BCBC In The News
Today's Trucking: "I only see good news for the trucking sector”: BC economist
[Excerpt] Canada’s economy appears to face a “tsunami” of risks and concerns, but Ken Peacock continues to project a growing economy for British Columbia -- and ongoing growth for the trucking industry that serves it.
“I only see good news for the trucking sector,” said the vice president and chief economist of the Business Council of British Columbia, during the annual meeting of the BC Trucking Association. He’s bullish on the potential growth because of factors such as exports to both the U.S. and other provinces, increasing construction, strong consumer spending, and rising activity in the Pacific Gateway. A strengthening global economy is pushing up commodity prices, and commodities like softwood lumber account for 80% of the province’s exports.
The good news has not been limited to the past year. From 2011-16, truck transportation in British Columbia increased an average of 5.1% annually, and that has outpaced growth in the province’s Gross Domestic Product every year along the way.
“Your sector grew at twice the rate of the overall economy,” he stressed, referring to growth last year that reached 7.1%.
TruckNews.com: Economist predicts B.C.’s trucking sector will continue to flourish
[Excerpt] B.C. economist Ken Peacock believes the provincial trucking industry has a bright future and will continue to grow in the coming years.
Speaking during the B.C. Trucking Association (BCTA) 2017 AGM and Management Conference June 3, Peacock, chief economist and vice-president of the Business Council of B.C., said the trucking sector would benefit from expected growth in exports to the US and Alberta, with the Wild Rose province digging itself out of the doldrums in 2017.
Peacock said he was surprised by how strong the trucking sector has been in B.C. over the past decade, growing 7.2% last year and 5.1% overall between 2011 and 2016.
Vancouver Sun: B.C. pipeline showdown: Will Kinder Morgan expansion get built?
[Excerpt] If a project like Trans Mountain cannot get built after receiving approval, it raises larger questions about building such projects in Canada and the country’s ability to attract capital, says B.C. Business Council president Greg D’Avignon.
D’Avignon, whose organization represents 250 major businesses including energy companies, said he was asked just that question by investors on a recent trip to New York.
He said his personal belief is the project will get built, because of the First Nations and community agreements that are in place, but also because of elements such as the $1.5-billion marine protection plan.
D’Avignon said something that appears to get forgotten in the debate is the jobs and economic activity the project will bring to the province.
BIV: The courtship of Andrew Weaver
[Excerpt] No matter which way Weaver leans, it’s not going to be good for B.C.’s economy, according to Greg D’Avignon, CEO of the Business Council of British Columbia (BCBC).
The BCBC is projecting B.C.’s economic growth to slow to 2.2% this year from 3% last year, due to a cooling housing market and other pressures like softwood lumber duties.
The uncertainty of either a coalition or minority government is another disincentive to business investment. Moreover, a Liberal minority government would likely have to literally buy Green support through increased spending.
“Our economy is starting to slow,” D’Avignon said. “We’re downshifting. So at the very time when we’re talking about spending a whole bunch more money, there’s been no conversation on how we’re going to pay for it.”
Petronas, Shell and Kinder Morgan (NYSE:KMP) have energy projects that, combined, total roughly $80 billion worth of capital investment for B.C.
The question now is whether they will make the final investment decisions that were expected this year and next or wait to see how long a minority government lasts. D’Avignon said he thinks the Trans Mountain pipeline expansion will proceed. Less certain is whether Shell and Petronas will proceed with final investment decisions on their two liquefied natural gas projects.
He added that other business investments could be deferred.
“Capital, in large measure, is going to sit on the sidelines and wait to see what happens, regardless of who’s in power.”
BIV: Why NAFTA and Canada are important to the U.S. economy
Dear President Trump:
The Senate’s recent confirmation of Robert Lighthizer as the new United States trade representative signals that the work to renegotiate the North American Free Trade Agreement (NAFTA) will get underway soon. Against that backdrop, we hope you and your cabinet will keep in mind a number of important facts regarding the U.S.-Canada economic and trade relationship.
Canada is the biggest export market for a solid majority of U.S. states – 35 states in all, based on the most recent count. The list includes Ohio, Michigan, Pennsylvania, Wisconsin, New York, Kentucky, Tennessee, Georgia, Alabama, North Carolina, Montana, North and South Dakota and Idaho. Last year, American companies sold $2.2 trillion worth of goods and services to customers in other countries. Of those foreign customers, Canadians were the biggest buyers of American-made products and services, supporting millions of U.S. jobs in the process.
Business in Vancouver: Worst fear for B.C. business: a minority government
[Excerpt] Greg D’Avignon, president and CEO of the Business Council of British Columbia, doesn’t think a minority government would necessarily stop major energy projects like the Trans Mountain expansion or the $36 billion Pacific NorthWest LNG project.
“Will it take a little longer to get some things done?” D’Avignon asked. “Yes. But those projects have already been approved; they’ve already gone through court cases. The decision to go ahead has already been made.”
But he agreed with Black that minority governments are bad for business and investor confidence.
“There’s going to be uncertainty for the next few weeks, but there’s going to be uncertainty past that,” D’Avignon said. “We’ll get decisions, but they will take longer. They will often be more complicated because there will be layered issues in those compromises.”
Calgary Herald: Don't ignore B.C.'s reliance on natural resources
[Excerpt] As for B.C., in specific, it might be premature to put away the hard hats in forestry, mining, oil and gas. Jock Finlayson, chief policy officer for the Business Council of B.C., noted just last month that B.C.’s entire clean-technology sector — the “new economy” — has only the value of a single B.C. forestry company, Canfor.
BIV on Roundhouse Radio: Greg D'Avignon on the 2017 BC Election
[17:45] The president of the Business Council of BC Greg D’Avignon discusses what the next four years will mean for B.C. businesses.
Vancouver Courier: Coalition or minority gov't: which way will Andrew Weaver lean?
[Excerpt] Greg D’Avignon, CEO of the Business Council of British Columbia, doesn’t think a minority government with the Greens holding sway will necessarily stop major energy projects like the Trans Mountain pipeline expansion or the $36 billion Pacific NorthWest LNG project from going forward.
But he does think a minority government would be generally bad for business, bad for the economy and bad for investment because of the uncertainty it creates.
“There’s going to be uncertainty for the next few weeks, but there’s going to be uncertainty past that,” he said. “We’ll get decisions but they will take longer, they will often be more complicated because there will be layered issues in those compromises.
“Uncertainty is not just a risk for business, it’s a risk for the economy as a whole because there’s lots of places to invest money and grow your business. And in an uncertain world, where you might have policy swings as a result of compromise and horse trading, it really makes it complicated.”
D’Avignon does not think the new makeup in the Legislature will necessarily halt projects like the Trans Mountain pipeline expansion of PNW LNG projects from going forward because they are already approved, federally and provincially.
“Will it take a little longer to get some things done? Yes. But those projects have already been approved, they’ve already gone through court cases. The decision to go ahead has already been made.”
Times Colonist: Election brings unwelcome uncertainty to business
The uncertain B.C. election results might have sown seeds of doubt through the provincial economy.
“Uncertainty is not a friend of business,” said Greg D’Avignon, president of the Business Council of B.C. after the Liberals appeared to have narrowly won the election, but face the prospect of a minority government.
D’Avignon said the business community already had concerns about the cost of doing business in B.C. The added uncertainty could translate into capital looking for new markets and investment drying up, he said.
“We knew it would be a tight election, but for the first time in 65 years we have uncertainty around a government’s agenda,” he said.
D’Avignon noted the province is facing a situation where three political parties with very different priorities could have a say in how government is run. “Business is very simple — regardless of which party is in power, whether I am a small business hiring one person or a big business investing hundreds of millions of dollars — I want to understand what the rules are and what the government agenda is,” he said.
CBC: Oilpatch watches nervously as B.C. heads to the polls
[Excerpt] "Energy issues haven't figured very prominently in the campaign," said Jock Finlayson, vice-president of the Business Council of B.C. "Including the Kinder Morgan pipeline expansion, somewhat surprisingly, given how contentious that's been."
Finlayson said he wouldn't be surprised if the NDP, if elected, slapped a moratorium on new fracking permits during that review.
"That's my understanding," he said. "That's not something the industry would be keen to see, but I think a moratorium would include the appointment of a panel that would do a fairly quick review, because there has been lots of work done across North America on fracking."
Vancouver Courier: Raising income taxes is risky business: Finlayson
When politicians talk about how to pay for promised programs, Jock Finlayson goes into mathematical fact-checker mode.
“If you want to say, ‘Let’s raise taxes,’ you need to have the arithmetic in front of you,” says the executive vice-president and chief policy officer of the Business Council of British Columbia.
The BCBC’s research shows that the top 20 per cent of B.C.’s income earners are contributing 75 to 80 per cent of the province’s income tax revenues. The top one per cent of income earners provide 20 per cent of the province’s income taxes.
The Liberals’ recent balanced budget proposed a 50 per cent cut in MSP (healthcare) payments starting in 2018.The NDP and Greens are proposing to cut MSP payments altogether and replace the $2.5 billion in lost income with some combination of personal and payroll taxes, Finlayson said.
The NDP and Greens want to shift those costs to the province’s higher earners. Finlayson says, “Our back-of-the-envelope estimates suggest that top combined federal-provincial marginal tax rates on upper-income earners, which stand at 47.7 per cent today, could easily climb to 55 to 56 per cent (or more) under the tax plans contemplated by the New Democrats and Greens.”
High taxation rates make it harder to attract and retain highly skilled people, Finlayson said. They also make it tougher on businesses and discourage entrepreneurial risk takers.
“Brains have legs,” Finlayson says of the risk of losing highly skilled workers such as managers, professional, entrepreneurs and researchers to high taxation rates.
National Post: Why Canada may have missed the boat on building a viable LNG industry
[Excerpt] “It’s a challenge for them to explain why the projects … and the scale of this massive industry that they were talking about a few years ago, haven’t really come to fruition,” said Jock Finlayson, executive vice-president at the Business Council of British Columbia.
“The Liberals would be happier if one or two of these projects had commenced, because they made this a pretty central theme in the 2013 election, and until quite recently it was the No. 1 economic policy preoccupation of the government to bring LNG over the finish line.”
Still, Finlayson argues the province’s economy has performed well even without LNG. Indeed, it has led the country in economic growth and job creation during the past couple of years, thanks to tourism, technology, forestry and, particularly, housing — all helped by the low Canadian dollar.
The Globe and Mail: BC Liberals are (once again) faced with HST fears on the campaign trail
[Excerpt] The BC Liberal Party also issued a statement to reassure voters that a VAT is no longer under consideration. “A panel on tax competitiveness last fall recommended a number of measures including removing PST on capital purchases and creating a B.C.-based Value Added Tax. The only recommendation we are moving ahead with is our commitment to exempt some inputs that job creators pay like the PST on electricity.”
Greg D’Avignon, president of the Business Council of BC, said he hopes the government that is formed after the May 9 election will be open to a broader tax-reform agenda: “What happens when the global economy starts to slow again? We’re not ready for it. These kinds of reforms can’t just be tinkering around the edges,” he said. He said rising protectionism south of the border has made the need for tax reform to make B.C. businesses more competitive even more acute now.
“Frankly, we have to stop talking about it and embrace the reality that the world has changed. It’s no longer the 1940s and we have a small, open trading economy. We have to figure this stuff out or we are going to get left behind.”
CKNW: BC Liberals accuse NDP of plans for massive top bracket tax increase, warn of brain drain
[Excerpt] Economist Jock Finlayson co-wrote the analysis and admits it’s speculative, as the NDP has not specified plans for such an increase in its platform, however he says the logic plays out.
He says while higher taxes for the wealthiest might not seem like a big deal to an average worker, it could have a wider impact on the economy.
“If we’re going to have much higher top tax rates here than other provinces or other parts of the United States, it’s going to be harder to attract companies to put head offices here, it’s going to be harder to create high paying sustained employment here, it’s going to be hard to generate a bunch of business innovation.”
Finlayson says with major tax cuts on the agenda in the U.S., putting B.C.’s top tax bracket in this range — should it be borne out — could put rates 15-20 per cent higher than south of the border.
The Globe and Mail: A growing divide
[Excerpt] Jock Finlayson, the Business Council of B.C.’s chief policy officer, said this real estate-fuelled wealth gap is the most troubling.
“In the business community, we are worried about it, it’s forcing people to look at living elsewhere. It’s forcing people with children to live in accommodations that are not really designed for families,” he said. “Those who are established in the market have all enjoyed an unearned windfall in wealth. It’s also tax free. How equitable is that, from the perspective of the 30 per cent of renters, or those who bought at top-dollar prices?”
Prince George Citizen: NDP, Liberals play loose with jobs history
In the view of Jock Finlayson of the B.C. Business Council, some context is necessary.
He noted the Asian financial crisis of 1997-98 translated into reduced prices for some of the commodities B.C. exports.
"That was one factor that hit the economy in B.C. - something that obviously was not under the control of the provincial government," Finlayson said.
But that's as far as it goes.
"It's fair to say the NDP's overall policy agenda over the 1990s, particularly as it affected forestry and mining, also played a role in weakening labour market conditions in your region," he said.
Among the government policies he said impinged on the province's natural resource industries were higher corporate tax rates, a corporate capital tax on large firms and more and increasingly complex government regulations.
He also pointed to a dramatic expansion of parks and protected areas, removing significant amounts of Crown land from potential economic development activity, although this region remained largely unscathed.
"A number of these policy initiatives may have been well-intentioned, but the cumulative effect on business was enough to discourage investment and cause some natural resource firms in B.C. to scale back operations," Finlayson said.
That said, Finlayson gave credit to the steps taken under then energy minister Dan Miller to increase oil and gas activity in northeast B.C.
"That, in turn, set the stage for the subsequent expansion of the industry in the early 2000s," Finlayson said.
As for the B.C. Liberal regime, Finlayson said that while B.C. remains subject to elements beyond its control - commodity prices, the state of global demand, and the value of the Canadian dollar - the current government "deserves some credit for its overall stewardship of the economy."
He listed balanced budgets, relatively low taxes on households, and an "inclination to allow market forces to operate instead of intervening extensively in economic activity," among their accomplishments.
"This approach to economic and fiscal policy has had a positive impact on business and investor confidence," Finlayson said.
Business in Vancouver: Mixed reviews for NDP platform among B.C. business groups
[Excerpt] Greg D’Avignon, president of the Business Council of British Columbia, said he likes the NDP’s focus on education and training to address skilled-labour shortages. But he added that its tax hikes could make B.C. uncompetitive.
He also wonders how the NDP plans to make up the lost revenue from scrapping bridge tolls.
“By eliminating tolls on the existing infrastructure, it’s probably a $500 million stranded capital that’s going to have to be serviced,” he said.
Vancouver Sun: WeWork leases seven floors of Vancouver's Bentall III tower for tech startups, freelancers to share
A New York-based company is turning a big chunk of downtown Vancouver real estate into shared office space for tech startups and freelancers.
WeWork announced Wednesday that it’s taking over seven floors in the Bentall III tower in a bid to attract 1,500 people to what it refers to as a “community of creators.”
The development is good news for Vancouver’s entrepreneurs, said Ken Peacock, vice-president and chief economist of the Business Council of B.C., but it also speaks to a trend toward more short-term, project-based employment in the so-called “gig economy.”
Business in Vancouver: Clark’s BC Liberals score high marks on economy
[Excerpt] But Finlayson said the government deserves some credit for its fiscal management, its taxation policies and its focus on economic diversification, which has helped shield B.C. from the kinds of shocks Alberta and Saskatchewan have suffered.
“I would give the government pretty good marks overall on their stewardship of the economy, recognizing they can’t take credit for all the positive things directly,” Finlayson said. “But they’ve certainly made a contribution.”