Greater Vancouver Economic Scorecard Report Overview

Dr. Daniel F. Muzyka President and Chief Executive Officer The Conference Board of Canada

Why a Regional Scorecard?

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

2 Purpose of Greater Vancouver 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.

3 Agenda

• 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

4 World Real GDP Growth per cent change

4.0

3.0

2.0

1.0

0.0

-1.0

-2.0 1991 93 95 97 99 01 03 05 07 09 11 13 15 17f

Source: Consensus Economics. 5 Tepid Global Growth an Impediment to Improving Exports per cent change 8.0% 7.0% 6.0% 5.0% 4.0% 2015 3.0% 2016 2.0% 2017 1.0% 0.0% -1.0% United China United Euro zone Japan Latin Hong Kong Total Trade States Kingdom America Weighted GDP Source: Consensus Economics. 6 Gateway to Asia • 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.

China: Real GDP Growth and Inflation per cent change

Real GDP Growth Inflation 12.0 12.0 10.0 10.0 8.0 8.0 6.0 6.0 4.0 4.0 2.0 2.0 0.0 0.0 -2.0 -2.0 03 04 05 06 07 08 09 10 11 12 13 14 15 16f 17f

Source: Consensus Economics. 8 China’s Global Influence per cent share of global consumption (2014) 60 55 50 45 40 35 30 25 20 15 10 5 0 iron ore aluminum nickel steel copper zinc soybeans oil

Source: World Bank. 9 Auto Sales in China millions, passenger vehicles 18.0 16.0 But the country is shifting to the 14.0 consumption of products and services. 12.0 10.0 8.0 6.0 4.0 2.0 0.0 2008 2009 2010 2011 2012 2013 2014 2015

Source: Statistica 2016. 10 India: Real GDP Growth and Inflation per cent change

Real GDP Growth Inflation

12.0 12.0

10.0 10.0

8.0 8.0

6.0 6.0

4.0 4.0

2.0 2.0

0.0 0.0 03 04 05 06 07 08 09 10 11 12 13 14 15f 16f

Source: Consensus Economics. 11 Agenda

12 Canada’s Real GDP Growth per cent change 4.0

3.0

2.0

1.0

0.0

-1.0

-2.0

-3.0 03 04 05 06 07 08 09 10 11 12 13 14 15 16f 17f 18f

Sources: Statistics Canada; The Conference Board of Canada. 13 The Resource Decade—Real GDP by Province average annual compound growth, per cent 2004-14 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 NL PEI NS NB Que Ont Man Sask Alta BC

Sources: Statistics Canada; The Conference Board of Canada. 14 The Resource Crash—Real GDP by Province average annual compound growth, per cent 2015-18 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 NL PEI NS NB Que Ont Man Sask Alta BC

Sources: Statistics Canada; The Conference Board of Canada. 15 Canada’s Aging Demography and the Knowledge Economy

• 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 Retirement Rate per cent share of the labour force (1976-2018)

1.40 1.30 1.20 1.10 1.00 0.90 0.80 0.70 0.60

Sources: The Conference Board of Canada; Statistics Canada. 17 Canada’s Employment Gains level change in 000’s (2004-14) 1,200 1,000 1,165 800 892 600 400 200 77 368 0 -200 -400 -559 -600 Resources, Manufacturing Construction Health, Education, Business Utilities and Public Admin Services Agriculture Sources: The Conference Board of Canada; Statistics Canada. 18 Agenda

19 Impact on Greater Vancouver

• 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.

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

Saskatoon 3.9 Edmonton 3.9 Regina 3.8 Calgary 2.8 Vancouver 2.5 Winnipeg 2.1 Québec 2.0 Toronto 1.9 Halifax 1.6 Ottawa-Gatineau 1.6 Canada: 1.6% Montréal 1.4 Victoria 1.2 Hamilton 0.9

Source: The Conference Board of Canada. 21 Where the Jobs are Being Created in Canada level change in 000’s (April 2016 over April 2015)

Vancouver 94.2

Toronto 90.8

Rest of Canada -41.0

Sources: Statistics Canada; The Conference Board of Canada. 22 Contribution to Growth over 2006-15 Vancouver (percentage added to total real GDP growth)

Finance, Insurance & Real Estate 1.1 Wholesale & Retail Trade 0.3 Construction 0.2 Business Services 0.2 Health & Education 0.2 Transportation & Warehousing 0.1 Vancouver’s economy expanded Public Administration 0.1 by 2.5 per cent per year between Personal Services 0.1 2006 and 2015. Resources, Utilities & Agriculture 0.1 Information & Culture 0.0 Manufacturing 0.0

Source: The Conference Board of Canada. 23 Vancouver to be Canada’s Growth Leader

• 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.

24 Agenda

25 Greater Vancouver Map

26 Criteria for Selecting Comparator Regions

• 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.

27 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

28 Agenda

29 Benchmarking: Ranking Method

• 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

Vancouver Scorecard: Key Findings

• 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.

31 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)

32 Greater Vancouver’s Economic Performance continued

Indicator Grade Ranking

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)

33 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.

34 Greater Vancouver’s Social Performance

Indicator Grade Ranking

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)

35 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

36 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

37 Agenda

38 Cluster Analysis

• 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.

39 Greater Vancouver’s Traded Clusters

1. Transportation (airport, port, rail and trucking) 2. Tourism 3. Information and cultural industries 4. High-tech 5. Finance and insurance

40 Greater Vancouver is a Transportation Gateway

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

Greater Vancouver is a Major Tourist Destination • 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.

Photo by Jon Eben Field.

42 Information and Culture is Another Key Industry

• 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.

Photo by Nigel Horsley.

43 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.

44 Greater Vancouver is a Growing Financial Services Centre • 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.

Agenda

• Economic context • National economic context • Impact on Greater Vancouver • Greater Vancouver defined and compared • Scorecard results • Greater Vancouver’s traded clusters • Risks and challenges

46 Greater Vancouver’s Outlook Not Without Risks • 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.

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

Hong Kong 22.0 Copenhagen 38.0 Halifax 47.4 Singapore 50.0 Portland 51.5 Barcelona 53.4 Calgary 54.0 Miami 55.4 Manchester 56.0 Vancouver 56.8 Seattle 57.1 Houston 58.3 Los Angeles 58.3 Montreal 59.4 San Francisco 62.2 Toronto 65.6 Sydney 66.0 Seoul 73.0 Shanghai 100.8

Source: Statistics Canada; and other international sources. 48 Vancouver’s Housing Among Least Affordable median house price divided by median household income

17.0

12.8 10.6 9.8 9.2 8.0 7.7 6.5 5.6 5.2

Source: Demographia. 49 Land Scarcity Another Serious Challenge

• 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.

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

Houston 122 Sydney 119 San Francisco 119 Calgary 116 Seattle 113 Portland 105 Los Angeles 96 Hong Kong 86 Rotterdam 81 Toronto 77 Miami 75 Vancouver 74 Copenhagen 73 Singapore 69 Barcelona 69 Halifax 65 Montreal 64 Seoul 64 Manchester 55 Shanghai 43

Sources: The Conference Board of Canada; Statistics Canada. 51 Educational Attainment per cent of the population, aged 25 and over, with at least a bachelor’s degree

San Francisco 45 Copenhagen 40 Seattle 39 Barcelona 37 Portland 35 Toronto 33 Calgary 33 Los Angeles 32 Vancouver 31 Houston 31 Manchester 30 Halifax 30 Miami 29 Rotterdam 27 Hong Kong 27 Montreal 27 Seoul 26 Sydney 24 Singapore 23 Shanghai 23

Source: Statistics Canada. 52 Taxes on Capital Marginal effective tax rate on capital

Halifax 13.4 The METR measures the tax impact on Montreal 15.9 capital investment as a portion of the Calgary 17.0 cost of capital. Rotterdam 17.1 Toronto 18.2 Copenhagen 18.6 Manchester 23.7 Sydney 25.9 Barcelona 26.0 Vancouver 27.5 Seoul 30.1 U.S. Average 35.3

Source: Chen and Mintz. 53 Head Office Employment Head office employment per 1,000 population (2013)

Calgary 22.7

Toronto 12.2

Montreal 10.2

Vancouver 6.0

Source: Statistics Canada. 54 Challenges Call for Regional Approach

• 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.

55 Greater Vancouver Economic Scorecard The Path Ahead

Iain J.S. Black President and Chief Executive Officer Greater Vancouver Board of Trade

The Path Ahead: “Let’s Get to Work”

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

2 The Path Ahead: “Let’s Get to Work”

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

3 Key Messages & Takeaways

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.

4 The Path Ahead: “Let’s Get to Work”

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

5 The Path Ahead: Our Policy Priorities

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

6 The Path Ahead: “Let’s Get to Work”

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

7 The Path Ahead: Some specific ideas

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.

8 conferenceboard.ca boardoftrade.com conferenceboard.ca boardoftrade.com