BC Economy Droops as New Era, “globalization” Take Effect

The Liberals’ “New Era” is upon us, but the promised prosperity has so far not materialized, as BC’s economy spirals downward.

“None of the government’s initiatives have stimulated the economy, and some have made things a lot worse,” says David Fairey, senior economist and director of the Trade Union Research Bureau. “Unemployment is up again, and BC is dead last in Canada for wage increases.”

He says the Liberals, who promised in the last election a revitalized economy under their reign, have been damaging the very sources that create markets and jobs that stimulate economic activity: lowering wages, cutting public services and laying off workers. He also adds that the Liberals’ tax cuts, which they touted as the key to economic stimulus, have failed, largely because they were directed at the wealthy.

“They have cut public sector jobs, which has affected earnings and spending power; they lowered welfare rates; they brought in a lower minimum wage, and all this has a negative spin-off effect in the private sector as well,” he said. “These are all things that impact market demand.”

Fairey is also highly critical of the government’s move to have new ferries built offshore, at the expense of local businesses and jobs. “This is exactly what destroys our economic infrastructure,” he said. “They have gone off-shore, when local shipyards are quite capable of building these ferries in a cost effective manner. They aren’t saving any money. This is just to satisfy international capital interest at the expense of local business.”

Bill Tieleman, researcher and senior columnist for the Georgia Straight, reported a recent column, that key economic forecasters, such as the BMO Financial Group and the Chartered Accountants Institute of BC, normally friendly to the Liberal regime, have all been forced to lower their forecasts. They now say BC’s economy will perform even worse in 2003 than its overall abysmal showing last year.

“BMO says the B.C. economy will grow this year by just 1.5 percent, compared to 1.8 percent in 2002, giving it the worst performance of any province for the second year in a row and less growth than the national average of 2.2 percent for 2003,” he reports. “Before that, the Institute of Chartered Accountants of B.C., a group very friendly to the B.C. Liberal government, warned on May 26 that economic recovery is years away, not months as previously believed.”

The government’s recent move to de-link local manufacturing requirements to timber harvesting rights on crown land has raised the ire of resource communities, forestry workers, environmentalists and even many secondary lumber manufacturing firms, as mills have begun closing across the province, and forest companies are demanding wage concessions from workers as raw logs move out of the province. This has prompted workers in Port Alice and Hazelton to occupy their mills, both closed down this year.

"There are thousands of logging trucks pouring out of the north end of the Island and there are no manufacturing jobs. That's wrong. It's wrong-headed and it's wrong economically,” said David Coles, vice-president of the Communication, energy and Paperworkers Union’s western region. “This government has got to make a choice: either it's on the side of the people or it's on the side of the corporations.”

The government, however, is sticking to its policies, claiming the economy is improving, and its trickle-down economics are working. “We are on the right track,” Premier Gordon Campbell told a recent meeting of the BC Chamber of Commerce. “We are seeing a new economy taking hold in BC. We are leading the way.”

But Fairey and Tieleman say the numbers don’t show this at all.

“Other B.C. economic indicators clearly show just how far the province's economy is off track. There's the unemployment rate, which jumped half a point to 8.6 percent in May after rising almost another half point to 8.1 percent in April from 7.7 percent in March, according to Statscan,” Tieleman said.  “In March, B.C. retail sales showed the largest drop of any province, slipping 2.9 percent from the previous month. Also in March, the number of visitors entering B.C. via border crossings declined 8.2 percent since February, the third straight month of declining tourist visits.”

 

However, Fairey says national and international factors created by the so-called “global economy” are wrecking havoc on the BC’s economy. While the Bank of Canada is keeping interest rates low, which is seen as the main reason for the continuing spurt in housing sales and residential construction across the country, Fairey says this is accompanied by skyrocketing consumer debt loads due to mortgages. “People aren’t buying houses because they have more money,” he said. “Rather they are taking advantage of the lower interest rate to buy homes now before they go up again.

 

“Nationally, we have seen a continued slump in the economy due to a huge drop in tourism due to the threat of SARS, and low prices for manufactured goods in central Canada due to the slow US economy,” he said, adding that the Canadian dollar, which had been climbing until last week, when it took the biggest drop in over 25 years, is a factor.

 

For BC, the US softwood lumber tariff continues to hamper an industry already suffering under Liberal policies. Fairey says the recent NAFTA tribunal ruling against removing the tariff mean it will continue to push forest companies to expand raw log exports and close more mills.

 

Fairey wants to see Canada move to a more diversified and locally based economy that puts more emphasis on value added products and innovation. This way, US government and industry dictates would have less impact on our economy.