BCBC In The News
Journal of Commerce: B.C. economy charges forward while the world wavers
B.C.'s economy is pulling ahead of the rest of Canada and construction is leading the charge.That's the opinion of Business Council of British Columbia executive vice-president and economist Jock Finlayson, who was one of the keynote speakers at the Independent Contractors and Businesses Association's 20th annual CEO breakfast, held at Buildex Vancouver.
"Construction is a long-term growth industry for B.C. with growth over a 15-year period at twice the pace of the economy," Finlayson said, though he cautioned non-residential construction is much weaker than residential work. "It's not an exaggeration to say B.C. has a housing and construction-centric economy."
Jobs in the Lower Mainland are also "skyrocketing," he said, though most jobs in the province are concentrated in metro Vancouver and the Fraser Valley.
B.C. was also the strongest province in Canada in terms of overall growth in 2015-16 and real gross domestic product (GDP) was 2.9 per cent in 2016. Finlayson predicted the province's GDP would slow to 2.2 per cent in 2017, and stay at that rate throughout 2018.
"This is based on a slowdown in lumber sales to the United States, along with a slowdown in retail sales and a slight decline in housing starts," he said.
Globe and Mail: B.C. Liberals’ pile of surplus cash masks serious deficit in services
[Excerpt] Economist Jock Finlayson, chief policy officer for the Business Council of B.C., doesn’t believe Mr. de Jong will have much room to play with after all the spending promises have been accounted for.
“I think the surplus will be fully spoken for – and perhaps then some – by the time we pore through the details of the budget,” he said.
He said government can count on growing revenues, although growth will slow compared to the year just ending. “Tourism is firing on all cylinders, high technology is doing well, film and TV production is setting new records,” he said, as just a few examples.
“While there will be some room for targeted tax measures over the course of a three-year fiscal plan,” Mr. Finlayson concluded, “it’s hard to imagine the surplus is large enough to finance big-bang tax cuts.”
BIV on Roundhouse: B.C.'s 20-year roadmap to prosperity
At 21:15 the Business Council of B.C.’s Greg D’Avignon delves into a new policy paper, BC 2035 outlining recommendations to government and private sector for a 20-year path to greater economic prosperity.
Globe and Mail: Will the foreign buyers tax endanger B.C.’s housing windfall?
[Excerpt] Working from those figures, the Business Council of B.C. calculated that the real estate sector – including construction, renovations and other spinoffs – accounted for 35 to 40 per cent of the province’s economic activity.
“It has played a big role in B.C.’s growth story,” said Jock Finlayson, economist and chief policy officer for the Business Council. “It’s not the only thing, but it has made an outsized contribution. And the government’s stronger-than-expected revenues are due in part to the strength of the housing industry – which of course is now diminishing.”
Journal of Commerce: Buildex Blog: the ICBA CEO Breakfast
[Excerpt] Business Council of British Columbia economist Jock Finlayson also addressed the CEO breakfast with a look at B.C.'s economic prospects in what he termed "an uncertain world."
Finlayson cited the new and "untested" U.S. administration, Brexit, shifting tides in the European Union, and a possible shift in China-U.S. relations.
However the outlook in B.C. is generally good, Finlayson said. The global economy remains in low gear, with growth globally only around three per cent.
Vancouver Sun: B.C. Liberal government promises financial relief in throne speech
[Excerpt] B.C. Business Council vice-president Jock Finlayson urged government to first focus on tax reforms suggested by a recent tax competitiveness commission, which called for more exemptions on machinery and equipment to increase productivity.
Globe and Mail: Trump ban drives Christy Clark to refine B.C. foreign buyer’s tax
[EXCERPT] Last August, senior economists Jock Finlayson and Ken Peacock of the Business Council of B.C. warned that the new property tax on foreign buyers would make it even harder to lure outside talent to take jobs in the lower mainland. “Over time, sky-high housing costs threaten to precipitate a gradual hollowing out of corporate Vancouver,” they wrote.On Monday, Mr. Finlayson said the tax was a concern to more than just the tech sector. “As soon as the tax was announced, we began to hear from some of our members who were worried it would hamper efforts to recruit global talent to companies and academic institutions in Greater Vancouver,” he said. He said it is too early to measure whether the policies of the Trump administration will translate into opportunities to expand British Columbia’s tech sector. “But it’s an opportunity worth pursuing, not only for those with the qualifications to take mid-level and senior positions in B.C. technology companies, but also for academic researchers, senior-level executives, and perhaps even medical specialists with hard-to-find expertise.”
Business in Vancouver: Subsidized daycare can pay for itself, study finds
[Excerpt] Jock Finlayson, executive vice-president and chief policy officer for the Business Council of British Columbia, said there is support among his organization’s members for increased access to daycare, especially for lower-income families.
“Adopting a universal, low-cost model, paid for entirely by government, is another matter,” he said. “The latter would require a big tax increase, which would be expected to have negative impact on economic and job growth – thus partially offsetting the economic benefits of universal daycare emphasized in the Fairholm report.”
Finlayson and the Canadian Taxpayers Federation point to Quebec, which has offered $7 per day daycare since the late 1990s but has some of the highest tax rates in Canada.
And despite having subsidized child care, some parents in Quebec still find it hard to find available placements for their children and end up paying market rates for private daycare.
Business in Vancouver: Could B.C.-Washington state trade benefit from Trump bump?
[Excerpt] The U.S. remains B.C.’s “No. 1 trading partner by a wide margin,” according to Ken Peacock, chief economist at the Business Council of British Columbia (BCBC). BCBC data provided to Business in Vancouver shows the province exported $5.1 billion to Washington state in 2015, making it B.C.’s largest trading partner in the U.S.
That number is nearly equal to the amount B.C. exported to China that same year ($5.9 billion). “Over the past few years B.C.’s exports to the U.S. have grown steadily, boosted by the weaker dollar and the fact the U.S. economy has gained some traction,” Peacock said.
Business in Vancouver: Outlook 2017: B.C. miners meeting 2017 with 'cautious optimism'
Political and market uncertainty will still plague commodity prices in 2017, but B.C.’s mining industry is cautiously optimistic that resource prices are stabilizing, if not recovering.
Both copper and metallurgical coal, which each account for approximately 40% of B.C.’s mining revenue, according to PwC Canada’s estimates, rallied to close out the year much higher than where they started. For an industry that has faced years of depressed prices, layoffs and idling operations, it’s welcome news.
“I think in 2016 we’ve seen that bottom out, or perking up,” Jock Finlayson, executive vice-president and chief policy officer with the Business Council of British Columbia, told Business in Vancouver.
“Will it continue into 2017? I certainly don’t expect anything resembling a commodity market boom, but I do think we’ve seen the worst of metals and energy prices.” Finlayson added that because three-quarters of B.C.’s exports come from natural resource industries, the trend is a favourable development for the overall provincial economy.
Nothing, however, is certain.
Prices for gold and silver have already shifted down from rallies earlier in 2016, and no one seems prepared to bank on a commodity price recovery.
“We have seen perhaps one of the most challenging cycles as far as commodity prices are concerned,” said Karina Briño, president and CEO of the Mining Association of BC (MABC).
BIV on Roundhouse Radio: Jock talks 2016 [12:15]
Jock Finlayson joined Business in Vancouver on Roundhouse radio to reflect on the biggest BC business news stories of 2016. [12:15]
BIV on Roundhouse Radio: Ken Peacock talks municipal spending [27:38]
BCBC Chief Economist Ken Peacock discusses trends in Metro Vancouver municipal spending as outlined in his recent report [27:38]
Maclean's: 75 charts every Canadian should watch in 2017
Canada losing its edge in trade with U.S.
Jock Finlayson, executive vice-president, Business Council of B.C. Twitter: @
“Canada long enjoyed the status of being the No. 1 source of American imports. No more. We were overtaken by China a decade ago, and more recently by Mexico. Since 2000, Canada has lost 5.5 points of U.S. market share. In some ways the picture is even darker, for the following reason: since 2000, Canadian oil exports to the U.S. have increased sharply. Absent oil, our share of the U.S. import market would be several percentage points lower than depicted in the chart. This highlights the worrisome erosion of Canada’s competitiveness on a North American basis, with manufacturing production and capital investment, in particular, having drained out of Canada into the southern United States and Mexico over the last 15 years. It remains to be seen whether the protectionist impulses of the new American president will alter the competitive landscape for Canada and other U.S. trading partners over the balance of the decade.”
BIV: Canada signs national climate change strategy
If one ignores a very large gap in the centre of Canada – Saskatchewan and Manitoba – the country now has a “pan-Canadian” strategy for tackling climate change through things like stricter building codes, reducing methane emissions in the oil and gas sectors and building new transmission lines between provinces.
Late Friday, December 9, Canada’s first ministers jointly announced they had signed onto a national strategy that includes a commitment to reduce greenhouse gas emissions through a suite of policies that will almost certainly result in higher building and energy costs for Canadians.
Jock Finlayson, executive vice president of the BC Business Council, said a pan-Canadian framework for carbon pricing and climate action policies “makes sense to work toward a common platform for carbon pricing to ensure that all regions and sectors of the economy are contributing and are treated equitably.”
However, he shared Clark’s concerns that British Columbians could end up paying a much higher carbon price than residents and businesses of Ontario and Quebec.
“I am worried that businesses and industries in B.C. could end up paying more for fossil fuels than those in central Canada, given that B.C. is using a broadly-carbon tax while Ontario and Quebec are relying on complex ‘cap and trade’ programs to meet the federal government’s $50 target,” he said.
“Second, I am troubled by the thought that tax-inclusive fossil fuel costs will be escalating steadily in Canada at a time when the United States will be doing nothing on carbon pricing under incoming President Trump.
“If Canada moves to a $50 carbon price by 2022 while the U.S. sticks with a zero national carbon price, investment in the oil and gas sector and also across swathes of manufacturing will bleed out of Canada into the U.S. to take advantage of lower energy costs there. That will further disadvantage the Canadian economy, which is already suffering from a loss of industrial competitiveness in the North American context.”
Roundhouse Radio: BCBC discusses TMX pipeline
BCBC President and CEO Greg D'Avignon discusses existing and potential economic opportunities derived from Canada's oil sector and an expanded Trans Mountain Pipeline.
MetroNews: Pipelandia: B.C. holds ‘last obstacle’ between Kinder Morgan and its pipeline dream
[Excerpt] The Business Council of B.C.’s executive vice-president and chief policy officer, Jock Finlayson, said he believes the province will both directly and indirectly benefit if Trans Mountain’s expansion proceeds — not just through thousands of construction jobs and company contracts to build it, but also thanks to boosting Alberta and Canada’s prosperity.
A “big chunk” of the $6.8 billion cost of the project, he explained, will flow into B.C. where the bulk of the pipeline work will happen.
“To the extent this pipeline project will lead to a more vibrant energy marketplace in western Canada, B.C.’s going to get some benefit from that,” he told Metro in a phone interview. “Recognizing it’s highly controversial, we are supportive of building our energy infrastructure to access global markets. Energy is the biggest export in the country.
“We think it’s very important in the national interest to get our products into global markets.”
However, there's disagreement over how much benefit B.C. will actually receive in the long term.
On one hand, the Conference Board of Canada estimates the project could create the equivalent of 15,000 construction jobs and 37,000 direct and indirect operations jobs after it's built. The province would see $5.7 billion flow into its economy, the Board said.
However, another report from Conversations for Responsible Economic Development (CRED) BC concluded, once it's built, "the proposal would create 50 permanent jobs" but that an "oil spill would put at risk industries that together employ over 200,000 people."
Finlayson said, “there’s real validity” to Clark’s fifth condition, particularly because of the risks borne by B.C. for an Albertan product.
“She’s saying we have legitimate concern about the environmental consequences or risks attached to it, both of terrestrial and maritime spills,” he said. “The premier said she wants some economic upside to this.”But if Clark is hoping for a share of Alberta’s oil royalties, “we don’t have a history of upstream royalties associated with hydrocarbon development in Canada,” he warned. “Resource development typically accrues to the province where the resource is domiciled … The principle of that is challenging to get one’s head around.”
BIV: U.S. tax reform could imperil Canadian advantage
To date, most of the hand-wringing in Canada’s business community over the prospect of a Donald Trump White House has been over trade with the U.S.
But an expert in cross-border taxation and accounting says Canadian businesses and governments should also pay attention to Trump’s tax reform policies, which could make Canada less attractive to companies like Microsoft (NASDAQ:MSFT), which has built up a substantial presence in Vancouver.
It could also trigger an outflow of talent from Canada to the U.S., which would have a much more competitive personal and corporate tax environment.
Jock Finlayson, chief policy officer at Business Council of BC, agrees American tax reform could be bad for Canada. He fears new business investment will flow to the U.S. instead of Canada in a range of sectors, including energy, manufacturing and software. And lower personal taxes could result in a drain of professionals.
“It is not hard to imagine that tax-rate differences of this magnitude would trigger an outflow of well-paid managerial and professional talent from Canada, and also encourage more ambitious entrepreneurs to immigrate to the U.S.,” Finlayson said.
News 1130: Tax changes recommended to make BC more competitive
Whether you hated the HST or embraced it, we might one day see a compromise.
The group tasked with finding ways to make BC more competitive for business is recommending we replace the PST with what it calls a ‘made-in-BC value-added tax.’ That’s one of four recommendations being made to the BC government by the Commission on Tax Competitiveness.
The panel was formed in July to review the BC corporate tax structure by holding consultations. Twenty-seven submissions were received, about 60 responses came through online and 12 stakeholder meetings were held.
The commission found the PST to be the major barrier to tax competitiveness. Three of the four recommendations deal with the sales tax.
The BC Business Council says the PST is an antiquated tax, which has become a big deterrent to business. Chief Economist and VP of the council Ken Peacock says the sales tax isn’t equal province to province, which hurts BC’s chances. “Alberta has no PST so, cost advantages are higher in Alberta. It’s different across the states, but ultimately, it ends up driving up the cost of doing business by having a PST rather than a value added tax system.”
Peacock adds the switch may actually bring prices down for consumers.
Vancouver Sun: Kinder Morgan pipeline risks exaggerated by critics
[Excerpt] Which brings me to the issue of oil pipelines. New pipelines are essential to get Alberta’s oil to global markets. Without them, one of the biggest drivers of the Canadian economy will hit a plateau over the next few years. Billions of dollars worth of future potential investment will go elsewhere, along with thousands of jobs. Not just in Alberta, but in B.C.
Alberta will lose and Canada as a whole will lose. In fact, Canada is already losing. While we twiddle our thumbs and our politicians engage in endless consultation and debate, U.S. energy production, exports and related infrastructure spending have gone straight up.
The U.S. added 8,600 kilometres of new pipeline capacity between 2014 and 2015 alone, notes Jock Finlayson, executive vice-president and chief policy officer at the Business Council of British Columbia. That’s equivalent to 7.5 new Trans Mountain pipelines.
“A lot of Canadians, including people in this part of the country, look at the U.S. through the lens of President Obama’s advocacy around things like climate policy, the Clean Power Plan and the Paris Agreement” on climate change, he notes. “All that is very important. But just as important has been the steady expansion of the U.S. oil and gas sector.”
Vancouver Sun, Peter O'Neil: Federal policy paper on housing gives short shrift to young people, expert says
Young Canadians squeezed out of housing markets in cities like Vancouver didn’t get the attention they deserved in a federal paper released Tuesday on plans for a National Housing Strategy, says one expert.
The report, which summarizes the results of an intensive four-month public consultation, noted the high concern — especially on the West Coast — with affordability.
Economist Jock Finlayson, executive vice-president of the Business Council of B.C., said the federal government is limited in what it can do given that affordability is a major issue only in Metro Vancouver and Toronto.
But he said Ottawa must still play a role, perhaps through tax policy, in finding innovative ways to boost private sector interest in affordable housing.
And Finlayson added that Ottawa has a responsibility to take its role seriously, given that the government has increased annual immigration to 300,000 — the highest level since just before the First World War.
“If Canadian policy-makers plan to ramp up immigration inflows in the next decade, as the Trudeau government has signalled, then they would be wise to recognize that this will exacerbate housing affordability concerns in the metropolitan regions where the vast majority of newcomers settle,” he said.
“This underscores the need to step up efforts to expand the housing stock — that is, to make housing supply ‘more elastic’ — in the large metro areas that immigrants are drawn to.”