British Columbia’s resource industries are still crucial to the province’s prosperity despite growth in the service and high-tech sectors, a new report says.
The resource sector – everything from forestry and mining to energy and agriculture – accounts for about 13 per cent of British Columbia’s gross domestic product, says a report issued by the B.C. Business Council.
That’s down from about 30 per cent in the 1960s, but is still higher than the 11.1 per cent average for the rest of Canada, the report says.
If all the direct, indirect and “induced” impacts of resource activity are included, at least one-third of all B.C. economic activity depends on the resource sector, the report says.
Resource-based goods account for 75 per cent of the province’s merchandise exports, yielding $22 billion in annual earnings.
Resource industries provide about 180,000 direct jobs – one in every 10 in the province.
Most typically offer pay and benefits well above average, “a fact that serves to enlarge the ‘economic footprint’ of resource extraction and processing,” the report notes.
The government also collects almost $3.5 billion a year in direct fees and royalties, equal to 20 per cent of all “own-source” provincial revenue. That doesn’t include various taxes and other revenue collected from resource companies and their employees.
The growth of the service and technology sectors based in the Vancouver and Victoria areas, combined with shrinking populations in the hinterland, reinforced a perception that resources were “sunset industries.”
“Many people in B.C. are under the impression, I think, that our resource industries are not as important as they were in the past and that our economy can thrive without them,” said Jock Finlayson, the council’s executive vice-president.
“This report highlights the fact that although B.C. has diversified our economy over time, we’re still critically dependent on the extraction and processing of forest products, oil and gas, mineral goods and also agriculture and fishing to drive economic activity.”
B.C. Finance Minister Gary Collins said the report’s conclusions come as no surprise.
The economy in general has diversified in the last couple of decades, he said, but even newer industries such as environmental services are tied to the resource sector.
“The resource economy isn’t going to go anywhere anytime soon,” Collins said.
The council’s report says government policies, especially those of the New Democrats in the 1990s, helped dampen activity. But it found the main reason for the decline in resources’ direct share of economic output was simply most of these industries had matured and were growing more slowly than the economy as a whole.
While agreeing with the report’s conclusions, Helmut Pastrick, chief economist for B.C. Credit Union Central, said “it may well be that our natural resource share of the economy will continue to decline because of stronger growth in other sectors.”
Forestry and mining especially face greater competition from cheaper offshore sources, Pastrick added.
After taking power in 2001, the B.C. Liberals changed the province’s forestry and mining policies to encourage renewed investment.
Oil and gas activity has been booming, thanks to higher prices and an open-door to energy development in northeastern British Columbia. The provincial Liberals would also like Ottawa to lift a moratorium on exploration off the northwest B.C. coast.
While many see resource production as a rapidly declining part of the economy, six of the province’s 15 fastest-growing industries are broadly in the resource category, the report says. They include oil and gas engineering construction, petroleum extraction, engineered wood products and fish farming.
