The BC Government Gets an F on Their Report Card

Asian Flu Isn’t the Problem, BC Caught a Virus From Victoria

Release Date: 26 October 1998

VANCOUVER, BC>>> The Fraser Institute today released an extensive review of the economic and social policies of the British Columbia government. In the study, entitled The Government of British Columbia, 1991-98, An Assessment of Performance and a Blueprint for Economic Recovery, authors Satinder Chera and Fazil Mihlar give the provincial government a grade of F for their overall performance in office.

The central conclusion of the report is that BC’s current economic crisis is a result of policies implemented by the provincial government since 1991. "The evidence shows, in spite of claims made by the Clark government, that the ‘Asian flu’ is not the root cause of British Columbia’s economic pain," said Fazil Mihlar, Director of Regulatory Studies at the Fraser Institute, "rather, BC’s economic troubles are mainly due to a home grown virus—courtesy of Victoria."

Current statistics paint a dismal picture for BC’s economic outlook. The TD Bank has forecast
-.5% real economic growth for the province in 1998 and a 0% growth rate for 1999. By way of contrast, the same TD study forecasts growth rates for Alberta at 3.4% and 2.0% respectively, while Ontario is expected to grow by 3.8% and 2.3% during 1998 and 1999.

"It’s quite remarkable," states Mihlar, "that British Columbia’s economy should be performing so poorly at a time when the other ‘have’ provinces, such as Alberta and Ontario, are experiencing high levels of economic growth. Referring to the report’s comparative analysis of the three provinces, Mr. Mihlar points out that while jobs and investment opportunities are being created in Alberta and Ontario, employment opportunities in British Columbia are disappearing and investment dollars fleeing to neighbouring jurisdictions."

Since 1991, government spending has increased by 36%. Provincial debt has increased by $15 billion, and the government has failed to produce a balanced budget, in spite of numerous promises to do so. This has resulted in an increased tax burden for the average British Columbia family of $803 per year. The top marginal personal income tax rate at 54.2% is the highest in Canada. This has translated into giving British Columbia the dubious distinction of being one of the highest taxed jurisdictions in North America.

Labour policies have had an equally negative impact on the provincial economy. The minimum wage has been increased by 30% which has decreased the employment rate among young people. New government regulations—such as Bill 26 (Sectoral Bargaining) which prevents employees from negotiating their own contracts—discourage investment and damage British Columbia’s already uncompetitive labour market. Since taking office, the government has passed 3000 regulations totaling almost 10,000 pages.

While progress has been made in addressing uncertainty over land use and reducing royalty payments to boost the oil and gas industry, natural resource policy has also proved to be a significant stumbling block for the government. The forestry sector has seen capital expenditures made by the industry decline 17% between 1996 and 1997.

The industry has also seen job losses of 4,500 over the past two years, rather than the creation of 40,000 new jobs as promised by Premier Clark in his 1996 Jobs and Timber Accord. The Forest Practices Code has increased the regulatory burden on the sector while failing to reach its own objective of sustainable forest resources development. Although recently reduced, overall stumpage fees have increased 200% since 1991, further crippling the industry.

"If the provincial government is serious about creating jobs and investment opportunities in BC, they should eliminate the minimum wage, introduce Right-to-Work legislation and give employers and employees more flexibility over working conditions," argues Mihlar.

Likewise, government efforts to improve the quality of health care in British Columbia have largely been a failure. Government expenditures on health care have increased by roughly 40% over the past seven years but waiting lists for various medical treatments continue to be long and medical professionals are weighed down by increasingly heavy workloads. Clearly, flaws in the system, rather than a lack of funding, are the problem. "Allowing the private sector to play a increased role in the delivery of health care services would go a long way to improving the quality of patient care in the province," said Mihlar.

"Government regulations, high taxes, inflexible labour laws, failure to balance the budget and to reduce the size of government have all contributed to the rapid decline in British Columbia’s competitive standing in Canada and around the world. If the provincial government is truly committed to ‘opening up the province’ to job creation and investment, it must make more than modest policy corrections. Tinkering around the edges simply won’t do," say the authors.

In order to put British Columbia’s economy back on track, the study suggests (among 43 recommendations) that the government implement substantial tax cuts, repeal restrictive labour laws, eliminate excessive government regulations, reduce spending, and bring in balanced budget legislation.

The Fraser Institute is an independent economic think tank. The Institute has an annual program of economic evaluations of federal and provincial governments. In the past ten years, the Institute has released report cards on the B.C., Alberta and Ontario provincial governments, as well as the previous conservative, and current liberal, federal governments. A report card on the Quebec government was released on October 19, 1998.

Established in 1974, The Fraser Institute is an independent public policy organization based in Vancouver.

For further information:

Suzanne Walters, Director of Communications,

The Fraser Institute, (604) 714-4582,
Email suzannew@fraserinstitute.ca

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