July 3 , 2009

BC Liberal Gov Economic Spin

The right side of the main BC Liberal government website contains a long list of links, some as graphics, a few as text. Way down the list is "positive economic indicators". With job losses and welfare claims mounting, we could all use some positive economic news. The only problem is the website is full of misleading information and half-truths.

As of July 2nd, the first item on the positive site says: "In May 2009, B.C.'s average weekly wage rate was approximately $790 per week, the third highest in Canada. The average weekly raise has risen by $142 - or 22 per cent - since 2001 ($648)." The Liberal government likes to make comparisons to 2001, the year it came to power. The positive news doesn't mention that over on the BC Stats website a monthly report is available on earnings and employment trends. Table 2.1 in the May 2009 report (issued June 5) shows that in 1999 BC had the second highest average weekly wage rate in Canada. Alberta's average weekly wage rate didn't pass BC's until 2004 when the average in BC was $686.74 and the average in Alberta $703.63 (Ontario $721.00). Also not mentioned in the positive news is that the $16.89 lead Alberta had in 2004 grew to $125.84 in May 2009; in 1999 BC was $34.25 AHEAD of Alberta.

The second item on the positive news site says: "In March 2009, the value of non-residential building permits was worth $307 million, an increase of 30 per cent compared to the same time in 2008." That sounds good until you look at the Statistics Canada report that is the source for the "positive news". It says:

"The value of building permits increased in half of the provinces in March."

"The most significant increases occurred in Ontario (+45.7% to $1.8 billion), Quebec (+30.3% to $1.0 billion) and Alberta (+34.1% to $696 million). The increases were mostly a result of higher construction intentions in the non-residential sector."

"Declines occurred in the Atlantic provinces, except for Newfoundland and Labrador, as well as Manitoba and British Columbia."

On a seasonally adjusted basis, the value of residential building permits in BC in March 2009 was $223.82 million; in March 2008 it was $670.86 million, a devastating drop of $447 million.

The third item on the positive news site says: "Despite the global economic downturn, the number and value of major construction projects planned or underway across British Columbia went up during the fourth quarter of 2008, with 880 major construction projects, worth an estimated $179.4 billion." Not mentioned on the website was that: "Forty-nine major construction projects are on hold, worth an estimated $14.2 billion". While not on the positive news site, that information was in the Ministry's February news release and in the project inventory report.

The Major Projects Inventory for the first three months of 2009 is now available but not what it says is not mentioned on the positive news site, namely:

"The capital cost of all major construction projects currently under construction in BC is estimated at $63.2 billion, up from $60 billion in the fourth quarter of 2008. Many major project proposals are listed In the preliminary stages and are not approved for construction; therefore, capital cost estimates should be viewed with caution."

You can say that again! In other words, don't believe the numbers.

The first quarter 2009 report goes on to say: "The available capital cost of proposed projects is estimated at $102.7 billion, down from $105.0 billion in the previous quarter. Approximately $18.3 billion of projects are judged to be "on hold" for the time being." The positive news website could have said that major projects on-hold increased by $4 billion, but that wouldn't be positive.

The fourth item on the positive news site says: "The 2008-09 fiscal year oil and gas land rights sales total of $2.4-billion trumped the previous record-breaking year by $1.2 billion, and broke every tracked record for oil and gas land rights sales in British Columbia." Sales of drilling rights may be the good news story, but this is not a bottomless pit. The government must take the revenue in over several years, showing it as deferred revenue on its balance sheet. That deferral increased from $1.7 billion in 2007 to $2.4 billion in 2008 (Note 15 in 2008 Public Accounts). It will be interesting to see that updated note when the next set of Public Accounts are released in a few weeks, but government needs to think about what happens when the non-renewable resources are exhausted (or at least when the drilling rights are exhausted). Just look at Alberta's deficit to see what happens when good luck with oil and gas runs out.

Why does the Liberal government continue to promote "positive economic news" on its website despite all facts to the contrary? Perhaps the almost hidden placement of the link to the positive page is a hint; they might fear the news coverage if they admitted the well has run dry and eliminated the link.

Since May 2008 over 21,700 people have joined BC's welfare rolls, and over 60,000 have lost their jobs. Those people aren't interested in government spin about positive economic news.