Vancouver Island's economy is stable in the short term, but can't continue to rely on the public sector for growth over the long term, say business leaders.
The Vancouver Island Economic Alliance's annual summit is being held this week at Nanaimo's Vancouver Island Conference Centre, and the keynote talk Wednesday, Oct. 23, looked at potential over-reliance on the public sector as an economic driver.
"In the short term, things don't look too bad, especially when you think about the shocks that we've been through," said Susan Mowbray, partner with MNP's consulting group. "But once you start to dig in a little deeper, you see that the foundation is starting to crumble. We're not seeing significant private-sector investment that's going to generate that increase in income for households, businesses and government in the longer term. As a result, growth is stalling at the same time that our public sector is expanding."
Population growth on the Island is at pre-pandemic rates, Mowbray said, driven by international immigration. Population growth from interprovincial migration has slowed, but remains higher than the B.C. average.
Approximately 9,000 new businesses have started up on Vancouver Island in the past five years, she said, but fewer than one-tenth of those new businesses have employees. The Island's GDP per capita is less than two-thirds the B.C. average.
Mowbray calculated that 64 per cent of households' basic income comes from either the public sector or the housing and construction industries, while only 13 per cent comes from what she would refer to as traditional economic base industries such as forestry and agriculture.
"Vancouver Island's economy is heavily dependent and increasingly dependent on lower-value services and that circulation kind of support for the local population," she said. "It's not the higher-value export services."
Panellists suggested a few reasons for the Island's lack of private-sector growth. Some could be related to demographics, such as baby boomers retiring and restructuring their investments, and there has also been unpredictability in B.C.'s regulatory landscape creating a lack of stability in housing construction, for example, and the forest industry's access to fibre.
Aaron Stone, CEO of the South Island Prosperity Partnership, said resource development fuelled the Island's economic engine for a long time, but even if aspects of those industries have growth potential, there's no turning back the clock.
"So we really need to direct investment into those new opportunities that help strengthen the foundation that we have, but also add value, as well as develop new opportunities around the true renewable resources we have here: the geographic sense of place, the innovation, the strength of the intelligence of the workforce here, and B次元官网网址� unlocking opportunity [with] First Nations," he said.
Other panellists were also interested in the latter topic, with Brodie Guy, CEO of the Island Coastal Economic Trust, explaining the importance of First Nations economic development.
"What type of investment do we want to have in this region? Do we want it to be a financial institution, people that are not here? We need to attract capital to our region, but how do we still have that local ownership component in control?" he asked. "So what's really exciting for me when I think about moving forward, is we know that First Nations are taking control of their lands and resources in a great way."
John Jack, chief councillor of Huu-ay-aht First Nations, noted that foreign investors have a lot of choice about where to invest, and some jurisdictions are willing to "race to the bottom" in order to attract investment.
"I don't think that that's going to be on the table on Vancouver Island, so we need to find ways to attract foreign investment that is used to a sure bet, that is used to an extremely stable, guaranteed outcome," he said. "If we can't create that sure bet, then what we can do is demonstrate confidence in an industry, demonstrate confidence in one another by creating those good relationships between Indigenous communities, local communities and business."
Stone said while it's not a good thing for public-sector growth to disproportionately outpace private-sector growth, the public sector needs to grow to care for an aging population and educate the next generation of workers and leaders. Guy suggested the public sector can't continue to expand at its current pace considering government deficits, but added that when it does expand, some decentralization of public services might be in order, for example to formerly resource-dependent communities to help them through times of economic transition.
Stone remarked that investment opportunities won't look the same everywhere on the Island. Communities need to determine their own identities, set up conditions to attract investment, and collaborate to make it happen. Government funding is appreciated, he said, but he added that senior levels of government should also put greater trust in local governments and know when to get out of the way, so to speak. Stone said the private sector knows best the challenges it faces, and government and economic development agencies need to be listening.
Stone is "bullish" on the future of Vancouver Island, and said there's so much opportunity for various regions of the Island between the baseline of where they are and the potential of where they can be.
"We're hopefully going to be co-op-peting. Is that a word?" he asked. "Co-operating and competing with each other, driving each other to do better."
