January 10, 2009

BC in Recession?

Governments frequently release bad news around quitting time on Friday afternoons. The Campbell government did that trick one better when it released welfare statistics late on the afternoon of New Year's Eve. Those statistics showed the number of cases classified as "temporary assistance expected to work" up 24.3% in November 2008 relative to November 2007. The increase was startling but only the latest jump in a trend that started in July when the "expected to work" caseload increased by 16.3% relative to July 2007. The total welfare (BC Employment and Assistance) caseload, including disabled, increased by 7.2% between November 2007 and November 2008.

Welfare statistics aren't the only indicator of an economic downturn in British Columbia. Statistics Canada reported that the number of British Columbians receiving regular employment insurance benefits in October 2008 (the latest data) increased by 18.2% relative to October 2007. That increase was only exceeded in Ontario where the increase was 18.4%. Alberta was third amongst the provinces with an 8.2% increase, far behind Ontario and BC.

On a seasonally adjusted basis employment in British Columbia peaked at 2.3251 million in August 2008. The latest numbers from Statistics Canada show employment in December at 2.3029 million, down 22,200 from August. The drop is almost entirely due to construction where employment (seasonally adjusted) peaked at 235,300 in September 2008; in December it was down by 21,800 to 213,500.

The welfare, employment insurance and labour force survey statistics all suggest that BC has been in an economic downturn, perhaps the beginning of a recession, since last summer. Estimates of GDP by province are only available on an annual basis, but the statistics that are available with greater frequency suggest that economic growth in BC has turned south. You don't have to tell that to anyone who is trying to sell their house, and you certainly don't have to tell that to anyone in the forest industry.

It is time for Premier Campbell and Finance Minister Colin Hansen to admit that BC is not in a shelter where the winds from the global economic disaster are minor. The Premier has taken no action since trying to make it look like he was doing something on the eve of the October by-elections. In 1983 the BC government responded to recession by radically slashing services. In early 2002 the Campbell government cut even deeper, creating problems that are still being felt today in areas like child protection. There is every reason to suspect that if Gordon Campbell is given a blank cheque for a third term he will turn to his old ways and balance the budget on the backs of those who most need the social safety net. In 2001 he promised the Hospital Employee's Union that he wouldn't gut contracts, and then broke his word. That is why it is difficult to believe what he says in the run-up to the May vote. For whatever his credibility is worth, Campbell needs to say what he will cut if he insists on balancing his budget. It would be trivial for government to have the legislature amend the law that requires a balanced budget so as to remove the requirement until recovery begins. Don't believe the figures that are presented in February; everyone knows the legislature will be adjourned before that budget passes and a new budget will presented by September following the May 12th election.