B.C. Economy to Grow, With or Without LNG

finance | BCBusiness
Vancouver ports are “absolutely humming,” UBC’s Michael Goldberg told the Surrey Regional Economic Summit

A Surrey Regional Economic Summit panel sees lots of upside to the B.C. economy, but cautions that challenges remain

The B.C. economy is well positioned for growth in the near term, but celebrations of a boom may be premature. That’s the conclusion of a panel of experts speaking at the sixth annual Surrey Regional Economic Summit on February 27.
Building an LNG industry from scratch would be “transformative,” according to panellist Ken Peacock, chief economist and vice-president of the Business Council of B.C. However, he noted that it’s not a certainty, pointing to such challenges as a labour-force shortage and a competitive global market, where industry will go wherever it’s cheapest to operate.
Even if our LNG hopes come to nothing, B.C. will do reasonably well, Peacock predicted, with modest growth in the short- to mid-term putting the province’s economic performance around the middle of the pack among provinces.
Peacock expressed optimism that B.C. has broken out of its historical boom-and-bust economic cycles, and according to one panellist, a large part of that diversification is due to a burgeoning service industry. “It’s not just two pieces: a manufacturing economy or a resource economy. There’s a third piece, and services are driving a huge part of the stability in B.C.,” said Michael Goldberg, UBC professor emeritus and former dean of the Sauder School of Business. Because of that third piece, said Goldberg, “When resources go in the can, this province doesn’t.”
The falling Canadian dollar is a boon to our export-driven economy, according to panellists, but can’t be taken for granted. Goldberg cautioned that while a falling dollar can give our economy a jolt, it can easily become a crutch, discouraging investment in innovation and productivity. “The lower dollar helps get us up off the mat, but it also lets us get away with low productivity and innovation,” he said.
Panellists pointed to increased trade with China as a significant turning point in diversifying B.C.’s exports, but pointed out that much needs to be done in further developing trade with other Asian nations. Goldberg was blunt in putting responsibility squarely with the federal government. “The federal government has let us down,” he said, pointing to its failure to conclude free trade agreements with Japan, Korea and China.
Andrew Ramlo, executive director of urban planning consultancy Urban Futures, said that affordability and cost of living are an issue in deterring business from the Lower Mainland, but not to the extent commonly believed. According to him, the data that are available don’t support popular perception: recent Statistics Canada numbers indicate that Lower Mainland residents pay 26.8 per cent of their income on housing, compared to 25.7 per cent elsewhere in Canada, and Lower Mainland residents spend proportionately less on things like transportation and recreation. “If you take a basket of indicators, we’re about in the middle of the pack in Canada,” said Ramlo.
The need to invest in infrastructure was a common theme among panellists. Goldberg pointed to the Gateway program as an excellent example of federal and provincial partnership, saying, thanks to it, Vancouver ports are “absolutely humming.” But such investments have to continue, he said, ensuring that the goods and people can move efficiently throughout the province.
Panellists concurred on the need to develop an efficient transportation system in the Lower Mainland, and in particular the need to sort out disagreements over TransLink planning and funding. “People moving to the Lower Mainland need to know they’re coming here to work, not to get stuck in traffic,” said Goldberg.