Dollars and Sense

Posted in BC Votes 2009 Reality Check Posted by CBC News on April 16, 2009 04:13 PM |

Half trueThe Liberal Claim of B.C.'s economy going from one the weakest to one of the strongest in Canada is Half-True.Though the official campaign started on Tuesday, the campaigning has been going on unofficially for weeks.

A Liberal ad, which you can watch here, was launched before the writ dropped, and it states “we’ve come a long way in the last eight years, from being the weakest economy in Canada, to one of the strongest.”

The ad is called, Keep B.C. Strong.

We wanted to check the reality of their ad's claim so we started by crunching the numbers.

Knowing which numbers to crunch was a little tricky: which numbers did they use when they said we were “the weakest economy in Canada?”

We wanted to check the reality of their ad's claim so we started by crunching the numbers.

Knowing which numbers to crunch was a little tricky: which numbers did they use when they said we were “the weakest economy in Canada?”

Was it Gross Domestic Product, Gross Domestic Product per capita, the growth rate of either of those or some other number?

We went straight to the source and asked the BC Liberals where thier number came from- but since we couldn’t get a call back after repeated attempts, we asked some experts if they thought the Liberal claim was true.

We went to Helmut Pastrick, he’s one of the advisors for the B.C. Progress Board, an independent council set up by Premier Campbell in 2001 to “contribute expertise on the province's economic progress and environmental and social condition.”

The gold standard according to most economists, including Pastrick, for measuring the strength of the economy is Real Gross Domestic Product Growth per capita. That’s adding up the value of all the goods and services produced by B.C.’s economy every year, dividing that by the population at the time, and comparing that number to other years to see how much the economy is growing.

So, how did B.C. compare to the rest of the country back when the Liberals took over in 2001?

According to the B.C. Progress Board, we ranked ninth out of ten provinces for economic growth in 2001.

The Progress Board uses Statistics Canada numbers, the latest figures available are for 2007, which show B.C. has moved up, from ninth place, to eighth.

"Our growth performance is roughly similar to what we saw in 2001, slightly better, but we are still lower than many other provinces,” according Pastrick.

So we thought the Liberal claim seemed pretty far from reality, so far.

Then we talked to an economist at the Business Council of B.C., Ken Peacock; the organization represents medium and large businesses in the province.

"You gotta look at a little bit more than one year. I mean, it's very easy to look at one year, and go, oh my goodness, things have turned, but it's never the case, particularly with these economic numbers," Peacock told us.

His argument is that the fluctuations in a provincial economy- one big project in Newfoundland starting up, or a big one in Alberta shutting down, can change the growth numbers so they aren’t reflective of the overall, long-lasting trends in a provincial economy.

So, he crunched the numbers differently- he used average economic growth over the NDP's entire time in office, compared to the Liberal's last two terms.

"Average growth, in the [1990's] was one per cent, and more recently, the past seven years, has been 2.2 per cent. So double the pace. It doesn't sound like that much, the difference between one percent and two per cent, but on a cumulative basis, compounding it year over year over year, that makes a big difference."

So that does sound more like the economy is doing better under the Liberals than under the NDP.

When we finally heard from the Liberals, eight days after our first call and two hours before our deadline, they sent us a ministry report written in 2001, you can read here, shows GDP growth per capita was the weakest in the country when you look at the 1990's as a whole.

But what isn’t in the ad, and is in their report, is that there were all sorts of factors at work depressing economic growth: the softwood lumber dispute, a shift to off-shore manufacturing and an unsustainable housing construction boom.

Since we, at Reality Check, have to decide if a claim is the reality or not, we decided this one was more of a half truth: we may have had one of the weakest economies in the 1990’s, but that doesn’t mean B.C.’s is now one of the strongest. And you can’t look just at the numbers, without looking at what’s shaping them.