BCBC In The News
Journal of Commerce Video: Ken Peacock at CanaData West
Peacock said the declining Canadian dollar is one of the factors affecting British Columbia, but while it will hurt imports, it will be of benefit to exports and helps with industries such as film and television, which take advantage of a lower dollar to move their business into the Lower Mainland. He also said that given the importance of the Asia-Pacific region to trade with British Columbia, China's current economic woes might have an adverse effect on the economy of B.C.
Journal of Commerce: B.C. leads the pack in Canada’s slow growing economy
B.C. is in good shape compared other parts of the country, but still faces some challenges, said economist Ken Peacock at this year's CanaData West Economic Forecast Conference in downtown Vancouver. Peacock, chief economist with the Business Council of B.C. started his talk, "B.C.'s Economic Prospects in a Slow-Growth World," by giving some context.
Overall global economic growth is weak and interest rates are extremely low. There are depressed levels of investment and China, formerly an economic superpower, is decelerating. Also, key commodity prices have been falling since 2011.
"Global growth continues to disappoint," he said.
But, closer to home it isn't all doom and gloom. Peacock explained that the U.S. has been recovering strongly from the 2009 financial crisis. Job market numbers are up, consumers are spending, fiscal drag is starting to wan and housing starts are gradually climbing. In Canada, economic growth is heavily dependent on consumer consumption. And as a consequence, low interest rates mean households are taking on more and more debt.
"I don't anticipate a bubble or a bubble bursting but it is becoming more difficult to get into the housing market and that is a concern," he said.
The low Canadian dollar is playing a large, mostly positive, role in B.C.'s economy, he said. Its decline is the steepest on record over a three year period. While this hurts those traveling to the U.S. and importers, other areas, like tourism and film production are seeing a massive boost.
"This a mixed story, but on a net basis it is good for B.C.," he said.
Vancouver Sun, Barbara Yaffe: Vancouver’s business success comes despite city policies
Days after the Business Council of B.C. labelled the province an unappealing place for corporate investment, another business group is stepping forward to diss Vancouver’s credentials as an entrepreneurial city.
The Canadian Federation of Independent Business places Vancouver 94th on a list of 121 cities in its 2015 Entrepreneurial Communities Index.
“The low ranking for the City of Vancouver reflects the need for a focus on more small-business-friendly policies,” asserts a federation news release.
But the blame may go well beyond the city. The Business Council of B.C. only last week criticized the province for its carbon tax, PST, fast-rising electricity rates, and high marginal effective tax rate, all of which, it contends, makes B.C. uncompetitive in the North American context.
That said, the CFIB’s index shows two B.C. cities, Penticton and Kelowna, positioned among the 10 most entrepreneurial cities in the country. They ranked second and third, respectively.
Most of the other communities in the top 10 are in Alberta.
Business in Vancouver: Five big B.C. business issues Justin Trudeau’s Liberal government needs to address
[Excerpt] Ottawa’s attention and investment are needed on several key files if B.C., its resource riches, Asia-Pacific Gateway trade doors and burgeoning innovation and technology capacity are to achieve their potential. Here are five that warrant priority status from Trudeau’s federal Liberals during the party’s first term in office and why.
[1) Energy] ...
Justin Trudeau has stated that the Northern Gateway pipeline will not be built; however, he has said the Trans Mountain pipeline expansion might be approved, but only after it’s been sent back to the drawing board.
The Northern Gateway project was already approved by the NEB and CEAA, subject to 209 conditions. Should Enbridge meet those conditions, only to have the Liberal government kill the project, it could send a negative signal to the international investment community, said Ken Peacock, Business Council of BC chief economist.
...[2) Transportation] ...
Total costs of congestion for Metro Vancouver add up to between $1.65 billion and $2.25 billion a year due to wasted fuel, increased greenhouse gas emissions and lost time and productivity, according to a Business Council of BC analysis.
The Business Council of BC said in an October report there is a legitimate place for Ottawa’s TFW program but the new government should separate it into three categories: seasonal workers, foreign workers needed to fill jobs in remote communities and well-paid workers who possess specialized skills “that employers in Canada require to succeed and to grow.”
Journal of Commerce: Business Council of B.C. chief economist Ken Peacock at CanaData West
He began by pointing out that there is weak overall economic growth, with extraordinarily low interest rates in the advanced economies.
"Global growth continues to disappoint," he said, with lower levels of investment and China decelerating, along with weaker growth in other emerging economies.
Key commodity prices have fallen sharply since 2011, he added, including oil, coal, natural gas, potash and base metals.
Macro risks for 2015 and 2016 include Eurozone debt woes and political and military problems in Iraq and Syria.
"The big story is interest rates. We're in an environment of unusually low interest rates for a protracted period of time," he said.
The economy has become "used to" low interest rates and there could be a shift in both consumer and investment behavior.
Vancouver Sun: B.C. business sees the upside of working with new PM
British Columbia’s business community is dwelling more on the upside of working with incoming prime minister Justin Trudeau’s Liberal government, such as lower small business taxes and a boost in infrastructure spending, than on potential downsides such as higher tax rates on wealthier Canadians.
Such projects would deliver a welcome economic boost to B.C. while it is suffering effects of the downturn in global commodity markets, said Ken Peacock, chief economist for the Business Council of B.C.
“Our preference would be for them to balance budgets,” Peacock said, “but in the context of $10-billion deficits, those aren’t unusually large deficits, and are manageable,” especially considering existing low interest rates.
Vancouver Sun, Barbara Yaffe: B.C. budget must address declining investment climate
The Christy Clark government must act in its spring budget to address the fact that “B.C. is not a particularly appealing location for new investment.”
That assessment was advanced last week in a pre-budget submission by the Business Council of B.C., which is also calling for a wholesale review of the province’s taxation system.
According to the council, B.C. is no longer a competitive place within North America to do business. The situation applies particularly to “trade-exposed” companies, and has developed “in the past several years”.
“There are few compelling reasons to locate or to invest in an export-oriented business in B.C. ... Returns on capital deployed in B.C. tend to be low relative to other jurisdictions.”
Make no mistake, what this means is that the province probably won’t be able to attract the private-sector investment needed to grow the economy and create new employment.
Business in Vancouver: Oil pipelines face new hurdles under Liberals
[Excerpt] B.C. is already viewed as a challenging place for resource industries to do business, said Ken Peacock, chief economist for the BC Business Council. Should a [federal] Liberal government kill the Northern Gateway project, it could send a negative signal to the investment community, he said.
“The negative signal it sends to the international capital markets would be unfortunate. The whole challenge of getting large projects across the finish line, that’s going to just increase the perception that it’s difficult to do those kind of projects in Canada.”
Business in Vancouver: A B.C. business election wish list
A Vancouver-based business advocacy group is hoping voters will be thinking about debt, productivity, innovation and trade as they head to the polls October 19.
The Business Council of British Columbia (BCBC) has released a policy paper outlining its top priorities for the election and Canada’s next government. Those include encouraging innovation and improving the post-secondary education system, signing more trade agreements and bolstering the country’s lagging productivity.
“I don’t think the party platforms are really dealing with a lot of the economic issues we’re dealing with in the business community,” Jock Finlayson, chief economist and vice president of BCBC, told Business in Vancouver in an interview for a September 29 story.
“We’re not hung up on individual tax measures so much as whether the overall system is going to put Canada in a strong position from a competitive perspective.”
24 Hours: TPP boosts B.C. biz, kills Internet rights: experts
B.C. business groups lined up Monday to celebrate the Trans-Pacific Partnership, but critics say it will censor the Internet due to the deal’s copyright provisions.
The partnership includes 12 countries and has provisions on financial, professional, architectural and engineering, research and development, environmental, construction and transportation services.
If successful, it would reduce or eliminate tariffs on products — from food, forestry and machinery industries.
The B.C. Business Council said it incorporates provisions to establish clearer rules concerning cross-border trade in services.
Vancouver Sun: B.C. expected to gain in Trans-Pacific Partnership trade pact
A tentative agreement reached on a sweeping Pacific Rim trade pact is expected to be a net benefit to British Columbia, which already has extensive trade links with Asia.
Most business and industry leaders here said had Canada — and British Columbia — not been part of the 12-country Trans-Pacific Partnership, it would likely have lost market share and faced the threat of becoming marginalized in the growing Asian economy.
B.C. will face reduced tariffs and trade barriers — along with the U.S. — into Japan, Malaysia, Vietnam, Singapore, Brunei, Chile and Peru. Australia, New Zealand and Mexico are also part of the deal.
First, however, the deal requires political approval.
Among business and industry groups in the province that support the deal are the B.C. Business Council, the B.C. Chamber of Commerce, the Vancouver Board of Trade, the Mining Association of B.C., the Council of Forest Industries and the B.C. Seafood Alliance.
B.C. Business Council chief policy officer Jock Finlayson said a big concern is what would have happened had Canada and B.C. not been part of the trade deal.
“Some are saying we should say no, but the reality is we would become completely marginalized in terms of the emerging Asia-Pacific trade block,” said Finlayson.
Vancouver Sun: BC Would be 'transformed' by LNG, company CEO claims
[Excerpt] LNG Canada — one of 19 projects proposed for the West Coast — expects 7,500 workers will be employed during peak construction and an estimated $8 billion will be spent on goods and services within Canada, including $3 billion in B.C.
[Andy] Calitz said Friday that the 2016 opening is on schedule, although a recovery in oil prices is very important.
Asked about the availability of labour, panelist Jock Finlayson, executive vice-president of the Business Council of B.C., said Alberta’s recession has put up to 30,000 workers out of a job, with significantly more to come.
“From our perspective, it eases the pressures for skilled workers, engineers, project managers, even materials. The timing of the oil-driven downturn in Alberta versus the potential ramping up of projects in B.C. should make it more possible for companies like LNG Canada to manage their labour supply and cost issues in a more effective manner than we might have expected two or three years ago.”
Business in Vancouver: Economists eye election plans as Canada's economy falters
[Excerpt] Business in Vancouver asked four B.C. economists to assess the health of the Canadian economy and the parties’ prescriptions.
Canada is not in a recession, say economists, but it’s in a “weak patch,” one that will likely continue as long as oil and other commodity prices remain low.
“Bloomberg’s commodity price index is all the way back to 2002 [levels],” said Jock Finlayson, chief policy officer at the Business Council of British Columbia.
“It’s not just oil; it’s natural gas, precious metals, base metals, potash, uranium, forestry ... and some agri-foods. Canada is a commodity producer, so how are we going to deal with a world where commodity demand has weakened?”
CTV News: B.C. to lead country in growth, but job creation stuck in second gear
[Excerpt] B.C. Business Council vice-president Jock Finlayson said his organization supports the government's attempts to develop an LNG industry.
"But LNG is for tomorrow," he said. "It's not there today."
Finlayson said the government has a limited capacity to influence job creation and should relax that focus and instead look at working with business sectors, including technology, forestry and resources.
"If I were developing an economic-development strategy for B.C. it wouldn't be centred around jobs to be candid. It would be looking at what I describe as which sectors do we want to encourage growth."
He said worldwide economic factors in the past four years have hurt job growth in B.C., including a drop in commodity prices. The economy in China has lost steam and the value of the Canadian dollar has dropped from parity with the U.S. dollar to about 75 cents, he noted.
"These are all some pretty big adjustments," Finlayson said. "Globally, the mining industry has gone into the tank. It's difficult to imagine a lot of growth taking place in a sector like mining. Natural gas prices are plumbing the depths and our traditional export market in the U.S. is drying up."
But B.C. Finance Minister Mike de Jong, who admitted recently that B.C.'s job growth is under-performing, said the province is heading towards another surplus budget and is poised to lead the country in economic growth through 2016.
"We are, by any measure, proving to be remarkably resilient," he said.
CBC Early Edition: Jock FInlayson talks about the Canadian Economy
BCBC's Jock Finlayson and Canadian Centre for Policy Alternatives, Igilka Ivanova speaks with CBC Early Edition guest host Stephen Quinn on the state of Canada's economy.
Business in Vancouver: Asia’s main economic engine slowing, not stalled
In the days following the August 24 “Black Monday” – when China’s equity markets dropped 8% in a single day, dragging other markets down with them – analysts and economists urged calm, saying it was part of a correction that had been long overdue.
But others are reading the correction – which erased nearly US$3 trillion in value over a three-week period – as a sign of eroding confidence in the Chinese economy and a pending global economic slowdown.
“I’m less concerned about China itself and more nervous about the outlook for the global growth over the next couple of years, given that China is not going to be giving much of a boost,” said Jock Finlayson, executive vice-president of the Business Council of BC.
Finlayson said close to one-third of the world’s economic growth in the past seven years has been driven by China, which for 30 years has grown at rates in or near double digits. That unprecedented growth resulted in China’s economy doubling between 2007 and 2013, creating a “supercycle” demand for key commodities such as iron ore, aluminum, copper, metallurgical coal and lumber – all of which, with the exception of iron ore, are key B.C. exports.
An oversupply of those commodities, coupled with lower demand in China, has pushed commodity prices to the point where some mines and oilsands operators in Western Canada are now producing at a loss or shutting down some operations. According to the most recent Scotiabank commodity price index, commodity prices are now below levels hit in the 2007-2009 recession.
Business in Vancouver Editorial: More divestment due diligence needed
[Excerpt] But while student and faculty-driven divestment initiatives have thus far taken root in 30 Canadian universities, far less initiative on those campuses has been applied to finding practical ways to develop bridge technologies to replace fossil fuels in transportation and other global economy fundamentals. As a recent Business Council of British Columbia paper noted, the global energy system, based on tens of trillions of dollars of embedded capital, is far more complex than environmental advocacy groups would have people believe. In short: it’s not going to change overnight.
Divestment cheerleaders might be adept at turning up the political volume in the media and elsewhere, but radically retooling the world’s energy landscape will require far more than noise. It will require objectively weighing the pros and cons of all sides in the debate so that the regulatory and technological changes that will make a real difference can be implemented.
Continuing to politicize the issue does nothing to achieve that.
Business in Vancouver Editorial: Consumers ill-served by supply-management system
[Excerpt] The Business Council of British Columbia also favours an overhaul of Canada’s supply-management regime, which protects not only the domestic dairy industry but poultry as well.
The farming sector is a very small part of the Canadian economy, Jock Finlayson, the business council’s executive vice-president and chief policy officer, wrote in an email.
“We can’t afford to be left out of accords like the Trans-Pacific Partnership (TPP) because of an unwillingess to address and gradually reduce Canadian trade barriers in a farming sector that amounts to at most 1% of the country’s GDP,” he wrote.
Yet all three major federal political parties support protecting the dairy farmers, Meredith said. Maybe they should rethink that.
Fairchild Television: Trade Deficit Shrinks (Chinese)
BCBC's Jock Finlayson provides comment on the increase in non-resource exports.
The Province: Retailers on both sides of Canada-U.S. border feeling effects of falling loonie
[Excerpt] Ken Peacock, chief economist and vice-president at the Business Council of B.C., said retail sales in B.C. are currently very strong, with the total value of retail sales increasing by 8.3 per cent this May compared with the same month last year.
Peacock said a number of factors are contributing to the growth, but a decline in cross-border shopping is “definitely a factor in helping boost retail sales.”
Another factor is an increase in the number of Americans coming to B.C., although most people in Washington find it easier and cheaper to shop close to home. The influx of American visitors is also bolstering the tourism industry.
“The weaker loonie already has resulted and will continue to result in more Americans coming up here,” he said.