1 The Rise of Western Canada Presented By: Jason Clemens, Director Fiscal Studies and the Centre for Entrepreneurship & Markets

2 Economic Prosperity Takes Hold in Western Canada

3 Economic Prosperity Shifts West: Economic Growth (2006)

4 Economic Prosperity Shifts West: Economic Growth (2007)

5 Economic Prosperity Shifts West: Economic Growth (2008)

6 Real GDP Per Capita (2005)

7 Economic Prosperity Shifts West: Employment Growth (2006)

8 Economic Prosperity Shifts West: Employment Growth (2007)

9 Economic Prosperity Shifts West: Unemployment Rates (2006)

10 Economic Prosperity Shifts West: Unemployment Rates (2007)

11 Economic Prosperity Shifts West: Gross Business Investment ( )

12 Gross Investment vs Expected (2005)

13 Gross Investment vs Expected (2005)

14 Interprovincial Migration (2005)

15 Prosperity in Western Canada  strong GDP growth  increasing per capita incomes  strong employment growth (job creation)  low unemployment  attracting investment & people

16 Investment & Economic Development: Secret of Success of the West

17 Two Approaches to Economic Development  competitive tax rates  incentive-based tax structure  cost-effective regulations  adequate infrastructure  broad-based free trade  optimal government  preferential tax rates  subsidies & other support  asymmetric regulations  targeted free trade  expanded role for government Create the Right Environment ActiveParticipation

18 Size of Government: Pillar 1  Size of government compared to the economy matters.  Western provinces have succeeded in reducing the size of government.

19 Provincial-Local Government Spending as a Share of the Economy (2005)

20 Federal Government Spending as a Share of the Economy (2005)

21 Total Government Spending as a Share of the Economy (2005) Includes federal, provincial, and local government spending.

22 Provincial-Local Size of Government ( )

23 Taxation: Pillar #2  The amount we collect (burden) matters.  The manner in which we collect it (mix of taxes) also matters.  Consensus in the West for less and better taxes.

24 Western Canada: Reduce and Reform Personal Income Taxes  BC (2001):  25% across-the-board reduction  AB (2000):  Canada’s only single rate tax  SK (2001):  reduced rates and increased the thresholds at which they apply

25 Western Canada: Where We Stand 25% 20% 15% 10% 5% $30,000$60,000$100,000 Federal SK BC AB

26 Western Canada: Reduce and Reform Business Taxes  BC (2001):  CIT reduced from 16.5% to 12.0%  Eliminated general CCT  AB (1999):  CIT reduced from 15.5% to 10.0%  CCT completely eliminated  SK (2006):  Reducing CIT from 17.0% to 12.0%  Eliminating CCT for most firms

27 Provincial Investment Climate Report  Based on 6 years of survey data ( ) of money managers  Includes 7 sections:  Corporate income taxes;  Fiscal prudence;  Personal income taxes;  Infrastructure;  Corporate capital taxes;  Labour regulation; and  Regulatory burden

28 Provincial Investment Climate Index: 2006 Results

29 Free Trade: Pillar #3  April 28 th, 2006 – TILMA  Free trade agreement between AB and BC covering products, services, investment, and labour  Fundamental improvement on previous agreement (AIT)

30 Rise of the West: Not Just Commodities…Smart Policies  Smaller, focused government  Incentive-based tax relief (personal and business)  Regulatory streamlining  Reduced government sector  Free trade