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Government, investments drive Okanagan‘s economy

 

By Steve MacNaull Saturday, March 28, 2009 (link to story)

 

The Okanagan economy is a lot more dependent on government and personal investments than most people realize, says Jason Cox, the commercial credit manager at Valley First Credit Union and the president of the Penticton Chamber of Commerce.

The Okanagan prides itself as an entrepreneurial hotbed where innovation drives a diversified economy based on real estate, forestry, tourism, agriculture and high technology.

The reality is the Valley is dependent primarily on government jobs, government handouts and people living off their investments.

“That‘s surprising to most people,” said Jason Cox, the commercial credit manager at Penticton-based Valley First Credit Union.

“But, really, you have to look at it as a whole package. Lots of government jobs exist in communities where there is the infrastructure and amenities to support them. So that means there‘s also going to be restaurants and shopping, culture and tourist attractions and other businesses that provide employment.”

The Okanagan has long been a desirable destination for retirees and the wealthy who bring with them big investment portfolios.

“Retirees and people who have been successful with their investments or sold a business have money to seek out places like the Okanagan with its nice climate and lifestyle,” Cox said.

“They obviously have money to spend in the community. It‘s important to have them to support everything from banks and stores to restaurants and other services.”

This month, British Columbia Statistics released its 115-page Local Area Economic Dependencies report based on 2006 figures compiled from myriad sources.

Six Okanagan communities were included.

Government jobs account for 16-24 per cent of after-tax income in the communities, government transfer payments 17 to 27 per cent and non-employment income (also known as investments and private pensions) 18 to 24 per cent.

Government transfer payments include everything from Canada Pension Plan, Old Age Security and child tax benefits to employment insurance, income assistance (welfare) and GST credit.

With about 60 per cent or more of the economy tied up in those three categories, that leaves just 40 per cent spread out over the nine other sectors – forestry, mining, fishing, tourism, high technology, construction, film production and other.

For instance, Kelowna, which went through an unprecedented building boom, had construction at just 12 per cent.

Oliver and Osoyoos, the orchard and grape growing capitals of the province, saw only 10 per cent of their income from agriculture and food.

Forestry, the economic backbone of the province, ranged from four to 11 per cent in the six Okanagan communities surveyed.

People of the Okanagan shouldn‘t be surprised or ashamed at the Valley‘s apparent lack of free enterprise and diversity.

“The major employer in almost every community the world over is government,” pointed out Cox.

“In Penticton‘s case we have the usual high employment and good incomes at the school district and in health care plus the tax and veteran‘s affairs offices. But we also have a good economy on top of that. You have to keep it all in perspective.”

David Webb, the chairman of the Central Okanagan Economic Development Commission, concurred.

“We appreciate the government jobs because they pay well and are important to the community,” said Webb, who is also the president of Everest Recruitment in Kelowna.

“But really, it is all that grows above that that makes a community sustainable. The tech sector and real estate attract skilled people and their families and help define a community. The activity means there has to be a service sector of retail and hospitality, that usually have lower-paying jobs, to support it. It takes all sorts to form a vibrant, diversified economy and the Okanagan has that.”

After tax income (percentage by category)

Penticton

Public sector: 24

Government transfer payments: 22

Investments: 22

Construction: 9

Tourism: 6

Forestry: 5

Agriculture and food: 3

Mining: 2

High tech: 0

Fishing: 0

Film: 0

Other: 7

 

Kelowna

Public sector: 23

Government transfer payments: 17

Investments: 20

Construction: 12

Tourism: 7

Forestry: 4

Agriculture and food: 3

Mining: 2

High tech: 2

Fishing: 0

Film: 0

Other: 9

 

Vernon

Public sector: 22

Government transfer payments: 20

Investments: 20

Construction: 10

Tourism: 5

Forestry: 9

Agriculture and food: 2

Mining: 2

High tech: 1

Fishing: 0

Film: 0

Other: 9

 

Oliver and Osoyoos

Public sector: 16

Government transfer payments: 27

Investments: 24

Construction: 7

Tourism: 6

Forestry: 4

Agriculture and food: 10

Mining: 2

High tech: 0

Fishing: 0

Film: 0

Other: 5

 

Peachland

Public sector: 19

Government transfer payments: 18

Investments: 21

Construction: 14

Tourism: 5

Forestry: 5

Agriculture and food: 3

Mining: 3

High tech: 2

Fishing: 0

Film: 0

Other: 9

 

Spallumcheen

Public sector: 18

Government transfer payments: 21

Investments: 18

Construction: 11

Tourism: 3

Forestry: 11

Agriculture and food: 7

Mining: 2

High tech: 0

Fishing: 0

Film: 0

Other: 9 

 

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