Vaughn Palmer: James' financial forecast calls for a few B.C. clouds, but mostly sun
Credit to Author: Gord Kurenoff| Date: Sat, 07 Dec 2019 02:20:47 +0000
VICTORIA — Finance Minister Carole James found her economic forecasting council to be a little less optimistic Friday than at this time last year.
At last December’s meeting with James, council members projected an average 2.5 per cent growth for B.C. in 2019, 2.6 per cent in 2020 and a further 2.2 per cent for each of the next three years.
On Friday, the same dozen or so council members collectively scaled down their forecasts to two per cent for this year, 2.4 next and about two per cent for each of the next three years.
Not a huge reduction. But one that was reinforced by the day’s release from Statistics Canada, which showed B.C. again losing private sector jobs.
Still, James was able to put a relatively positive spin on the outlook in a statement released at the end of her three-hour exchange with the council.
“B.C.’s economy remains resilient amid global uncertainty and is expected to outperform the country with steady growth over the forecast horizon,” it read in part.
“A resilient economy means B.C. is well prepared to respond to global trade challenges, while continuing to deliver landmark investments in people and services.”
These annual sessions with a council comprised of analysts and economists from the chartered banks and other agencies are a longtime fixture in the budget-making process.
Successive finance ministers use the council to frame their own forecasts, lowballing the numbers to add a measure of prudence to the provincial budget.
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Even with the scaling down of the latest forecasts from the council members, James was still able to boast the best outlook in the country.
“British Columbia currently has the lowest unemployment rate in the country and is the only province in Canada with a triple-A credit rating from the three major international rating agencies.”
She also claimed that even with the latest jobs numbers from Stats Can, “B.C. has retained its position atop the national leaderboard, with strongest employment growth year-to-date to November.”
One feature of these annual get-togethers with the forecasting council is the back-and-forth between members and the minister. The sessions are open to the news media, on condition that only the finance minister is quoted.
Among the positives highlighted in Friday’s session in the provincial capital were the remarkable growth in the technology sector and high levels of investment from both the private and the public sector.
But I also heard council members flag a number of concerns about the economy for the year ahead.
One of the biggest is the emerging economic divide between urban and rural B.C., a long-standing problem exacerbated by the crisis in the forest industry.
“Bleak” was the one-word outlook from one economist for communities in the north and Interior that are overly dependent on the forest industry.
Closer to home for James, who represents a Victoria constituency, was a reminder from another council member that forest industry troubles have cost several thousand jobs “here on Vancouver Island alone.”
Which is not to say the council offered a lot in the way of remedies. Long-term restructuring, retraining and value-added production were all discussed. But there was a sense the industry of the past is never coming back.
James acknowledged the “heartbreaking stories” from hard-hit communities. But she insisted that in the long term, the industry has a bright future.
The NDP government plan for the industry includes a shift to manufactured wood products and the use of more wood in public construction. But I didn’t hear her offer much hope in the short term.
The session also heard multiple laments about lags in the housing supply, particularly rentals and development of units suitable for families.
“Housing, housing, housing” was the way one member of the council characterized the biggest challenge for the provincial economy.
Another pointed out that in terms of migration to B.C., the fastest growing demographic is aged 25-45, prime candidates for affordable housing. But “we’re not getting supply to market fast enough.”
Local governments were blamed for causing supply bottlenecks by holding up approvals and loading up costs. Rental housing was rated as too risky and/or not economical in the estimation of one member of the council.
Another reminded James that municipalities “are creatures of the province” and it is well within her government’s power to push the locals on project approvals, zoning and density.
But James was not at all inclined to go that route. Instead she spoke of partnership agreements with local government and private developers on purpose-built rental housing.
She noted how in Victoria just last month, the province put up $19 million to build 130 affordable rental units in partnership with a developer.
She also claimed the province is having “very good discussions” with Metro Vancouver to increase housing density along the route of provincially-funded SkyTrain expansions in Vancouver and Surrey.
Good beginnings notwithstanding, the evidence suggests the New Democrats need to do a lot more to increase the housing supply.
Without progress on that file, they will have trouble living up to their promise to make housing more affordable, the No. 1 plank in their last election platform and a factor in their breakthrough in Metro Vancouver.
More than enough there to keep James and her colleagues busy in the year ahead. If they falter, next year’s session with the forecasting council could be more of a downer than this one.
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