BCBC In The News
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?”
CTV News: B.C. to lead country in growth, but job creation stuck in second gear
[Excerpt] B.C. Business Council vice-president Jock Finlayson said his organization supports the government's attempts to develop an LNG industry.
"But LNG is for tomorrow," he said. "It's not there today."
Finlayson said the government has a limited capacity to influence job creation and should relax that focus and instead look at working with business sectors, including technology, forestry and resources.
"If I were developing an economic-development strategy for B.C. it wouldn't be centred around jobs to be candid. It would be looking at what I describe as which sectors do we want to encourage growth."
He said worldwide economic factors in the past four years have hurt job growth in B.C., including a drop in commodity prices. The economy in China has lost steam and the value of the Canadian dollar has dropped from parity with the U.S. dollar to about 75 cents, he noted.
"These are all some pretty big adjustments," Finlayson said. "Globally, the mining industry has gone into the tank. It's difficult to imagine a lot of growth taking place in a sector like mining. Natural gas prices are plumbing the depths and our traditional export market in the U.S. is drying up."
But B.C. Finance Minister Mike de Jong, who admitted recently that B.C.'s job growth is under-performing, said the province is heading towards another surplus budget and is poised to lead the country in economic growth through 2016.
"We are, by any measure, proving to be remarkably resilient," he said.
CBC Early Edition: Jock FInlayson talks about the Canadian Economy
BCBC's Jock Finlayson and Canadian Centre for Policy Alternatives, Igilka Ivanova speaks with CBC Early Edition guest host Stephen Quinn on the state of Canada's economy.
Business in Vancouver: Asia’s main economic engine slowing, not stalled
In the days following the August 24 “Black Monday” – when China’s equity markets dropped 8% in a single day, dragging other markets down with them – analysts and economists urged calm, saying it was part of a correction that had been long overdue.
But others are reading the correction – which erased nearly US$3 trillion in value over a three-week period – as a sign of eroding confidence in the Chinese economy and a pending global economic slowdown.
“I’m less concerned about China itself and more nervous about the outlook for the global growth over the next couple of years, given that China is not going to be giving much of a boost,” said Jock Finlayson, executive vice-president of the Business Council of BC.
Finlayson said close to one-third of the world’s economic growth in the past seven years has been driven by China, which for 30 years has grown at rates in or near double digits. That unprecedented growth resulted in China’s economy doubling between 2007 and 2013, creating a “supercycle” demand for key commodities such as iron ore, aluminum, copper, metallurgical coal and lumber – all of which, with the exception of iron ore, are key B.C. exports.
An oversupply of those commodities, coupled with lower demand in China, has pushed commodity prices to the point where some mines and oilsands operators in Western Canada are now producing at a loss or shutting down some operations. According to the most recent Scotiabank commodity price index, commodity prices are now below levels hit in the 2007-2009 recession.
Business in Vancouver Editorial: More divestment due diligence needed
[Excerpt] But while student and faculty-driven divestment initiatives have thus far taken root in 30 Canadian universities, far less initiative on those campuses has been applied to finding practical ways to develop bridge technologies to replace fossil fuels in transportation and other global economy fundamentals. As a recent Business Council of British Columbia paper noted, the global energy system, based on tens of trillions of dollars of embedded capital, is far more complex than environmental advocacy groups would have people believe. In short: it’s not going to change overnight.
Divestment cheerleaders might be adept at turning up the political volume in the media and elsewhere, but radically retooling the world’s energy landscape will require far more than noise. It will require objectively weighing the pros and cons of all sides in the debate so that the regulatory and technological changes that will make a real difference can be implemented.
Continuing to politicize the issue does nothing to achieve that.
Business in Vancouver Editorial: Consumers ill-served by supply-management system
[Excerpt] The Business Council of British Columbia also favours an overhaul of Canada’s supply-management regime, which protects not only the domestic dairy industry but poultry as well.
The farming sector is a very small part of the Canadian economy, Jock Finlayson, the business council’s executive vice-president and chief policy officer, wrote in an email.
“We can’t afford to be left out of accords like the Trans-Pacific Partnership (TPP) because of an unwillingess to address and gradually reduce Canadian trade barriers in a farming sector that amounts to at most 1% of the country’s GDP,” he wrote.
Yet all three major federal political parties support protecting the dairy farmers, Meredith said. Maybe they should rethink that.
Fairchild Television: Trade Deficit Shrinks (Chinese)
BCBC's Jock Finlayson provides comment on the increase in non-resource exports.
The Province: Retailers on both sides of Canada-U.S. border feeling effects of falling loonie
[Excerpt] Ken Peacock, chief economist and vice-president at the Business Council of B.C., said retail sales in B.C. are currently very strong, with the total value of retail sales increasing by 8.3 per cent this May compared with the same month last year.
Peacock said a number of factors are contributing to the growth, but a decline in cross-border shopping is “definitely a factor in helping boost retail sales.”
Another factor is an increase in the number of Americans coming to B.C., although most people in Washington find it easier and cheaper to shop close to home. The influx of American visitors is also bolstering the tourism industry.
“The weaker loonie already has resulted and will continue to result in more Americans coming up here,” he said.
Vancouver Sun, Don Cayo: Federal measures to goose the economy won't mean much to B.C.
[Excerpt] And, as noted in the B.C. Business Council’s mid-year economic review and outlook, the provincial economy is by no means booming, but rather merely holding its own.
“As a small trade-oriented jurisdiction, the province is certainly not impervious to the economic headwinds, whether they blow globally or from within Canada,” says the review, which is being released Friday.
“Sluggish commodity prices and the oil-driven recession unfolding in Alberta and Newfoundland are affecting all regions of Canada and have prompted us to trim our growth B.C. outlook relative to expectations back in January. However, by Canadian standards British Columbia looks well-positioned for a decent economic performance over the next 18-24 months.”
To be fair, today’s nationwide economic woes — technically a recession, although both the Harper government and Poloz are having trouble saying the word — are mild, at least for now, compared to then.
But the monetary policy response, which is Poloz’s bailiwick, has been puny, and he can’t strengthen it much even if conditions worsen. And a fiscal policy response, which Prime Minister Stephen Harper controls, has been and is likely to remain non-existent.
Poloz can’t be forceful because, in the words of business council vice-president Jock Finlayson, “He’s running out of ammunition.”
790 KGMI News Talk: Stronger dollar, weaker loonie a mixed blessing
At about 77-cents, compared to the U.S. dollar at the end of trading yesterday, the Canadian dollar’s at its lowest point since 2004. While a stronger American buck means the availability of bargains for Whatcom County shoppers willing to cross the border, it also results in fewer Canadian wallets opening here.
According to a Business Council Of British Columbia study cited by The Bellingham Herald, there have been about 148,000 fewer single day visits to Whatcom County each month since March, compared to two years earlier.
The study notes that the fluctuating exchange rate has substantially less of an effect, however, on Canadians who spend two nights or more here.
The Bellingham Herald: Canadian dollar drops to 77 cents U.S.
The Canadian dollar sank to its lowest level in nearly 11 years as the Bank of Canada cut a key interest rate to try to restart a sluggish economy.
The loonie was hovering around 77 cents compared to the U.S. dollar at the end of the trading session on Wednesday, July 15. It hit the lowest level for the Canadian dollar since since September 2004. It was a one-cent drop from the day before and came after the Bank of Canada announced it was lowering its benchmark overnight interest rate to 0.5 percent.
While a one-cent drop itself won’t have a big impact on cross-border traffic, the overall weaker loonie could lead to further declines in cross-border shopping in Whatcom County, said Paul Storer, a professor in the economics department at Western Washington University.
The response to the lower loonie shows up most in same-day trips to the U.S., according to a study released last month by the Business Council of British Columbia. By March 2015, southbound same-day border trips were down 28 percent compared to two years earlier, according to the study, translating into 148,000 fewer short-duration trips each month.
The weaker Canadian dollar doesn’t seem to have as much impact yet on overnight travel to the U.S., according to the report. in March 2015, the number of B.C. vehicles making trips in the U.S. that last more than two nights was down just 4 percent compared to two years earlier.
Business in Vancouver Editorial: Organized labour needs reorganization
The union business is under duress in Canada and elsewhere, and that’s cause for concern on both sides of the labour-management table.
According to a recent Business Council of British Columbia (BCBC) report, union membership is shrinking in most Western economies as manufacturing jobs give way to those in the service sector.
In Canada, where the percentage of workers who are union members has been relatively stable, numbers are now dropping as upcoming generations of workers, many of whom have virtually no cultural connection to the labour movement, see less need for representation by a union. BCBC numbers show unionization in the country had dropped to less than 29% in 2014 from 37.6% in 1981.
That continued weakening of organized labour’s leverage in the marketplace threatens to yield a corresponding erosion in worker wages and benefits, especially at the lower end of the job market.
But the other concern raised by the BCBC report, especially for taxpayers and private-sector companies that compete with government for workers or clients, is the growing concentration of unionization in the public sector.
BC Business: Is BC's Treaty Process Dead?
[Excerpt] First Nations involved in the treaty process are not exactly enamoured with its current form either. Member chiefs of B.C.’s First Nations Summit, including David Michael Harry, acknowledge that the treaty process has been broken for years. In part, they attribute bogged-down negotiations to the fact that federal and provincial ministers have doled out very limited mandates to government negotiators. At a March conference in Vancouver, one seasoned negotiator reminisced about the time when then-prime minister Jean Chrétien flew to northern B.C. to hammer out final details of the historic Nisga’a treaty himself.
B.C.’s business community—with several major resources projects, from LNG terminals to coal mines, hanging in the balance—also wants a more expedient and effective process to deal with outstanding land claims. Greg D’Avignon, president of the B.C. Business Council, acknowledges that the treaty process established a common table for all sides to come together and discuss issues.
“We need those kinds of forums to continue to advance reconciliation, whether it’s the treaty commission or some vestige of it.”
But he points to a best practices manual for revenue-sharing agreements, promoted by Campbell and ramped up by Clark, as the real forum where deals are done.
Since 2006, the province has entered 200 revenue-sharing agreements with First Nations; that’s in addition to 500 direct agreements between private companies—from BC Hydro to Imperial Metals—and native bands.
Globe and Mail, Jeffrey Simpson: Where’s the debate on our dire fiscal future?
What will the future look like in British Columbia and the rest of Canada? There are a host of imponderables, except one.
British Columbia’s population, like the country’s, will be much older. Aging will be the dominant underlying factor here and across Canada, its impact unfolding incrementally but irreversibly.
Aging will produce one change that no political party wants to tackle, certainly not in the federal campaign now under way: Governments of whatever stripe will need more money but will find their revenues shrinking.
B.C.’s population, for example, now has 31 people 65 years old or over for every 100 working-age persons. In a decade, the ratio will be 41 to 100. Ten years later, in 2035, the ratio will be 48 to 100, according to a recent paper from the Business Council of British Columbia’s policy analysts Jock Finlayson and Ken Peacock.
Put matters another way. The number of people in B.C. over 65 is growing at four times the rate of the number of people 25 to 64 years of age.
Fewer people working within the overall population means – at current rates of taxation – less revenue for government. Argue Messrs. Finlayson and Peacock: “Absent a major windfall from new resource development, demographic projections suggest that the province may need to explore ways to make the tax system less vulnerable to ‘revenue erosion’ linked to population aging and a slowdown in the growth of the work force.”
Business in Vancouver: Moms go to work — and pay more taxes — when child care is affordable: report
[Excerpt] Jock Finlayson, vice-president and chief policy officer at the Business Council of British Columbia, was skeptical about how much Quebec’s child care program has boosted the province’s economy, given Quebec’s high public debt, low growth in GDP and incomes and lower levels of business investment compared with Canada and the western provinces. He noted that social programs such as universal daycare and comparatively low university tuition have resulted in high taxes.
A provincial child care program funded by tax increases would be much less risky if the federal government contributed a large share of the funding, Finlayson said.
Globe and Mail: Living wage won't fix Vancouver's income inequality but it's a start
[Excerpt] This phenomenon prompts us to consider one of the many contentious aspects of the living wage/minimum wage debate: Is it in the best interests of the greater good?
Jock Finlayson, executive vice-president of the Business Council of British Columbia and one of the top economists in the country, says he sympathizes with what proponents of a living wage are trying to achieve.
“[However] I think it is problematic for a taxpayer-funded body, such as the City of Vancouver, to pledge to eschew future efforts to identify and contract for outside services/goods at the lowest cost to taxpayers,” said Mr. Finlayson in an interview.
“Stated bluntly: Who is looking after the interests of Vancouver taxpayers in this case?”
As well, if the City of Vancouver chooses, as a matter of policy, to impose higher costs on itself in terms of the future expenses procuring goods and services, on what basis can it then turn to governments in Victoria and Ottawa and plead poverty as the city is prone to do, Mr. Finlayson wonders.
BC Business: Sink or Swim: an overview of 2015's Top 100
[Excerpt] But does it even matter if the province isn’t growing a new crop of companies to follow in the footsteps of its largest firms? Ken Peacock, chief economist with the Business Council of B.C., thinks it does. “It’s one thing having ICBC and WorkSafe doing well and being profitable, but you want a vibrant, robust export sector over the long term to grow wealth and prosperity in B.C.,” he says. “When a company starts exporting, it can take advantage of economies of scale and have access to much larger markets. It tends to be more productive, generally, because of the discipline of having to compete in the international marketplace.”
That’s not only good for the company, Peacock says—it’s good for workers, because better revenues often translate into better wages.
Times Colonist: Dollar drop cuts border trips, Canadians spend more at home
The drop in the value of the Canadian dollar has led to 148,000 fewer same-day trips to the United States from British Columbia over the past two years, a 28 per cent decrease, according to a report from the Business Council of British Columbia.
Overall, the drop in visits to the U.S. has led consumers to stay at home in B.C., where retail spending has increased by about $500 million annually, said Ken Peacock, chief economist for the BCBC.
“Consumers, as expected, have responded to the devaluation in the Canadian dollar and are not making as many trips across the border to make consumer purchases,” he said.
Retail sales increased by 2.5 per cent in 2013 and 5.6 per cent in 2014. While part of the increase has to do with economic growth in B.C., the decline in the number of British Columbians crossing the border to spend money in the U.S. has also been a factor, Peacock said. In the past two years, cross-border trips lasting two or more days have dropped 23 per cent to about 66,000 per month from 86,000.
BC Business: Cross-border shopping is way down in B.C.: report
Fewer B.C.ers are heading south for deals, although that's no surprise.
"The fall in the value of the Canadian dollar, unsurprisingly, has led to a decline in the number of British Columbians making short-duration visits to the United States," says a new report from the Business Council of B.C., which cites a whopping 28 per cent drop in same-day trips to the U.S. among British Columbians since early 2013, when the dollar was high.
Longer overnight trips are down substantially too: 23 per cent. But, as the report notes, there are at least two winners here: local retailers, which now have less competition from the states, and gas stations.
24 Hours: Lower Canadian dollar could benefit B.C.
A lower Canadian dollar appears to be beneficial for the B.C. economy, according to a new study.
Ken Peacock, author of the Business Council of B.C. report published Tuesday, said a higher dollar means people are keeping their spending local.
“It makes imports more expensive, if you’re talking about outside cross-border shopping. That makes inflation a little higher,” he said.
And people used to cheaper groceries and gas would likely lose those savings, which takes away from extra money they have to spend locally.
But those negatives would struggle to stand out in the face of the $1.2 billion British Columbians are estimated to spend in the U.S. over a single year.
That billion-dollar figure was calculated based on short-term trips to the U.S. from 2009 to 2012 by the Business Council. The latest report showed short-term trips in March 2015 were 28% down from the 2013 high — a loss of about 148,000 trips each month. Longer term, two-day or more trips also fell by about 20,000 per month.
According to the business council, the rate of growth for retail sales in B.C. has more than doubled since the dollar’s fall.