Government blunts our competitive edge

Alexandra Samuel
May 29, 2002

Patricia is a computer programmer; her partner Lee is an electrical engineer. While they are both proud British Columbians, they've been offered higher paying jobs in Seattle. For the first time, they're asking themselves: Why stay in B.C.? There was a time when the answer was clear: We stay in B.C. for the quality of life. And that quality of life means not just access to oceans and mountains, but to health care and education.

Apparently, those days are over. The B.C. government has embraced a fiscal policy that cuts social spending in pursuit of lower taxes and growing prosperity.

Gordon Campbell's government is hardly the first to take this approach, although it has taken it to a new extreme. Unfortunately, it's an approach that is particularly ill-suited to the needs of the Canadian economy.

Canada's postwar economy has rested on an implicit social bargain among business, government and labour -- especially highly skilled labour. Many skilled Canadian workers have forgone the promise of higher wages in the U.S. in return for social benefits.

Government's job is to provide the benefits that keep skilled workers in Canada: Health care; public education; publicly accessible wilderness; clean drinking water; public broadcasting; unemployment insurance and social assistance; gun control and safer communities.

Business paid the taxes that fund these social benefits. That was the first piece of the bargain to crumble, a trend that accelerated in the years since free trade agreements were signed. Canadian businesses joined in the international corporate grumble, threatening to pull up stakes unless government cut taxes.

What businesses forgot is that Canada's tax system is a major factor in Canadian competitiveness. Our taxes are higher than our American counterparts' -- but so are our social benefits.

Without those taxes, we can't fund the social programs that set Canada apart from the U.S. Without those social programs, there is little reason for highly skilled workers to stay here.

It's becoming even more important to keep Canada's skilled workers, especially in B.C., where the government wants to build an "information economy" to succeed embattled resource industries.

The most important information in an information economy does not reside in computers or networks. It resides in the people who design, build or use those networks.

Building B.C.'s information economy means building an information-age labour force of skilled workers. That means spending money on educating the kids who are tomorrow's workforce and spending money to train the workers of today.

But all the education and training will mean little to the B.C. economy if our skilled workers move south.

Why shouldn't they? The government has cut every social program that differentiates Vancouver from Seattle, Victoria from Portland, or Nelson from Bellingham.

Whether it's good politics is up for debate. But if we want to build an information economy, it's definitely bad for business.