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by
Rick Peterson September 23, 2008
(Vancouver)
Watching the massive bailout underway
in the US financial markets provides
food for thought for us all in British
Columbia as we head towards a provincial
election in May of 2009.
US taxpayers are being asked to
bail out mistakes made by unsuspecting
buyers of very bad investment vehicles
– most often in the form of
mortgages sold to people who shouldn’t
have bought them in the first place
- created by fee-driven investment
banks under the benevolent eye of
US regulators and bankers. Without
the bail-out, there’s talk
of a major U.S. recession.
It’s hard to argue with US
Senator Jim Bunning of Kentucky
when he says “The free market
for all intents and purposes is
dead in America…The American
taxpayer has been misled throughout
this economic crisis. The government
on all fronts has failed the American
people miserably.”
Could this happen in Canada? Wall
Street’s chase for investment
banking fees and profits, coupled
with lack of US federal government
oversight, would probably not happen
on the same scale here in Canada.
This “toxic” mess was
fueled by a backdrop of excessive
U.S. borrowing and spending, along
with easy credit that fueled a housing
boom. Again, we’re not leveraged
to that extent here in Canada.
However, Conrad Black wrote an
interesting article last weekend
in the National Post that also highlighted
what he saw as another factor contributing
to this nightmare, and this factor
is very much playing out here in
Canada – and especially in
the Greater Vancouver area.
“The United States and other
countries have fallen too far into
the fool’s paradise of the
service economy,” wrote Black
in the September 20th Post, lamenting
the loss of companies that make
things. “Towering downtown
skyscrapers are jammed with people
who work hard and are very talented,
but don’t actually do anything
useful.”
“As a society, we came to
despise blue collar work as menial,
and most of it has migrated to Third
World places. The service economy
only works when people want and
can pay for the services. This progressively
ceases to be the case – more
swiftly and profoundly than with
finished goods – as economies
slow down.”
While there’s nothing wrong
with a growing service sector, Black
is right on the money when he suggests
that any government that does not
make real economic growth its number
one focus will soon have to pay
the piper. This is a message we
have to heed here in BC, as we see
the first signs of a housing market
correction, the upcoming end of
several large Olympic-related construction
projects, and while our forestry
sector is on its knees.
It’s time we re-sharpened
our focus on economic growth in
BC, and clearly made the economy
a top priority with some bold policy
proposals. There is a lot to do.
We haven’t opened up a new
mine in this province in more than
a decade, and another two dozen
projects are caught in red tape.
Despite that we’ve just decided,
inexplicably, to extend the moratorium
on exploration and development of
uranium. That has to change. As
Harvey Enchin wrote elsewhere in
this paper last weekend, coal-fired
and nuclear energy should receive
no more and no less attention than
hydro, natural gas, wind, solar
and run-of-river projects.
There’s more. BC should take
the lead in calling for a single
securities regulator, for our province
is the home of venture capital financing,
and the current regulatory patchwork
across the country hurts us even
more-so today, a time when venture
capital financing for resource companies
is at a low. The federal government
under Finance Minister Jim Flaherty
has taken the lead on this issue.
He should get stronger support from
our province on this push.
British Columbia should continue,
aggressively, on the path of tax
reduction for both individuals and
corporations. We need to harmonize
the provincial sales tax with the
GST to simplify and our two-tier
tax system. We need to control spending,
review infrastructure projects,
cut red-tape, reduce our debt. These
are all top priorities for this
province today, tomorrow, and for
the future.
Finance Minister Colin Hansen has
a budget in the spring. Premier
Gordon Campbell will lead his government
into an election in May. Both men
have a challenge to meet: to make
the economy – not the carbon
tax, not the environment, and not
civil service salaries – the
number one priority in the next
eight months.
It’s our best chance to avoid
getting caught by the effects of
the mess in the US.
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