In 2011, British Columbia experienced a second consecutive year of economic growth, and the province continues to hold its own in the wake of the recent recession.
A major factor driving economic growth is large-scale injections of capital investment. The province’s solid fiscal record and high credit rating make B.C. an attractive place to invest, and combined with abundant and in-demand natural resources, a wake of new investment is either planned or in progress.
In the first quarter of 2012, the value of all projects under construction in B.C. totalled $78.9 billion – a 25 per cent increase over the first quarter of 2011.
According to the BC Check-Up, a report recently released by B.C.’s chartered accountants, the major investments currently underway throughout the province, especially those in the resource sector, should lead to increased economic activity and wealth, especially in the Interior, Northeast, and Northwest regions.
These regions have the resources – coal, minerals, oil and gas, and timber – that correspond to market demand, especially in the Asian market. While all of B.C. stands to gain from growth in resource exports, our northern communities will enjoy the most immediate benefits, in the form of jobs, increased spending, and population growth.
At the provincial level, projects, such as the Forest Kerr Run-of-River Hydroelectric Project (valued at $700 million) - one of three hydroelectric projects proposed for the Iskut River in Northwest B.C. - will contribute significantly to the province’s goal of energy self-sufficiency.
On the North Coast, once complete, the Kitimat Modernization Project (valued at $2.7 billion) will boost aluminum output and reduce production costs, making the smelter more competitive worldwide and further stabilizing a major employer in the region.
In Southwest B.C., new public- and private-sector infrastructure projects include the Evergreen Line (valued at $1.4 billion) and the Seaspan Marine Shipbuilding Contract (valued at $8 billion).
Strategically important, the Evergreen Line will expand the existing transit and road system in Metro Vancouver, reducing road congestion and making road transportation more efficient for commercial vehicles.
The Seaspan shipbuilding contract will generate high-paying jobs throughout the life of the contract, more than 4,000 new jobs over the next eight years, which will drive the rebirth of B.C.’s shipbuilding industry.
However, some of the major private-sector investments, such as unconventional gas development or oil/gas pipelines, still face a wide array of environmental and social concerns that will need to be addressed before they gain public acceptance and move ahead.
Overall, it is clear that major projects are important for B.C.’s long-term economic growth.
Our provincial tax policies and regulatory system need to remain clear and predictable to investors and businesses alike, in order to ensure the province continues to be an attractive place to invest.
Richard Rees is the chief executive officer of the Institute of Chartered Accountants of British Columbia. The BC Check-Up is published by the Chartered Accountants of BC, and is available online at www.bccheckup.com.