B.C.’s economy is in relatively good shape compared to other provinces as the NDP government prepares for a year where the COVID-19 pandemic is easing, the B.C. Business Council says in a pre-budget analysis.
But the tax environment is affecting competitiveness, working against the provincial government’s push to move B.C. to a more high-tech economy with hundreds of millions in innovation, clean energy and skills training spending ahead.
Finance Minister Selina Robinson is preparing to release B.C.’s 2022-23 budget on Feb. 22. A forecast deficit for the current year has shrunk from nearly $10 billion to $1.7 billion, including large contingency funds, but much of that is likely to be expended this year on massive reconstruction of flood-damaged highways and recovery of Lytton, Merritt and the Eastern Fraser Valley.
The skills shortage is significant, particularly in senior management roles where top executives are faced with an personal income tax rate of more than 53 per cent, BCBC chief economist Ken Peacock said Friday. And B.C. competes with the U.S. Pacific Northwest, where Washington has no state income tax, as it hopes for more investment from technology giants such as Amazon and Microsoft.
B.C. already has Canada’s highest offered wages, but attracting young people to the province to replace retiring baby boomers and build new industry is held back by high income taxes and housing costs, Peacock said Feb. 18. Despite the wages, B.C. has the highest number of job vacancies among provinces.
— Tom Fletcher (@tomfletcherbc) February 18, 2022
As Premier John Horgan and Jobs Minister Ravi Kahlon said this week in updating the province’s economic plan, resource industry exports continue to be key to the province’s future growth. B.C. has the highest carbon tax in Canada, without protection for exporting industries as other jurisdictions have, and measured as a share of gross domestic product, B.C. and Canada’s exports are at the same level as in 1980.
“It needs to change,” Peacock said of industrial carbon costs. “It’s becoming very onerous.”
B.C.’s clean energy transition requires copper and other minerals. Last January B.C. cabinet ministers were reminded that it takes an average of 13 years to approve a new mine in the province.
“The regulatory environment and permitting absolutely have to be addressed,” Peacock said.
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The province announced on Friday a series of rural development grants in the Nicola Valley to support economic development and diversification.
This is the next step in the StrongerBC Economic Plan and the ongoing recovery efforts in Merritt following the floods in November last year.
“People in Merritt have been through a lot in the past year, and they know how important business recovery is for community rebuilding,” said parliamentary secretary for rural and regional development Roly Russell in a press release.
The provincial government is providing a $1-million rural development grant to the Small-Scale Meat Producers Association to build a community abattoir in the Merritt area.
This will provide meat processing and cut-and-wrap services to local farmers and ranchers.
“This project represents significant job and economic opportunities for the region, while ensuring local ranches, abattoirs and businesses are part of a strong, resilient B.C. food system,” said minister of agriculture and food Lana Popham in a press release.
“With the recent changes to B.C.’s meat-licensing system and investments in facilities like the Nicola Valley community abattoir, this revitalization of the small-scale meat industry makes it easier to produce, buy and sell B.C. meat in our rural communities, and helps strengthen our food security and food resiliency.”
The abattoir will be a government-inspected licensed facility with a full range of services to process red meat.
According to the province, local producers have been impacted by the lack of processing capacity. Julia Smith who is a pork and beef producer in Merrit is hopeful this new facility will help her business as well as other local producers.
“My partner and I moved to the Nicola Valley in 2016 planning to expand our business to meet the growing demand for well-raised, local meat. But we soon found that the processors we relied upon were not able to keep up with our production and we had to scale the business back instead of growing it.”
More than 900 people still displaced following Merritt flooding last fall
“We were on the verge of giving up. But now we are ready to press on, because this facility will allow us, and other local family farms and ranches, to grow and thrive while providing greater food security for the community.”
The province is providing a $1-million rural development grant to the Scw’exmx Tribal Council toward Gateway 286 in Merritt.
“After an unbelievable year of fires, floods, and a pandemic, we welcome the B.C. government’s $1-million grant that will bolster our rural community, support good-paying jobs and much-needed economic development,” said Spayum Holdings LP director and Scw’exmx Tribal Council Terrence (Lee) Spahan in a press release.
“The Gateway 286 project is a 30-plus-year vision of past and present Nicola Valley Indigenous Chiefs and these monies will take our commercial and tourism development one more step closer to reality. This project will enhance the experience of the [traveling] public by providing much-needed services, and it will provide good-paying jobs and entrepreneurial opportunities for the residents of the Nicola Valley.”
Meanwhile, the City of Merritt is receiving a $500,000 grant related to economic recovery for communities that were affected by the flooding. The grant will go towards completing economic development projects and initiatives to support long-term economic recovery.
This is in addition to $329,000 in provincial funding for the City of Merritt to update flood-hazard mapping and develop new flood-mitigation plans.
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