Opinion

How Campbell Tied His Own Hands as Economy Plummeted

Libs quietly cut programs, laws for protecting BC jobs.

By Ellen Gould, 7 May 2009, TheTyee.ca

Tied Hands

Roped in by bad research.

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There have been a number of "good grief" moments in this election. One was Gordon Campbell's statement, while accepting the solicitor general's resignation, that it is important "for all of us" to set a good example while driving. But that was nothing compared to the Liberals' boasting in their platform that because of their policies, B.C. is in now in "much better shape than most other places" to weather the economic storm.

As The Tyee has reported, the most recent data tell a different story.

Follow these links to Stats Canada and find how BC has outdone every other province in a number of categories: the largest jump last year in EI recipients; the largest drop in jobs -- 22,600 -- in the most recent monthly data; the biggest decline last year in manufacturing sales.

The Liberals sum up their economic platform in one, capitalized word: "CONFIDENCE." Explaining government's role in the economy, Gordon Campbell told reporters "You have to ask outsiders what the government is responsible for... We have to set an environment that creates a sense of confidence in the people that are investing in British Columbia."

For the Liberals, making investors confident in B.C. has meant cutting taxes and tying government's hands. They imposed balanced budget legislation so that the provincial government could not play a counter-cyclical role, evening out the downturns in our resource-based, boom-and-bust economy.

They only lifted this constraint temporarily, with an election looming.

Killing development programs

The Liberals had moved quickly in their first term to eliminate a variety of economic development programs put in place either by the NDP or the Socreds, including the Fisheries Renewal Act, the Forest Renewal Act, the Industrial Development Incentive Act, the Natural Resource Community Fund Act, and the Small Business Development Act.

Sometimes the amounts involved were quite minimal, so the motivation behind the cuts appears to have been driven by ideology rather than savings. For example, the Science Council used to give out small start-up grants through the B.C. Technology Fund to entrepreneurs with innovative ideas, one of the first programs the Liberals put on the chopping block.

Tied up by TILMA

In 2006, the Liberals locked in this restriction on the role of government in a pact with Alberta: the Trade, Investment, and Labour Mobility Agreement (TILMA). TILMA is essentially a more extreme version of the NAFTA and WTO agreements, adding more to the list of things governments are not allowed to do. One example of how trade agreements really bite is physically embodied by the abandoned canneries along the B.C. coast. A trade panel ruled in 1989 that Canada's ban on the export of unprocessed salmon and herring was a violation of the first free trade agreement between the U.S. and Canada.

A key provision imposed by TILMA is that government cannot provide either direct or indirect subsidies that "distort investment decisions." You would think there are times when corporate investment decisions need to be distorted. Now, for instance, when corporations have decided not to invest, banks have decided not to lend, and regions are facing extremely high rates of unemployment. Williams Lake, the community suffering the worst jobless increases compared to any other municipality surveyed, has seen the number of its residents on EI go up by 189 per cent in the past year.

But TILMA was signed in secret so the public discussion around the pros and cons of permanently eliminating business subsidies never happened.

As well as prohibiting most kinds of business subsidies, TILMA obligates governments not to place conditions -- such as local hiring -- on investment crossing the B.C./Alberta border.

No more preference for local contractors

And then there's the ban on local preferences in government purchasing. In this election season, community papers are crowing about "local contractors" getting work because of the Liberals' infrastructure spending. But what most people don't know is that under TILMA, government-funded construction projects of any significant size cannot in any way be steered towards local contractors. Again, British Columbians did not get to debate whether or not they might want their municipal and provincial governments to include some kind of preference for local businesses when they buy goods and services.

TILMA's restraints on government were supposed to create eye-popping increases in economic activity. Colin Hansen has made this the centrepiece of his pitch for the agreement. The claims are still, all evidence to the contrary, up on the Liberals' website, which states "TILMA will add $4.8 billion to real GDP and is forecast to create 78,000 jobs in B.C."

Bad research, self-inflicted pain

When you drill down to find where these numbers came from, you get a frightening picture of the state of research being used to justify policy.

Businesses were asked, without ever checking what they knew about the agreement, to rank its likely effects. These rankings were magically translated into predictions of GDP and job increases.

John Helliwell, a UBC professor emeritus of economics, dismissed this methodology by saying "Since there was no research or quantitative base for this translation, it has no empirical basis, and hence cannot be treated as evidence.... In my view, this is an inappropriate use of the survey instrument, akin to estimating national GDP by asking households how they think everyone else is doing these days...."

Arguments are made, particularly by the B.C. Business Council, that the economic crisis is not the Liberals' fault and their government was helpless to do anything about it. But some of the Liberal government's helplessness was self-inflicted, and that they should be held accountable for.

Related Tyee stories:

[Tyee]

Ellen Gould is an independent consultant on trade and investment agreements. Read her previous articles for The Tyee here.

23 Comments:

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  • morechatter

    3 years ago

    I told you so

    And not because I have a crystal ball or read tea leafs or any of the above. I read and I read and I research and I talk some and then talk some more. And then after I have taken all there is avaiable and only then do I trust my intuition which rarely lets you down.

    The province is in the hole?
    The provine has gone through 8 years of untold wealth.
    How does that happen?
    It dosen't if you know what your doing?
    And the housing bubble that burst was just that kinda high risk speculation that is doing in small business as they are the first going down. And with 45% of new business in this province being small and the high rents and high costs because of rents are doing them all in? So real hard times ahead for business especially small.

    As Campbell's speech talks of looking into foreign markets? Go ahead look but BC can't even compete with the rest of Canada much less foreign markets.

  • G West

    3 years ago

    Fact is

    CEO government is not guided by research and empirical evidence; it is run like a religion, on ideology.

    An ideology whose chief priest, ALAN Greenspan, recanted in October of 2008.

    Apparently Mr Campbell didn't get the MEMO.

  • morechatter

    3 years ago

    BC Business Council Argues

    Well they love Mr. Campbell because he is their De Regulation King as he gives business the right to rape and pilleage the lands especially those from foreign lands. Now thats not nice letting strangers invest in our lands and letting business destroy our environment? And thats a given and its why business council needs their King because who else can break the laws out there. Or better yet make them as TILMA needs to find its way into the trash along with the rest of the Liberal's corruption. Oh yes don't forget take back BC Hydro and no more giving Business the right to destroy are lands in the name of profit while they get unprecedented tax breaks along with wealth while BC sits in the hole and her environment is destroyed.

  • ROBBINS Sce Research

    3 years ago

    there's something happening

    there's something happening out in Point Grey---UBC--spec--fed liberals out there-may be taking Campbell out---

    see Mike Smith and Stockwell Day--in today's province.

  • frenchy mcswede

    3 years ago

    the bc neo-liberals

    are rabid ideologists, their god and supreme being is bush, they are barbarians who sacrifice children, the sick, the dying and seniors at their bloody altar, whose latest butcher board is tilma. No wonder they refused to debate it. And any small business owner who thinks the liberals care about them should be forced to memorize the above very well done article.

    If we don't get rid of these PARASITES, our children and grandchildren will never forgive us. Once again, the bc liberal's are the MOST INCOMPETENT ECONOMIC "MANAGERS" EVER....

  • morechatter

    3 years ago

    Wanna know a Secret

    Remember all that controversay about homes for the east side and how they picked up all those hotels. Do you know what they did with them? They sold them when no one was looking. Thats right Coleman and Campbell ran around picking up hotels like they were doing something for the homeless and global does it media blitz on the subject while quitely Coleman turns around and sold them.
    http://thetyee.ca/News/2007/06/04/Homeless4/

  • Rod Smelser

    3 years ago

    Where are the university economists?

    During the Bill Bennett "Restraint" era there was no shortage of university economists willing to publicly criticize his administration for pursuing a pro-cyclical fiscal policy of spending cuts and tax increases that had the effect of unnecessarily lengthening and deepening the recession of that era.

    Where are the economists from SFU and UBC today, including those who have sometimes published works on such issues as income inequality with left-of-centre groups such as the CCPA? The answer is simple. They are still supporting Stephane Dion's Green Shift, even though it's been completely repudiated by Michael Ignatieff, and also supporting Premier Gordon M. Campbell's carbon tax.

    Simply put, they are not prepared to publicly criticize the government that they say accepted their advice on carbon taxes:

    http://www.econ.ubc.ca/green/carbon.doc

    http://www.econ.ubc.ca/green/let_list.doc

    Even if they disagree with Campbell and Hansen's budgetary approach, they are not prepared to do or say anything which would imperil the political acceptance of the carbon tax. Essentially, that's the same position in which David Suzuki's followers find themselves.

  • mcdull

    3 years ago

    Our new Slogan

    Our new provincial slogan is SELL B.C. VOTE LIBERAL. Now all the attack adds on Carol James and the NDP make sense.Bringing a little equality to our economy would hurt the Big Businesses. As I look for things that tell me who belong to the groups advertising I find the CFIB member sign and then or other business group and if they are using attack adds I boycott them. Remember to Vote for the man who took the GRIT out of the word INTEGRITY.

  • Frank

    3 years ago

    Ellen Gould

    Great article!

  • cfvua

    3 years ago

    Tilma etc.

    The time to debate tilma is May 12. any government who can't see the unfair advantage out of province businesses have should be put in the same position as local businesses and their employees-no job. This is especially true in the case of subsidized natural gas producers who bring in out of province services for all manner of readily available services. If tilma in fact eliminates subsidies, right on. Lets just recognize that as long as we have the PST we must collect on full invoice up front from visiting businesses. the precedent exists in the International Fuel Tax Agreement. Full tax paid up front and refunds issued when proven correct. IF they leave then maybe give a pro-rated amount back. This would put the touring business operators on the same footing as BC folks and maybe stimulate growth in some communities as companies would decide to locate in BC rather than just going on a poaching trip and thereby get acccess to all opportunities, not just the ones outside BC. Sometimes if you want the profit you can make here you have to ante up, just like playing at the back room big table in the casino. NO ante no play. We all know that at over $5 Billion a year in PST being collected it is not going away, so why not collect everything that is out there? Put the teeth back in the weigh scales and have tax collection right at the boundary crossing, much like it is for a resident when they purchase out of province.Then enforce a payroll tax for out of province business like the NOrthwest Territories do. As I have said the liberals can crow about lowering taxes all they want, none of it matters if I am not paying income or corporate tax due to the jobs my business could be doing going out of province and subsequently no purchases generating any PST. What is it that they don't get about such a simple concept?

  • jimorsheryl

    3 years ago

    How 'ya gonna spin this

    As released today by Stats Canada:

    "All the employment growth observed in April occurred in Quebec (+22,000) and British Columbia (+17,000), "

    Note to Editor, you may think you are doing a great job based on comments but you are just preaching to the choir.

    Your 'balance' is pathetic.

  • Grumpy

    3 years ago

    Balance, what balance?

    Today's Sun Editorial says Campbell deserves a third term!

    Ha, ha, ha, ha

    The Editorial should have read - None of the leaders deserve to be elected!

  • Skywalker

    3 years ago

    Sun endorses Campbell?

    Surprise! Surprise! LOL

  • Rod Smelser

    3 years ago

    jimorsheryl: The question is, how are YOU going to spin it?

    jimorsheryl
    As released today by Stats Canada:

    "All the employment growth observed in April occurred in Quebec (+22,000) and British Columbia (+17,000), "

    How are you spinning this item, jimorsheryl? Am I right in guessing that you see this as confirmation that the Liberals are good for business, and therefore good for labour too?

  • G West

    3 years ago

    jim or sheryl

    EDITED FOR PERSONAL INSULTS -- TYEE MODERATOR This is a direct quote from the CTV/BC story on the employment numbers:

    Quote:
    Canada boasted a surprising 35,900 new jobs in April as the unemployment rate remain unchanged at 8 per cent but economists say they're not convinced it's an indication that the economy is set to recover from the current deep recession.

    Quote:
    The job gains were the result of an increase in self-employment, Statistics Canada reported Friday but economists warned about "trusting" the figures.

    Quote:
    Michael Kane, reporter with the Business News Network, told CTV Newsnet that there could have been errors in reporting during the survey.

    Quote:
    "Perhaps somebody, when survey is conducted, they say 'I lost my job but I'm working for myself now,'" he said.

    EDITED FOR PERSONAL INSULTS

    And, btw Rod, that's a pretty good line from Michael Kane, don't you think?

  • J.McIntyre

    3 years ago

    How Campbell Tied His Own Hands as Economy Plummeted

    We’ve been wondering why our creative industries, which has the second highest GDP in BC after forestry and employs over 78,000 people, is barely mentioned in papers or the Liberal platform. How can we trust that the Liberals have the soundest economic vision to lead us through these tough economic times when they are punishing a tried and true economic stimulator? Their proposed budgets cuts to BC Arts Council of nearly 50% over the next three years will cripple if not destroy art communities throughout the province. Belt tightening is an absurd notion when their own studies have shown that the government recoups in provincial taxes at least 138% of every dollar invested in the arts, while a Conference Board of Canada study has put that figure at 184% return on investment. Now you might not understand an artist‘s work but supporting him/her clearly makes good economic sense. Moreover, our cultural industries are integral to creating healthy and vibrant communities. Artists literally spin clay or paint into gold, audiences into communities, and communities into destinations. Everyone has witnessed how artists have gentrified local neighbourhoods and some like Chemainus and Port Moody have let their artist help define their cities to attract new settlers and tourists. Imagine what artists could do with a province if given a chance!

  • Frank

    3 years ago

    Bias

    "Today's Sun Editorial says Campbell deserves a third term!"

    Just as they supported him every time he's ran back to 1996.

    In fact, I believe the Sun in the past 40 years has only endorsed the NDP once, Harcourt.

  • larry elford

    3 years ago

    government sells us out financially

    Perspective from an Alberta writer, that applies to each and every BC resident as well. 

    Bank of Canada governor Mark Carney,  said yesterday in our local paper said that “the Central Bank had warned years in advance about the risks in the $32 billion dollar ABCP market......”  It was ignored.

    Those warnings could have saved us billions. 

    Now we learn that the BC Securities Commission,  sold or gave away the public interest of protecting you from these toxic investments.  The Commission took payment from “about 20 investment companies” (according to my Alberta Finance dept) to allow these bad investments.  Something which, without this exchange of money to the commission, would otherwise be illegal in your province.   I am having difficulty imagining a system whereby a crown corporation will accept money to allow persons to violate our laws.

    We would not accept toxic products sold into our food supply system?  We would not accept toxic infections entered intentionally into our health care system?  But here we have knowingly, in exchange for money, accepted infected investments into our financial system.

    My questions for our Finance Minister:

    What possible public interest is served by accepting money in exchange for allowing our laws to be violated?

     Why are such transactions done outside of public view, with no ability to accept public input and no public notice when these known toxic products are then put on sale to our consumers?

    Why does it appear, that despite numerous notices, and millions lost, that your ministry seems more intent on protecting the ASC, or suppressing investigation into this matter, than in protecting the public of Alberta. 

    These same questions could be asked of each responsible minister in every province and territory of  Canada that has a Securities Commission.  Each one has copied these actions under the "passport" system of cooperation.

    Larry Elford ,

    Lethbridge, Alberta
    www.investoradvocates.ca

  • WHAT

    3 years ago

    morechatter

    Nice post,,,facts before fiction...I totally agree.

    A fair number of my friends, colleagues, etc who started a roofing, siding, framing (etc) business are all seeing dramatic slow downs if not a halt in the number of prospects coming down the funnel...I feel for them. I hope it picks up for their own sake and their employees too...Who can buy a house at $300,000 - 400,000 + (in a rural area paying $8-17 dollars an hour..Yes some get paid more, but most of them aren't working at the moment...(the freedom 55-60 boomers were basically fueling the boom, assets handed down from their parents came to be valuable all of a sudden, waterfront property all over the place went up dramatically, (1 million plus in the middle of no where at that). What happens when nature takes it course and they move on....can their children move in,,(wait there are hardly any well paying jobs to support high mortgages.

    In Qualicum Beach,,the local newspaper is full of rental houses, suites etc...two years ago they have maybe ten rental house listings, now they are over 40 in the local newspaper...etc... Another point, a rental house used to go for Victoria prices, now....they are back down to reflect the employment and wages of the area...How about this, everyone is trying to sell their houses, before the values go done,,,,I drove to Campbell River and you should see the little real estates signs on the waterfront,,,I thought at first they were elections signs....nope...each corner had about 5-10 real estates signs....People looking to sell before the prices come down...I would be doing the same thing if I bought in at $400,000 - $700,000....wouldn't you....

    I want everything to improve, but not at the expense of trying to trick the public into thinking that it will happen tomorrow...Things take time to correct,,,I know no-one wants to hear that. IF you are sick you usually don't get better overnight and this isn't a 24 flu...Let's create sustainable jobs, by investing in public owned renewable energy...

    CEO's are all about presentation,,,ask them to debate in the spotlight,,,I wonder if they would agree, some of our politicians won't even debate....now that is scary! Jobs will come back,,but our integrity is at risk. Please...all voters do some research, you can find the truth! Just take a couple of minutes and search for it...

  • freebear

    3 years ago

    What for Premier!

    What up !

    What has it down!

  • jimorsheryl

    3 years ago

    G West

    EDITED FOR PESONAL SNIPING -- MODERATOR

    I am not 'spinning' these numbers one way or the other. I am simply pointing to a stat which a group oft quoted is reporting.

    The fact a large number of the newly self employed decided to stay in BC speaks as much to the desirable geography as to governing party.

    I realize in the perfect NDP world everyone would work for the government and that government would take care of everyone in eutopia.

    The only fundamental problem with that scenario, is that the government has no money of it's own.

  • G West

    3 years ago

    jimor sheryl

    That's just baloney.

    It's all right for you to insult teachers and civil servants but it's not okay for me to call you jim'o or to suggest that someone who signs him/herself wouldn't use 20 fingers on the keyboard.

    The fact that two pairs of hands contain 20 fingers isn't much of an insult.

    But, if it makes you feel better, I'm sorry.

    I'll expect an apology from you for implying that teachers, civil servants and people who support the NDP are all mindless slugs.

    By the way, as I told you on another thread, I'm a self-employed professional...and I'm not a member of ANY political party.

    Once again, cheers.

  • cw

    3 years ago

    Reminds me of an old saying

    "Yes friends, I am the man you can have CONFIDENCE in, so send your contributions to me, CONFIDENCE MAN, care of radio station XERF, Del Rio..."

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