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The Rise of Western CanadaThe Rise of Western Canada

Presented By: Jason Clemens, DirectorPresented By: Jason Clemens, DirectorFiscal Studies and the Centre for Entrepreneurship & MarketsFiscal Studies and the Centre for Entrepreneurship & Markets

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Economic Prosperity Takes Economic Prosperity Takes Hold in Western CanadaHold in Western Canada

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Economic Prosperity Shifts West:Economic Prosperity Shifts West:Economic Growth (2006)Economic Growth (2006)

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

AB NL BC SK MB NB NS QC PEI ON

4

Economic Prosperity Shifts West:Economic Prosperity Shifts West:Economic Growth (2007)Economic Growth (2007)

0

0.5

1

1.5

2

2.5

3

3.5

4

AB BC SK NS MB NB QC NL ON PEI

5

Economic Prosperity Shifts West:Economic Prosperity Shifts West:Economic Growth (2008)Economic Growth (2008)

0

0.5

1

1.5

2

2.5

3

3.5

4

AB BC ON QC MB SK NS NB PEI NF

6

Real GDP Per Capita (2005)Real GDP Per Capita (2005)

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

AB ON CA SK BC QC MB NF NB NS PEI

7

Economic Prosperity Shifts West:Economic Prosperity Shifts West:Employment Growth (2006)Employment Growth (2006)

0

0.5

1

1.5

2

2.5

BC AB PEI SK NF NS ON NB QC MB

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Economic Prosperity Shifts West:Economic Prosperity Shifts West:Employment Growth (2007)Employment Growth (2007)

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

AB BC PEI NF SK NB QC ON NS MB

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Economic Prosperity Shifts West:Economic Prosperity Shifts West:Unemployment Rates (2006)Unemployment Rates (2006)

0

2

4

6

8

10

12

14

16

AB MB BC SK ON QC NS NB PEI NL

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Economic Prosperity Shifts West:Economic Prosperity Shifts West:Unemployment Rates (2007)Unemployment Rates (2007)

0

2

4

6

8

10

12

14

16

AB MB BC SK ON NS QC NB PEI NF

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Economic Prosperity Shifts West:Economic Prosperity Shifts West:Gross Business Investment (2001-05)Gross Business Investment (2001-05)

-5

0

5

10

15

20

2001 2002 2003 2004 2005

Per

cen

t C

han

ge

CAONABBC

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Gross Investment vs Expected (2005)Gross Investment vs Expected (2005)

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

NF PEI NS NB QC ON MB SK AB BC

Investment GDP Prediction

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Gross Investment vs Expected (2005)Gross Investment vs Expected (2005)

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

45.00%

NF PEI NS NB QC ON MB SK AB BC

Investment Employment Prediction

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Interprovincial Migration (2005)Interprovincial Migration (2005)

-10

-5

0

5

10

15

20

In T

hous

and

s

AB BC PEI NS NF NB ON MB SK QC

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Prosperity in Western CanadaProsperity in Western Canada

strong GDP growthstrong GDP growth

increasing per capita incomesincreasing per capita incomes

strong employment growth (job creation)strong employment growth (job creation)

low unemploymentlow unemployment

attracting investment & peopleattracting investment & people

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Investment & Economic Development:Investment & Economic Development:Secret of Success of the WestSecret of Success of the West

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Two Approaches toTwo Approaches toEconomic DevelopmentEconomic Development

competitive tax ratescompetitive tax rates

incentive-based tax structureincentive-based tax structure

cost-effective regulationscost-effective regulations

adequate infrastructureadequate infrastructure

broad-based free tradebroad-based free trade

optimal governmentoptimal government

preferential tax ratespreferential tax rates

subsidies & other supportsubsidies & other support

asymmetric regulationsasymmetric regulations

targeted free tradetargeted free trade

expanded role for governmentexpanded role for government

Create theCreate the

Right EnvironmentRight EnvironmentActiveActive

ParticipationParticipation

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Size of Government: Pillar 1Size of Government: Pillar 1

Size of government Size of government compared to the compared to the economy matters.economy matters.

Western provinces Western provinces have succeeded in have succeeded in reducing the size of reducing the size of government.government.

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Provincial-Local Government Spending as a Provincial-Local Government Spending as a Share of the Economy (2005)Share of the Economy (2005)

0

5

10

15

20

25

30

35

Perc

ent o

f GD

P

AB ON BC NL SK NS MB QC NB PEI

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Federal Government Spending as a Share of Federal Government Spending as a Share of the Economy (2005)the Economy (2005)

0

5

10

15

20

25

30

Perc

ent o

f GD

P

AB ON BC QC SK NL MB NB NS PEI

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Total Government Spending as a Total Government Spending as a Share of the Economy (2005)Share of the Economy (2005)

0

10

20

30

40

50

60

70

Per

cen

t o

f G

DP

AB ON BC SK NL QC MB NB NS PEI

Includes federal, provincial, and local government spending.Includes federal, provincial, and local government spending.

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Provincial-Local Size of Government Provincial-Local Size of Government (1990-2005)(1990-2005)

15

20

25

30

35

40

Perc

ent o

f GD

P

SK

AB

BC

QC

ON

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Taxation: Pillar #2Taxation: Pillar #2

The amount we collect The amount we collect (burden) matters.(burden) matters.

The manner in which we The manner in which we collect it (mix of taxes) also collect it (mix of taxes) also matters.matters.

Consensus in the West for Consensus in the West for less and better taxes.less and better taxes.

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Western Canada: Reduce and Reform Western Canada: Reduce and Reform Personal Income TaxesPersonal Income Taxes

BC (2001):BC (2001): 25% across-the-board reduction25% across-the-board reduction

AB (2000):AB (2000): Canada’s only single rate taxCanada’s only single rate tax

SK (2001):SK (2001): reduced rates and increased the reduced rates and increased the

thresholds at which they applythresholds at which they apply

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Western Canada: Where We StandWestern Canada: Where We Stand

25%25%

20%20%

15%15%

10%10%

5%5%

$30,000$30,000 $60,000$60,000 $100,000$100,000

FederalFederal

SKSK

BCBC

ABAB

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Western Canada: Reduce and Reform Western Canada: Reduce and Reform Business TaxesBusiness Taxes

BC (2001):BC (2001): CIT reduced from 16.5% to 12.0%CIT reduced from 16.5% to 12.0% Eliminated general CCTEliminated general CCT

AB (1999):AB (1999): CIT reduced from 15.5% to 10.0%CIT reduced from 15.5% to 10.0% CCT completely eliminatedCCT completely eliminated

SK (2006):SK (2006): Reducing CIT from 17.0% to 12.0%Reducing CIT from 17.0% to 12.0% Eliminating CCT for most firmsEliminating CCT for most firms

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Provincial Investment Climate ReportProvincial Investment Climate Report

Based on 6 years of survey Based on 6 years of survey data (1998-2004) of money data (1998-2004) of money managersmanagers

Includes 7 sections:Includes 7 sections: Corporate income taxes;Corporate income taxes; Fiscal prudence;Fiscal prudence; Personal income taxes;Personal income taxes; Infrastructure;Infrastructure; Corporate capital taxes;Corporate capital taxes; Labour regulation; andLabour regulation; and Regulatory burdenRegulatory burden

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Provincial Investment Climate Provincial Investment Climate Index: 2006 ResultsIndex: 2006 Results

0123456789

10

AB BC SK MB ON QC NB NS PEI NF

Inde

x S

core

(0-1

0)

CIT Fiscal PIT Infrastructure CCT Labour Regulations

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Free Trade: Pillar #3Free Trade: Pillar #3

April 28April 28thth, 2006 – TILMA, 2006 – TILMA

Free trade agreement between AB Free trade agreement between AB and BC covering products, and BC covering products, services, investment, and labourservices, investment, and labour

Fundamental improvement on Fundamental improvement on previous agreement (AIT)previous agreement (AIT)

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Rise of the West:Rise of the West:Not Just Commodities…Smart PoliciesNot Just Commodities…Smart Policies

Smaller, focused governmentSmaller, focused government

Incentive-based tax relief (personal and Incentive-based tax relief (personal and business)business)

Regulatory streamliningRegulatory streamlining

Reduced government sectorReduced government sector

Free tradeFree trade