Why does this conversation matter?

In order to decide whether energy development projects should go forward, it’s essential to have a good understanding of where the sector fits into the bigger economic picture. Of course we know that energy is important to Canada, but how important? In what ways? And is it more or less important than other sectors?

Where does our wealth come from?

It’s often said that British Columbia is a resource-based province. In actual fact, the reality is a lot more complex. While it’s true that much of BC was built on natural resources, and that even today sectors like technology and construction have a certain amount of inter-relationships with the resource sector, the basis of our economy has overwhelmingly shifted to service-based industries. More than 4/5 of us work in services and over 76% of our GDP comes from those sectors.

It’s also important to note that a significant part of our economy is based on small businesses. Small businesses make up 98% of all businesses here in BC, more than any other province.

Although economics can be complex and numbers can tell different stories depending on how they’re interpreted, some data speaks for itself. Here’s a chart breaking down the main sources of GDP in British Columbia:

BC GDP by industrySource: The 2012 British Columbia Economic Accounts, BC Stats

Oil, gas and support services make up just 3% of our GDP, compared to 15% for manufacturing and construction and over 23% for financial and real estate services. When secondary energy services are added into the equation, the total contribution to GDP is still only 11%. While this number is significant, it’s certainly not where most provincial economic activity is coming from.

Federally, the numbers are similar. The oil sands make up just 2% of Canada’s GDP. When you add in conventional oil & gas extraction, the total is still only 6% of our wealth.

Oil contribution to Canadian GDP
Source: Statistics Canada (CANSIM table 379-0031)  

Where’s the economic growth?

This graph from KMPG’s recent tech sector report card gives an overview of which industries are growing and which are shrinking in BC. The sectors to the right of the middle line are contributing more each year to provincial GDP, and those to the left are contributing less each year – in other words, they’re shrinking.

The sectors showing the most growth are construction, high tech, finance and real estate, retail trade, and professional, scientific and technical services. A recent survey of small businesses had similar findings.

Tech sector report card

Where are the jobs? 

In BC, the mining, oil and gas sector combined employs just 1% of the workforce.

BC energy jobs
Source: 2012 British Columbia Financial and Economic Review

Instead, the biggest employers in the province are:

  • Construction – 205,000 jobs
  • Manufacturing – 164,000 jobs
  • Tourism – 127,000 jobs
  • Real estate and property development – 121,000 jobs

The film sector adds an additional 36,000 jobs and the technology sector employs 84,000 people – more than oil, mining, gas and forestry combined.

Across Canada, the numbers are similar. In fact, more people in work in the beer economy than in the oil sands:Screen Shot 2014-03-13 at 2.00.58 PM

Who funds social programs?

Although BC Stats doesn’t gather data on the tax contributions of different sectors, StatsCan makes this information available on a national level. In total, the oil and gas sector (oil sands plus conventional oil and gas) contributes 4.2% of corporate GDP. Compared to financial services (25%) and manufacturing (13%) this number is unimpressive. Particularly considering that the manufacturing sector is widely reported to be struggling and has decreased in size significantly over the past decade, manufacturing businesses contribute much more towards social spending for big ticket items like schools and hospitals.

Tax revenues by sectorSource: Statistics Canada (CANSIM table 180-0003)  

On the whole, the sectors most responsible for creating jobs, funding social programs and contributing to the wealth of British Columbians are finance, real estate, manufacturing, construction, retail trade and tourism. Any big development project should take into consideration its impact on these sectors – positive or negative – before it gets approved.

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