Blogging the West

No, the West is not Alberta as everyone in Ontario seems to think (I’m from Toronto so I can say that). I mean BC, where an election is on in two months. You would not really know it walking around Vancouver, probably because the writ has not yet dropped, so we are in the calm before the storm.

I’ve been moonlighting over at the Lead Up, the CCPA’s pre-election BC blog. There is a lot of great content there for those interested in “the regions” (in Ottawa-speak). I have compiled below a few of my recent posts from the Lead Up (mostly of local interest) for the BC-philes out there.

BC unemployment rate surges to 6.7% (updated)

March 13th, 2009

The hurt is on. After jumping to 6.1% in January, the ranks of BC’s unemployed swelled by 14,200 in February, pushing the unemployment rate to 6.7%, its highest level in five years. Given that February is the shortest month of the year, one can only imagine how bad things would have gotten had it been one of those brutal 31-day months.

Technically speaking, the number of employed dropped by 4,900 and the size of the labour force grew, so we have to be careful about the numbers. These are also monthly survey data, which have some swings to them, so we should mostly note the trends. But the conclusion is inescapable: this is bad and it shows the utter state of denial of the BC government, who just weeks ago in their 2009 budget forecast that the unemployment rate for the entire year of 2009 would be 6.2%. In fact, we are likely to see an unemployment rate above 7% by the time we vote, perhaps pushing 8%. I’ve been musing that unemployment rates would close the year in the 8-9% range; if present trends continue, that will have been overly optimistic.

BC Stats has the full set of numbers and breakdowns by industry and other key characteristics. Total employment in the good-producing sector, which constitutes much of the primary employment and income that supports other (mostly, service-oriented) jobs in the economy, fell by 8% compared to a year ago. After a large drop in January, construction employment was essentially the same in February, which is a relief in the short-run anyway. The big challenge for 2009 is going to be rising unemployment from this sector as projects wind up, and new ones are not there to replace them (housing starts are down 70% according a report earlier this week).

In the service sector, total employment is just below where it was a year ago, but down quite a bit from its peak in June 2008. Losses in a number of sectors have been kept at bay by some growth in the public sector, notably education, and health care and social services (offset somwhat by civil service cutbacks). So thus far, the public sector is cushioning the fall – we certainly do not want to pile on right now with major public sector cuts, although that would appear to be the case given a read of BC Budget 2009.

Beggar-thy-neighbour politics in Metro Vancouver

March 13th, 2009

Surrey Mayor Dianne Watts made the news this week calling for property-tax-free zones in Surrey to attract new business to her city. Of course, in a climate where businesses are not making new investments, this will at best lure businesses from other parts of Metro Vancouver. Economists call these beggar-thy-neighbour policies because you can only get ahead at someone else’s expense, and on a grand international scale they were part of what made the Great Depression so great.

Yet, on the front page of the Vancouver Sun, Miro Cernetig opines that this is wonderful, and makes a sneering comparison to Gregor Robertson, arguing that the economic policies of the new Vancouver mayor amount to chicken coops in the backyard and organic veggies on the city hall lawn. Cernetig goes on to quote an anonymous provincial bureaucrat saying that “Vancouver has no economic plan”, which is ridiculous given the source – the provincial government is still officially in denial about the deepening economic crisis, and its strategy amounts to building a $5 billion super-bridge across the Fraser (officially, $3.3 million but no one believes that target will be met) and waiting for the Olympics.

Besides, the City of Vancouver has been preoccupied getting the house ready for those very Olympics, and athletes’ rooms are in a shambles. And what about eliminating homelessness? That is good for business, is it not? Cernetig’s comments are more than a cheap shot – he endorses a race to the bottom that will have the impact of further reducing municipal services so that businesses can get more tax cuts.

Cernetig points to a Microsoft office that ended up in Richmond not Vancouver (this was in 2007) as further evidence for his thesis. But does this really matter? From Microsoft’s perspective they see Vancouver as Metro not the City. And why shouldn’t Richmond get more corporate offices, as it needs greater economic diversity?

This us-versus-them frame is unfortunate. With an election coming in just two months, the real topic of discussion should be about the future of Metro Vancouver and what can be done to create greater harmony among cities, not more division. For example, most cities in Metro have “economic development” offices, such as the Vancouver Economic Development Commission, specifically tasked with finding locations for businesses that want to set up shop here (this is a very narrow conception of “economic development” but that is another blog post). What we need is a Metro-wide organization that does this function, so that individual cities are not spending our tax dollars competing against each other.

Moreover, citizens of Metro Vancouver need more say over what happens in their individual cities and in the region. The trend has been in the opposite direction, with the somewhat-democratic Translink turned into a totally undemocratic board of directors by the provincial government. Cities, and perhaps the region as a whole, need more powers of taxation so that they can address pressing issues without being reliant on property taxes. And they are very limited in terms of how they act to fight the recession.

We need some public debate, even if just among the Liberals and NDP, about a vision for the region. If we are left with beggar-thy-neighbour politics, our reputation as one of the world’s most liveable cities will be tarnished before long.

Social assistance caseload way up

March 15th, 2009

In our pre-budget Reality Check, we noted that a recession would lead to upwards pressure on social assistance expenditures. The 2009 Budget notes that every 1% increase in the temporary assistance caseload increases expenditures by $3.5 million (and $7 million for the disability caseload). During a major recession it would not be unrealistic to project that this could translate into cost pressures in the hundreds of millions of dollars. And that is not mentioning the various punitive reforms made to the system that make it much harder to get on to access what is a very meager level of benefits.

Alas, in its 2009 budget the government planned for only a small rise in temporary assistance caseload of 6%, and for the total caseload, 4.6%. We noted on budget day that given a then-50% (now 60%) increase in the numbers of unemployed over the past year, the budget is essentially on a different planet.

So just as February’s unemployment rate has exceeded the budget’s projection for the whole year, budget projections for social assistance are essentially out the window a month after the budget was tabled. As reported in the Sun:

Welfare numbers in B.C. soared by 36.5 per cent in January compared to the previous year, and government expects the figures to keep increasing. Between January 2008 and January 2009 — the last month for which the province has figures — the number of people in the temporary assistance/ expected to work category rose from 20,800 cases to 28,391. In the month between December last year and the end of January this year, the caseload increased by 10.8 per cent.

The grim reality that this recession is going to be worse than the BC government is admitting. That increase alone if annualized will add about $128 million to provincial expenditures, and I would not be surprised if the caseload continues to rise at a rapid clip over the remainder of 2009.

But let me get this straight: when the budget was tabled in mid-February, the government did not know that the social assistance caseload from January had shot way up? Surely, it cannot be correct that the officials in the Ministry of Finance were ignorant of this fact, even if just anecdotally, even though everyone has been talking about a recession for months, and even though this is a major source of cost pressure in the budget.

Well, now that Alberta is doing it …

March 17th, 2009

You could say that BC is more than a little sweet on Alberta. We love their individualistic, tax-cutting, tar-sanding grit. Can’t get enough of it. We even signed a silly economic agreement called TILMA (the BC-Alberta Trade, Investment and Labour Mobility Agreement) so we could be more like them. If Alberta went and ran massive budget surpluses while ignoring social services, we figured we could do that too.

But there is a new sheriff in oil town. And one bold new initiative is to end homelessness within ten years. As reported by the Wellesley Institute:

The Alberta government … released a dramatic plan to end homelessness in 10 years by committing $1.2 billion in capital investments and $2 billion in operating funding. The plan – based on the “housing first” approach (which provides immediate housing and then offers supports as required) – will lead to the creation of 11,000 new homes by 2012, according to the provincial government. Full details, including funding and implementation lines, will be released in next month’s provincial budget. Alberta’s plan – the first of its kind among the federal government and Canada’s provinces and territories – builds on top of a record of dramatic increases in affordable housing investments in recent years. Alberta cut provincial affordable housing investments in the early 1990s, as did many other provinces, but has dramatically increased investments in the past couple of years.

From fiscal 2007 to 2008 (the latest year for which numbers are available), Alberta’s housing investments jumped 140% to $4.57 billion – a record increase compared to other provinces. With today’s announcement, Alberta’s investments are scheduled to continue to increase. The critical details of the Alberta plan will be closely scrutinized by housing experts (more detailed analysis from the Wellesley Institute will follow), but the news has surprised more than a few housing advocates who don’t expect the Alberta government to be blazing the lead on critical social policy issues such as affordable housing. Compared to Ontario, for instance, Alberta – at about one-quarter the population – is making investments in affordable housing that are substantially higher than Ontario, which is leading to the creation of more affordable homes in that province. Much of the credit for today’s announcement goes to active and energetic housing groups in Calgary, Edmonton, Red Deer and many other municipalities which created local 10-year housing plans and then “uploaded” the requirements to meet those plans to the provincial level.

So now that Alberta is doing it, let’s hear the Liberal and NDP plans to do the same. So how about some time lines and targets? Here is what Minister Coleman had to say when we released our poverty reduction strategy (which includes homelessness but is more comprehensive in addressing poverty overall):

“We’re committed to ending it, but they say, ‘Give us a time frame.’ You know what, it’s just not possible because you don’t know how many people with mental health and addictions are coming at you at any given time, so what you do is you do the job based on the population you have.”

The response from the Leader of the Opposition was only somewhat better:

“I think those are ambitious targets. I don’t know if that’s realistic, but I think you have to start somewhere.”

Actually, we did have a good news day today, as the BC government announced $300 million in new housing investments that will create 569 units in Vancouver and 478 units elsewhere in the province. I’m waiting to see the fine print, and while acknowledging that this is a good start, it is a bit late in the game. About six years ago we flagged the problem of poverty and homelessness as something that needed to be tackled – if only because the Olympics are coming to town. Yet, only now, right before an election, are we starting to see some action, and relative to Alberta the numbers are still on the small side.

9 comments

  • In that last post (no comments over at the Lead Up?), who is this “we” you’re referring to? It’s no British Columbian I know. So you must mean the BC Liberals.

  • I’d say the Liberals, plus the media consensus. You know, the usual Canwest-Global suspects and so on.

  • You are right: I was using “we” in a colourful manner, largely in the context of the elites in business and government who run the province. Call it literary license for a blog post.

  • UPDATE (March 23): An email from Jenny Kwan, the NDP critic on this issue (and my MLA) informs me of a policy release two days before I made my blog post:

    “The NDP commitment is to end the crisis in homelessness in 5 years with annual progress reports to the legislature on how that target is being met. The primary mechanism will be investing in a new housing program with 2400 units in year one and 1200 annually to year 5 – there will be support services connected. This is a total of at least 7200 units. We will reallocate the existing $250 million B.C. Housing Endowment Fund to kickstart the expansion of social housing immediately.”

  • I can never understand why so much emphasis is put on building public housing units. Why not just give them money?

    “Many countries provide large in-kind transfers although standard economic theory says cash transfers would be more efficient. Here is some new evidence evaluating the many justifications for in-kind transfers; it seems paternalism is the most likely explanation.”

  • Stephen,

    I have a lot of sympathy for that argument. If low income people have a housing problem one obvious solution is to give them more income. That said, I would like to see more of the heavy lifting done in the labour market itself, through structural mechanisms like higher minimum wages and more unionization. Otherwise, more transfers to low income people have to come from other people’s taxes and thus face a larger political hurdle.

    At the same time, housing has more than its share of market failure, and policies need to guide the creation of new housing stock that is indeed affordable. Here in Vancouver we spend most of the past eight years building condos and duplexes with marble counter-tops that would necessitate a massive income transfers if low-income people were to be able to afford them. So ultimately, I think there is merit in creating incentives for greater rental stock and public money to create social housing stock as part of the solution.

  • Once upon a time it was thought that public housing could play a dual role and save taxpayers’ money at the same time.

    Build enough public housing with rental rates at some reasonable fraction of income and effectively set a ceiling on rental rates for low income housing. At the same time given the government was paying many of these rents anyway it would also cut costs on housing those on welfare over the medium to long terms (in terms of housing costs to the government).

    Then came along a big bad silver tailed wolf with a two dimensional ax which graphically represented simultaneously guns and butter, bread and roses, low income housing supply and average rents…blah blah blah fish paste: conclusion the idea would not work.

    The government not really impressed by the graphic but fearing wolves more than lambs (lambs tend not to vote) switched to paying rent directly to slum lords.

    The slum lords knew the government was short of (wy)man-power to enforce minimal housing standards and that the tenants were without power to with-hold the rent because it was being paid directly to the slum lords and hence they could not exercise any power: save for choosing another slum lord where the government paid the slum lord directly.

    The wolves beamed with satisfaction: the government had listened to well buttered scientific reason. Their cousins, the red tailed wolves (slumlords) grinned from ear to ear as their canines dripped with red stained profits. Indeed, all was well in locus land, and all was as it should be for ever more.

    Then came along some woodsman who suggested taking an ax to some of the wolves and teaching them to be scared of humans and at the same time building safe cottages for the citizens of Disenfranchised Ville.

    Just then, as fate would always have it, or ideology as the case may be, a wolf in sheep’s clothing arrived and yelled: “PATERNALISM.”

    And then the idea died and all was as well as it could be in lotus land.

    Tune in next week for the second episode wherein we learn minimum wages and food standards are naked paternalism too!

    Or just by buy Ayn Rand and get all the episodes in advance. http://www.aynrand.org

    Although I should say I do agree that the anti-smoking legislation is paternalistic. Am I an addict: you bet!

  • I dunno. It just seems to me as though every time someone says “Why don’t we give money to poor people?”, the Conventional Left response is to come up with reasons for why it’s not a good idea.

  • Yep the left-right dichotomy fits exactly with my recollection of the debate over welfare cash benefit levels and then the later debate over UI replacement rates during the 1990s.

    And come to think of it, that fits exactly with the description of what happened during the latest debates over EI and the federal budget. The NDP wanted to claw back replacement rates and the Cons and Liberals were adamant that they had to be increased. But in the end the left won and we got a little cash for paternalistic training schemes instead.

    Sure is good we have had such a vocal center and right demanding direct cash payments to the poor and the temporarily impoverished!

    This would be a bang on description if we lived in Russia.

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