B.C. finance minister forecasts modest economic growth for the province

VANCOUVER – British Columbia’s finance minister says he’s received advice from some of the smartest business minds in Canada and he’s optimistic the province will see modest economic growth next year.

Mike de Jong spent much of Friday with members of the B.C. Economic Forecast Council, an organization that includes 14 of Canada’s most respected, independent forecasters. Council members provide the minister with economic advice as he plans the province’s budget and fiscal plan.

The council told de Jong it expects the provincial GDP to be about 2.1 per cent for 2012 and slightly higher in 2013, outperforming the average for the Canadian economy.

“The terms I heard a lot today: modest growth, caution. These are still turbulent economic times internationally,” he told reporters after the meeting.

Other issues discussed included international markets and how they will effect B.C., the recovery of the U.S. economy, the liquefied natural-gas industry, rising household debt, tax competitiveness and the need for skills training because of labour-market demands.

To cover the province’s deficit and balance the forecasted $1.1-billion budget, de Jong said his government will continue to focus on hiring freezes, wage freezes for excluded staff, modest negotiating mandates for unionized workers and constraints on all non-essential spending.

De Jong said the council complimented the government on how it’s managing the books, noting the province has more flexibility than virtually every other jurisdiction because of its financial and debt discipline.

He said the government also received compliments for how it has diversified its trade markets, especially for products like lumber that are being exported in greater numbers to China and other Asian countries.

At the same time, though, he acknowledged gaps in skills training.

“We are going to want to address that,” he said.

De Jong said the government has learned an important lesson when it comes to natural gas: not to build a budget that’s overly dependent on the resource.

While the experts are optimistic about the U.S. economy, he said B.C. will experience an impact if the U.S. doesn’t avoid the so-called fiscal cliff, a series of tax hikes and spending cuts set to take effect at the start of 2013.

“I think it’s fair to say that around the table, most of these economists believe the U.S. will avoid that, but that doesn’t make it so,” he said.

NDP finance critic Bruce Ralston, a member of the select standing committee on finance and government services, attended the meeting but released few details to reporters about his party’s economic platform.

Instead, he reiterated plans to focus on jobs training, introduce a capital tax on financial institutions to fund a needs-based grant system for students, and return the corporate tax rate to 2008 levels.

“If the labour force is not growing, the only way to get more productivity from the economy is to increase the skills of those who participate in the economy.”

He said while the NDP agrees with balancing the budget, it’s not a goal that should be achieved “at all costs,” and there needs to be flexibility in the medium term.

“We will be unveiling a platform, which will come before the election, and I think you’ll see a very sharp and clear defining difference between ourselves and the B.C. Liberals,” said Ralston after the meeting.

De Jong said he plans to release more information on the state of the province’s economy in the coming weeks during the second-quarter report.

“We are committed to the balanced budget,” he said. “Achieving that will not be easy. It will require discipline. We want, where possible, to address issues of family affordability. We want to continue a climate that has worked well at attracting investment.”