Marc Lee: First the Olympic party, next the hangover in B.C.

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      By Marc Lee

      The 2010 Winter Games are almost upon us. In Vancouver, banners are dropping down the sides of downtown buildings; huge tents are being erected anywhere there is open space; and advertising from anyone but Olympic sponsors has all but disappeared (I hereby challenge any Olympic athlete to eat McDonald’s daily between now and your event). Whether you like the Games or hate them (personally, I find the lure of Olympic hockey irresistible), it’s gonna be a huge party, and the world is coming.

      Here in Vancouver, the Olympics are so big, so looming, it’s difficult to think of anything else. For years preparations have been underway, as planners have made their plans, and new, gorgeous facilities have been built. But it’s hard to say how much these activities have actually increased economic activity in B.C. The province’s economy was already firing on all cylinders when most of the Olympic projects were under construction (i.e., before the 2008 crash). There is a case to be made that most Olympics projects have merely crowded out other public and private sector capital investments (and driven up costs for all projects). It’s possible that over the past year the Olympics spending smoothed out the harshest impacts of the recession in Vancouver, but unemployment still shot up to 8.4 percent in December, and is now about the same as the national average.

      As for the two-week period of Games themselves—a lot of money is being spent on things like security, and there will be higher-than-normal tourism. Some economists foresee a 0.5 percentage point increase in GDP as a result of the Games. But it seems to me that, like the upfront capital investments, there is a lot of displacement going on—most regular business is being put on the back burner, as projects and offices close down due to concerns about traffic and security perimeters.

      My real concern, though, is what happens after the Games. The provincial government will table its 2010 budget a mere two days after the Games end, and the big danger is that B.C. experiences a hangover of Olympic proportions. Outside the Lower Mainland, the province is in rough shape, where resource industries have been hammered by the decline in U.S. market. Real estate is showing signs of recovery, but there is not much indication that new construction activity that creates jobs is returning to the highs of 2003-2008. Tourism may get an Olympic bump, but a high Canadian dollar and weak income growth are keeping a lot of Americans at home. It is hard to imagine what private sector forces could drive a resurgence of economic growth for the remainder of 2010.

      So we need the B.C. government to step up to the plate in its 2010 budget. Last year, B.C. brought in very little in the way of stimulus spending, preferring to take a free ride on federal stimulus dollars. This is at least part of the reason why unemployment rates have doubled in the past 12 months. That situation could get a whole lot worse if the provincial government claims the cupboard is bare after the Olympics.

      Already the government has announced hundreds of layoffs in the Ministry of Forests and Range and the Ministry of Citizens’ Services, and school boards in Vancouver and Prince George are contemplating devastating cuts that could see hundreds of teachers lose their jobs and many schools shut their doors. Failing to adequately fund the public sector will only pile on to the post-Olympic pain that host cities typically experience.

      But there is an, er, golden opportunity here. Since the 2008 budget that announced the B.C. carbon tax and a host of other climate actions, we have seen a whole lot of nada on the climate front. In fact, budget restraint in the past year has closed down some of those actions, like the LiveSmartBC program to retrofit homes to be more energy efficient. Anecdotally, this is drying up business for contractors who do retrofits. So now would be a perfect time to get back on the green file, and make some investments that will create jobs and meet our climate objectives.

      B.C. has a legislated target of a one-third reduction in emissions by 2020 (relative to 2007 levels), but currently we do not have a plan that gets us there. Now is the time for that plan. Think transportation. Think household energy efficiency. Think green power. But also think about avoiding double-digit unemployment, and a potentially nasty post-Olympics hangover.

      Marc Lee is the senior economist at the B.C. office of the Canadian Centre for Policy Alternatives.



      Steve Jones

      Jan 21, 2010 at 12:08pm

      I like the stuff that comes out of the CCPA, but the BC Liberals aren't going to bend over backwards for working stiffs. It's a shame that BC didn't vote for proportional representation at the election before last.
      If they had, we would probably have an NDP-Green coalition of some sort, which would suit most voters in a general way. Oh well.


      Jan 21, 2010 at 3:26pm

      Since you brought up the idea of athletes eating at McDonald's....

      McNuggets worked OK for Usain Bolt.

      Mike Chalmers

      Jan 27, 2010 at 6:00pm

      this is a really tepid article, you say nothing other than what is expected and fail to even mention the 5 billion dollar debt that the Olympics had produced. Weak.

      Mike's Sister

      Feb 12, 2010 at 11:58am


      Is there a $5 Billion debt? Or has it already been paid? I'm not sure. I agree to a certain extent that the article is weak, but it at least heads in the right direction in terms of throwing some numbers out there. But with tax cuts continuing to be a Liberal economic strategy, where will funds come for government stimulus?