who is willing to do this? three questions should be picked out from 6. shold follow essay format. no plagirism. very spesific in your answer. using your own words. i have attached the slides shown by the professor during the class so you can follow.

Pol 223 Week 11

BC Political Economy

Road Map

• Garth Stevenson article • Regional Nature of Canadian political

economy • The Economy at joining Confederation • Duff Patullo and the Genesis of Today’s

Political Party Competition in BC • W.A.C. Bennett video • Political Geography of the Province

Regional Nature of Canadian Political Economy

• Obvious regional differences in the economy of Canada

• No regional development programs until after WWII

• 1957 equalization programs begin

Click to edit Master text styles Second level

Third level Fourth level

Fifth level

Regional economies

03-5

Regional Economies

• Striking regional economic differences in Canada that reinforce geographic distinctiveness and create another pattern of demands on the Cdn political system

– begin with differences in primary industries ● Natural resource base of provs and territories

• Importance of natural resources to the national economy central tenet of Cdn political economy

– Usually termed Staples theory

03-6

Regional Economies

• Staples theory – Harold Innis -1930s • Political economist – University of Toronto

– Canadian economic development has relied on succession of resource exports

● Furs, fish, timber, wheat, minerals, and energy – Rather than manufacturing

– Includes the notion of dependence on one or more foreign industrial centres and of an economy that remains underdeveloped and subject to the rise and fall of international markets

03-7

Regional Economies

• Secondary industries – Consist of manufacturing, construction, and

utilities including electricity ● Manufacturing includes initial processing and

refining of primary products as well as the making of finished goods

– Produces more revenue, more jobs than primary industry ● Less seasonal, higher wages

● Ongoing criticism of govt policy that includes exploitation and exportation of raw materials instead of developing plans to manufacture

03-8

Regional Economies

• Also criticism of low levels of research and development in Canada

• Transportation, communication, trade, finance, insurance and real estate, public administration considered tertiary or service sector

• Most focus today is on the service sector • Provincial GDP Chart

http://www.statcan.gc.ca/daily-quotidien/ 120427/dq120427a-eng.pdf

03-9

Regional Economic Demands

• Most natural resources fall under provincial jurisdiction

– Demands arising are first dealt with by provs – Industries also seek support from feds

● Ottawa’s policy response has often benefited a certain industry

● At other times feds might support particular region’s economic development

– May result in increased taxes being paid which benefits entire country

– May also result in less equalization payments having to be paid

03-10

Regional economic demands

03-11

Regional Economic Demands

• Demands arising from the primary sector are often first addressed to the respective provincial government

• Every primary industry has sought fed govt support of one kind or another and most other regional economic demands are primarily directed to Ottawa

• Ottawa’s policy outputs have often benefited a certain industry throughout the country

• At other times the support of one region has been done in the national interest

– Eg. Canada Wheat Board

• As a result of economic differences, the fed govt regularly faces demands to assist a single industry or the economy of a single province or region

03-12

Historical Regional Conflicts

• Demands regularly conflict among regions

– Most pervasive historically – East vs West (periphery-core)

– Principal historic economic complaints have involved the ownership, taxation and regulation of natural resources, tariffs, transportation and banking

03-13

Ownership of Natural Resources

• Began with the creation of Manitoba in 1870 – Ottawa decided to retain jurisdiction over the natural

resources in the province and similarly when Saskatchewan and Alberta were created in 1905

– Notion was that the feds should control such resources in the national interest, allowing Ottawa to guide the development of the West

– Prairie provs fought this until they gained control in 1930

03-14

Tariffs

• Central Cdn interests (Macdonald, etc) saw the tariff as the means of promoting and protecting the industrial heartland of Ontario

• West demanded lower tariffs at every opportunity (could buy equipment cheaper from the US) especially in the 1920’s when it sent its own farmer representatives to the House of Commons

• FTA which took effect in 1989 can be seen as a response to 110 years of Western discontent with the tariff aspect of the National Policy

03-15

Transportation

• Crow’s Nest Act (Crow Rate) of 1897 was an attempt to subsidize the transportation rates of farmers to markets in the East

• Chretien govt decided to eliminate the Crow in 1995

• Have been modifications by the Harper govt as well – e.g. the governance structure of the Wheat Board 03-16

Banking

• Canada developed a centralized branch banking system

– An attempt to construct a sound, stable banking community that would avoid frequent local collapses

– Handful of large national banks, mostly based in the East, with local branches across the country

03-17

Banking

– Money deposited in the local branch of a national bank would not remain in the community to be lent out for local purposes, but instead sent to headquarters in central Canada to be used for the economic development of Quebec or Ontario

– Decisions to make large loans were centralized at the head office so that Western entrepreneurs would have to travel east to borrow substantial sums

03-18

Other Regional Economic Conflicts

• Government procurement • Lack of support for fish stocks in the East • Alberta and Kyoto, etc. • CF18 contract to Montreal instead of

Winnipeg • Health Care Funding • F-35 Procurement Process • Enbridge/Keystone XL

03-19

Vertical vs Horizontal Imbalance

• Vertical Imbalance – an imbalance between the different

levels of government; in the case of Canada, between the federal and provincial levels of government. This sort of imbalance occurs when the responsibilities of one level of government are disproportionately large compared with its share of revenues. Such imbalances can be addressed by a transfer of responsibilities and/or revenues from one level of government to another

03-20

Vertical vs Horizontal Imbalance

• Horizontal Imbalance – a fiscal imbalance within one level of

government; in the case of Canada, between the various provincial governments. This sort of imbalance occurs when some provincial governments have much weaker fiscal capacities than others. Traditionally, this has included provinces such as Quebec, Manitoba and those in Atlantic Canada.

03-21

Vertical vs Horizontal Imbalance

• Because of their smaller populations and/or economies, these provinces tend to have less capacity to support social services than their larger provincial cousins, such as Alberta, British Columbia and Ontario.

• Equalization is meant to address this horizontal imbalance by providing federal monies to those provinces with lesser financial capacities.

• The result is greater equality between provinces in terms of their levels of taxation and ability to provide comparable social programs.

03-22

Equalization Payments

• 1957 - Ottawa responded to repeated provincial demands to make equalization payments

– Annual cash grants to have-not provs designed to allow them to raise their services to an acceptable national level but can be spent for any purpose – unconditional grants

– Payments are entrenched in Constitution Act, 1982 Section 36

03-23

Entrenched Equalization

• "Parliament and the government of Canada are committed to the principle of making equalization payments to ensure that provincial governments have sufficient revenues to provide reasonably comparable levels of public services at reasonably comparable levels of taxation."  (Subsection 36(2) of the Constitution Act, 1982)

03-24

Equalization Payments

https:// www.fin.gc.ca/fedprov/mtp-eng.asp

03-25

Equalization Payments

• Equalization entitlements are determined by measuring provinces’ ability to raise revenues – known as "fiscal capacity".

• Before any adjustments, a province’s per capita Equalization entitlement is equal to the amount by which its fiscal capacity is below the average fiscal capacity of all provinces – known as the "10 province standard". 

03-26

Equalization Payments

• Provinces get the greater of the amount they would receive by fully excluding natural resource revenues, or by excluding 50% of natural resource revenues. 

• Equalization is adjusted to ensure fairness among provinces while ensuring that receiving provinces can get a net fiscal benefit from their resources equivalent to half the per capita resource revenues of the receiving provinces.

03-27

Equalization Payments

• Equalization is also adjusted to ensure that the total program payout grows in line with the economy. 

• The growth path is based on a three-year moving average of gross domestic product (GDP) growth.

• This helps to ensure stability and predictability while still being responsive to economic growth and ensuring that provinces are protected against reductions in overall Equalization.

03-28

Associated Equalization

• In 1977, the Government of Canada agreed to transfer 13.5 percentage points of Personal Income Tax (PIT) and 1 percentage point of Corporate Income Tax (CIT) to the provinces and territories as part of the federal government’s on-going contribution for health and post- secondary education.

• Since tax points are worth more in some provinces than others, the federal government agreed to equalize the tax points on an on-going basis.

03-29

Associated Equalization

• The annual amount paid to equalize these tax points (approximately $1.3 billion in 2011-12) is called Associated Equalization – because it is the Equalization amount ‘associated’ with the tax point transfer.

• The amounts are calculated and paid through the Equalization program; however, they are intended to support health, post-secondary education and social assistance and social services and as such are included in the Canada Health Transfer (CHT) and the Canada Social Transfer (CST).

03-30

Federal – Provincial Transfers

• The Government of Canada provides significant financial support to provincial and territorial governments on an ongoing basis to assist them in the provision of programs and services.

• There are four main transfer programs: the Canada Health Transfer (CHT), the Canada Social Transfer (CST), Equalization and Territorial Formula Financing (TFF).

03-31

Federal – Provincial Transfers

• The CHT and CST are federal transfers which support specific policy areas such as health care, post-secondary education, social assistance and social services, early childhood development and child care.

• The Equalization and TFF programs provide unconditional transfers to the provinces and territories. Equalization enables less prosperous provincial governments to provide their residents with public services that are reasonably comparable to those in other provinces, at reasonably comparable levels of taxation. TFF provides territorial governments with funding to support public services, in recognition of the higher cost of providing programs and services in the north.

03-32

Federal- Provincial Transfers

• Subject to ideology of fed govt – Health and Social Transfers History

● http://www.fin.gc.ca/fedprov/his-eng.asp

03-33

Federal government regional development programs

Regional Nature of Canadian Political Economy

• During the 1960s, the federal government began to set up specific regional development initiatives such as special tax incentives (e.g., accelerated capital cost allowances on acquisitions of productive capital for designated regions), agricultural development boards and other programs to assist economically depressed regions with high rates of unemployment and poverty.

• In 1969, the federal government consolidated these programs and activities into a single entity by creating the Department of Regional Economic Expansion.

• This, in turn, was replaced by the Department of Regional Industrial Expansion (DRIE) in 1982.

Regional Nature of Canadian Political Economy

• In 1987–1988, the federal government dissolved DRIE and transferred some of its regional development responsibilities to two new organizations: the Atlantic Canada Opportunities Agency (ACOA), which was established to represent the four Atlantic provinces, and the Department of Western Economic Diversification Canada (WD), which was set up to promote regional development and represent the four western provinces

Regional Nature of Canadian Political Economy

• In the meantime, as the new Department of Industry, Science and Technology (DIST) – the forerunner of Industry Canada – was being constituted, it was announced that a new, stand-alone organization would be formed within DIST, namely Regional Development Ontario and Quebec.

• This new organization would assume regional economic development responsibilities for both Ontario and Quebec.

• DIST retained the regional development responsibilities for both central provinces, while eastern and western Canada retained their own stand-alone regional development agencies.

Regional Nature of Canadian Political Economy

• In 1987, the federal government also established the Federal Economic Development Initiative in Northern Ontario (FedNor), a fund to support development initiatives in northern Ontario.

• To implement FedNor, a local advisory board – the FedNor Board – was appointed and the FedNor Secretariat was established within DIST. 

• At its inception, FedNor received funding of $55 million over five years.  • The federal government twice extended program funding to FedNor and, in

Budget 2005, announced that it would commit an additional $88 million to allow FedNor to continue operating until 2013.

Regional Nature of Canadian Political Economy

• In 1989, DIST split Regional Development Ontario and Quebec into two separate entities, one for each province.  • DIST retained responsibility for regional economic development in Ontario, including FedNor for northern Ontario, and

eventually spun off the Quebec portion of regional development programs and activities by forming a new agency, the Federal Office for Regional Development–Quebec (FORD-Q), in 1991.

• As the Agency responsible for regional economic development in Quebec, FORD-Q operated independently from DIST and coordinated federal interventions with respect to regional development initiatives.

• However, although FORD-Q was a stand-alone entity, its activities were based primarily on an industrial strategy developed by DIST in 1988.

• In January 1996, responsibility for FORD-Q was transferred back to the Minister of Industry through an order in council

Regional Nature of Canadian Political Economy

• In 2005, Parliament passed legislation transforming FORD-Q into the Economic Development Agency of Canada for the Regions of Quebec (CED-Q) and conferring autonomous status to CED-Q on the same basis as ACOA and WD.

• In 2009, the federal government announced the establishment of two new agencies, the Federal Economic Development Agency for Southern Ontario (FedDev Ontario) and the Canadian Northern Economic Development Agency (CanNor), to support economic and regional development in the southern portion of Ontario and in the northern territories (i.e., Northwest Territories, Nunavut and Yukon), respectively.

• Both agencies are stand-alone entities with programs and initiatives that aim to support economic and community development in their respective regions. 

• Each new agency will initially deliver existing programs and services and will later establish its own program structures and operations.

Regional Nature of Canadian Political Economy

• CanNor inherited programs previously delivered by the Department of Indian Affairs and Northern Development (DIAND), and FedDev inherited FedNor’s eastern Ontario development program operations.

• ACOA, CED-Q and WD were created and are governed by enabling legislation. In contrast, both FedDev Ontario and CanNor were established through orders in council.

Regional Development Annual Expenditures

Expenditure by Region

• http:// www.parl.gc.ca/content/lop/research publications/2011-05-e.htm

Duff Patullo and BC at the turn of the 20th century

The Economy at Joining Confederation

• Strong mining taking place in the Kootenays – silver, lead, copper, gold • Coal in the Crow’s Nest, smelters also in the Kootenays • Agriculture spread first to the Kootenays and then to the Okanagan • Grand Trunk Pacific railway opened up the north linking up to Prince Rupert,

many other communities developed • Lumber spread along the lines • Strong development of pulp and paper industry • Coal mining boomed on Vancouver Island • 1901 population boomed from 178,657 to 392,480 people • 7 years from 1905 to 1911 a surplus of $10,925,346, while net debt was $8,

969, 778 – surplus ended in 1914 (deficit was $5,283, 653, and deficits were the norm from that point most years to WWII

Depression and Post WWII

• As with all provs B.C.’s economy suffered tremendously during the Depression and flourished in the post-WWII period

• Duff Patullo – social capitalism • W.A.C. Bennett – province building • http://www.cpac.ca/en/digital-archi

ves/?program=233

Regional Development

• As in most jurisdiction that were liberal democratic based on free markets, regional development began in earnest in BC post WWII and under Bennett

• Motivated by: – The ability and access to resources from within the province – Desire to diversify the development of the province

geographically throughout the province – Ongoing fears of annexation drove Bennett to secure BC’s

North as connection between the North and California – feds and Alberta were getting cosy

Regional Development

• Resulted in 3 guiding principles of provincial regional development

– The development of an implicit social contract or social compromise between the state and the regions to build and sustain communities

– A model of governance that recognized the geographic and cultural diversity of the prov and thus sustained an over-representation of the North in the legislature

– A model of economic development with the goal of integration of the prov economy along north-south lines

The Social Contract

• Tact agreement to support communities by distributing the wealth of the province throughout all regions

• Halseth & Manson (2008): the WAC Bennett govt “understood the vital connection between social and economic development, and sought solutions that brought a broader range of benefits to the province”

– Linked industry and government with labour and indirectly with northern communities

● Close to a corporatist model

The Social Contract

• Young & Mathews (2007) 4 specific policies that encouraged resource dependent communities that help develop a strong sense of place and purpose

– Tenure system for the forestry industry – licensing, stumpage rates

– Heavy investment by the province in transportation infrastructure throughout BC

– Imposing restrictions on private enterprise to encourage diverse development in all regions

– Worked with corporations to invest in new communities mostly in the North which promoted the dispersion of labour

Representation

• Realization that not only was it in the best of interests of the province to disperse economically but also a recognition citizens in all areas of the province required political representation

• Some tension in BC between the principle of equity of representation and the recognition of the geographic and population distribution challenges

– Inherent weight of MLA’s of North greater than that of urban MLA’s

Regional Economic Development

• Linking the province’s resources to industry resulted in a deep dependence on government and showed the significant structural weakness of a staples economy

• Innis (1995): puts pressure on the state to invest in infrastructure to move resources to market

• Creates boom bust economy that leaves communities susceptible • Little secondary industry (value-added) develops • Service provision by the prov govt to local communities became

important and ongoing challenge particularly in one industry towns

Effects of Globalization and Neo-Liberalism

• Role of the province in the economy was effected by forces of globalization and the adoption, by governments provincially and nationally, of neo-liberal/neo-conservative policy agendas

• Ended the period of province-building which threatened the interdependence of corporations, communities and the government – goal of globalization was to open up markets, lower trade barriers and diminish international/national and provincial borders

• Diminished the notion of equitable development in all regions North-South • Principle of subsidiarity had an effect at all levels of government • Increased pressure for communities to be self-sustaining providers of public services

Effects of Globalization and Neo-Liberalism

• Within the Legislature, despite the demise of many one industry communities and the susceptibility of boom and bust economies, levels of representation remained consistent

• Resistance from the North to rationalize representation in the Province

– 2007 BC Electoral Boundaries Commission report recommended reducing the number of northern ridings

Effects of Globalization and Neo-Liberalism

• Commission followed an established practice of maintaining +/- 25% population per constituency while recognizing “geographic realities, demographic realities, the legacy of our history and the need to balance community interests of the people of British Columbia”

• Government decided to not change representation from the North – representation, geography, distance and isolation remains core factors in the distribution of seats

Challenges of Place, Distance and Isolation

• Electoral politics and political life in BC are much more linked today to the fate of the new political economy

• Still tension between representation and regional economic development

• New economy values the diversity of place because communities are forced to assess their assets that are available for sale in the new economy – shift away from traditional resource extraction models to a service sector economy

– Has been termed a shift “from forestry to film”

Challenges of Place, Distance and Isolation

• Progress 250 panel recommended: – Formation of clusters based on

information and human capital/knowledge-based industries; recreation and tourism; and specialty agriculture

– Variation as to what regions could best handle specific industries

Challenges of Place, Distance and Isolation

• Complexity of local government and the relationship between those governments and the provincial govt became more complex

• Place based economic model suggests “local actors and institutions are called upon to be the source of contextual knowledge that identifies community and regional assets”

• Capacity of resources, institutional knowledge, political and bureaucratic actors, may be limited in the hinterland making ability to thrive in the new reality a challenge

Challenges of Place, Distance and Isolation

• Aboriginal groups were also challenged to meet the new realities

– Lacked capacity to enter complex negotiations over certainty – Campbell government evolution – motives?

– Treaty negotiation process was extremely tedious in the BC model

Challenges of Place, Distance and Isolation

• Traditional regional identities were also challenged – Insiders vs outsiders – Peach City vs Int’l Wine centre – Penticton example – Made it difficult for communities to attract outside

investment because residents were forced to consider the effects of the outsiders’ influences on their traditional identity

– Traditional locations of political power were also challenged by regional hub approaches to the new economy

Future of Regional Economies

• Has been pressure to rebuild the social contract based on bringing the hinterland into the new economy by providing some of the basic infrastructure that would allow for economic diversity

• System of representation has also been considered – 2009, potential change to electoral system to BC STV

– Would have created larger Northern constituencies with multiple MLA’s – would have not conformed to the +/-25% rules

Future of Regional Economies

• Still remains ongoing challenges to relationship between rural communities and the market – Clark government push for LNG – remnants of Campbell approach to “win the North” and minimize the need to dominate urban areas (traditional NDP support) in elections

• Gateway plan (including Port development) and LNG has both economic and political underpinnings – recent election ended up being about jobs and the economy in the end!

Summary

• Focus on hubs and clusters makes distance and geography more important in development strategies – communities have to look outward to access markets

• Province withdrew from creating an interdependent prov economy to looking outward (mostly Asia) – lots of challenges remain – capacity, institutional knowledge, time, infrastructure support

• Close connections remain between government and the economy

Effects of Globalization and Neo-Liberalism

• One strategy used by the prov govt to deal with the effects of globalization and neo-liberalism was to create several regional hubs to gain economies of scale in the regional economies of the prov