The West Coast is an earthquake zone and thinking about the “big one” is an ongoing British Columbia fixation, but the province is already quaking from a seismic shift that has dramatically changed the economic landscape.
The election of the BC NDP/BC Green Party coalition has uprooted perceptions of what it is to do business in what has been the strongest economy in the country.
Perceptions like a fair playing field for international investors, the rights of employers to match wages to performance, British Columbia’s potential to become a trusted partner in the global resource industry, and the perception that real estate offers a secure route to financial security.
The new government wasted little time moving to topple B.C. from its perch as Canada’s leader in job generation and economic vitality.
Within weeks of the provincial election, Malaysia-based Petronas killed an $11 billion liquefied natural gas export facility planned for B.C.’s north coast. It is naive to think the coalition’s election did not play a role in that decision. If you think the signal it sent around the world has not been heard, you are not listening.
Now the provincial government has pledged to “use every tool available” to stop the $7.4 billion Trans Mountain pipeline expansion, a project considered vital to Canada’s economy and fully approved by the federal government.
We had hoped they were simply grandstanding, but apparently not.
The Trans Mountain pipeline would create 37,000 direct and indirect jobs per year during operations. It would provide $5.7 billion per year in provincial tax revenue for more than 20 years and deliver $23 billion in federal tax revenues. But, if the provincial strategy is successful, the project will be dragged into lengthy, costly delays that will eventually kill it.
The new government is also threatening to stop the Site C dam, and the thousands of jobs that depend on it. A large bridge project in Metro Vancouver also appears doomed.
Victoria is also boosting the minimum wage, despite evidence that it will reduce employment.
This government will expand the carbon tax, hike the corporate tax rate to 12 per cent and increase the top personal rate to 19 per cent.
Residential real estate, arguably the province’s most important financial engine, is already reacting to the economic earthquake.
B.C.’s residential dollar volume has plunged nearly 20 per cent from a year ago, housing sales are down 17 per cent and price reductions are becoming common across Metro Vancouver.
It is evidence of a loss of economic confidence that we believe is well founded.