May 2001
May Questions & Answers and May Graph
by Joel Emes and Jason Clemens
Q: How does British Columbia’s economic performance over the last decade compare to the other "have" provinces, Ontario and Alberta?
A: Ontario and Alberta both significantly outperformed British Columbia
on basic economic indicators in the 1990s. While Ontario and Alberta posted
respectable rates of growth in real per capita GDP, namely, 16.7 and 26.7
percent respectively over the decade, British Columbia lagged with a growth
rate in real per capita GDP of 2.1 percent (see table 1).
British Columbia’s
performance in expanding real per capita personal disposable income between
1990 and 2000 was disastrous. From 1990 to 2000, only BC experienced a
net reduction in this measure—a decline of 5.8 percent. Although all three
provinces saw real per capita personal disposable income fall in the early
1990s, Alberta and Ontario recovered in the latter part of the decade to
post growth rates of 4.0 and 1.1 percent, respectively (see table 1).
The
level of investment in BC has not kept pace with the depreciation of past
business investment. On average, net business investment in BC shrank by
0.4 percent between 1990 and 1994, and decreased another 4.2 percent between
1995 and 1999. Ontario also experienced a decline over the 1990 to 1994
period but recovered sufficiently to end up with an average growth rate
of 2.8 percent in net business investment over 1990 to 1999. Alberta alone
posted strong and consistent growth in net business investment over the
entire period (see table 1).
Q: From previous Fraser Forums, I know that British Columbians have a high tax burden and that government in BC spends a relatively large portion of GDP. However, doesn’t that higher tax burden and spending translate into an equally higher level of government services?
A: Actually, no. Consolidated provincial/local spending as a percentage of GDP in BC is 21.7 percent higher than in Ontario. This higher level of spending and the high tax burden needed to pay for it result in BC spending only $208 (2.7%) more per person than Ontario. The comparison with Alberta is even more depressing for British Columbians. Although provincial and local governments in BC spend 28.2 percent more of GDP than do provincial and local governments in Alberta, government spending per person is $562 (7.0%) higher in Alberta than in BC. The reason? Alberta takes a smaller slice of a larger economic pie than BC does; this translates into more spending for Albertans.
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