ROB Insight is a premium commentary product offering rapid analysis of business and economic news, corporate strategy and policy, published throughout the business day. Visit the ROB Insight homepage for analysis available only to subscribers.
Christy Clark has just pulled off an unusual feat. The British Columbia premier's Liberal party won an unlikely re-election by campaigning on the economy – at a time when the province's economic performance looks more like a political liability than a strength.
This election was won not on a strong economic track record, but rather on a "the other guys will do even worse" theme. A clever marketing pitch to win (scare?) over voters, but delivering an economic renaissance for the province may prove much harder. Let's consider where the B.C. economy stands – not exactly on the kind of stable ground you'd like when you've just pledged to get an economy back on its feet.
British Columbia's real GDP grew a scant 1.7 per cent in 2012, the third year in a row that it underperformed Canada's overall economy. Economists don't expect it to do any better this year – putting it on track to be one of the country's weakest provincial performers. In a national economy that increasingly has been driven by the resource-rich Western provinces, B.C. has become the West's weak sister.
The Liberals' tax policies won't help. Last month's B.C. budget, which took aim at the province's deficit, included a temporary income-tax hike on high-income taxpayers and a permanent one-percentage-point increase on the provincial corporate income tax rate. The C.D. Howe Institute predicted the tax hikes will be a drag on spending, corporate investment and economic growth – resulting, ironically, in government revenues falling well short of their book-balancing targets.
The slumping B.C. housing sector is also weighing down growth. The huge (and previously booming) Vancouver housing market has posted nine consecutive months of home-price deflation, and home sales posted their weakest April in more than a decade. No turnaround is in sight.
B.C.'s unemployment rate stands at 6.4 per cent, in the middle of the pack nationwide but the highest in the West. Over the past 12 months, B.C. has shed more jobs than any other province in the country.
Despite being Canada's gateway to the Asian economic boom, B.C.'s exports as a share of the province's GDP haven't budged in the past three decades. The province's total exports, by value, have shown virtually no growth in the past 10 years.
British Columbia accounts for 13.2 per cent of Canada's population, but only 7.4 per cent of the country's head-office employment. Businesses intend to reduce their capital spending in the province this year, one of only three provinces expecting a decline. The government's reluctance over pipeline investment, and its recent corporate tax hike, do nothing to improve its image as not a particularly friendly environment for businesses to set up shop.
Ultimately, Ms. Clark's ability to deliver improvements, on all these fronts, boils down to a single word: Pipelines. Moving energy resources to B.C. ports and shipping them to Asian markets will change the economic game for the province, attracting business investment and reviving employment.
So far, all we can see from Ms. Clark's government is that it is open to pipeline development and energy exports, under the right conditions. Still, that's more than we were getting from her NDP opponents. On the rocky road to solving B.C.'s economic problems, at least it's a starting point.
David Parkinson is a contributor to ROB Insight, the business commentary service available to Globe Unlimited subscribers. Click here for more of his Insights, and follow him on Twitter at @parkinsonglobe.