“Volatility is not our friend,” says Jill Tipping.
“We want stability. Ideally, stability and modest growth. That's what you're really looking forward to, whether you're a government or a household.”
The CEO of the B.C. Tech Association is hoping that message can gain traction with policymakers as the provincial government prepares to unveil its 2022 budget next month.
A new report from the industry association, A New Economic Narrative for B.C.: B.C.’s Fiscal Future, is pushing for a rethink of economic priorities. Rather than relying on the province’s traditional revenue-generators such as frothy real estate markets or cyclical industries within natural resources, the B.C. Tech Association argues policymakers should focus more on the province’s knowledge-based service sector.
The report, released Monday, concludes there are five major considerations facing the government’s finances, including the housing market serving as an “unhealthy” source of revenue, a decline in revenue from natural resources and ongoing reliance on individual taxes as the most consistent form of revenue.
“What we don't want is to be pinning our hopes on things that are inherently volatile or bring with them [negatives] like relying on the overheated housing market to provide a significant amount of tax revenues in the form of property tax transfers and property taxes,” Tipping told BIV.
“Those are less solid foundations to build our fiscal future than the other options that are available to us.”
Instead, the report recommends the province prioritize three initiatives:
· Investing in sectors with high-growth potential
· Focusing on education and skills development to drive growth in a knowledge-based economy
· Collecting better data on digital and “intangible” economic growth
“There's so many questions that we had in producing this report where we just couldn't answer the questions from the data that we had because it's just not captured,” Tipping said, adding there’s a tendency to overly focus on issues where data is prevalent and unintentionally neglect issues where data is lacking.
“It's more than frustrating. I think it's actually the problem itself.”
The report also draws concerns the provincial government is low-balling projections for growth within the tech sector: an estimated 75,000 additional jobs by 2029 compared with the industry’s forecast of 150,000 by the end of the decade.
“We should be prioritizing well-paying jobs in sustainable sectors that will continue to grow into the future, rather than in sectors that are subject to volatile boom-and-bust cycles or that face inevitable decline, which creates significant uncertainty for employees and communities,” the report stated.
B.C. Innovation Minister Ravi Kahlon told BIV last month his government was developing an economic plan “that will be coming out in the new year that really will set us [up] going forward 10, 15 years from now.”
“It's important that we have the supports in place, but we need government and the private sector and others to be looking [ahead] 10 years, 15 years to make sure that our economy is resilient as we go forward,” he said in December.
“And I'm looking forward to being able to share that in a public way very soon.”
The province and two new partners within the tech sector committed in September to put up a combined $29 million in what is being described as a “revamp” of the Innovator Skills Initiative (ISI).
The ISI’s initial goal was to find job placements for 3,000 people facing barriers entering the sector — such as women, Indigenous people, Black people and other under-represented groups — by giving companies access to $5,000 grants. Those grants are being expanded to as much as $10,000 after Mitacs and the Information and Communication Technology Council came on board with an additional $14 million in funding.
Citing government numbers from the 2020-21 fiscal year, the B.C. Tech Association points to taxation as the No. 1 source of revenue for provincial coffers at 55%. Federal transfers come second at 20.7%.
“Natural resources as a direct source of revenue have experienced a steady decline, from 13% of total revenues in 2000 to just under 4% in 2020,” the report stated.
“All other revenue categories have either remained stable or have grown over the past 20 years, with personal income tax, federal transfer payments, and sales tax revenues being the most important and reliable sources.”
The report argues natural resources revenue is set to decline even further amid global efforts to reach net zero goals that require dramatic reductions in emissions.
The B.C. Tech Association further argues the government needs more stable sources of revenue to ensure there is a sufficient social safety net to address crises such as the pandemic.
“In the current economic context, competitiveness does not mean a race to the bottom for commodity exports, where we get less and less of a return on our investment,” the report stated.
“We cannot attempt to chase the ghosts of economies past.”
