Barbara Yaffe: B. C.’ s outlook bright, compared to rest of Canada.
Expanding trade with Asia is likely to generate greater prosperity in the west as province’s projected deficit down to $ 968 million by next year
On a day of fiscal reckoning, British Columbians might want to look east to better judge the health of their province’s finances. The reality is, B. C. is doing a lot better than most other provinces.
These days only resource- rich Saskatchewan and Alberta are besting the west coast province on the fiscal front.
The story to the east is worrisome, with Ontario and Quebec’s manufacturing sectors struggling and a downturn in trade with the U. S. depressing Central Canada’s growth.
Ontario had a January jobless rate of eight per cent and Quebec, 8.4 per cent, compared to B. C.’ s 6.9 per cent.
The B. C. budget was tabled Tuesday in Victoria, just a week after economist Don Drummond issued a devastating report on Ontario’s economic outlook.
With Ontario contributing as much as 39 per cent of federal revenues, this is bad news for all Canadians.
Dalton Mcguinty’s Liberals are puzzling over where and how to cut as they tackle a $ 16- billion deficit, on track to double to $ 30.2 billion by 2017 - 2018.
Worryingly, Ontario’s debt represents about 35 per cent of its economy, a percentage that has more than doubled since the late 1980s and is now on par with the three Maritime provinces.
Quebec is even worse off, with an accumulated debt that represents about 50 per cent of its economy.
The pending cuts to Ontario’s public spending are bound to further depress that province’s growth.
By contrast, jurisdictions in the west have their deficits and debt under more control.
For example, Alberta announced Feb. 9 that its deficit this year will be just $ 886 million. ( But then, the oilrich province doesn’t fund all- day kindergarten like Ontario, or $ 7 a day daycare like Quebec.)
B. C., meanwhile, projected on Tuesday that by next year its deficit would be down to just $ 968 million, from $ 2.5 billion this year.
Victoria’s accumulated debt represents some 19 per cent of the provincial economy.
Saskatchewan’s debt is at 16 per cent.
Credit rating agencies served notice last December they’re watching Ontario, Quebec and New Brunswick with a view to possible credit downgrades in those provinces. Ontario’s credit rating is AA- compared to B. C.’ s AAA rating.
Also in December, the Royal Bank forecast weak growth for all three. Ontario is expected to grow by about two per cent in 2012, Quebec, by a scant 1.4 per cent and New Brunswick, just over two per cent.
B. C.’ s growth forecast for 2012 also is modest, at 1.8 per cent — certainly nothing to write home about when put against 4.5 per cent projected growth for Saskatchewan and four per cent for Alberta.
Two other Royal Bank measures are interesting to note.
• The ‘ provincial discomfort index,’ combining in a single equation the impact both of inflation and joblessness, was 8.9 in B. C last fall — higher than all other western provinces but more favourable than any province located east of Manitoba.
The discomfort index was Ontario is 10.8, 11 in Quebec and 16.4 in Newfoundland.
• The bank cites 2010 per capita disposable income in Alberta at $ 38,000, the highest in Canada.
Saskatchewan was in second spot, with incomes of $ 30,593. Ontario came third, with earnings of $ 29,800 — just ahead of $ 29,000 in B. C.
Based on the above numbers, it appears Alberta, Saskatchewan and B. C. are replacing Quebec and Ontario as Canada’s economic engines. To be sure, they’re smaller engines, but working smoothly.
And a federal focus on expanding trade with Asian markets — so hungry for Western- based commodities — with shipping by way of west coast ports, is bound to generate further prosperity for western provinces.