BCBC In The News
Vancouver Sun, Barbara Yaffe: Urbanization trend in B.C. can only intensify
A weak currency and slumping global commodity prices are indirectly contributing to a rush on Lower Mainland real estate.
The two forces are aggravating a pre-existing situation of too many buyers and renters chasing too few housing units.
Of course, the lower the dollar drops, the more of a fire sale residential property here becomes for foreign investors. Even Vancouver’s detached houses are starting to look like bargain offerings.
Foreigners, particularly the Chinese, already were keen on Vancouver real estate before the dollar lost a third of its value. Real estate analysts say that more Europeans and Americans are also now looking to invest.
Another factor is a less obvious one. The recent decline in the value of commodities has been proving just as problematic on the housing front. It has prompted population movement from B.C. resource towns to larger urban centres, most notably Metro Vancouver.
This urbanization trend will continue through 2016, says Jock Finlayson, executive VP of the Business Council of B.C., citing the Vancouver region as the province’s “economic growth engine”.
“A growing population in the region, juxtaposed against a fixed supply of land, particularly developable land,” says Finlayson, “will tend to push up land values, which in turn will put sustained upward pressure on the prices of certain types of housing, especially single-family homes.
“So, it is fair to say that continued urbanization in the B.C. context, particularly in the case of Metro Vancouver, promises to exacerbate the affordability problem.”
Finlayson asserts that “it would be better for the province as a whole if population growth was more evenly distributed across regions, not only to ease the pressure on land prices in the Lower Mainland, but also to support long-term economic development in other regions.”
Business in Vancouver: Budget OK with business in B.C. even without tax reform
Given the pounding B.C.’s mining sector has taken, the Business Council of British Columbia (BCBC) had hoped to see some relief for the sector in last week’s provincial budget.
Specifically, it had hoped that B.C. miners would get a break on the provincial sales tax.
Mining and forestry already get a PST exemption on big-ticket machinery and equipment. But mines also spend an enormous amount of money on electricity, which is subject to the PST, and some B.C. mines are currently teetering on the brink of closure.
“We were sort of hoping there would be some little bit of relief for the mining industry, [and] other resource industries,” said BCBC chief economist Ken Peacock.
Instead, what the B.C. business community got was a promise of a new commission that will consider a range of tax reforms, although Finance Minister Mike de Jong made it clear that scrapping the PST and taking a second stab at a harmonized sales tax is not on the table.
Peacock is hoping that medical insurance premiums will also be part of that commission’s review. Medical Services Plan premiums will increase 4%, and for businesses that pay those premiums on behalf of employees, it’s essentially a tax increase.
Although disappointed with the absence of PST reforms, the BCBC generally praised last week’s budget. So did other industry associations, including the Association for Mineral Exploration British Columbia and the Truck Loggers Association.
Vancouver Sun: Commodity crash shrinks resources’ share of provincial revenue in new budget
[Excerpt] And while the budget forecasts improvements in revenue from some commodity sectors, such as forestry and natural gas, a big drop in anticipated revenue from the auctioning of drilling rights for natural gas has the resource sector edging further down as a proportion of the public purse.
That in itself is not a bad thing, said Jock Finlayson, executive vice-president of the Business Council of B.C., because it is a sign that the economy, and provincial budget, are more diversified and less reliant on commodity revenues. Commodity markets, he said, are more volatile and government has less control over them.
“Having said that, the decline in resource revenue is obviously noticeable and not welcome to the province,” Finlayson said.
Resource revenues from mining are even lower, expected to come in at $68 million for 2016/17, down from an anticipated $92 million for 2015/16.
“Mining and natural gas (are) absolutely terrible,” Finlayson said, “there’s no sugar coating it. (For mining) this is one of the worst global mining slumps in 100 years, according to JP Morgan.”
Revenue from forestry is expected to be $812 million, still off from 2005/06, when it accounted for just under $1.3 billion.
Finlayson said that B.C.’s economy is still growing (forecasts anticipate 2.7 per cent GDP growth in the coming year) despite the commodities crash, a sign of how much its economy has changed.
“When you’ve been around as long as I have, it really is quite striking that we could be doing reasonably well — not booming but certainly better than other provinces — in spite of one of the worst commodity environments in decades,” Finlayson said.
BC Business: 5 things you need to know about the budget
[Excerpt] 2. What B.C.’s business community thinks
The document earned an ‘A’ from the Vancouver Board of Trade, for its plan to hold in spending, pay down direct operating debt and a low debt-to-GDP ratio of 17.4 per cent. Meanwhile, the B.C. Business Council’s chief economist Ken Peacock also pointed out that the budget did little to address mounting cost pressures for business. “With the return to the PST, the highest carbon tax in North America, higher MSP premiums, a complex and costly regulatory environment, (especially for land-based and infrastructure industries,) and in some municipalities an unfair property tax burden, B.C. businesses are challenged by escalating costs,” he said. “The good news is that a solid fiscal framework and relatively positive economic outlook in 2016-17 have created a foundation to enable the province to take action to bolster B.C.’s competitive position over time.”
Vancouver Sun: Children don't pay MSP under new provincial budget
[Excerpt] The elimination of children's payments will not offset the rise in premiums and higher cost for couples without kids, said Ken Peacock, chief economist for the Business Council of B.C. Because of those increases, the cost to businesses who pay premiums on behalf of their employees will go up, he said. The rise in MSP premiums, along with rising electricity costs and property taxes make B.C. businesses less competitive, Peacock said.
MSP premiums have been going up regularly by four per cent each year, and the budget projects this will continue. MSP premiums do not cover the full cost of health care in B.C., which is projected at $19.6 billion of the province's $48.1-billion budget.
The Province: B.C. government to begin tracking citizenship of homebuyers
The government of British Columbia will collect new information on citizenship of homebuyers as one of several measures proposed in the 2016 budget to address housing affordability.
The government will also modestly raise property transfer taxes to three per cent on luxury homes and in turn exempt taxes on new homes that cost under $750,000.
The new housing tax exemption will be available to Canadian citizens or permanent residents on principal residences lived in for a full year. The exemption will be available to both first-time buyers and previous property owners, and will run in conjunction with Victoria’s existing first-time-buyer exemption on homes priced up to $475,000.
Ken Peacock, chief economist of B.C. Business Council, said the new housing tax exemption would likely not increase housing affordability.
“It is obviously directed at trying to approach building new homes and getting more supply on the market,” Peacock said. “I don’t think you’re going to see a dramatic change. I just don’t think you will get enough supply response (to lower prices).”
Vancouver Sun: B.C. budget offers help to buyers of new homes
Premier Christy Clark responded to intense public pressure to fix Metro Vancouver’s housing affordability crisis Tuesday with a budget that offered a tax break on new homes and the promise to start collecting data on foreign buyers.
But real estate, business and academic experts say the modest changes will do little to spur new construction, slow price hikes or help most buyers get into the market.
“It will probably be effective to some extent but I don’t think you’re going to see a dramatic change,” added Ken Peacock, B.C. Business Council’s chief economist. It would be “very difficult” for government to change the housing market prices, he said.
Energetic City: Alberta’s economic slowdown steering more people to B.C.: Business Council of B.C.
We now have data confirming that more people are moving to B.C. while there’s a dramatic reduction in the number headed to Alberta. [Ken Peacock explains.]
In this area, despite the increase in northeast regional unemployment resulting from the downturn in oil and gas industry activity, the situation is still better than it is in many areas across the border. [Ken Peacock speaks about increased availability of workers.]
Business in Vancouver: B.C. to be bright spot in 2016 as global economy struggles: BCBC
Soft growth in China is underscoring the forecast for a weak global economic outlook in 2016, but British Columbia could be poised to thrive over the next year, according to a Business Council of B.C. (BCBC) report released February 11.
While much of the rest of Canada is seeing a downturn this year, “B.C. is holding up surprisingly well,” the BCBC said in its report. The council expects the country to experience real GDP growth of 1% this year; in B.C., this number jumps to 2.8%. Prospects are similarly positive for 2017, with Canadian real GDP growth forecast at 2.1% and B.C.’s forecast at 3%.
“Against the backdrop of diverging growth prospects across the developed and emerging economies and substantial declines in the prices of many commodities, British Columbia is poised for another year of respectable economic performance in 2016,” the BCBC said in the report.
“The province’s economy is being held back by low prices for many commodities, but non-resource merchandise and service exports are kicking into gear, aided by the low Canadian dollar.”
CKNW: B.C. businesses feel pinch of struggling Alberta oil sector
[Excerpt] Alberta’s decline is also making waves in B.C.’s labour market.
Ken Peacock with the Business Council of B.C. sees it as good news, with the potential to help fill BC’s labour shortage.
He says the latest data shows BC is gaining a net inflow of more than 6,300 people per quarter from other provinces, while Alberta is seeing a sharp decrease to just 1,000 people moving there.
“A lot of that reason is due to Alberta. Fewer British Columbians moving to Alberta and more Albertans moving to British Columbia and that is further underscored by Alberta seeing a sizeable drop in the number of people coming into its province on a net basis.”
He says that means more skilled labour for big B.C. projects like Site C.
The Georgia Straight: Business groups weigh rate hike that would raise B.C.'s minimum-wage from the bottom of the country
B.C. business groups heaped praise on Jobs Minister Shirley Bond when she announced in March 2015 that B.C. was tying the minimum wage to the consumer price index (CPI).
Annual increases on the basis of a predictable economic indicator are preferred to larger, unpredictable changes implemented without warning, they said.
But less than a year since that announcement, the B.C. NDP and labour groups are suggesting the province do exactly what the peg to the CPI was intended to prevent. Last week, the Straightreported on calls for an increase to the minimum wage beyond a 20-cent rise based on the CPI.
“If the other provinces have moved in a way that wasn’t anticipated two or three years ago, then it would be understandable if B.C. wanted to take another look at it,” BCBC executive vice president Jock Finlayson told the Straight.
He explained that B.C.’s minimum wage of $10.45 an hour ranks near the bottom of the country’s 13 provinces and territories. (Last October, the Straight reported this situation is the result of a mistake that the government has since refused to acknowledge or redress.)
“B.C. has ended up at the low end of the spectrum on the statutory minimum, whereas the government had previously indicated they wanted to be in the middle,” Finlayson said. “So that’s an issue for them to sort out. But we have not historically been particularly anxious about small adjustments.”
To return B.C.’s minimum wage to the middle of the pack would take an additional increase of only 20 or 30 cents above a 20-cent increase scheduled for implementation this September, federal data shows.
Finlayson, a trained economist, cautioned against a large adjustment. But he described a 20- or 30-cent increase as “small” and an amount businesses could absorb without significantly disrupting the labour market.
Business in Vancouver: Influential Women in Business: Marcia Smith
Marcia Smith may work for B.C.’s largest mining company, but her background is in public relations, not mine management.
So when her boss, Don Lindsay, CEO of Teck Resources (TSX:TCK.B), assigned her to run one of the company’s B.C. coal mines for four months in 2013, it was more than a little daunting.
“It was terrifying and exhilarating and probably the best professional experience of my career,” said Smith, who is Teck’s senior vice-president of sustainability and external affairs.
The mining sector remains under-represented by women; by putting a woman in charge of Teck’s Line Creek coal mines, Lindsay was trying to prove a point.
“He did it because he wanted to send a message that a woman can do any job in this company,” Smith said. “I think it was a really powerful message for all of us at Teck.”
...She also sits on the executive committee of the Business Council of British Columbia and the executive committee for the Mining Association of Canada.
In addition to being recognized this year with an Influential Women in Business Award, Smith also made Women’s Executive Network’s 2015 Canada’s Most Powerful Women: Top 100 list.
The Leader: Think globally, get used to a low loonie, Surrey businesses told
[Excerpt} Ken Peacock, chief economist and vice-president of the Business Council of B.C., agreed with many experts' assessment that oil prices have hurt the Canadian economy. The average price for a barrel of oil was almost $105 (US) in February 2014. It fell below $30 last month.
"We've seen the quickest decline of the Canadian dollar in the shortest period of time," said Peacock. "The Canadian economy is expected to grow by one per cent next year, which is very low. And it is mostly due to (declining) oil prices."
Peacock displayed a chart which showed the increase or decrease in the GDP (Gross Domestic Product) of each province in the past year, noting only two were in decline. Alberta fell by 2.5 per cent, while Newfoundland and Labrador was down by 3.8 per cent. The economies of both provinces depend heavily on the oil industry.
B.C. led the country with a 2.5-per-cent increase in GDP, followed by Ontario at 2.2.
And Canada isn't alone in its economic struggles, the panel said.
"The global economy is failing to pick up speed," said Levy. "In B.C., where we do a lot of business with the United States and overseas, it presents a lot of challenges."
Peacock said a struggling American economy is showing small signs of recovery.
"U.S. housing starts are up, which is good for B.C. lumber," said Peacock, adding the economy in the United States remains the driving force globally. Several American cities, he added, have economies the size of countries.
"New York's economy is as big as Australia's, Chicago's is as big as Nigeria and Houston is as big as Taiwan's," he noted. "The U.S. economy is a large, dominant force in the global economy."
BC Business: Corporate Vancouver still lags behind Toronto and Calgary
Metro Vancouver may be building a reputation for producing feisty start-ups, but it still ranks poorly against heavyweights like Toronto and Calgary, according to a recent report by the BC Business Council. Using data from a Statistics Canada survey on head offices across the country, the council reported that “Metro Vancouver has room for improvement if the region wants to ‘punch at its weight’ compared to other major cities across Canada.”
In 2013, the year of the survey, British Columbia was home to approximately 12 per cent of the 2,773 head offices in Canada, a number roughly in line with its share of the national population. Alberta hosted 15 per cent while Ontario boasted 40 per cent. However, Metro Vancouver lagged behind in head office employment, with only seven per cent of national head office jobs.
“These findings affirm that British Columbia is predominantly a province of small businesses,” the report stated. “The entrepreneurship, innovation and local economic impact that small businesses bring are beneficial to regions and local communities. However, the corporate offices of more substantial companies form the foundation of the ‘corporate ecosystem’ that underpins most successful large cities and have a positive impact on the employment and income base of their host city-regions.”
The report noted several factors that work against Metro Vancouver’s ability to attract head offices, including: a fragmented regional governance structure; a complex tax structure, a cumbersome immigration system; a reputation as a high-cost jurisdiction; and a high cost of living. The report also pointed to two local initiatives, HQ Vancouver and the Vancouver International Maritime Centre, that have scored “early wins” in securing new corporate offices.
Vancouver Sun, Barbara Yaffe: Lack of head offices means B.C. missing out on opportunities
Calgary’s uncanny ability to attract corporate head offices with all their employment benefits has long been a source of frustration, even embarrassment, for Vancouver’s business community. But perhaps not for much longer.
As a new study from the Business Council of B.C. notes that two initiatives are showing early signs of paying off, attracting new business and investment to Metro Vancouver.
The Vancouver International Maritime Centre, formed last September, has been tasked with promoting the region’s advantages as a global shipping hub, while HQ Vancouver, established a year ago, is working to convince medium- to large-sized Asian corporations to establish North American head offices in B.C.
Both agencies were launched with nearly $12 million in funding from the province and Ottawa.
The business council study, by chief policy officer Jock Finlayson and consultant Karen Graham, observes that, in its quest for head offices, Metro Vancouver needs to counter a problematic “reputation as a high cost jurisdiction for companies and ... a perception in some quarters that Vancouver is not a city for global businesses.”
The business council says head offices are worth fighting for. They generate top employee salaries and hefty taxes for government.
They also give a boost to small- and medium-sized businesses in their midst. And they “contribute to the vibrancy of an urban region through philanthropy and sponsorship”.
The Globe and Mail: Great Bear Rainforest pact is a ‘jewel in the crown’ of Canada’s protected areas
[Excerpt} Only a handful of treaties have been settled in British Columbia, leaving the 94 per cent of the land base that remains as Crown land subject to unresolved land claims.The Business Council of B.C. has warned in past reports that the resulting uncertainty over the land base is bad for the economy.
However, the business council’s chief economist, Jock Finlayson, said the scale of this deal is troubling because it effectively “sterilizes” a large amount of land.
“While we support what the players are seeking to accomplish here and also recognize the ecological sensitivity of some of the areas captured by the GBR agreement, classifying massive portions of land as off-limits for future development represents a big step, one that is not cost-free,” Mr. Finlayson said.
B.C. already leads North America with the amount of land that has been set aside for protection, he said. “There are limits to how far this kind of thing can and should be carried forward.”
CBC: B.C. business council report targets province's 'lacklustre' reputation
Vancouver is suffering from a "lacklustre reputation as a business centre" and needs to attract more head offices, according to a newreport from the Business Council of B.C.
"I think we're seen as a lifestyle jurisdiction by those who even think of us — and most don't," said Jock Finlayson, executive vice-president with the business council.
The council's latest report examines recent data from Statistics Canada and says "B.C. punches well below its weight" when it comes to the number of head offices compared to the size of its population and has fewer high-paying jobs as a result.
- Alberta: 10 head offices per 100,000 people.
- Ontario: eight head offices per 100,000 people.
- B.C.: seven head offices per 100,000 people.
Finlayson said the province hasn't done enough to make itself attractive to big businesses, which forms a foundation in the "corporate ecosystem" by then engaging smaller, related businesses and supply firms.
"If I was in government, I'd be spending less time worrying if we have an environment where somebody will start up a business in their garage — because we excel at that," he said.
"I'd be asking the question, how come we don't have more significant-sized companies?"
Business in Vancouver: B.C. budget 2016: challenges ahead threaten upbeat projections
[Excerpt] B.C. led the country in economic growth in 2015 and is forecast to have the highest growth again in 2016. But as the BC Liberals prepare to introduce the provincial budget later this month, economists warn there are more clouds on the horizon than those projections might suggest.
Challenge No. 1: Confidence
B.C. might have relatively upbeat gross domestic product growth projections approaching 3% for 2016, but Canada’s economic prospects are dismal.
“It’s an [economic] environment that has a lot of risks, more than the usual,” said Jock Finlayson, executive vice-president and chief policy officer of the Business Council of British Columbia.
“Canada is struggling. All the data I’m looking at tells me that Canada is going to be challenged to really get any growth at all in the economy this year, and that’s largely due to the collapse in commodity prices and weakness in emerging markets.”
Finlayson expects a relatively upbeat economic forecast from Minister of Finance Mike de Jong, but he thinks a key challenge for the government will be to reinforce confidence in B.C.’s economy.
Business in Vancouver: Low head-office count makes B.C. ‘a province of small businesses’: report
Metro Vancouver’s high cost of living and fractured regional governance is doing it no favours when it comes to attracting corporate offices, according to a report from the Business Council of B.C. (BCBC).
The study found Vancouver’s reputation for not being a city for global business, coupled with a “cumbersome” immigration system, is keeping corporations from establishing offices on the West Coast.
The BCBC examined Statistics Canada data tracking the number of head offices throughout the country.
In 2013, Metro Vancouver was home to 242 head offices, Calgary had 216, Montreal had 392 and Toronto had 702.
Employment at head offices in B.C. amounted to 17,000 direct jobs in 2013, or 7% of the national figure compared with 12% of the province’s share of the national population.
The report found B.C. “punches well below its weight” with just seven head offices per 100,000 people compared with Ontario’s 8.4 head offices per 100,000 people and Alberta’s 10.3.
“These findings affirm that British Columbia is predominantly a province of small businesses,” the report said.
But the BCBC pointed to two initiatives — Vancouver International Maritime Centre (VIMC) and HQ Vancouver — that are helping to reversing the tide.
Vancouver Sun, Barbara Yaffe: Both west and east coasts have to face reality on future of pipelines
When Montreal Mayor Denis Coderre recently rejected an oil pipeline through his city, it sparked a firestorm in Parliament and across the West. Yet Vancouver’s Gregor Robertson regularly disses the notion of shipping bitumen through Burrard Inlet and no one bats an eyelash. What gives?
That double standard was discussed earlier this week at a gathering of some 50 economists and government representatives, sponsored by the Conference Board of Canada and Vancouver’s Board of Trade.
“Alberta is going to have a stranded asset if it cannot get access to tidewater,” Ken Peacock, Chief Economist and Vice President at the Business Council of B.C., told the group. “It’s something we really have to deal with, as a nation.”
Both Coderre, opposing the Energy East pipeline proposal to ship Alberta crude through Montreal and on to New Brunswick, and Robertson, opposing expansion of the Kinder Morgan pipeline to Burnaby, have been speaking parochially for their constituencies, reflecting canny politics.
But they are not championing the greater economic good, the capacity for Canada to get top price for a commodity that, until recently, was the main driver of this country’s prosperity.