Want to break BC’s boom and bust cycle? Focus on people, says a tech leader

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Credit: Pexels/Tomas Williams

Well-paying jobs in growing, profitable industries are key to stable government revenues and a less volatile economy, says BC Tech boss Jill Tipping

Every business likes to say that people are its greatest asset. For Jill Tipping, president and CEO of the BC Tech Association, that maxim applies across the province.

You can read all about it in A New Economic Narrative for British Columbia: British Columbia’s Fiscal Futurewhich follows a study of the same name published last summer.

The new report builds on its predecessor by working from a different angle. “Last summer we were just looking at the facts of the economy, and in this one we dug a little deeper to look at sources of government revenue,” says Tipping. “But both reports come from the same point of view, which is: There’s a conversation we’re having in BC about the economy that’s a bit outdated.”

By focusing on the issue of revenue, BC Tech hopes to bring this conversation to a new horizon. “What is our economy like now, and where do we actually get sustainable government revenue from today?” Tipping request. “Does this tell us anything about how to build a stronger and more sustainable future? How can we move beyond boom and bust? »

LEARN MORE: British Columbia’s economy has fundamentally changed. Are we ready for tomorrow?

The latest report points to an aging population, overheated housing market and declining resource incomes as threats to BC’s financial future. “We have enough inherent risk,” says Tipping. “Resource royalties are subject to fluctuation. Housing — there are downsides to depending on it for your economic growth and government revenue. So when you look at that in comparison, trying to make tech and other industries as big and successful as possible doesn’t seem like the riskiest thing we can do.

This argument is based on the fact that services now represent 75% of provincial gross domestic product and 80% of jobs. BC Tech predicts the local tech industry will create 150,000 new jobs by 2029, double what the government has estimated.

“What we were really interested in was reflecting how much of the economy today is in services, how much of the economy today is in tech, and how much job growth is in services. next 10 years that will come from these new sectors,” Tipping said. .

“And then bringing that angle back to government revenues and realizing that individuals – human beings, people – and the income taxes and the commodity taxes and the property taxes that they pay, it’s in makes our most important and sustainable source of income.”

As the report notes, taxation was by far the biggest source of money for the BC government in the 2020-2021 fiscal year, accounting for 55% of total revenue. At 32.5%, personal income tax was the largest contributor to provincial tax revenue, far exceeding sales tax (22.5%) and corporate income tax (14.1 %).

Given this reality, the reports call for the creation of more well-paying jobs in technology and other growth sectors. “If we do this, not only will it be a good outcome for the individuals involved, but it will also result in a great economy with less boom and bust and more stability for government revenues,” Tipping said.

Beyond booms and busts

But like any other industry, technology is subject to downturns. Perhaps the most infamous example is the dot-com bubble of the late 1990s, which saw internet stocks lose over US$1.7 trillion in value in the ensuing crash.

“Tech has certainly had its share of booms and busts,” admits Tipping. “But the tech economy of 2022 is quite different from where we were at the turn of the millennium, because technology has now infiltrated every sector of industry,” she adds. “So I think there’s less of a tendency to explode and fall apart than there might have been, you know, [20] years ago in technology. Today, it really is the modern basis of the economy.

Tipping also distinguishes between high-margin service businesses, which offer “the opportunity for creativity and growth and paying people well,” and their less profitable counterparts in other industries. “There are differences in profiles between the sectors which are often explained by short-term economic factors but which can also be explained by [asking]are we actually talking about a low margin business or are we talking about a high margin business? »

Then there is the question of which industries will continue to grow. “Anyone looking at trends for the future is saying this will only mean growth in technology adoption,” says Tipping. “So when you look at an industry that has high profit margins, pays its people well, expects to employ more people, and expects to grow globally, it’s a great place for Colombia. -British”

BC Tech’s new report also makes the case for increased services exports, especially in knowledge-based industries centered on intellectual property. “Intellectual property is probably just another way of saying added value,” says Tipping. “Any time we can add more value to the product before selling it, we’ve given ourselves a much stronger economic negotiating position in the world. We also keep more of the profits for ourselves and more of the value in British Columbia. »

Talent trumps taxes

All of this raises political questions for the government, for example, whether to reduce taxes on intellectual property developed here, as some local companies have proposed. “There are certainly tax implications and political implications that need to be considered soberly and seriously,” says Tipping. “I would say, however, that the No. 1 topic of conversation in technology, and indeed in many other service sectors, is access to the workforce.”

READ MORE: AbCellera founder Carl Hansen calls for cutting taxes on innovation

For BC Tech, solving this problem means rapid qualification, reskilling of workers who want to move into new sectors, and a bigger role for micro-credentials, says Tipping. “We like the idea of ​​changing the past, the established model of education and looking for new ways to bring in people with relevant experience and give them credit for their degrees,” she says.

“So that’s where our focus is all the time, on talent, talent supply and skills. Although we talk about taxation, that’s further down the list of things we’re concerned about, much less than access to talent.

READ MORE: Education Guide 2021: Micro-credentials are making their way to BC universities and colleges

The tip also suggests looking at the income tax situation in other tech hubs. “If high personal tax rates meant you couldn’t have a thriving tech industry, then no one would have ever heard of Silicon Valley in California,” she says, claiming the same goes for the cost of living. “People say, Well, how can British Columbia be successful? We have such a high cost of living. I’m like, have you watched? The most successful technology sectors in the world, they are all in absolutely fantastic places to live where the cost of living is high.

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