Savings essential for building a diversified northern economy

It was was easy politics for opposition MLAs and pundits to take shots at the province’s new $100 million prosperity fund last month. After all, the fund was supposed to be seeded with liquefied natural gas (LNG) revenue, not budget surplus.

Fair enough.

Yet I have a hard time taking aim at a savings account – even if it’s only $100 million – when our provincial debt will reach $72 billion by 2018-19, and more than one-third of Canadian families have total debt that is twice their net income.

Here in the north, where our economy remains largely reliant on the natural resource sector, we could use a few more sustainable rainy-day funds – or any-day funds.

In good years, rural B.C. is responsible for as much as 75% of the value of B.C.’s exports, but a common complaint in the Interior and the north is that little of that money flows back into the communities that produce it.

The north is now at an interesting crossroads. Its population is stable and aging, commodity cycles are becoming shorter and our resource industries are more efficient.

As well, the cost of delivering services is increasing, forcing a slow but consistent trend toward the centralization of education and health care.

The postwar boom that fuelled much of the wealth creation and regional expansion in the second half of the 20th century is over.

If we want our communities to thrive in the decades to come, we must create a base of wealth now that can be used to invest in community development in perpetuity – sustainable savings accounts that can be responsive to local needs.

B.C. is already a leader in this area.

Since the 1990s, government, industry, non-governmental organizations and First Nations have established endowments to retain wealth in rural areas, ranging from the Columbia Basin Trust and Northern Development Initiative Trust (my employer) to Gwaii Trust, Coast Opportunity Funds and the Nechako-Kitamaat Development Fund, among others.

Each is different, but the most successful are sustainable, have a clear focus and are locally led and responsive to the needs of their communities.

In short, responsibly responsive.

The impact benefit agreements First Nations have signed with resource companies will inject consistent funding streams into some of B.C.’s most remote and impoverished communities.

While some of this funding will be used to offset annual operating costs, my hope is that at least a portion of it will be used to establish foundations to support communities long after today’s mines, pipelines and mills cease operations.

Northwest communities have also established the Northwest BC Resource Benefits Alliance, which is negotiating revenue-sharing agreements with the province related to major resource projects.

A recent article in The Atlantic highlighted cities across the U.S. that are in the midst of economic revivals, noting that part of the recent success of Pittsburgh – once the heart of America’s steel industry – is owed to “the extraordinary density of rich, locally rooted philanthropies” established by industrial titans years before.

The dollars B.C.’s trust funds, endowments and foundations provide to communities account for a considerable portion of the annual funding spent on local economic diversification projects, supporting everything from entrepreneurship and training to recreational trail development and arts and culture programs.

These dollars also give communities the baseline funding they need to take advantage of multimillion-dollar grants from the province or federal government to expand pools, build arenas, resurface runways and improve marinas.

I don’t take issue with the province establishing a prosperity fund without LNG revenue – savings is savings at a time when our collective debt is out of control.

My concern is that we aren’t focused enough on saving for future generations.

That’s how we became indebted in the first place. 

Joel McKay (joel@northern development.bc.ca) is director, communications, at Northern Development Initiative Trust, a non-profit organization that stimulates economic growth throughout northern B.C.