Clark gambles on minimum wage hikes and film tax credit cuts

In the space of 24 hours last week, the election-eyeing BC Liberals played catch-up and took two significant risks, one with businesses and the other with an industry crucial to the province’s modern brand. Up will go the minimum wage, down will come the tax credit for film and television production.

On the eve of a campaign, these were socio-economic measures riven with political objectives: neutralize an NDP criticism about a necessity, ease an incentive that at the moment may not be a necessity.

It has been incongruent for the country’s best-performing economy to have its lowest minimum wage. It may have been once that prosperity was built on the backs of the lowest earners, but it isn’t the case out of necessity any longer. The longer the province took to address this, the more susceptible the BC Liberals were to charges of chronically advantaging the disadvantaged.

The context has changed in recent weeks, too. The premier has been skirmishing with a heaping helping of withering words about topping up her salary, so she topped up the salaries of those furthest down the ladder. The furor will go away, right?

In doing so, though, she spurred jaw-dropping in the business sector. Employers were expecting far less than the $0.40 increases this September and next – closer to the  $0.10 hike tied to the consumer price index. Certainly by the second wave there will be some shoreline damage.

Smaller firms had been promised tax rate reductions over the next two years, but let’s be clear: a $100,000 business will see that reduction practically wiped out by one employee’s minimum wage increase. A 40-hour, 52-week hike puts about $830 more into the pay packet.

The response from business advocacy groups to wage increases, often a clichéd antipathy with the spontaneity of professional wrestling, had more of an authentic ring this round. Sorry to say, there are deaf ears.

Political truth be told, the Liberals know businesses have nowhere to scamper, and this had to be part of their calculation: there is less to lose by annoying supporters than to gain by reaching out.

The more curious gesture to industry came a day earlier when the province reduced the tax credit for film and television production. Let’s be frank: these incentives were juiced when the dollar was near par and other provinces were snagging productions from our ’hood. Lately, though, the sun shone, hay was being made, and the treasury was all of a sudden in no bright-sky mood. A subsidy of about $180 million has nearly tripled.

Unlike the minimum wage manoeuvre, though, this reduction was no surprise to the industry. The province had been convening a form of family therapy for a few months to accept that changes were necessary to the relationship. Reluctantly but acceptingly, the business will adapt to the new compact.

The question is whether the wise short-term economic tactic might not be a good long-term cultural strategy.

Our film and TV production business employs more than 50,000 British Columbians and tens of thousands more indirectly. To give birth to that form of life takes lengthy government-supported gestation, as the Canadian music industry can attest.

A constant critique is that the project-based industry doesn’t develop or retain the permanence of intellectual property. The creativity and the spoils from it flow from, and to, elsewhere.

To pull back even a tad opens the flank to other provinces to gobble what we won’t grow – even if, to be fair, it’s a race to the bottom on who can be most benevolent. But in this seemingly sensible reboot comes risk that the next iconic Canadian culture will spring from somewhere else’s subsidy.

Moreover, there is a bigger picture about the moving pictures. The British Columbia brand is created in no small way through this industry and seen around the world, even if we almost never are told it’s B.C. on the screen. A vital breed works and stays here and returns more to the economy than it derives from the tax forfeitures of it.

Perhaps, perhaps not, but this might be a penny-wise, pound foolish political calculation one day regretted.

Kirk LaPointe is Business in Vancouver’s vice-president of audience and business development.