B.C. will continue to show at least some economic growth, not only this year, but next year too.

That’s the word from Finance Minister Colin Hansen, who prepared this week’s economic update.

His federal counterpart, Jim Flaherty, has been hinting that Canada may technically be in a recession now, with negative economic growth for the last quarter of 2008 projected to continue into the new year. But Hansen insists that none of his advisors see that kind of lost ground for B.C.

Of course that, like the revenue-neutral carbon tax, is based on the provincial average. Many resource-based communities already know all too well what negative economic growth looks like, and so do some sectors of the economy. According to the B.C. credit union economists, a recession is well underway in housing, and the median provincial home price will decline another 13 per cent next year before beginning to recover in 2010.

But overall, the B.C. government expects to tack through the worst economic headwinds since the Dirty ’30s without being pushed backward, or even running a deficit as Ottawa and other provinces seem destined to do.

How is this possible? Well, according to the business leaders assembled to meet with Hansen last week, the best signal is that despite all the bad economic news, the biggest worry on the minds of small business people remains a shortage of skilled labour.

“The average British Columbian right now is worried about their job,” says Brian Bonney, B.C. director of the Canadian Federation of Independent Business. With many B.C. employers still looking to hire, Bonney says, most jobs are secure.

The B.C. government is still hiring too. While Hansen and Premier Gordon Campbell insist that a sharp pencil is being applied to every ministry, the daily stream of announcements is all about spending.

They can get away with this, in large measure, because of natural gas. The government doesn’t immediately collect the billions spent by companies this year on drilling rights, but those companies now have to start showing a return on their record spending, so more drilling must surely follow. That means high-paying work and income tax revenue for B.C. as well as royalties on the gas that’s found.

The NDP vows to end incentives for new and unconventional drilling, even though they represent the goose laying golden eggs right now. Alberta, faced with the loss of much of their drilling activity across their northwestern border, has just moved to match B.C.’s incentives.

The legislature is back this week to pass Campbell’s recently announced economic measures. There will be bickering about the freeze on property assessments, but both parties support the main policy, making a five per cent income tax cut retroactive to the beginning of 2008.

Hansen says that means the average taxpayer will get an extra $70 back at tax time next spring.

What’s government’s advice for that extra cash? Spend it. Buy presents. Hit the road or catch a ferry to visit friends and family. Get that $144 million circulating through the B.C. economy. Be confident.

For the government and retailers, it’s important that you believe this, because consumer and business confidence is to a large extent a self-fulfilling prophecy.

Hansen looks set to take his own advice, and spend every spare dollar he can find this spring. The goal is to track the declines in tax revenues since September, and spend as much of the remaining surplus as possible. “In this fiscal year we’re in today, it is not my objective to end with any kind of significant surplus,” he said.

A merry Christmas?

The recent economic lurches haven’t been all bad news for B.C. The Canadian dollar is now apparently a petro-dollar, rising and falling mainly with the price of oil.

Mark Startup of Retail BC notes that stores were buying their fall merchandise with Canadian dollars near the U.S. value, so they have room to discount on imported goods now. And while surveys show consumer confidence has fallen with turmoil in world financial markets, he still expects that B.C. retailers will finish 2008 with a slight increase in retail sales over last year.

Tom Fletcher is legislative reporter and columnist for Black Press newspapers.

tfletcher@blackpress.ca