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Vancouver Sun, Barbara Yaffe: B.C. becoming Canada’s economic darling

[Excerpt] The Conference Board’s generally rosy outlook for B.C. is shared by the Business Council of B.C., which notes that west coast tourism will see gains from a lower Canadian dollar.

In a list of things to watch for in 2016, the Business Council cites agricultural exports, which it characterizes as an underappreciated sector, one that has become “one of the province’s major export engines,” growing by more than 20 per cent last year.

The council is predicting less-robust economic growth for B.C. than the Conference Board, at 2.8 per cent after inflation in 2016, but again, ahead of all other provinces.

It points to persistently weak commodity markets, with lower earnings from coal, copper, gold and natural gas, all of which translates into lower government revenues and poses challenges for communities beyond the Vancouver area.

For example, natural gas exports fell 40 per cent last year, generating $1.5 billion compared to $4 billion a decade ago.

The council says population growth is helping B.C.’s economy, fuelling both consumer spending and house buying.

In the third quarter of 2015, B.C. experienced a net inflow of 6,300 people from other provinces — the strongest third-quarter tally in two decades.

The Lower Mainland is to remain B.C.’s “key economic growth engine” this year. The Business Council says cities such as Victoria and Nanaimo will also do well as urbanization continues, partly in response to lower resource revenues.

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Vancouver Sun, Pete McMartin: The eggs-in-one-basket economy

[Excerpt] B.C. led the country in job growth (2.3 per cent in 2015 compared to Alberta’s minus-0.6 per cent). Interprovincial migration was up close to 18,000 by the third quarter.

“Most forecasters, including my own shop,” said Jock Finlayson, chief economist of the Business Council of B.C., “project that B.C. will lead Canada in GDP growth in 2016. Once the final numbers are tallied for 2015, they are likely to show B.C. topping the growth charts last year as well.”

No better time then, Finlayson said, for “a stepped up public policy” to promote industries outside of the natural resource sector — tech, tourism, advanced manufacturing, knowledge-based businesses. And time, too, to pour money into our schools, rather than war on them.

“On higher education,” he said, “it is worthwhile noting that virtually all successful jurisdictions are allocating additional resources to expand and strengthen university and college education, technical training, and related research.”

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CKNW: Plunging loonie creates winners and losers

For the first time since 2003, the Canadian dollar has dipped to under $0.70 U.S.

But beyond an abstract line on a graph, what does that mean for every day British Columbians?

 The effects aren’t being  felt evenly. Some are having the wind knocked out of them, while others are seeing windfall. 
 

Winners:

Resource sector

It’s a classic maxim for economists: Anyone who exports is going to do well off the plunging loonie.

In B.C., among the biggest exporters are the resource sector.  Ken Peacock, Chief Economist of the BC Business Council says that’s good news for the mining industry, which has been hard-hit by low commodity prices.

But he says the big winner will be forestry.

“Our lumber products and some of the panel products that are produced here in B.C. will be sold in greater quantities into the U.S. because of the increased competitiveness.”

Agriculture

B.C. exports more than $1.7 billion in agrifoods every year, and about about three quarters of that goes to the U.S.

Peacock says the sector is already seeing results. He says greenhouse producers and other farm products are seeing sales up about 20% year over year in 2015, something bound to accelerate as the dollar drops.

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National Post: B.C. Premier to pitch byelection voters on the fruits of austerity: financial ‘dividends’ through services

[Excerpt] But B.C. has twice revised downward this year’s budget forecast, most recently projecting a $265-million surplus on a $47-billion fiscal plan. Even if the surplus grows unexpectedly — as it did last year when $184 million turned to $1.7 billion by the end of the year — Finance Minister Mike de Jong has said the money goes first to paying off B.C.’s debt.

Economic experts predict B.C. could book a larger-than-expected surplus this year, but not by much, said Jock Finlayson, executive vice-president of the B.C. Business Council.

“I could see there’d be a little bit more flexibility over the next couple of years, if the overall economy performs as we’re forecasting and the province keeps a tight rein on the expenditure side,” he said. “But we’re not talking multiple billions of dollars.”

Clark’s move to reopen spending comes after Prime Minister Justin Trudeau won last fall’s federal election with a plan to boost federal spending while running several years of deficits.

Clark has refused to entertain a deficit for B.C., but admitted Trudeau picked up votes based on his optimistic promises.

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Vancouver Sun, Barbara Yaffe: Ignore First Nations at your peril, says chief

B.C’s Assembly of First Nations regional chief delivered a bold message recently to the province’s business community, asserting aboriginals want not just to partner economically with resource developers, but to own the companies overseeing those developments.

“Our longer-term goal is to own those companies,” Chief Shane Gottfriedson told 400 business people attending a conference sponsored by the Business Council of B.C. “We want to own those major projects. We are getting beyond being mom-and-pop, band council operations.”

Gottfriedson was elected to his position last June, replacing Jody Wilson-Raybould, now the Liberal MP for Vancouver-Granville and federal minister of justice.

Gottfriedson served notice to the business crowd that the rules of the game have changed.

“We’re open-minded. We’re business-minded. We are looking at creating a better future for our communities. We are the poorest of the poor, the most disadvantaged. Everybody’s got to win in this process.”

In a riveting address, the former chief of the Tk’emlups Indian Band in Kamloops lamented that aboriginals have become experts at “managing poverty”. Now, he says, they “need to become good at managing wealth.

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Vancouver Sun: Election looms, B.C. premier ready to spend

[Excerpt] But B.C. has twice revised downward this year’s budget forecast, most recently projecting a $265-million surplus on a $47-billion fiscal plan. Even if the surplus grows unexpectedly — as it did last year when $184 million turned to $1.7 billion by the end of the year — Finance Minister Mike de Jong has said the money goes first to paying off B.C.’s debt.

Economic experts predict B.C. could book a larger-than-expected surplus this year, but not by much, said Jock Finlayson, executive vice-president of the B.C. Business Council.

“I could see there’d be a little bit more flexibility over the next couple of years, if the overall economy performs as we’re forecasting and the province keeps a tight rein on the expenditure side,” he said. “But we’re not talking multiple billions of dollars.”

Clark’s move to reopen spending comes after Prime Minister Justin Trudeau won last fall’s federal election with a plan to boost federal spending while running several years of deficits.

Clark has refused to entertain a deficit for B.C., but admitted Trudeau picked up votes based on his optimistic promises.

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Maclean's: The death of the Alberta dream

[Excerpt] To be sure, the oil crash isn’t yet deep or dark enough to have actually lowered Alberta to the status of federal welfare case, qualifying for equalization payments. It still remains a wealthy province, with the highest average weekly income in Canada. “It’s still not that bad relative to the rest of the country,” says University of Calgary economist Trevor Tombe. “I think we were just used to things being so good that we lost a little bit of perspective.”

But, to Jaster’s point, there is much his province used to have that now seems gone. Most noticeable is Alberta’s eroding status as the Promised Land for so many Canadians from other parts of the country. Over the last decade, net interprovincial migration by 18- to 44-year-olds, the key working demographic, swelled Alberta’s population by 200,000, according to a report by a rather envious Business Council of British Columbia. (That province netted fewer than 40,000 over that stretch, while all other provinces were net losers.) The momentum has shifted. While 1,200 more Canadians still moved to the province than left it during the third quarter of 2015, that was the smallest gain since 2010—when the province was recovering from the 2009 oil price collapse—and less than half the average of the last 50 years.

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Business in Vancouver: Economic Outlook 2016: B.C. to fly above resource mire

2016 will be a tale of two economies: the still-struggling mining and energy sectors will likely fail to see any significant lift in depressed commodity prices, while it’s a much rosier outlook for non-resource industries.

That dynamic explains why in forecast after forecast, economists are predicting British Columbia will lead the country in economic growth, even as Canada’s economy will see little expansion thanks to the falling price of oil.

 While resources still play an important role in B.C., the provincial economy is much more diversified than those in provinces like Alberta and Newfoundland and Labrador, which have relied heavily on oil production to boost wages, employment and government revenues.

 “We do have a very diverse economy in B.C., probably looking across the country the most diverse, and way more diverse than Alberta,” said Ken Peacock, vice-president and chief economist at the Business Council of British Columbia.

 “We do have the resource base but then we also have this urban-based economy where you see development of high-tech and tradable services and other pieces of the puzzle.”

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But as export growth to Asia has waned, B.C. is once again heavily dependent on exporting to the U.S. So one risk to B.C.’s economy would be a slowdown south of the border, although all signs point to continued U.S. economic growth, Peacock said.

 As resilient as the B.C. economy seems in the face of low oil, coal and natural gas prices, there’s no question that resource doldrums are causing economic pain, especially in the northeast and Interior. Mines have closed in the northeast, causing significant job losses, and more than 800 B.C. companies that supply equipment or services to the Alberta oilsands are being adversely affected, Peacock said. Exploration work for oil and gas and for mining is almost nonexistent.

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Globe and Mail: Co-operation among cities crucial to Vancouver region’s economic prosperity

[EXCERPT] The new Metro initiative is getting praise from the Business Council of British Columbia, which has been begging the region to get itself together for years.

“We’ve got a third of the head offices we should have for a city this size. We have lower wages, fewer jobs, less tax revenue,” said president Greg D’Avignon said.

The lack of a co-ordinated agency or effort in the Lower Mainland is one of the reasons behind the region’s low economic performance, he said.

“I was in Hong Kong in November and three different municipalities [from the Lower Mainland] came through, all with a different message. We need a common brand, a common strategy,” he said.

The business council, which supports a federal initiative started in February called HQ Vancouver, has found that many businesses considering coming to the region are confused by the multiple cities that seem to be operating independently.

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Langley Times: Lowly loonie means winners and losers in B.C.

The dramatic dive in the loonie that has put the brakes on cross-border shopping and driven up the cost of U.S. imports is far from over, according to the Business Council of B.C.

The council predicts the Canadian dollar will continue its slide down through the 70-cent threshold before bottoming out at around 67 cents U.S.

"All the pressure on the dollar is down and I think it's got further to fall," said BCBC executive vice-president Jock Finlayson, who expects the loonie to languish between 67 and 75 cents for the rest of this decade, barring a major rebound in energy prices.

"I think we're in a world where the Canadian dollar is going to stay quite low for as far as the eye can see."

The impacts of the spectacular currency swing will be felt much more strongly in 2016, he said.

The loonie's descent from the heights of three years ago – when it was above par – to below 72 cents today already translates into savage math for anyone buying U.S.-priced goods: it costs Canadians roughly 40 cents more to convert each U.S. dollar than it did in late 2012.

The loonie's "stunning" drop is the steepest decline of any three-year period.

"It's an enormous shift in buying power," Finlayson said. "We're significantly poorer in a global sense."

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The Leader: Lowly loonie means winners and losers in BC

[Excerpt]

The dramatic dive in the loonie that has put the brakes on cross-border shopping and driven up the cost of U.S. imports is far from over, according to the Business Council of B.C.

The council predicts the Canadian dollar will continue its slide down through the 70-cent threshold before bottoming out at around 67 cents U.S.

"All the pressure on the dollar is down and I think it's got further to fall," said BCBC executive vice-president Jock Finlayson, who expects the loonie to languish between 67 and 75 cents for the rest of this decade, barring a major rebound in energy prices.

"I think we're in a world where the Canadian dollar is going to stay quite low for as far as the eye can see."

The impacts of the spectacular currency swing will be felt much more strongly in 2016, he said.

The loonie's descent from the heights of three years ago – when it was above par – to below 72 cents today already translates into savage math for anyone buying U.S.-priced goods: it costs Canadians roughly 40 cents more to convert each U.S. dollar than it did in late 2012.

The loonie's "stunning" drop is the steepest decline of any three-year period.

"It's an enormous shift in buying power," Finlayson said. "We're significantly poorer in a global sense."

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Business in Vancouver's Newsmaker of 2015: Justin Trudeau's new economic course

[EXCERPT] “The government’s setting a tone and a style for how they’re going to govern,” said Greg D’Avignon, president and CEO of the Business Council of British Columbia. “They’re going to be more transparent, more consultative and more open, and I think that bodes well for B.C. on issues like trade.”

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Business in Vancouver: May: BIV 2015 Year in Review

[Excerpt] 

What will Alberta’s NDP victory mean for B.C.?

They’re calling it the orange crush.

Alberta NDP Leader Rachel Notley handily defeated Progressive Conservative Jim Prentice on May 5. Her party won the majority of seats in the province’s legislature, ending a 44-year political dynasty.

Some in British Columbia are ecstatic about the win. Others are cautioning that the upset could have grave implications for both Alberta’s and B.C.’s economies.

...

Greg D’Avignon, president and CEO of the Business Council of British Columbia, is concerned that Notley’s promise to raise corporate income tax as well as taxes on high-income earners will dampen Alberta’s already shaky economy.

“Companies, when they make investment decisions, look at a myriad of things and corporate tax is one of them,” he said.

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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

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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.”

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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.

 

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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.”

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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.”

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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.

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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.”

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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.

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