A Warning for BC

This guest article was co-written by David Bieber. Lougheed is a founder of OMI, dimeRocker and the recently purchased NodeFly. Bieber is a public affairs consultant based in Vancouver.

On a pleasant morning last June, less than a month after her storied victory in the recent provincial election, Premier Christy Clark announced the creation of BC’s Ministry of Technology, Innovation and Citizen’s Services.

This is historic because for the first time, BC’s technology sector had its very own government ministry dedicated—mostly —to supporting its goals. It was a worthy and perhaps overdue recognition for an industry that has come to employ more than 85,000 British Columbians, a number oft and correctly quoted as representing more jobs than all of BC’s more well-known resource industries combined. Numbers that were confirmed in a new KPMG report just released. And by naming as Minister long-time Liberal Party insider Andrew Wilkinson, in addition to giving tech entrepreneur Todd Stone a key position in her cabinet, Clark signaled that under her government, the technology sector was going to have a seat at the table.

Several months later, on a somewhat overcast evening in October, Robert Reich stepped onto the stage of the Orpheum Theatre. The respected American economist, who served in the cabinet of President Clinton and has advised President Obama, delivered an engaging overview of the origins and consequences of growing income inequality in our globalized economy. And he delivered a gentle but firm warning.

“The real issue here, and it’s an issue for California, for the United States, for British Columbia, for Vancouver, for Canada,” said Reich, strolling about the stage, without notes, relaxed and engaging as if at a cocktail party. “The real question in terms of standard of living of any group of people is what those people add. The value they add to an increasingly integrated global economy. If you add a lot of value you do very well. If you are not adding very much value, you will not do well.”

He let this sink in while lightening the tone a little, shifting to a story and a few jokes. Then he returned to his point.

“Now this is very important for places like British Columbia. There is a fundamental challenge that any natural resource economy faces. And that challenge is that while natural resources are a blessing, they are also an economic curse.”

The curse, he explained, is that the sale of natural resources tends to pump up the currency and this puts every other exporting industry, including manufacturing and technology, at a great disadvantage. Sometimes this is called “Dutch disease,” and many economists argue that it currently afflicts Canada. The federal government, quick to defend aggressive development of the tar sands, dismisses the idea. Either way, Reich was emphatic about the need to avoid it.

“Australia is a good example,” he continued. “Australia is becoming a mine and a beach for China. The Australian dollar keeps going up. That makes it more difficult for Australian manufacturers to sell their goods worldwide. It makes it more difficult for high technology in Australia to get much of a grounding. Do you get my point? A natural resource based economy can generate huge gains, but those gains come at a cost. And that benefit may be temporary in any event. Those natural resources are themselves subject to huge changes in the global economy. The demand for commodities can go all over the place.”

“So be careful,” he said, after a pause.

Now, it’s hardly reasonable to suggest that Premier Clark should abandon her ambitious plans to grow BC’s economy by developing liquid natural gas resources for export. Nor is it reasonable to suggest that she, as a provincial leader, has the power to manipulate the value of the Canadian dollar to mitigate the impact on BC’s other industries like technology.

But it is reasonable to ask how the BC government plans to reconcile its new-found commitment to growing the technology sector with its almost singular focus on growth through resource exports.

As Clark invests in LNG projects, will she also invest to expand and modernize the eligible business corporation and venture capital tax credits that have done so much to help the technology sector grow faster than any other industry in BC over the last ten years? Will her government invest in high tech education and training to help technology companies continue to expand exports that now make up 10% of BC’s total? Will it find better ways of helping to capitalize local tech firms to continue job growth that is second only to construction?

These are early days in her four-year mandate, and we’ve seen some promising signs. But the proof of Premier’s Clark’s commitment to BC’s technology sector is yet to come.