What should the provincial government do in the face of a business downturn?

Helmut Pastrick
Chief economist, Central 1 Credit Union

“It’s feasible, conceivable that the government could try to offset some of this growth slowdown with increased spending or perhaps some reduction in taxation or perhaps a combination of the two. The growth slowdown that I see is quite different from a broad-based contraction, [to] which I think most agree that there should be some kind of government response.”

Jane Sterk
Leader, Green Party of B.C.

“We need to be working towards guaranteed livable income. It’s a very different concept than any other party has, and that’s to use all of the support that comes to individuals in one form or another and to essentially set up a system similar to old-age security. Short of that, we need to make sure that there is adequate accommodation and incomes for people who are on income assistance.”

Julie Norton
First Call: B.C. Child and Youth Advocacy Coalition

“A lot of the time our policies cater to the interest of taxpayers more so than citizens. The poor, the unemployed, the homemakers, or people who raise families and care for dependents at home”¦children, the disabled—they’re not taxpayers, for the most part, and so because we don’t focus on the welfare of citizens, we aren’t getting the services to [those who] benefit most from them.”

Maria Javier
Program director, Multicultural Helping House Society

“A downturn”¦could spell disaster for the new immigrant who has no Canadian experience and education. The government could help by giving subsidies to housing, tuition, foreign-credential evaluation fees, and expansion of skills. The government should have an intensive campaign to let new immigrants know what government services are available to them.”

Colin Hansen
B.C. finance minister

“We now have the lowest provincial income-tax rate for low- and middle-income families of any province in Canada. Lower-income families in British Columbia now pay less for their medications than they did in the past. The premium-assistance programs for health insurance now mean that lower-income families pay less than they did in the past. We have been able to put a lot of those supports in place and they will certainly continue.”

British Columbia’s dubious distinction of having the worst child-poverty rate in the country is a stark reminder that many families have been left behind while the province has prospered.

With dark clouds looming on the economic horizon, community activist Jenn McGinn wants to make sure these poor families don’t fall even further behind. Standing at the corner of East 14th Avenue and Main Street on August 23, a day after she was acclaimed as the NDP’s nominee for the Vancouver-Fairview by-election, McGinn handed out leaflets calling for an increase in the minimum wage from the current $8 per hour to $10.

The flyers also demanded a rollback of the pay raises, ranging from 22 percent to 43 percent, that were granted in early August by the B.C. government to senior provincial bureaucrats—a move that McGinn described as “totally out of touch with the people”.

“One in five children lives in poverty here in B.C., and”¦when you really break that down and ask yourself why, it’s because their parents are poor, their parents are trapped in these low-wage jobs without any kind of security and future,” McGinn, who lives two blocks east of Main Street, just outside the constituency, told the Georgia Straight.

The minimum wage has been frozen since 2001, Premier Gordon Campbell and the B.C. Liberals’ first year in power, and times are about to get harder in the province.

A forecast released on August 19 by Central 1 Credit Union projects B.C.’s economic growth will “downshift” to less than two percent in 2008 and 2009, its lowest level since 2001, due to weak international trade and a slowdown in the domestic economy.

According to the analysis prepared by Central 1 chief economist Helmut Pastrick, the economy will grow 1.5 percent this year and 1.8 percent next year. These projections are way below the 3.3-percent and 3.1-percent expansion posted by the economy in 2006 and 2007, respectively.

“Certainly, when the economy is growing faster, it generally results in some benefits for even the poor, but not in all cases, obviously,” Pastrick told the Straight.

Whether the weakened economy will reverse the fortunes of the B.C. Liberals when they face voters in May 2009 is a question Pastrick is leaving to political pundits.

Results of an on-line Angus Reid survey released August 27 show that the economy is the second-most important issue among British Columbians after health care. The survey showed that a majority of voters (58 percent) believe it is now time to dump the B.C. Liberals.

Norman Ruff, a retired University of Victoria political-science professor, recalled that the economy was faltering in 2001 and the B.C. Liberals won that year’s election. But Ruff said that other factors contributed to the NDP’s defeat, like the shadow cast by controversies that hounded then-premier Glen Clark.

In a phone interview with the Straight, Ruff noted that the economic situation leading to the 2001 election wasn’t as grim as that preceding the 1983 provincial election, describing the economy’s state in the early ’80s as the “worst in living memory of any British Columbian today”. However, he recalled that Bill Bennett’s Social Credit government survived the NDP’s challenge because the latter “ran a poor campaign”.

Finance Minister Colin Hansen will release a report on the economy in September. “It will probably show that there will be some softening of predictions on the B.C. economy, but I think we still have strong fundamentals to our economy,” Hansen told the Straight.

Hansen said that although the province is affected by the downturn of the U.S. economy, B.C. will continue to see its economy “outperforming the rest of North America”.

Ipsos-Reid will release a new survey of voters before the end of September, according to vice president Kyle Braid. Asked if a weakened economy would be a boon for the NDP next year, Braid told the Straight: “It will depend on whether people in some way associate an economic downturn with mismanagement by the Liberals and, similarly, whether Carole James and the NDP could have done a better job.”

How will B.C.’s economic future measure up?

> Average real (inflation-adjusted) gross-domestic-product growth per year for 2008–2012: 2.5 percent

> Average real GDP growth per year for 2003–2007: 3.4 percent

> Real consumer-spending growth per year for 2008–2012: 3.2 percent

> Real consumer-spending growth per year for 2003–2007: 4.6 percent

> Real personal-income growth for 2008 and 2009: 3.5 percent and 2.3 percent

> Real personal-income growth for 2006 and 2007: nearly 6 percent and 4.7 percent

> Unemployment rate in 2008 and 2009: 4.6 percent and 4.8 percent

> Unemployment rate in 2007: 4.2 percent

Source: Central 1 Credit Union’s 2008–2012 economic forecast