The News Rundown

Canada’s no good, very bad fourth quarter might be even worse than we expected

We've been told in recent months that the Canadian economy is doing just fine. A few weeks ago, Statistics Canada said that Canada had added 34,500 jobs in January and that the overall unemployment in Canada fell one tenth to 5.5% from December's numbers.
However, it all depends on how you spin the numbers. Conservative leader Andrew Scheer said in the House of Commons: “We look at our partners around the world and growth is higher in over half the G7 countries than it is here at home in Canada.” Scheer said the Liberals’ deficit spending has run the domestic economy aground compared to other six countries in the G7 group of advanced economies. Prime Minister Trudeau, on the other hand, said all that spending is helping the economy grow. It comes down to a difference of two ideologies completely refuting each other.
Canadian manufacturing sales unexpectedly sank in December, a disappointing end to an already weak year for the sector.
Factory shipments were down 0.7 per cent from November, the fourth straight monthly decline for the indicator, driven by a sharp drop in motor vehicle sales, Statistics Canada reported Tuesday in Ottawa. Economists had predicted sales would rebound by 0.7 per cent.
Economists had thought December would be a stronger month for factories, particularly after trade data showed a jump in exports in the month following the end to the CN Rail strike in November. The data, which also showed falling new orders, will reinforce expectations the Canadian economy stalled in the final quarter of 2019.
The weak December reading was driven by a 6.8 per cent drop in motor vehicle shipments, along with a 16 per cent decline in aerospace products. Sales were down in 11 of 21 industries, representing 43 per cent of the Canadian manufacturing sector. In volume terms, sales were down 0.4 per cent. For all of 2019, sales increased 0.5 per cent, down from 5.4 per cent in 2018 and 6 per cent in 2017.
With CN Rail now laying off 450 workers due to the protests crippling our infrastructure network, and Via Rail temporarily laying off 1000 workers, one would think that manufacturing is going to take another plunge, as product will not be able to make it to market.
There's also been another factor that's at play - coronavirus, and the impact on parts and goods made in China. Business, retail and tourism experts say the new coronavirus has begun to hurt businesses in Canada but its full effects will be evident in the coming months. Canadian companies that rely on China for processing small components, for raw materials or for tourist dollars will all feel the effects from coronavirus.
Rocco Rossi, president and CEO of the Ontario Chamber of Commerce, said in a statement on Tuesday that certain sectors, such as manufacturing and airlines, will be hardest hit: "The outbreak of the coronavirus (COVID-19) has so far had a minimal effect on both the Canadian and Ontario economies. However, given the length of supply chain cycles, we may not see the full impact of the disruption for some months," Rossi said.
Jim Danahy, CEO of CustomerLAB, a retail consulting firm in Toronto, said the effects will be worse than those of SARS in 2003 because Chinese manufacturing has quadrupled since then.
Global supply chains mean Canadian products with components made in China may not make it to store shelves, he said.
Danahy says: "What I see happening to Canadian businesses is that they are depending on buying ingredients and raw materials from China, or having their raw materials put together, or in some cases sewn together in China, where maybe very small components in a process come from China, or are processed in China, but without it, you just have a bunch of scraps. You don't have a finished product and you can't sell them. You know, a zipper, a button, a logo flash, one ingredient in a food product, these are the kinds of things that will prevent Canadian businesses from selling their own products," he added.
For example, Roger Gingerich, a fashion broker for Maholi Inc., a Canadian company that makes luxury bedding and outerwear, said Maholi down jackets are sewn in Toronto but cannot make it into stores to be sold because each jacket has a branding label that comes from China. That label, a small metal piece, is manufactured in China and appears on the sleeve. Gingerich says that their entire production floor is waiting for that branded label and that they "can't go further" with production until the label comes in.
Tourism, retail, and manufacturing will all be hit. The only question is, how much will Trudeau's reckless overspending put us deeper in the hole when our recession inevitably hits?
Supplementals:

Alberta Education will be drastically changing the way school boards and students will be funded.
As like most things with the UCP, money will be handed on based on performance and need.
Over the last 15 years there’s been an 80% increase in educational spending but the student population only grew by 25% and inflation by 33%.
The Alberta student population is expected to rise by about two per cent each year. At the same time, the government wants to keep education spending at $8.23 billion for the next three years.
Money will be taken out of admin, medical assessment, and Alberta Education pilots and put into one big pot to pay teachers.
Each school will now be funded for each coming school year when the legislature sets out its budget in February or March.
Each local school board will get money based on a weighted average of the number of students it has had for the past two years and the projected coming year, with the most weight given to projected attendance.
The old model sees schools not knowing their final budget until the final student count on September 30 each school year.
Minister LaGrange says that this uncertainty of not knowing the budget was a frustration while she was a school board trustee.
This meant not knowing if teachers or assistants could be hired.
Extra funding will still be available for small rural schools, specialized programs, refugees, First Nations and Métis and students from lower income families.
As we have seen elsewhere in the UCP’s reforms, the focus comes down to administration where the cost cutting is focused. Most Alberta Education and school board head offices spend above average on administration costs.
That’s the key word, administration. The NDP, labour groups, and workers in the sectors facing cuts have all pointed to this becoming a culling of the public service.
It is the administration that is bloated and over funded that is causing staff cuts to happen in the first place.
This messaging gets out via the media, gains traction on social media, and becomes the story of the day missing the point that the administration departments are all just looking out for themselves.
Do. Not. Be. Fooled.
And as David Staples in the Edmonton Journal wrote, “This looks like a sound plan to control education spending. It promises to cut red tape, continue to care for the most vulnerable learners and direct a higher percentage of money into the classroom. It looks like a decent bet to succeed, but we’ll need to know the details to be certain.”

Canada’s latest blockade? It's at the end of B.C. Premier John Horgan’s driveway

Last week, in my BC story detailing the ongoing Wet'suwet'en protests, including the Legislature being barricaded during the throne speech, I mentioned that the budget would be tabled this week and that we would see if it got overshadowed by protests as well. Interestingly enough, protests did happen, but not in the way that we would have expected.
Pipeline protesters were arrested outside the home of B.C. Premier John Horgan on Tuesday morning while attempting a "citizen's arrest" (read: kidnapping) of the premier. Activists with the group Extinction Rebellion Vancouver Island said they intended to prevent Horgan from attending today's provincial budget announcement at the legislature.
Four RCMP vehicles were on scene before 8 a.m. as were members of the premier's security team. The premier wasn't home when the protest began but he came home shortly after and verbally accosted the protesters. Horgan said he rushed back home because he was concerned about the safety of his wife, who was still in the house at the time the protesters showed up.
At 8:15 a.m. two protesters were laying across the driveway of the Langford home while another group of protesters held signs on the street. The RCMP moved to create an exclusion zone in front of the premier's home, pushing media back to the end of the street and threatening to arrest anyone who remained. At 8:20 a.m., police began arresting protesters who were blocking the driveway, while a handful of other protesters stood on the street.
Three protesters were ultimately arrested for mischief, but will be released with the conditions that they avoid the premier's home and his constituency office, police said.
BC Liberal Leader Andrew Wilkinson took to social media to condemn the protest at the premier's house, saying: "I strongly condemn the actions of protestors at the home of John Horgan this morning. No one in B.C. should ever feel unsafe in their homes or at their workplace. This is not how democracy works and this is not how we treat each other here."
The B.C. drama at Horgan’s home came hours after Swedish teen activist Greta Thunberg tweeted that she stood with the Wet’suwet’en hereditary chiefs.
Meanwhile, the Legislature was the site of a protest on Tuesday with hundreds of people, though these were mostly forestry workers, not the same people who have been protesting in the B.C. capital for the past week.
Hundreds of forestry workers descended on the B.C. Legislature Tuesday afternoon in a rally to support the struggling sector.
"The forestry sector has been in a downturn all across the province," said organizer Carl Sweet. "The economy sector on Vancouver Island around the old growth logging will slowly deteriorate until there's not much left."
Sweet said many workers are concerned the province's Old Growth Strategic Review, which is currently underway, might decrease available land for timber harvest.
Sweet said "We just had an eight-month strike on Vancouver Island ... and it's kind of given us a glimpse into the future of what it could potentially be like if we continue to lose our harvestable land base. Right now in coastal B.C. we only harvest on 30 per cent of the land base. The other 70 per cent is either protected, restricted ... or uneconomical for harvesting. With this petition and rally we're asking to maintain that 30 per cent."
Sweet said the petition has garnered 8,000 signatures in less than two months.
"I think people are misinformed about the impacts of logging. There's a lot of professional foresters, biologists — everyone that looks after the forest industry — they're doing everything they can to ensure it's sustainable."
B.C. Forest Minister Doug Donaldson acknowledged loggers' concerns with the Old Growth Strategic Review and promised they'd be consulted.
"I commit today that before any recommendations from that process are implemented, I will be going out to communities...[and] rural areas to gather input on any ... recommendations that come from that report," he said.
Now that all the protests are detailed, we can actually talk about the BC budget, which, despite the best efforts of Extinction Rebellion, Premier Horgan was actually on hand for.
The province projects a surplus of $203 million for the 2020-21 fiscal year. New sources of revenue will accompany new taxes this upcoming fiscal year. The PST will now apply to "sweetened carbonated drinks" and a new 29.5c tax will be applied to "heated tobacco products" such as vape equipment. Extra money will be set aside for "climate-related emergencies", such as floods and wildfires, and more money is being put into healthcare, housing, education and ICBC.
With over three-quarters of the NDP's election platform already on the way, and a commitment to a balanced budget, there was always going to be little room to manoeuvre — even if reforms at ICBC and a slight slowdown in the provincial economy hadn't taken place.
But those things did happen, and it meant the government had a decision to make: how would it stay in the black without going back on spending commitments in the expensive health and education ministries?
The answer was a new tax on the people making the most money in the province — giving the province its highest marginal tax rate (20.5 per cent for people making over $220,000) this century.
Overall it's a very stay the course budget that the NDP have introduced in previous years, though with the BC economy humming, one would hope that more money would be used to pay down the provincial debt for the future, but all in all, at least they aren't spending more than they're making. The left believe they aren't doing enough on housing, while the right believe they're taxing the top 1% too much. So all in all, it's a very middle of the road budget that doesn't appear to satisfy anyone completely.
Supplementals:

Firing Line

Who are the protesters? 'There's a lot of people that aren't from these communities, that aren't Aboriginal'

Last week we asked, who are the protestors and who is organizing them. We have those answers.
Many have astutely noticed that a lot of the protestors aren’t from the communities in which they are protesting and they aren’t aboriginal.
Ellis Ross who served for 14 years on a band council on one of the 20 elected band councils that approved Coastal Gaslink said, “There’s a lot of people that aren’t from these communities, that aren’t Aboriginal, that are saying hereditary leadership has full authority, and they’re not doing it based on any facts. It would be like me saying that the elected leadership of B.C. and Canada has no authority, and it’s the Queen who has all authority.”
Ellis Ross is the Liberal MLA for the provincial district of Skeena.
5 of 13 hereditary Wet’suwet’en chiefs have claimed they have a land claim on a 22,000 km^2 area about the size of PEI. That’s what set off the protests.
These protests are quickly becoming an economic issue hurting trade by truck, train, and boat. Justin Trudeau has cancelled his campaigning trip to the Caribbean this week to try to deal with the situation.
On Tuesday Trudeau and opposition leaders held a cabinet meeting on what to do next but Conservative Leader Andrew Scheer was not invited because Trudeau smugly said that Scheer “disqualified himself from constructive discussions with his unacceptable speech earlier” that he made in the house.
This issue on its own and that it’s been allowed to fester poses a great problem to every Canadian, one wrong move and both sides risk alienating their supporters.
So who’s causing this?
In a statement sent to CHEK news last week the protest organizers who blockaded highway 19 were supported by Extinction Rebellion, though it wasn’t an official extinction rebellion event.
Extinction Rebellion also blocked rail traffic in northern BC and Toronto. And held a rally in Fredericton just to name a few instances of many protests across the country.
Extinction Rebellion has also been blockading the Port of Vancouver, bridges in Vancouver, and earlier this week even John Horgan’s house.
What is Extinction Rebellion and why are their names not reported?
Extinction Rebellion was founded in 2018 as an advocacy group out of the UK. They are active throughout the world but as with any group they need money.
We knew as soon as there was an associated hashtag and action across the country that these protests were not organic.
The Extinction Rebellion received £1.2m British pounds in donations between October 2018 and January 31, 2020.
Who?
The band Radiohead donated £395,019. The Climate Emergency Fund donated £323,835. Other notable names include Greenpeace donating £20,000 and cosmetics chain Lush donating £10,174.
But of course we need to look at the Climate Emergency Fund, who’s involved with that?
One of the group’s founders is Rory Kennedy, daughter of deceased senator Robert Kennedy. Also Aileen Getty, third founder and granddaughter of oil magnate Jean Paul Getty who gave $600,000 to the climate emergency fund.
So while it remains unclear if the protestors have received any money from Extinction Rebellion, Extinction Rebellion fully supports the protests happening in Canada.
Had we seen this groundswell of support in the federal election Trudeau would’ve repeated 2015 or the NDP would’ve done a lot better as these types of folks are the core supporters of Jagmeet Singh’s NDP.
There’s a lot left to come on this story and we need to ask why the media rarely mentions Extinction Rebellion and their associated funders.
We have a right to rule of law in this country and to not have our affairs dictated by foreign organizations.
Supplemental:

Word of the Week

Bottleneck - A part of a process where its limited capacity reduces the capacity of the whole chain. The result of having a bottleneck are stalls in production, supply overstock, pressure from customers and low employee morale.

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Show Data

Episode Title: The Throttled Bottleneck

Teaser: The Canadian economy slumps due to coronavirus and protests, Alberta’s education plan cuts down on admin costs, and a blockade outside John Horgan’s home overshadows the BC budget. Also, we look at the foreign funded origins of the debilitating protests.

Recorded Date: February 19, 2020

Release Date: February 21, 2020

Duration: 47:16

Edit Notes: None

Podcast Summary Notes

Duration: XX:XX