The Housing Bubble Is Over: Trouble Is Brewing

The BC economy’s unbalanced and inequitable growth : Policy Note

Jul 22, 2016     By

Skyrocketing property transfer tax revenues have been in the news the past few days, but the bigger story, well-documented in a recent Huffington Post article, is how dependent the entire BC economy is on the unsustainable and socially damaging housing market.

It is instructive to reread the 2012 BC Jobs Plan to see how far the economy has diverged from what was intended.

The core of the Jobs Plan was natural resource development, with more efficient regulatory processes and the pursuit of new markets in Asia. It was, at its core, all about LNG, mining and other resource sectors.

Though well masked by the housing bubble, there clearly is the need for a new economic development strategy in BC.

However Statistics Canada data clearly shows that didn’t take place.

There has been growth in the BC economy over the last four years, but over one quarter of the total growth in BC’s gross domestic product (the standard measure of total output in the economy) has been in real estate services. And real estate services combined with residential construction has accounted for over one third of the entire growth in the economy over the last four years.

Resource industries have made no significant contribution to the growth of the BC economy. Output in agriculture, forestry and fishing has been flat, and in mining and energy there has been a decline in output since the Jobs Plan went into effect.

What we are witnessing is not just unsustainable, but also unbalanced growth. The table below, showing unemployment rates by region in the province, clearly indicates the disparity between regions benefiting from the housing boom and the rest of the province:

  • Unemployment rates in the south coastal region over the last four years have fallen to very low levels, but have increased everywhere else.
  • In the Northeast the rate of unemployment is as high or higher than what Alberta is experiencing.

Unemployment Rates by Region
(Statistics Canada Labour Force Survey)

June 2013 June 2014 June 2015 June 2016
Vancouver Island / Coast 6.3 6.6 6 5.1
Lower Mainland 6.6 5.8 6 5.3
Thompson-Okanagan 6.5 5.7 4.9 7
Kootenay 5.8 6.7 7.3 7.5
Cariboo 5.6 7.1 7.9 7.8
North Coast / Nechako 7 9.8 7.5 8.1
Northeast 4.8 5.9 6.1 9.2

In addition to being regionally imbalanced, the growth we are experiencing in British Columbia is, by any measure, extraordinarily inequitable:

  • People who own homes are doing very well. They are realizing more in capital gains than they or other workers (except perhaps those in real estate and other housing related industries) could ever hope to earn in labour income.
  • Those who do not own homes—particularly those who live in Vancouver, Victoria or other urban centres with rapidly rising costs of housing—are seeing their real disposable income after housing costs sharply decline.

It truly is not what governments of any political stripe would want for the population as a whole.

Though well masked by the housing bubble, there clearly is the need for a new economic development strategy in BC.

It is not just that the bubble will eventually burst, it is that growth from the bubble is leaving too many regions and people behind.

Source: The BC economy’s unbalanced and inequitable growth : Policy Note

Prime Minister to travel to Japan for an official working visit and to attend the G7 Leaders’ Summit

Fort McMurray, Alberta

13 May 2016

The Prime Minister, Justin Trudeau, today announced that he will travel to Japan to participate in the G7 Leaders’ Summit on May 26 and 27 in Ise-Shima. Prior to the Leaders’ Summit, and at the invitation of Prime Minister Shinzo Abe, Prime Minister Trudeau will participate in an official working visit from May 23-25.

While in Japan, Prime Minister Trudeau will have an audience with the Emperor and Empress of Japan, and will meet with Prime Minister Abe to reaffirm the close and growing ties between Canada and Japan across a broad range of areas of cooperation. The Prime Minister will also meet with leaders in the automotive sector to discuss ways to further promote trade and investment between Canada and Japan, all of this in an effort to create good-paying jobs for Canadians, strengthen the middle class, and work towards clean and sustainable economic growth.

During the G7 Leaders’ Summit, Canada will reaffirm its new approach to global engagement. The Prime Minister will highlight Canada’s resolve to work with its G7 partners on a number of key global issues, including the economy, trade, climate change, peace and security, development and women’s empowerment, which will all contribute to advancing the government’s priorities.

Quotes

“Japan is a long-standing and important partner for Canada. I look forward to meeting the Emperor and Empress of Japan.  During my meeting with Prime Minister Shinzo Abe, we will explore ways to deepen Canadian and Japanese ties on many levels, including trade, investment, peace and security, culture, education, environment, and science, technology and innovation.”
– Rt. Hon. Justin Trudeau, Prime Minister of Canada

“In this new era of Canada’s international engagement, I look forward to meeting my G7 counterparts to bolster collaboration on shared domestic and global priorities and challenges, including our work to build inclusive and sustainable economies and societies that support a strong middle-class.”
– Rt. Hon. Justin Trudeau, Prime Minister of Canada

Source: Prime Minister to travel to Japan for an official working visit and to attend the G7 Leaders’ Summit | Prime Minister of Canada

Precarious work drives interest in basic income

Aleksandra Sagan, The Canadian Press
Published Sunday, April 17, 2016 11:11AM EDT

 

TORONTO — In the mid- to late 1970s, every single person in one rural Manitoba city received $1,255 a year — roughly $7,500 in today’s dollars.

The amount increased depending on the number of people living in each household, maxing out at $3,969, or nearly $23,500 in 2016 currency, for a family of five or more.

The people in the Dauphin, Man., experiment didn’t have to work to receive this stipend. If they did, their benefit dropped 50 cents for every dollar they received.

The residents of Dauphin just had to exist to receive their full guaranteed annual income.

About four decades later, policy-makers and the public in Canada and around the world are eyeing the basic guaranteed income scheme again, buoyed by an evolving labour landscape and technological advances that have left them wondering if today’s social services are enough.

Finland plans to launch a basic income pilot next year. The Swiss will soon vote on unconditional basic income in a referendum.

Closer to home, the Ontario government’s latest budget promises to run a pilot in the future and multiple politicians across Canada have expressed interest in studying the idea.

“I think people are simply looking at the state of the economy and they’re starting to focus on changes that have been taking place for a very long time,” said Evelyn Forget, a professor at the University of Manitoba, who studied the so-called mincome experiment in Dauphin and continues to research data from the pilot.

One of these changes, she said, is that work is no longer a permanent, 9-to-5 gig with health coverage and a pension. Instead, it takes longer for people to land stable employment and many shuffle between short-term contracts without such benefits, she said.

In the Greater Toronto Area, for example, 60 per cent of workers have stable, secure jobs, according to a 2013 report on precarious work. Insecure employment has spread beyond jobs in the service sector to the white-collar workforce as well, a followup report found.

This changing labour force is prompting people to rethink how governments deliver social programs, said Forget, and realize that current solutions like income assistance are expensive and for the most part, ineffective.

“I think tensions are building in our society,” said Wayne Lewchuk, a McMaster University professor of economics and labour studies, who co-authored both reports in conjunction with United Way Toronto & York Region.

“More and more people are questioning … the wisdom of how we’re organizing our labour markets and our economy.”

Lower wages and precarious employment lower a person’s purchasing power, he said, and more people spending less negatively effects the economy.

A guaranteed basic income could be a way to prime the economic pump, Lewchuk said.

Another change in the workforce could come from technological advancements that will eliminate jobs, some basic income advocates argue.

Millions of positions will be lost over the next several years thanks to disruptive labour market changes, according to a World Economic Forum report published this year.

No job is safe from machine-outsourcing, writes Scott Santens, a basic income advocate who lives in the U.S. off of a crowdfunded monthly basic income.

He argues people need to prepare for a world where their income isn’t dependent on the jobs machines can do, but instead should be given a stipend to sustain themselves while doing the kind of work they still find valuable.

Forget believes it is a matter of continued public interest and political will for basic income to become reality.

“I think it’s almost inevitable, eventually, that this kind of a policy will be implemented.”

Source: Precarious work drives interest in basic income | CTV News

Chinese Leaders To Meet On New Five-Year Plan For Economic Reform : News : Headlines & Global News

The four-day meeting of the Central Committee will see reforms made to China’s economy as they propose a new blueprint for the coming Five-Year Plan.

Source: Chinese Leaders To Meet On New Five-Year Plan For Economic Reform : News : Headlines & Global News