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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.
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?”