The Columbia Journal
P.O. Box 2633 MPO,
Vancouver, British Columbia,
Canada V6B 3W8
BC’s economy still lagging, despite Outlandish Claims
Despite a recent media advertising blitz by the Liberal government and
business elite claiming BC is leading the country in economic recovery
and job creation, the province’s economy continues to stagnate as wage
rates fall and the consumer-price index widens, according to Statistics
Statscan also says while consumer spending, which dropped substantially
in 2003, has improved slightly since the beginning of the year, it is
minimal and the economy remains overall stagnant. It also reports that
overall consumer savings in BC have now dropped to the lowest in the
country. The consumer price index, the measure of consumer spending
power relative to prices, widened again over the summer.
Also, it reports that the average wage rate in BC has fallen to the $16
an hour $17.80 an hour reported in 2000. That was just behind Alberta,
which averaged $18.04 an hour. Statscan says while unemployment has
dropped marginally to a seasonally adjusted rate of 6.9 per cent, the
average yearly rate has remained above 7.4 per cent—well above the
average during the five years prior to the liberals’ election to office.
According to a Canadian Center for Policy Alternatives study, declining
capital spending a as portion of the Gross Domestic Product, the
supposed saviour of the BC Liberals, is lower now than at any time
during the tenure of the NDP government.
BC Federation of Labour President Jim Sinclair says working
people are the primary motivators of the economy and job creation
through their constant investment of consumer dollars in the
marketplace. He adds that moves by the BC Liberals to cut services and
jobs, raises taxes and user fees on workers and building the new BC
Ferries vessels off shore all contribute to higher jobless rates and
lower consumer spending.
"Working people know that relying on a "Visa" economy is no way to
rebuild our province's economic footing," Sinclair said, pointing out
that average weekly wage rates for the first quarter of 2004 had
decreased when compared to 2003. "Real spending power is on the
decline. That’s what happens when you take money out of working
people’s pockets by cutting wages, laying people off and cutting vital
social services like health care and education."
In 2003, BC's personal savings rate as a percentage of disposable
income was the worst in the country at negative 8.2 percent, he said.
Construction and real estate remain highly active due to prolonged low
interest rates. But most of this activity remains confined to the lower
mainland and southern Vancouver Island.
But both Sinclair and numerous economists warn that much of this is
based on heavy borrowing of money, due to the decline in consumer
savings and spending power.
“People aren’t buying houses because they have more money,” said David
Fairey, senior economist and director of the Vancouver-based Trade
Union Research Bureau, in a recent interview. “Rather they are taking
advantage of the lower interest rate to buy homes now before they go up
Fairey says it is no coincidence that increasing housing sales and
residential construction across the country, and especially in BC, are
accompanied by skyrocketing consumer debt loads due to mortgages.
“Personal consumer debt is at an all-time high,” he said. “People are
trying to buy houses and condominiums with less money in their pockets.
Right now, lending institutions are happy to accommodate this because
of the low interest rates of the Bank of Canada. That will change when
they start to rise again.”
He added consumer desperation is the main cause of the buying spurt, as
people try to take advantage of the low interest rates and resulting
favourable mortgages to buy a home before they go up again, putting
home ownership out of reach once more.
Sinclair highlighted increasing energy costs and BC's growing trade
deficit as issues that needed immediate attention if BC is to achieve
any real, sustained economic growth. Sinclair also commented on the BC
Liberal's failing privatization strategy, calling it a sad effort to
attract private investment to our province.
In spite of declining capital investment and consumer spending, along
with rising unemployment, since the Liberals took office, Premier
Gordon Campbell says the overall economy remains strong and things are
“We have a strong economy and a healthy investment climate,” he said in
the September release of the New Era in Review. “We have set rules in
place to streamline development projects…and our tax cuts have given
consumers more money to invest in our economy.”
The government is celebrating its legacy of reducing human rights
and environmental standards and overriding of municipal powers as “as
cutting red tape,” “increasing workplace flexibility” and “creating
Sinclair renewed his call for a summit on the economy that includes
input from labour, small business, municipalities and community
organizations. This demand has been accompanied by NDP leader Carole
James’ call for an opening up of the government to a wide range of
public input and idea on economic improvement.
But Campbell says the government’s progress board, made up exclusively
of executives and senior bureaucrats of large corporations and elite
investment agencies, is sufficient in assessing the state of the
economy. Labour or community participation is not required.
The premier insists that the provincial government’s 2004-05 budget is
balanced and will produce a substantial surplus of up to $1 billion,
but Lee says the Liberals are relying on higher global commodity
prices, especially for oil and natural gas and the fact the federal
government is now putting money back into provincial transfer payments,
especially for health care.
“In the 1990s, the provincial government had to deal with low commodity
prices, higher interest rates and huge federal funding cuts, and it
still managed to balance the budget (without the huge cuts of the BC
Liberals),” he said. “Now it’s the other way around, the (BC Liberal)
government is still cutting.”