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Crash Dixon pilots Yukon economy into nosedive

Do you have what it takes to be a communications strategist for the Yukon government's cabinet office? Here's a scenario to test your skills: the previous September, your government put out a news release trumpeting its new economic forecast.

Do you have what it takes to be a communications strategist for the Yukon government’s cabinet office?

Here’s a scenario to test your skills: the previous September, your government put out a news release trumpeting its new economic forecast. It had lots of positive quotes for the minister such as “Yukoners continue to enjoy a growing economy, low unemployment and strong prospects for the future.” It also forecast 2014 growth of an impressive 8.8 per cent, which is how fast the Chinese economy grows and is more than triple forecasts for the rest of Canada.

Fast forward to February. Government economists turn up in your office. They have done the math and updated their forecast, slashing expected 2014 growth more than five points to just 3.3 per cent.

Here’s the test. Do you:

A. Do nothing, tossing your economists’ forecast in the shredder and telling them to go back to their data cave.

B. Send out a press release entitled “Ec. Dev. Minister Currie ‘Crash’ Dixon pilots Yukon economy into abrupt nosedive.”

C. Tell your minister to face the music and take accountability, equipping him with some (hopefully) plausible lines that he will be holding more meetings and attending more conferences than ever to kick-start the economy.

D. Send the minister to an undisclosed location, put out a bare-bones news release without his name in it on the Monday after Rendezvous, and offer your economists as fresh meat to the opposition and media wolves.

(B) is tempting, but only a good idea if you already have the job and want to make a career change. (A) is the easy choice, and likely popular with many communications strategists, but doesn’t sound very dynamic at a job interview. (C) is painful, but lets the minister show character and display his mastery of the file even in a difficult situation.

It turns out, at least for the current cabinet office, the correct answer is (D). They released their four-sentence news release the Monday after Rendezvous without mentioning Crash Dixon. They rolled some defenceless government economists out in public, and NDP leader Liz Hanson duly put a few bullets into them. According to the CBC, she even went so far as to allege that the downgrade was due to either faulty math or an effort to mislead the public.

You can call economists a lot of things, but accusing them of faulty math really makes them mad. Fortunately for her, economists aren’t a very large percentage of the electorate.

We shouldn’t make too much fun of Crash Dixon either. I’m not even sure that’s really his nickname. And it’s not easy being minister of economic development.

In good times, your masters tell you to go out and take credit for growth even though most people know it’s because of transfer payments and global mineral prices. Then, in bad times, you have to dodge and weave to avoid the people who believed you the first time and think you actually make some kind of difference to the economy.

That’s enough about the antics of our political class. Let’s look at the new forecast. Cutting the growth forecast from 8.8 per cent to 3.3 per cent is a hefty downgrade, but even 3.3 per cent is more than most European countries can hope for next year. At least it’s positive.

The new forecast updates assumptions across a wide range of factors, including global economic growth rates, metal prices, energy prices and exchange rates. The forecasters expect exploration expenditure to be similar in 2014 to what we saw in 2013, while development spending by mines is expected to increase slightly. Gains in both population and retail sales are expected, as are border crossings. Inflation in the Yukon is expected to be a bit more than the national average.

We already know that transfer payments from Ottawa will be going up $38 million. However, we also know that several Yukon mines laid people off in 2013 and that the hiring outlook for 2014 is murky. The owners of the Minto mine also recently announced their Yukon operations lost money in 2013, which is not confidence-building news.

The forecast also notes that the construction of the new F.H. Collins school will contribute to gross domestic product, although the new forecast cuts estimated total building permits for 2014 from $125 million to $85 million. That’s a hefty cut for local contractors.

Overall, the revised forecast probably can be summed up as “it could have been worse.” Businesses and individuals would be wise to keep in mind the possibility of what economists call “downside risks” before making major investment decisions. The forecast notes the potential impact of global growth slowdowns, commodity price volatility and potential hikes in interest rates. As for the government’s communications strategies, if you have better ideas than (A) to (D) above please send them to the cabinet office. The economists are probably already in their data cave working on the September 2014 update of their forecast and it’s never too early to write the communications plan.

Keith Halliday is a Yukon economist and author of the MacBride Museum’s Aurore of the Yukon series of historical children’s adventure novels. You can follow him on Channel 9’s Yukonomist show or Twitter @hallidaykeith