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BIV podcast (No. 73): Can B.C.'s housing sector handle a rate hike?

The Bank of Canada has finally handed down its long-awaited rate hike — so what does this mean for the economy?

Ken Peacock, chief economist at the Business Council of B.C., talks to hosts Tyler Orton and Hayley Woodin about what we can expect from everything from mortgage rates to exports. 

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Fairchild TV: Jock Finlayson on upcoming NAFTA renegotiation

Jock Finlayson, Executive Vice President and Chief Policy Officer, speaks with Fairchild TV reporter Nicole Ho about the recently released goals released by the United States in advance of the NAFTA renegotiation and potential impacts for the BC economy.

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BIV on Roundhouse Radio: Ken Peacock

On the show, Ken Peacock, chief economist at the Business Council of B.C., discusses the Bank of Canada’s latest rate decision and why his organization is revising the province’s economic forecast upward. [Starts at 00:30]

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Castanet: BC outlook looks good

The Business Council of British Columbia has improved its outlook for the provincial economy due in part to a stronger-than-expected job market.

In its mid-year review, the council has boosted its forecast for economic growth this year to 2.7 per cent, up from 2.2 per cent forecast early this year.

It credits robust consumer spending and a job market that has defied expectations, with employment growth hitting a 23-year high of 4.1 per cent in the second quarter.

But a rise in interest rates and B.C.'s wildfires pose a growing risk to the economic outlook, the council said.

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BIV: ‘Disproportionate’ growth still flowing into housing as B.C. economy revised upward: BCBC

A “disproportionate” amount of growth is still flowing into the B.C. housing sector this year even as business investment remains soft, according to a report from the Business Council of British Columbia.

Meanwhile, higher than expected job growth and consumer spending also helped the BCBC revise an earlier economic forecast from 2.2% real GDP growth in 2017 to 2.7%.

“The momentum from last year is carrying forward more so than previously anticipated, prompting us to adjust our 2017 forecast upwards,” the BCBC said in its quarterly economic review and outlook.

The lower value of the loonie coupled with higher commodity prices helped B.C. merchandise exports reach nearly $40 billion in 2016

But the BCBC expects new U.S. duties targeting Canadian softwood lumber to hurt exports in that sector this year.

The BCBC highlighted job growth as one reason it revised its economic forecast.

Job growth was up 3.6% in the first quarter and 4.1% in the second quarter of 2017 compared with 3.1% growth in 2016.

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Vancouver Sun: B.C. lags other provinces in reaching greenhouse gas reduction targets

[Excerpt] Greg D’Avignon, president of the Business Council of B.C., said in a written statement that the council supports carbon tax increases so long as it remains in step with other jurisdictions, particularly in Canada and the United States.

The council, which represents 250 major businesses in B.C., including in the energy sector, cautions both the provincial and federal governments to be careful that regulatory change and increases to the carbon tax are not out of step with other jurisdictions, which would threaten the country’s export economy, said D’Avignon. “The result will be carbon leakage and a shift of market advantage to other jurisdictions,” he said.

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CBC: B.C. Liberals leave checkered legacy following 16 years of power

[Excerpt] "Campbell's departure was really triggered by the fiasco around the HST," said Jock Finlayson with the Business Council of B.C.  

"It's quite unprecedented for a government to introduce a major piece of tax legislation and it triggered this public backlash that led to the petition launched by Mr. Vander Zalm, securing enough signatures to force a referendum on the matter, then the government losing the referendum." 

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Vancouver Sun: Labour group delighted by transfer of power in B.C.; business group looks for stability

[Excerpt] 

After Thursday’s non-confidence vote, but before a decision by Guichon,Business Council of B.C. senior official Jock Finlaysonsaid the council wants a functioning government that can command enough support in the legislature to put forward a budget and a legislative program.

Finlayson, executive vice-president and chief policy officer for the council, said the business grouphad no position on whether there should have been another election.

The council will deal with the changes in priorities and economic policy that will come with an NDP-Green government, he said.

He said he didn’t think the political uncertainty in recent weeks was hurting the economy in B.C., as there was no evidence it was hurting retail sales or the housing market.

“It may be having a bit of an effect on business confidence. … And if the uncertainty persists, that could become more visible,” said Finlayson.

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CBC Radio, BC Almanac: Political Uncertainty

Jock Finlayson, chief policy officer of the Business Council of British Columbia, and Seth Klein, B.C. director of the Canadian Centre for Policy Alternatives, with guest host Michelle Eliot on political uncertainty in B.C. 

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Vancouver Sun: B.C. Liberals tout $2.8B surplus, reduced debt on eve of expected defeat

[Excerpt] “The economy has been much stronger than pretty much anyone anticipated,” said Ken Peacock, chief economist for the Business Council of B.C. and a council member.

Peacock said the forecast council does its projection each November and has the opportunity to tweak it in January, and the first time anyone would have realized they had underestimated B.C.’s growth was at the beginning of June, when Statistics Canada released its estimate of the province’s GDP growth.

“Prior to the Statistics Canada number coming out, it’s people running their own models and doing their own assessment,” Peacock said.

Peacock guessed that officials in the Ministry of Finance, who tend to be more conservative in their estimates, were as surprised as everyone else.

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Vancouver Sun: Vancouver International Airport, Musqueam band sign 30-year 'friendship' agreement

[Excerpt] The Business Council of British Columbia hailed the agreement as an example of reconciliation that improves the health, education and social outcomes for First Nations groups and strengthens the province’s economy and ability to attract investment. 

The agreement caps a growing list of more than 250 agreements between B.C. First Nations and industry, said CEO Greg D’Avignon.

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Voice of BC - A Tale of Two Provinces

VIDEO: Jock joins Vaughn Palmer and Ben Parfitt to discuss the sharp differences between BC's rural and urban economies. They also share their thoughts on what the ongoing uncertainty in Victoria means for the overall BC economy.

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Bloomberg BNA: British Columbia: Vancouver Raises Minimum Wage, Challenges Other Employers

[Excerpt] The makeup of the next British Columbia government remains uncertain following a May 9 general election that left the governing Liberal Party of British Columbia and a coalition of the opposition Green Party and New Democratic Party deadlocked for seats in the provincial parliament.

The NDP advocates a C$15 hourly minimum, and the Greens have promised to establish a fair wages commission to set a new minimum wage and oversee regular rate reviews.

Business Council of British Columbia president Greg D’Avignon told Bloomberg BNA June 9 that the main concern with such wage increases is “rate shock.”

“If you move from the current [minimum wage] to $20 overnight, businesses shut down and students and those most vulnerable pay the price with job loss or limited access to their first job,” D’Avignon said.

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CTV News: B.C.'s NDP-Green agreement required reading ahead of likely minority government

[Excerpt] Greg D'Avignon, of the B.C. Business Council, said he supports plans to form an emerging economy task force and establish an innovation commission for business development in the technology sector, but he's wary of proposed increases to the carbon tax.

B.C. businesses pay millions a year in carbon taxes while trade partners, competitors and possible customers in Canada and other jurisdictions are not paying a similar tax, and talk of raising the tax is causing concern, he said.

“We don't have an issue with the carbon tax going up as a business council,” said D'Avignon. “We have an issue with the carbon tax going up just in B.C. Some of my members pay as much as $50 million a year in carbon tax that no one else in North America pays.”

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Today's Trucking: "I only see good news for the trucking sector”: BC economist

[Excerpt] Canada’s economy appears to face a “tsunami” of risks and concerns, but Ken Peacock continues to project a growing economy for British Columbia -- and ongoing growth for the trucking industry that serves it.

“I only see good news for the trucking sector,” said the vice president and chief economist of the Business Council of British Columbia, during the annual meeting of the BC Trucking Association. He’s bullish on the potential growth because of factors such as exports to both the U.S. and other provinces, increasing construction, strong consumer spending, and rising activity in the Pacific Gateway. A strengthening global economy is pushing up commodity prices, and commodities like softwood lumber account for 80% of the province’s exports.

The good news has not been limited to the past year. From 2011-16, truck transportation in British Columbia increased an average of 5.1% annually, and that has outpaced growth in the province’s Gross Domestic Product every year along the way.

“Your sector grew at twice the rate of the overall economy,” he stressed, referring to growth last year that reached 7.1%.

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TruckNews.com: Economist predicts B.C.’s trucking sector will continue to flourish

[Excerpt] B.C. economist Ken Peacock believes the provincial trucking industry has a bright future and will continue to grow in the coming years.

Speaking during the B.C. Trucking Association (BCTA) 2017 AGM and Management Conference June 3, Peacock, chief economist and vice-president of the Business Council of B.C., said the trucking sector would benefit from expected growth in exports to the US and Alberta, with the Wild Rose province digging itself out of the doldrums in 2017.

Peacock said he was surprised by how strong the trucking sector has been in B.C. over the past decade, growing 7.2% last year and 5.1% overall between 2011 and 2016.

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Vancouver Sun: B.C. pipeline showdown: Will Kinder Morgan expansion get built?

[Excerpt] If a project like Trans Mountain cannot get built after receiving approval, it raises larger questions about building such projects in Canada and the country’s ability to attract capital, says B.C. Business Council president Greg D’Avignon.

D’Avignon, whose organization represents 250 major businesses including energy companies, said he was asked just that question by investors on a recent trip to New York.

He said his personal belief is the project will get built, because of the First Nations and community agreements that are in place, but also because of elements such as the $1.5-billion marine protection plan.

D’Avignon said something that appears to get forgotten in the debate is the jobs and economic activity the project will bring to the province.

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BIV: The courtship of Andrew Weaver

[Excerpt] No matter which way Weaver leans, it’s not going to be good for B.C.’s economy, according to Greg D’Avignon, CEO of the Business Council of British Columbia (BCBC).

The BCBC is projecting B.C.’s economic growth to slow to 2.2% this year from 3% last year, due to a cooling housing market and other pressures like softwood lumber duties.

The uncertainty of either a coalition or minority government is another disincentive to business investment. Moreover, a Liberal minority government would likely have to literally buy Green support through increased spending. 

“Our economy is starting to slow,” D’Avignon said. “We’re downshifting. So at the very time when we’re talking about spending a whole bunch more money, there’s been no conversation on how we’re going to pay for it.”

Petronas, Shell and Kinder Morgan (NYSE:KMP) have energy projects that, combined, total roughly $80 billion worth of capital investment for B.C.

The question now is whether they will make the final investment decisions that were expected this year and next or wait to see how long a minority government lasts. D’Avignon said he thinks the Trans Mountain pipeline expansion will proceed. Less certain is whether Shell and Petronas will proceed with final investment decisions on their two liquefied natural gas projects.

He added that other business investments could be deferred.

“Capital, in large measure, is going to sit on the sidelines and wait to see what happens, regardless of who’s in power.”

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BIV: Why NAFTA and Canada are important to the U.S. economy

Dear President Trump:

The Senate’s recent confirmation of Robert Lighthizer as the new United States trade representative signals that the work to renegotiate the North American Free Trade Agreement (NAFTA) will get underway soon. Against that backdrop, we hope you and your cabinet will keep in mind a number of important facts regarding the U.S.-Canada economic and trade relationship.

Canada is the biggest export market for a solid majority of U.S. states – 35 states in all, based on the most recent count. The list includes Ohio, Michigan, Pennsylvania, Wisconsin, New York, Kentucky, Tennessee, Georgia, Alabama, North Carolina, Montana, North and South Dakota and Idaho. Last year, American companies sold $2.2 trillion worth of goods and services to customers in other countries. Of those foreign customers, Canadians were the biggest buyers of American-made products and services, supporting millions of U.S. jobs in the process.

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Business in Vancouver: Worst fear for B.C. business: a minority government

[Excerpt] Greg D’Avignon, president and CEO of the Business Council of British Columbia, doesn’t think a minority government would necessarily stop major energy projects like the Trans Mountain expansion or the $36 billion Pacific NorthWest LNG project.

“Will it take a little longer to get some things done?” D’Avignon asked. “Yes. But those projects have already been approved; they’ve already gone through court cases. The decision to go ahead has already been made.”

But he agreed with Black that minority governments are bad for business and investor confidence.

“There’s going to be uncertainty for the next few weeks, but there’s going to be uncertainty past that,” D’Avignon said. “We’ll get decisions, but they will take longer. They will often be more complicated because there will be layered issues in those compromises.”

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