Greater Vancouver Economic Scorecard · 2018-08-24 · •Vancouver is expected to lead all major...

Greater Vancouver Economic Scorecard Report Overview

Dr. Daniel F. Muzyka

President and Chief Executive Officer

The Conference Board of Canada

A regional scorecard:

• Provides an evidence-based foundation for performance evaluation

• Identifies areas for performance improvement

• Defines areas for further growth

• Helps set the agenda

• Helps track progress

Why a Regional Scorecard?

• Major trends: globalization, rise of Asia, knowledge economy, aging population.

• Greater Vancouver, like all major cities, is in a global competition for talent and

investment.

• Scorecard’s purpose is to assess Greater Vancouver’s relative strengths and

weaknesses in socio-economic performance.

• Also provides evidence-based research for GVBOT’s policy analysis.

Purpose of Greater Vancouver Scorecard

• Global economic context

• National economic context

• Impact on Greater Vancouver

• Greater Vancouver defined and compared

• Scorecard results

• Greater Vancouver’s traded clusters

• The region’s risks and challenges

Agenda

World Real GDP Growth per cent change

1991 93 95 97 99 01 03 05 07 09 11 13 15 17f

Source: Consensus Economics.

Tepid Global Growth an Impediment to

Improving Exports per cent change

United States

China United Kingdom

Euro zone Japan Latin America

Hong Kong Total Trade Weighted

• The 11 TPP countries account for almost 2/3 of B.C.’s trade.

• Japan is still the number three economy, even if growth is stalled.

• Free trade agreement with India is in the works.

– Emerging markets have slipped:

• China will struggle to grow by 7 per cent next two years.

• Brazil and Russia in recession.

• But Indian performance has recently improved.

Gateway to Asia

China: Real GDP Growth and Inflation per cent change

03 04 05 06 07 08 09 10 11 12 13 14 15 16f 17f

Real GDP Growth Inflation

China’s Global Influence per cent share of global consumption (2014)

Source: World Bank.

iron ore aluminum nickel steel copper zinc soybeans oil

Auto Sales in China millions, passenger vehicles

Source: Statistica 2016.

2008 2009 2010 2011 2012 2013 2014 2015

But the country is shifting to the

consumption of products and services.

India: Real GDP Growth and Inflation per cent change

03 04 05 06 07 08 09 10 11 12 13 14 15f 16f

Real GDP Growth Inflation

Agenda

03 04 05 06 07 08 09 10 11 12 13 14 15 16f 17f 18f

Canada’s Real GDP Growth per cent change

Sources: Statistics Canada; The Conference Board of Canada.

NL PEI NS NB Que Ont Man Sask Alta BC

2004-14

The Resource Decade—Real GDP by Province average annual compound growth, per cent

NL PEI NS NB Que Ont Man Sask Alta BC

2015-18

The Resource Crash—Real GDP by Province average annual compound growth, per cent

• To replenish the workforce,

Canada needs to add more

highly skilled workers and replace

retirees:

– Invest in education—

increase the skills and

participation of the

workforce.

– Raise levels of immigration

and speed up integration.

Canada’s Aging Demography and the

Knowledge Economy

Canada’s Retirement Rate per cent share of the labour force (1976-2018)

Sources: The Conference Board of Canada; Statistics Canada.

Canada’s Employment Gains level change in 000’s (2004-14)

Resources, Utilities and Agriculture

Manufacturing Construction Health, Education, Public Admin

Business Services

Agenda

• Greater Vancouver’s economy has been strong and the outlook is bright.

• Why the optimism?

– Expect more agglomeration:

• Knowledge workers cluster.

• Immigrants tend to settle in large cities.

– Given globalization/Asia-Pacific growth/TPP—―Gateway‖ dynamics will

increase.

Impact on Greater Vancouver

Real GDP Growth by CMA: 2006-15 average annual per cent change

Source: The Conference Board of Canada.

0.9 1.2

1.4 1.6 1.6

1.9 2.0

2.1 2.5

2.8 3.8 3.9 3.9

Hamilton

Victoria

Montréal

Ottawa-Gatineau

Halifax

Toronto

Québec

Winnipeg

Vancouver

Calgary

Regina

Edmonton

Saskatoon

Canada: 1.6%

Where the Jobs are Being Created in Canada level change in 000’s (April 2016 over April 2015)

Rest of Canada

Toronto

Vancouver

Contribution to Growth over 2006-15 Vancouver (percentage added to total real GDP growth)

Source: The Conference Board of Canada.

Manufacturing

Information & Culture

Resources, Utilities & Agriculture

Personal Services

Public Administration

Transportation & Warehousing

Health & Education

Business Services

Construction

Wholesale & Retail Trade

Finance, Insurance & Real Estate

Vancouver’s economy expanded

by 2.5 per cent per year between

2006 and 2015.

• Vancouver is expected to lead all major CMAs in economic growth between

2016 and 2020.

• Vancouver’s status as the Gateway to Asia and the continued rise of the

Asia-Pacific region bodes well for local trade and transportation outlook.

• Local trade outlook will also be buoyed by healthy U.S. economy.

• Post-secondary institutions and local labour talent means many ingredients are

in place to take advantage of rising services trade and other knowledge-based

growth.

Vancouver to be Canada’s Growth Leader

Agenda

Greater Vancouver Map

• Each of the selected metro areas meet one or more of the following criteria:

– A transportation hub.

– One of Greater Vancouver’s Canadian competitors.

– One of Greater Vancouver’s Pacific Northwest competitors.

– Comparatively sized to Greater Vancouver.

– Located in a rapidly emerging economy.

– A popular tourist destination.

Criteria for Selecting Comparator Regions

Benchmarking: Metro Regions

Barcelona Portland

Calgary Rotterdam

Copenhagen San Francisco

Halifax Seattle

Hong Kong Seoul

Houston Shanghai

Los Angeles Singapore

Manchester Sydney

Miami Toronto

Montreal Greater Vancouver

Agenda

• This study uses a report card-style ranking of A–B–C–D (indicators are divided

into quartiles) to assess performance.

• Backward looking—all indicators end in 2014 or earlier.

• The report features 32 indicators divided into two categories:

Economy (21) and Social (11).

• Economy category also includes indicators that measure transportation

(ports, airports, rail and trucking) performance.

• The overall ranking is an average of the Economy and Social category scores.

• For more information: http://www.conferenceboard.ca/hcp/methodology.aspx

Benchmarking: Ranking Method

• The overall results of the Scorecard offers mixed news for Greater Vancouver—

it finishes 9th out of 20.

• Greater Vancouver does slightly better in the Social category than in the

Economy category.

• Within the Economy category, Greater Vancouver ranks highly among the

transportation-oriented indicators.

• Region still faces significant challenges that threaten its economic vitality.

Vancouver Scorecard: Key Findings

Greater Vancouver’s Economic Performance

Indicator Grade Ranking

KPMG’s total tax index A 3 (12)

Office rents (US$ per square foot) A 5 (17)

Port cargo tonnage per $1 million of GDP B 3 (19)

Labour productivity growth B 7 (20)

Employment growth B 11 (20)

Venture capital investment per $1 million of GDP C 4 (11)

Port container traffic (TEUs) per $1 million of GDP C 5 (19)

Real GDP per capita growth C 7 (20)

Number of cruise vessel calls C 7 (18)

After-tax income growth C 8 (19)

Number of participants at international associations meetings C 8 (19)

Greater Vancouver’s Economic Performance continued

Inbound airport cargo tonnage per $1 million of GDP C 9 (20)

High-tech employment share C 9 (19)

Unemployment rate C 10 (20)

Inbound airport seats per capita C 10 (20)

Marginal effective tax rate on capital investment C 10 (17)

International visitors C 11 (20)

Labour productivity C 12 (20)

After-tax income per capita C 13 (20)

Real GDP per capita C 14 (20)

Market size D 16 (20)

Economy Report Card

“A” Metros “B” Metros “C” Metros “D” Metros

1. Singapore 5. Seattle 10. Seoul 18. Los Angeles

2. Hong Kong 6. Copenhagen 11. Sydney 19. Manchester

3. Shanghai 7. Houston* 12. Rotterdam 20. Miami

4. Calgary* 8. San Francisco 13. Toronto

9. Vancouver 14. Halifax

15. Barcelona

16. Montreal

17. Portland

* Results for Calgary and Houston do not take into account the decline in oil and gas prices.

Greater Vancouver’s Social Performance

Air quality A 1 (20)

Proportion of population foreign born A 2 (19)

Homicide rate A 9 (20)

Proportion of population that is employed in cultural occupations B 10 (20)

Climate B 12 (20)

Proportion of the population with at least a bachelor’s degree C 9 (20)

Non-car commuting C 8 (17)

Average travel time to and from work C 10 (19)

Income inequality C 11 (20)

Proportion of population aged 25-34 D 7 (19)

Housing affordability D 15 (17)

Social Report Card

“A” Metros “B” Metros “C” Metros “D” Metros

1. Barcelona 7. Vancouver 18. Miami 20. Shanghai

2. Copenhagen 8. Manchester 19. Houston

3. Sydney 9. Montreal

4. Portland 10. San Francisco

5. Toronto 11. Calgary

6. Seattle 12. Hong Kong

13. Rotterdam

14. Seoul

15. Halifax

16. Singapore

17. Los Angeles

Overall Ranking

1. Singapore 11. Portland

2. Copenhagen 12. Seoul

3. Hong Kong 13. Rotterdam

4. Calgary 14. Montreal

5. Seattle 15. Houston

6. Barcelona 16. Halifax

7. Sydney 17. Manchester

8. San Francisco 18. Shanghai

9. Greater Vancouver 19. Los Angeles

10. Toronto 20. Miami

Agenda

• Clusters are groups of firms and institutions that are located near one another

and draw productive advantage from their mutual proximity and connections.

• Traded clusters serve markets beyond the region in which they are located.

• They are key drivers of economic growth.

• Famous clusters include ―The City‖, Silicon Valley, and Hollywood.

• We used an empirical approach to identify Greater Vancouver’s traded clusters.

Cluster Analysis

1. Transportation (airport, port, rail and trucking)

2. Tourism

3. Information and cultural industries

4. High-tech

5. Finance and insurance

Greater Vancouver’s Traded Clusters

• In 2012, the Gateway Transportation

System directly supported

approximately 82,000 jobs and

over $7.2 Billion in GDP.

• Nearly 3/4 of the value of Western

Canadian trade that moves by sea

goes via the Gateway. Nearly half of

the value that moves by air goes via

Greater Vancouver is a Transportation

Gateway

Source: Economic Development Research Group. Economic Impact of the Greater Vancouver Gateway, Sept. 2014.

• More than 9 million overnight visitors

came to Greater Vancouver last year.

• More than 805,000 cruise passengers

landed in Vancouver in 2015,

1/3 of all Canadian cruise port traffic.

• Proximity to Whistler adds to the

region’s appeal.

Greater Vancouver is a Major Tourist

Destination

Photo by Jon Eben Field.

Information and Culture is Another Key

Industry

Photo by Nigel Horsley.

• The information and cultural industry

generated $5 billion in GDP last year and

employed 39,400 people.

• Vancouver is the third largest Film & TV

production centre in North America.

Greater Vancouver is a “New Tech Hub”

• 64,300 people worked in the

information and communication

technology industry in 2015.

• The industry encompasses major

global players, such as Amazon

and Microsoft, as well as

homegrown firms like Hootsuite

and TELUS.

• Greater Vancouver’s finance

sector has been quickly rising in

prominence internationally—it

has moved up in the rankings of

the Global Financial Centres

Index from 27th place in 2007 to

14th place in 2014.

• The finance and insurance sector

generated nearly $34 billion in

GDP and employed 59,300

people in 2015.

Greater Vancouver is a Growing Financial

Services Centre

• Economic context

• Risks and challenges

Agenda

• Investment deficit in roads and public transit.

• Rapidly deteriorating housing affordability.

• Barriers to further port expansion.

• Relatively low productivity levels.

• Relatively low educational attainment rates.

• High marginal effective tax rate (METR) on capital.

• Trouble attracting head offices.

Greater Vancouver’s Outlook Not Without

100.8 73.0

66.0 65.6

62.2 59.4

58.3 58.3

57.1 56.8

56.0 55.4

54.0 53.4

51.5 50.0

47.4 38.0

Shanghai

Sydney

Toronto

San Francisco

Montreal

Los Angeles

Houston

Seattle

Vancouver

Manchester

Calgary

Barcelona

Portland

Singapore

Halifax

Copenhagen

Hong Kong

Average Commute Times average travel time to and from work (minutes)

Source: Statistics Canada; and other international sources.

12.8 10.6 9.8 9.2

8.0 7.7 6.5 5.6 5.2

Vancouver’s Housing Among Least Affordable median house price divided by median household income

Source: Demographia.

• The importance of the transportation sector to Greater Vancouver economic

vitality is a recurring theme throughout our report.

• The Port of Vancouver has continually been upgraded and expanded to

manage growing Canadian trade with Asia.

• But further investments could be hindered by land scarcity and local opposition.

• Indeed, the supply of vacant land suitable for trade and goods movement could

be exhausted within 10 years, based on the inventory of trade-enabling

industrial land.

Land Scarcity Another Serious Challenge

64 64 65

73 74 75

105 113

116 119 119

Shanghai

Manchester

Montreal

Halifax

Barcelona

Singapore

Copenhagen

Vancouver

Toronto

Rotterdam

Hong Kong

Los Angeles

Portland

Seattle

Calgary

San Francisco

Sydney

Houston

Labour Productivity GDP per worker (000’s 2007$)

27 27 27

29 30 30

37 39 40

Shanghai

Singapore

Sydney

Montreal

Hong Kong

Rotterdam

Halifax

Manchester

Houston

Vancouver

Los Angeles

Calgary

Toronto

Portland

Barcelona

Seattle

Copenhagen

San Francisco

Educational Attainment per cent of the population, aged 25 and over, with at least a bachelor’s degree

Source: Statistics Canada.

U.S. Average

Vancouver

Barcelona

Sydney

Manchester

Copenhagen

Toronto

Rotterdam

Calgary

Montreal

Halifax

The METR measures the tax impact on

capital investment as a portion of the

cost of capital.

Taxes on Capital Marginal effective tax rate on capital

Source: Chen and Mintz.

Vancouver

Montreal

Toronto

Calgary

Head Office Employment Head office employment per 1,000 population (2013)

Source: Statistics Canada.

• Many of these challenges are complex and

regional in scope.

• Local government fragmentation reduces the

likelihood that these challenges will be

successfully met.

• The region’s municipalities need to come

together.

Challenges Call for Regional Approach

Greater Vancouver Economic Scorecard The Path Ahead

Iain J.S. Black

President and Chief Executive Officer

Greater Vancouver Board of Trade

GVBOT’s initial response to Scorecard 2016

1. Key messages & takeaways

2. Priority policy areas on which we will focus

3. … and some specific ways we can apply our resources

The Path Ahead: “Let’s Get to Work”

What did we learn from this process?

1. The empirical evidence is in: this is no longer the stuff of cocktail chatter.

2. While pleased with BC’s national leadership in economic growth, embracing

the longer term opportunities & challenges requires thoughtful and

coordinated action.

3. The Pacific Gateway (Greater Vancouver’s network of roads, rail, port, and

airport) is a strategic asset for Canada’s economy… not just BC’s.

4. There is obvious linkage between our region’s challenges.

Key Messages & Takeaways

The resulting four key policy focus areas where the GVBOT will focus

1. Gateway Resources

2. Housing Affordability & Public Transit

3. Human Capital

4. Regional Coordination

The Path Ahead: Our Policy Priorities

Initial thoughts as to some things we can do as GVBOT

1. Re-engage re: transit projects.

2. Focus on municipal-imposed housing costs; regulatory certainty; density/diversity.

3. Identify municipal-controlled opportunities for regulatory streamlining &

harmonization.

4. Further engage our CYP re: their needs for housing, cultural amenities, industry

diversification, transit, and entrepreneurship.

5. Reactivate The World Trade Centre.

6. Focus our policy committees on the GVBOT priorities falling out to the Scorecard.

The Path Ahead: Some specific ideas

conferenceboard.ca boardoftrade.com

Greater Vancouver Economic Scorecard · 2018-08-24 · •Vancouver is expected to lead all major...

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