More on the Conference Board and TILMA

Ellen Gould has noted that the Conference Board’s report projects gains for industries that are explicitly exempted from TILMA: utilities, energy, mining, forestry, and fishing.

The Conference Board’s analysis was based on a “draft negotiators’ text” (see page 39). However, the actual agreement wholly or partly exempts the industries listed above (see pages 19-20 and 22).

These exempt industries could conceivably still benefit from lower transport costs. However, as suggested below, a desire to better co-ordinate trucking regulations hardly justifies an agreement like TILMA.

Therefore, it would be interesting to factor these exempt industries out of the Conference Board’s estimate. In weighting industries by employment share, the Conference Board has already understated the contribution of capital-intensive industries (such as utilities, energy, and mining) to GDP. Therefore, excluding these industries is unlikely to dramatically reduce its overall estimate.

Energy, mining, forestry, and fishing must constitute most of the “primary” category (see page 36). This category and “utilities” account for 29% of TILMA’s projected benefit (i.e. 0.25 out of 0.87) in the Northeast region, 17% in North Coast/Nechako, 13% in Cariboo, 8% in Kootenay, and 1% or less everywhere else.

The percentage for the whole province would depend on the employment shares by which these regions are weighted, but must be fairly low given the concentration of employment in the Lower Mainland. However, any reduction in the projected benefits for tradable industries makes the projected spin-offs for retail, wholesale, and commercial services even less credible.

The “primary” and “utilities” industries are most significant in regions where “retail/wholesale” and “commercial” are least significant. The contribution of these four industries to the Conference Board’s scores is 0.54 in the Northeast region and from 0.44 to 0.49 in all other regions (see page 36). These numbers are quite large relative to the province’s overall score of 0.76.

In conclusion, at least 60% of TILMA’s projected benefits are based on industries exempted from the agreement or industries that barely engage in inter-provincial trade. The remaining 40% amounts to below $1 billion.