It’s hard to fathom how two provinces located right next to each other can find themselves in such starkly different economic situations.
Here in B.C., things are on a proverbial roll. Unemployment is relatively low, jobs are being created and the economy is growing faster than anywhere else in the country.
But our neighbour, Alberta, is an economic basket case. Instead of growing, the economy is shrinking and jobs are being shed in record numbers. In fact, Alberta is now in the midst of what the TD Bank calls “one of the most severe recessions ever.” The bank forecasts a cumulative contraction of economic activity of 6.5 per cent by the end of the year, which is far worse than the 2008 recession or the ones that hit Alberta and the rest of the country in the 1980s.
The collapse of world oil prices has plunged Alberta into that recession. The Fort McMurray fire, which halted oil sands production for more than a month, turned a very bad situation into an even worse one.
Meanwhile, on this side of the Rocky Mountains, the economy grew by an impressive three per cent last year and will likely come close to that growth rate this year.
What’s fuelling B.C.’s golden times? Real estate plays a big role. Almost $95 billion (yes, that’s “billion”) was spent last year on real estate transactions, and there are no signs the amount this year will be much different.
Most of that was spent on residential properties, a further indication of the fevered state of the housing market.
Last week, Finance Minister Mike de Jong released the public accounts for the last fiscal year, which provide the final when-all-is-said-and-done totals for revenue and spending.
The document revealed the government took in a whopping $1.53 billion in property transfer tax revenues. That’s more than $600 million higher than originally forecast in the budget.
This year’s budget had forecast the tax would decline to about $1.2 billion in the current year, but de Jong has abandoned that forecast and now says the expected revenue stream will be “significantly” higher than first thought. Translation: the housing market has not cooled down and isn’t expected to anytime soon.
It’s a tale of two provinces: one chugging along, the other lurching from crisis to crisis.
This may prove to be rich fodder for the B.C. Liberals come the next election, as they link the fact an NDP government is ruling Alberta to that province’s woeful economic performance, even though that government is almost powerless to do anything to reverse the tide.
Keith Baldrey is chief political reporter for Global B.C.
