corporate profits to GDP |
10.31% |
11.29% |
While B.C. is currently a leader in economic growth, that growth has not yet made us a national economic powerhouse. The gains we are making now are simply catching us up to where other provinces have been for almost a decade.
As we catch-up, we're not immune from new challenges that could cap future growth. Volatility in commodities prices and the current economic slowdown in the U.S. could impact our bottom line. In addition, record-low unemployment, robust job creation, retirements, and stiff competition from other jurisdictions are all combining to create the perfect storm of skills and labour shortages. In 2010 more British Columbians will be exiting the workforce than entering it, and over the next decade, the province will need 1.1 million new workers. While these issues are not insurmountable, they do demand our continued attention.
We've made excellent progress, but we are not out of the woods yet. B.C.'s growth needs to continue unabated for a few more years before we can rightly claim our place as an economic powerhouse on the national scene.
Richard Rees is the Chief Executive Officer of the Institute of Chartered Accountants of British Columbia.
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