BCBC In The News
Global BC VIDEO: Will US interest rate hike affect Canada's loonie?
Will the U.S. interest rate hike affected Canada’s struggling dollar? Aaron McArthur reports. Featuring interview with Ken Peacock, Chief Economist, Business Council of British Columbia
Business in Vancouver: U.S. rate hike expected to boost B.C. exports and Vancouver home prices
[Excerpt} Economists don’t expect to see any dramatic moves in the Canadian dollar or mortgage rates because the market has been “pricing in” the rate hike, which has been anticipated for months.
While a low Canadian dollar is painful for vacationers planning trips outside the country and can make some consumer goods more expensive, overall it’s a good-news story for both the United States and Canada, said Ken Peacock, chief economist and vice-president of the Business Council of British Columbia.
The Federal Reserve has been holding interest rates at historic lows for over seven years as the economy has recovered, much more slowly than initially thought, from the shock of the 2008 financial crisis and subsequent recession.
Economic indicators, especially job-growth creation, are now showing the U.S. economy is healthy enough to withstand gradual rate increases. While the economy has been boosted by cheap money that bolstered consumption of consumer goods and real estate, Peacock said low interest rates are also “distortionary.”
“It encourages and supports consumer consumption, particularly in real estate,” he said. “It encourages people to go out and take big mortgages. So you tend to get these asset price appreciations in residential real estate, and we’re not seeing the same level of investment in the business sector.”
Vancouver Sun: B.C. environmentalists cheer Paris climate deal
[Excerpt] Groups such as the Business Council of B.C. argue the tax should not be increased until other jurisdictions catch up.
Business Council of B.C. president Greg D’Avignon noted Sunday that B.C. has the highest carbon tax in North America and sixth highest in the world among developed countries.
D’Avignon welcomed the Paris agreement, noting the path it charts is one that B.C. has been on for at least seven or eight years.
But he said British Columbia faces a “delicate” balance in continuing its efforts to reduce carbon emissions and increase its economy, which will be necessary to invest in new green technologies and help developing countries such as India to make the transition to lower carbon economies.
“We can’t have an economy that becomes uncompetitive,” said D’Avignon.
He noted that B.C.’s vast forests could help sequester carbon, and the province can also help reduce emissions by exporting natural gas, through a new LNG industry, to replace coal.
Globe and Mail: Alberta, the rest of Canada feels your pain
[EXCERPT] Alberta’s arrivals were different demographically than British Columbia’s, as shown in a recent monograph by the B.C. Business Council. During the past decade, the most prominent age cohort of migrants to B.C. was 45 to 64 years old, whereas Alberta attracted 18 to 44 year olds.
The B.C. paper, however, points to the national impact of Alberta’s woes. It says: “An Alberta that is no longer able to absorb large numbers of Canadians looking for better opportunities is likely to have adverse consequences for the entire national economy and labour market.”
Maclean's: The most important charts for the Canadian economyin 2016
[EXCERPT] From employment and trade to energy and deficits, here are 50 charts picked by Canada’s brightest minds to help you understand the economy in the year ahead.
“This chart highlights the outsized role that Alberta has played as a destination for interprovincial migrants in Canada since 1995. Over the past two decades, Alberta has gained almost half a million people (net) as a result of in-migration from other provinces. The only other province in the plus column over that period was BC (+69,000). Every other province experienced net outflows of people on a cumulative basis. With Alberta mired in recession and the energy industry stuck in what looks to be protracted slump, one wonders how the national labour market will be affected. It is hard to imagine that other provinces will be able to step forward to ‘replace’ Alberta, in a quantitative sense, as a desired destination for working-age interprovincial migrants looking for better economic opportunities.”
Vancouver Sun: Trudeau signals more power for First Nations over economic development
[Excerpt] Business Council President Greg D’Avignon said it’s good news for his constituency to have a federal government fully engaged in resolving economic and social issues facing First Nations. “We’ve been on the record for some time that the federal government has been absent on a lot of these issues.”
D’Avignon noted that while some aboriginal leaders view Canada’s support for the UN declaration as confirmation that First Nations hold vetoes, the council’s view is that the Supreme Court of Canada — which has said the Crown must “consult and accommodate” First Nations — has never suggested there is an outright veto.
Asked if he was concerned Trudeau is raising expectations and that this could give investors pause in B.C., which is blanketed by land claims, D’Avignon said: “I’ll give the prime minister the benefit of the doubt because he’s talked about having an open spirit and a consultative government, and that has to include the business community and investors as well.
“I would expect the prime minister would have that full, open conversation and create greater clarity, because that’s what’s going to drive reconciliation and opportunity. … The minute there’s a lack of clarity then that’s going to create an economic problem, not just for First Nations but for business as well.”
Canadian Energy Perspectives: Policy considerations when carbon taxes meet cap-and-trade
[Excerpt] While there appears to be a growing consensus on the need to price carbon, there is no consensus on the most effective means of doing so – either via taxes or trading schemes – and the debate continues. BC was an early adopter of a carbon tax which currently stands at $30 per tonne of CO2 equivalent. However with Ontario’s announcement that it will implement a cap-and-trade system, the launch of an emissions trading system in South Korea and the planned cap-and-trade system in China, it appears that emissions trading is emerging as the carbon pricing tool of choice. As a result, BC may eventually consider a hybrid carbon pricing system that segments the market between industrial activities and commercial transportation (63.4% of BC’s emissions) and the rest of the economy (31.7% of emissions). In a hybrid system world, the former would likely be included in some form of cap-and-trade scheme; and the latter would continue to pay the carbon tax. The policy challenges of such a hybrid system are discussed in a recent paper co-authored with the Business Council of British Columbia entitled Carbon Pricing, Fusion Style – Policy Issues to Consider When Carbon Taxes Meet Cap-and-Trade.
Global News Video: What do Canada’s climate change promises mean for BC?
Canada has taken a long list of promises to the Paris climate summit. What might they mean for B.C.?
Jock Finlayson comments on the leadership British Columbia has already shown with its carbon tax and the need for other jurisdictions to catch up.
National Observer: Premier Clark's climate advisors to urge a carbon tax hike
Protecting the economy while tackling emissions was a key struggle by the premier’s Climate Leadership Team this year.
That’s why the they will also recommend a slash in the provincial sales tax to buffer the economy against a carbon tax hike, sources said.
The government said it is reviewing the Climate Leadership Team’s recommendations, and will release a draft plan in December when British Columbians will have a second opportunity for review. B.C.’s new Climate Leadership Plan will be released in 2016.
New analysis from Clean Energy Canada shows if B.C. meets its climate targets, the result would be an economic boost: 900,000 new jobs between now and 2050 and 270,000 in the next decade. [See the Business Council's analysis of Clean Energy Canada's study]
But the Business Council of B.C is a recommending against a carbon tax hike. After four years of increasing it, the carbon tax rate was frozen in 2012, a year after Clark became premier.
Vancouver Sun: B.C. needs to lower its carbon emission targets, business council says
With environmental groups, academics and urban communities calling for a stronger push to reduce greenhouse gases in British Columbia, the Business Council of B.C. is calling for a more cautious approach.
Premier Christy Clark is set to release a renewed climate-change strategy before Paris talks next month, where agreement on new global targets is expected, but the business council says the province needs to lower its 2020 emission-reduction target and keep carbon prices at their current price until at least the end of the decade.
The environmentalists, communities and academics are calling for the opposite: an increase in the price of carbon and significant reductions in carbon emissions in areas such as natural gas extraction by plugging leaks and replacing gas-powered equipment with electricity.
The business council’s position is outlined in a submission to the province provided to The Vancouver Sun, which argues that it will be difficult and more costly than in other jurisdictions to lower emissions because B.C. already has a low-carbon intensity economy, with most electricity supplied by hydro power.
As a result, there is no low-hanging fruit such as switching from coal-fired power plants to natural gas, as Alberta has just said it will do, noted the business group.
B.C. also needs to be recognized for being ahead of other jurisdictions, argues the council, having introduced a carbon tax in 2008 that is now the highest in North America. The council represents 250 major companies in B.C., including members such as energy heavyweights Shell Canada, Suncor, Encana and Cenovus.
“Very few appear to have the willingness to say this, but we said right in our submission, the B.C. targets need to be revised and revisited,” B.C. Business Council economist and chief policy adviser Jock Finlayson said in an interview Tuesday.
“I think even the NGOs (non-government organizations that include environmental groups) realize we are not going to achieve the targets that were set in 2007 by 2020,” he said.
The targets were unrealistic and didn’t take into consideration that B.C. was already a low emitter of carbon on a per capita basis, said Finlayson.
Business in Vancouver: China’s clean-power needs paying dividends in B.C.
[Excerpt] For B.C. business leaders who took part in a massive trade mission to China earlier this month, a few days of breathing Beijing’s semi-solid air would have underscored just how bad China’s air pollution problem is.
And bad is good if you are in the clean-energy business.
“Clean energy is going to play such an important role as a result of everything from air quality to [greenhouse gases] and climate change issues,” said Greg D’Avignon, CEO of the Business Council of British Columbia.
D’Avignon was one of about 200 business, government and non-governmental organization leaders who took part in the trade mission, which took place from October 30 to November 7 and was described as the largest trade delegation B.C. has ever led.
Although a wide range of sectors were represented, the mission’s main theme was energy, which is not surprising given the opportunities China presents for both B.C. natural gas – in the form of liquefied natural gas (LNG) – and clean-energy technology.
In China, air pollution can be so bad it can go above 300 on the Pollution Standards Index – a point considered a serious health hazard.
While he was in China, D’Avignon said there was “an apocalyptic moment” in one of China’s cities where the index reached 400.
So for China, the drive to reduce its reliance on coal isn’t just a climate action measure – it’s a human health imperative.
China, which meets 66% of its energy needs through coal, has committed to reducing that to 62% by 2020.
Despite that commitment, it continues to build new coal-fired power plants at an alarming rate.
But that build-out presents opportunities for Canadian technology that cleans up emissions or captures and stores carbon. And it offers potentially large markets for B.C.’s nascent LNG industry.
“That’s another significant piece that people miss on this whole LNG story in B.C. – that we’re actually helping large economies that are continuing to grow to create new transition fuels to get out of older fuels into cleaner-burning fuels,” D’Avignon said.
Vancouver Sun and Stu McNish Video: Report Card on B.C.’s Economy
This week’s Conversation That Matters features Ken Peacock, the Chief Economist at the Business Council of British Columbia. Peacock discusses his report card on B.C.’s economy. This is episode 60 in a series of videos by Stu McNish.
Vancouver Sun, Barbara Yaffe: Survey shows Canadian housing prices wildly overvalued
A recent Economist magazine survey of 26 housing markets around the world shows that Canada has the highest housing prices in relation to its residential rental rates.
The survey, according to the Business Council of B.C., suggests that “renting may provide more short-term value in the Canadian market”.
The business council notes that in addition to immigrant inflows, more Canadians are now moving to B.C., particularly from Alberta and Ontario. The province received nearly 4,000 people from other provinces in the second quarter of 2015.
In Vancouver, bidding wars for property also suggest that housing here is not viewed as overvalued by all. Such bidding suggests the buyers involved believe the properties they are bidding on hold even more value than their sellers might think.
Of course, low interest rates — which are subject to change — are another factor keeping prices high on the west coast. If they go up, the housing market in both Vancouver and Canada could shift.
Edmonton Journal: Without Alberta, where will Canada's new jobs come from?
[Excerpt] Consider this. Over the past two decades, no fewer than 470,000 net newcomers from other provinces moved to oil-driven Alberta, the country’s fastest-growing economy, in search of good jobs and a better life.
Most were young, pushing the province’s median age down to the lowest in Canada.
The 470,000 increase is a huge number in a province of just 4.2 million residents. It’s roughly equivalent to twice the population of Regina, or two-thirds the population of Winnipeg. What would have happened if they had no jobs to go to in Alberta?
It’s pretty obvious. Many would have stayed home, and jobless rates across the country would have risen.
No other province could have taken up the slack. During the same period, British Columbia attracted just 69,000 more interprovincial migrants than it lost. Meanwhile every other province lost residents, according to data compiled by the Business Council of British Columbia.
Some 30,000 B.C. residents — or “interprovincial commuters” — worked in Alberta in 2013, says Jock Finlayson, executive vice-president and chief policy officer of the Business Council of B.C., which represents 250 companies and other organizations around the province.
As a result, even Alberta’s stunning population growth “understates Alberta’s true importance as a place that has provided employment opportunities for interprovincial migrants and for Canadians from other parts of the country,” he says, by email.
“That is one reason why the oil and gas slump that is centred in Alberta is going to have wider national impacts than many Canadians realize.”
“With global energy prices in a seemingly protracted slump, one wonders where within the country Canadians will be moving in pursuit of better employment and economic opportunities,” write Finlayson and co-author Ken Peacock, the Business Council of B.C.’s chief economist, in their recent report.
“Ontario and B.C. are likely to see higher inflows from other provinces, but it is hard to imagine that they will soon come close to replicating Alberta’s status as a new home for hundreds of thousands of working-age interprovincial migrants,” they add.
“An Alberta that is no longer able to absorb large numbers of Canadians looking for better opportunities is likely to have adverse consequences for the entire national economy and labour market.”
Vancouver Sun, Peter O'Neil: Interprovincial labour mobility vital for Canadian prosperity: report
B.C. and Ontario will absorb only a relatively small portion of Canadian jobseekers who have traditionally moved by the tens of thousands to Alberta to find work, according to a new study by the B.C. Business Council.
So the new Trudeau government should make it a top priority to push for policies that will make it easier for migrating workers to find jobs while Canada’s oil-rich former jobs magnet struggles through its economic malaise.
The council said interprovincial migration added a net increase of 470,000 people to Alberta’s population over the past two decades.
The only other province to record a net gain from 1995 to 2015 was B.C., with a far more modest 69,000 increase.
Quebec suffered the biggest net loss, with close to 200,000 more people leaving the province to find work than the number who arrived.
Interprovincial migration, according to the paper, is vital in ensuring that Canada is prosperous despite its vast geography and diverse economy.
With Alberta in a deep and potentially protracted slump due to low world energy prices, both B.C. and Ontario will take up some of that slack.
“But it is hard to imagine that they will come close to replicating Alberta’s status as a home to hundreds of thousands of working age interprovincial migrants,” concluded the report, which was provided exclusively to The Vancouver Sun.
The report said Prime Minister Justin Trudeau, who is meeting provincial premiers here later this month to discuss climate change, should make interprovincial labour mobility a priority.
That could be done by removing protectionist barriers that prevent nurses, teachers, mechanics and other job-seeking tradespeople and professionals from moving from province to province without obtaining a new license or certification.
Only B.C., Alberta and Saskatchewan, through the 2010 New West Partnership Agreement, allow for mutual recognition of those credentials.
“Canada would be stronger and our labour market would operate more effectively if the provinces could agree to a system of mutual recognition across the full spectrum of regulated occupations and professions,” the report said.
Calgary Herald: As Alberta ponders carbon tax, lessons from British Columbia
As Alberta’s NDP government contemplates introducing a carbon tax to help the province curb greenhouse gas emissions, there are notes of encouragement — and caution — from British Columbia’s experiment with such a levy.
But Jock Finlayson, executive vice-president with the Business Council of British Columbia, is more skeptical.
Finlayson said the carbon tax’s overall impact on the province’s economy has essentially been “a wash,” causing neither significant harm nor benefit. However, energy intensive sectors, such as natural resources and manufacturing, have seen a negative effect, he cautioned.
In an interview, Finlayson said the muted economic effect of the tax is due, in part, to the B.C. government’s decision to make it revenue-neutral by introducing tax cuts or credits to offset its impact.
In its most recent budget, the B.C. government said it expected to collect $1.2 billion from applications such as the six-cent-per-litre carbon tax on gasoline, while offsetting tax cuts and credits total $1.6 billion.
Premier Christy Clark’s 2013 decision to freeze the tax at $30 for at least five years — a move applauded by the business council — has also blunted the potential negative economic effect, he said.
But at the same time, the $30-a-tonne tax is too low to make significant greenhouse gas reductions, Finlayson said. Overall CO2 emissions in B.C. are lower than they were before the carbon tax was introduced, but have gone up since 2009.
“(In) B.C., we moved way in front of other jurisdictions on this, way ahead of other provinces or American states. We need to wait for other jurisdictions to catch up in terms of carbon pricing,” he said.
If Alberta does move forward with a carbon tax, Premier Rachel Notley needs to take into account the potential impact on the province’s massive oil and gas sector, Finlayson added.
Vancouver Sun, Barbara Yaffe: Clark needs to consider stakeholders in her climate change policies
[Excerpt] In a paper released this fall, the [Business Council of British Columbia] advocates a go-slow approach on climate policy, advising the province to tread cautiously, to ensure “our small trade-oriented, natural resource-dependent economy can successfully compete in the global marketplace.”
The council says B.C. should not increase its carbon tax until at least 2020, thereafter considering whether other jurisdictions have caught up to B.C. on carbon pricing.
The council observes B.C. has led the way with its carbon tax and met its goal of achieving a carbon-neutral government. B.C. has adopted low-carbon fuel standards, energy efficiency measures and sustainable forestry practices, and has an electricity sector that’s 94-per-cent clean.
“B.C. has already harvested much of the low hanging fruit, in terms of reducing GHG emissions. As a result, the province has few low-cost GHG abatement options available at the present time.”
It’s conclusion: “Absent significant and near-term technological advances and strong moves on carbon pricing by neighbours and trading partners, B.C. needs to be pragmatic and modest in pursuing further climate policy action in the next few years.”
Premier Clark, while in Paris, will need to keep in mind she has an assortment of constituencies back home to satisfy in embracing any new and greener measures.
Vancouver Sun Editorial: Vancouver could be more business-friendly
In a cris de coeur delivered as a one-two punch, the Business Council of B.C. and the B.C. branch of the Canadian Federation of Independent Business have recently slammed both the province and the City of Vancouver for ignoring the needs of the business community.
At present, economic growth in Vancouver is leading the country, but it would be a mistake to use that as an excuse to ignore the criticisms.
B.C., and Vancouver, have relatively high living costs, making it important that the businesses here thrive and create well-paying jobs.
Specifically, the business council has complained about the fact the province now has the highest marginal effective tax rate in the country. It asserts that B.C. no longer is an appealing place in North America to invest, especially for trade-exposed industries and those requiring a land base. High land costs and the need for aboriginal consent can lead to long delays and great expense.
The council points out that provinces with HST offer their firms an advantage because business inputs are HST exempt. B.C., of course, re-adopted its PST in 2013. With the province running surpluses, it should be in a position at this point to expand sales tax exemptions for machinery and equipment purchased by businesses in the interests of enhancing productivity.
The business council also is critical of high, and escalating, electricity rates and a carbon tax that, it legitimately argues, should be frozen at its current level until competing jurisdictions adopt similar levies.
These messages from the business sector constitute responsible commentary on the challenges faced by B.C.’s entrepreneurs.
The business groups are arguing for no more than that they must be competitive with businesses elsewhere if they are to survive.
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.