The News Rundown
- Warren Buffett's investment company Berkshire Hathaway has decided not to invest $4 billion in a liquefied natural gas (LNG) plant by the Saguenay port in Quebec. The marine terminal to ship LNG to overseas markets is slated to be built roughly 230 kilometres northeast of Quebec City, at a cost of $9.5 billion.
- The LNG project also involves the construction of a pipeline across a 782-kilometre stretch of the province, from northern Ontario to Saguenay, to transport natural gas from Western Canada. That pipeline is slated to cost $4.5 billion, bringing the total value of the project to $14 billion. The goal is to export 11 million tonnes of LNG per year.
- The decision by Berkshire Hathaway, which represents a major blow to the project, was first reported by La Presse Thursday and later confirmed by Radio-Canada.
- Stéphanie Fortin, head of communications for the company behind the project, GNL Québec, said the company had lost a significant potential investor, but did not want to say who it is.
- She did say, however, that the company lost the investor because of the "current Canadian political context." She said with "instability" in the last few weeks, such as ongoing rail blockades, foreign investors are getting nervous.
- This won't keep the project from progressing, Fortin said, nor will it mean job losses in the immediate future. She said the loss won't be without an impact, though.
- Gazoduq, the company behind the pipeline, says in a Thursday statement that it is now looking for "other potential investors."
- Louis Bergeron, Gazoduq's president, said the project's 10 original investors, who have been onboard since 2014 and have so far invested more than $130 million, are not backing out.
- He also declined to name the investor who quit, but said the decision was not based on the pipeline's financial viability. The investor was concerned that the project could still be nixed as GNL Québec seeks the needed permits and government approval.
- "Even if you succeed in obtaining all these permits, it doesn't mean you will be able to execute your project," Bergeron said. "So an investor will take that into account."
- Michel Potvin, deputy mayor of Saguenay, told Radio-Canada's Tout un matin that this represents a real setback for the project.
- "It's concerning when we talk about an investor putting in $4 billion of $9 billion. It's clear that Mr. Buffet has good reasons. We're seeing the rail crisis — that's surely one of the reasons."
- He said he understands, given the current discussion around the Coastal GasLink pipeline in B.C. In Quebec, the LNG project has also stirred opposition from members of Innu communities. The proposed pipeline would go through their ancestral territory.
- "It takes the acceptance of Indigenous people," Potvin said. "In our head, here in Saguenay, we thought we had it. We thought it was accepted by the people. What we're seeing is that actually nothing is certain."
- Nothing is certain anymore, after rail blockades, and rail derailments that are not even being investigated by the RCMP. A train derailment in British Columbia led to a local school being evacuated. The train derailment happened approximately 40 kilometres east of Prince George, just this Friday morning. This is the second train derailment in two days, and the twelfth since December. Yesterday, a train was derailed in Kingston, Ontario, and was reportedly carrying hazardous goods.
- The Quebec Federation of Chambers of Commerce released a statement Thursday calling on the provincial and federal governments to reassure potential investors. President Charles Milliard calls the climate of business uncertainty in Canada "deplorable" and that it "needs to be reversed". The federation, which represents 130 chambers of commerce across the province, says the country is facing "an image crisis" on the international stage. The federation is asking for "concrete measures" to restore confidence and encourage foreign investment in Quebec.
- Milliard said: "The governments of Quebec and of Canada need to fix this significant damage in order to support businesses impacted by the rail blockades."
- Conservative MP Richard Martel, who represents Quebec's Chicoutimi—Le Fjord riding, said Quebecers risk losing a $4-billion energy project that would bring jobs and other opportunities to the Saguenay region "because of Justin Trudeau's weak leadership. Over the last month, a clear signal has been sent to businesses across Canada that the rule of law will not be upheld and that major projects cannot get built," said Martel.
- Prime Minister Justin Trudeau made a surprise appearance at an annual mining conference in downtown Toronto on Monday to pitch the idea that having a national policy framework to reduce the country’s carbon emissions to net zero by 2050 is good for the economy. It marked his second consecutive appearance at the annual Prospectors and Developers Association of Canada conference.
- This year, however, Trudeau appeared one week after Teck Resources Ltd. cancelled its application for a permit to build a $20.6 billion mine in Alberta’s oilsands, with its chief executive Don Lindsay citing a lack of clear policy in Canada about carbon taxes and other climate change legislation. The prime minister’s appearance also came after weeks of protests temporarily stopped the construction of the Coastal GasLink pipeline in British Columbia and inspired dozens of other protests including rail blockades that paralyzed parts of the country’s economy.
- Trudeau acknowledged that reconciling resource development and climate change is polarizing, and transitioning to a low-carbon economy will be difficult for some industries such as mining. But he insisted “protecting the environment” is the best way to attract investment in Canada and called on all governments to work cooperatively on climate change policies.
- “Of course we can only create a better stronger economy for everyone if we are fighting climate change at the same time,” said Trudeau. “We know that, Canadians know that — we just haven’t reached that point of consensus … about the best way to do it.”
- Trudeau seems to be pushing forward for a transitional natural resources economy: “For a country like Canada, where the national economy was built on the natural resources sector, there’s a big transformation ahead, to be sure. We just need to transform our approach to meet the challenging future.”
- The Berkshire Hathaway story is yet another concrete sign to foreign investors that Canada is closed for business. Not only do projects have to clear innumerable hurdles from a federal government hostile to business, they then have to clear their project with activist courts. Then, time is spent negotiating with First Nations, who could revoke their approval and start blockades. And then, after all that, environmental groups funded by the US or Russia or OPEC will protest the project indefinitely until it's completely shut down. No wonder nothing is getting built in Canada, and it all starts with the federal government and Justin Trudeau.
- Last week we covered the whirlwind of news in Alberta from the Teck mine cancellation, Alberta’s win on the carbon tax, the throne speech, and the budget.
- As expected the budget has become a point of contention with public sector workers.
- This government was elected to balance the budget.
- We know Alberta spends more capita on health than any other province.
- Health spending has remained constant.
- No cuts.
- Money has been re-allocated to provide $500m over 3 years for 80,000 more surgeries, $100m for surgical suites, equipment and rural hospitals, and $3.7b over 3 years for capital projects including the Calgary Cancer Centre, the Peter Lougheed Centre expansion, and the Red Deer Regional Hospital Centre.
- Health Minister Tyler Shandro tweeted a graphic showing healthcare spending maintaining the same value that it had under the former NDP government and increasing by $200m.
- As mentioned last week Education spending sits at $8.3b and this represents a $100m increase from the previous year.
- 87% of this goes directly to supporting school jurisdictions.
- A few weeks back we talked about the new funding model that will allow school boards to know how much money they are getting before the year begins which better enables long term planning.
- The 2020 Capital Plan (for investment projects) adds 2 new school modernization projects and full funding for 9 projects that were only greenlit to the design phase.
- At a gathering at the MacDougal centre in Calgary, the Premier said, “I can tell these folks we’re not going to blink. They can have all the protests they want. They can call me all the names in the world. They can be as nasty as they want to be. We’re not going to blink.”
- This of course is the same language that Ralph Klein used when his government was reigning in spending in the 1990s.
- Kenney also made the comment that the unions and opposition groups were as “frenzied” today as they were 25 years ago when the Klein government cut spending by 20% and pay by 5%.
- Kenney said he could’ve pulled out a chainsaw like Ralph or skipped the scissors as Notley did but this is the middle of the road approach.
- While the opposition groups say these are drastic cuts, they aren’t. The per person spending cut over 3 years with the UCP plan is 14.1% while Klein’s was 30%.
- Spending is being held constant and all levels of government and administration have been asked to look for cost saving measures.
- Whether it be the healthcare or education industries claiming cuts or Calgary’s city council saying they’re going to raise property taxes, all these people would need to do is hold spending for a few years like the province has asked or cut in administration.
- One major story has gripped headlines around the world since early January, and shows no sign of stopping anytime soon. That is of course the spread of COVID-19, more colloquially known as coronavirus. Because of the mass spread of panic and hysteria from the pervasiveness of the coronavirus outbreak that has now spread worldwide, I urge anyone listening to make sure to use trusted news sources when researching rather than drive to Costco or Walmart to buy up all their toilet paper and hand sanitizer.
- There are of course social drawbacks to coronavirus. Events with large numbers of people like music festivals and sporting events have been cancelled or are considering cancellation. There have been reports of racism against Asians and people of Asian descent, and even helpful policies like travel bans have been called racist. And there has been misinformation everywhere.
- There is also a huge economic impact to coronavirus that has not been completely felt yet. In Canada, many businesses have barred their employees from travelling internationally. The NHL, for instance, has been monitoring the situation and NHL commissioner Gary Bettman has been in contact with both the CDC in the US and Health Canada, as well as the other 3 major North American sports leagues. Even if you don't like or watch sports, you can't deny that sporting events have a major impact on the Canadian economy.
- "What we can do is take it a day at a time and see what the experts in the field are telling us," Commissioner Bettman said as the NHL general managers meetings ended Wednesday.
- Trent Carroll, chief operating officer of Canucks Sports and Entertainment, noted that while public health officials are still rating the risk of a coronavirus outbreak in Canada as low and that there has been no impact at Rogers Arena to date, the team is still monitoring the situation closely.
- “The health and safety of our fans, players and staff are our highest priorities, and we will implement all necessary safety measures as required,” he said in an emailed statement. The team is also liaising with provincial health officials and the NHL to keep up to date on the latest information on the local, national and global coronavirus situation.
- “Out of an abundance of caution, and to fight cold and flu season, we have taken some proactive steps at Rogers Arena, including additional hand-sanitizing stations as well as the acquisition of specialty sanitizing equipment,” he said.
- Approximately 100 sanitizing stations have been installed around the arena and educational signage has been added, while the frequency with which surfaces are being cleaned — including food-service areas, washrooms, elevator lobbies and entry gates — has been increased.
- Calgary Flames general manager Brad Treliving said the Flames have spent a lot of time internally redeploying scouts and being prepared because of the situation in Europe: "You've got to take leadership for your staff, making sure you're not putting them in tough situations. But for right now, it's business as usual until you find out otherwise."
- That's pretty much the gist of it right now, business as usual until it isn't. It seems to be the stance that the government has taken on cruise ships that are scheduled to visit Victoria and Vancouver for the summer, an annual event that brings in millions of tourists. Just one cruise ship visit is estimated to inject roughly $5 million dollars into the provincial economy. But with coronavirus? No amount of money may be worth spreading an outbreak.
- 237 Canadians out of a total of about 3,500 passengers are onboard the Grand Princess cruise ship that’s being held off the coast of California for coronavirus testing, Global Affairs Canada confirmed on Thursday. The ship had been returning from Hawaii to San Francisco, but it has been quarantined and passengers are being tested for coronavirus.
- Concerns about a spread of COVID-19 on the ship were raised after a 71-year-old Sacramento, Calif. man, who had taken a voyage on the Grand Princess between Feb. 11 and 21, died from the virus on Wednesday.
- California Gov. Gavin Newsom declared a state of emergency on Wednesday following the man’s death. Princess Cruises, owners of the Grand Princess, said 267 Canadians had been onboard the Grand Princess during its trip in mid-February.
- Provincial health officer Dr. Bonnie Henry said in a teleconference Thursday that some of the Canadians on board the ship are likely from B.C.
- Twenty-one people aboard the Grand Princess cruise ship have tested positive for the new coronavirus, U.S. Vice President Mike Pence confirmed Friday. Alberta's first case of coronavirus was detected in the Calgary zone Thursday, and Chief Medical Officer of Health Dr. Deena Hinshaw said it's believed the woman contracted COVID-19 in the Grand Princess cruise ship in California.
- As of Thursday, the 951-foot vessel is still booked to arrive in Victoria as the first cruise ship of the season, said Ian Robertson, chief executive of the Greater Victoria Harbour Authority. The Grand Princess is scheduled to pull in at 7 a.m. on April 3 from Vancouver, and depart at 2 p.m. for San Francisco.
- Princess Cruises previously made headlines over a quarantined Diamond Princess cruise in Japan that had more than 700 passengers infected with the virus.
- No Victoria cruise-ship arrivals have been cancelled to date, said Robertson, speaking from London, England, at a Cruise Lines International Association conference, where participants are barred from shaking hands. “We are planning for a full season and that will be our position until we hear differently.”
- This year, about 770,000 passengers are expected to arrive on almost 290 ship visits to Victoria. Thousands of crew members typically come to shore, too.
- The harbour authority has called on health officials for advice, said Robertson, who is hoping for direction in the next week. If additional screening of those arriving from the ship is required, “then [health authorities] will be the ones that will do that.”
- In the past, if a ship arrived with a case of norovirus and some passengers were quarantined in their rooms, the harbour authority implemented an additional level of cleaning at terminals, Robertson said. Staff do extra cleaning of hard surfaces and hand-sanitizing stations are made available.
- Prime Minister Justin Trudeau said “knee-jerk” reactions to the outbreak will not keep people safe. He defended Canada’s decision not to close its borders to foreign nationals coming from regions where the outbreak is spreading: “We’re going to stay focused on doing the things that actually matter: on empowering Canadians to make the right decisions for their own health, for their families’ health, listening to experts, working to coordinate with health authorities across the country, including in all provinces and territories, and ensuring that our response is active and up to date every step of the way.”
- Trudeau's most notable response to the outbreak has been that he has created a new Cabinet committee to tackle the new coronavirus.
- In a news release issued Wednesday, the Prime Minister’s office said the committee will “complement the work being done by the Incident Response Group” and will meet regularly to “ensure whole-of-government leadership, coordination and preparedness for a response to the health and economic impacts of the virus.”
- One thing is for sure, the coronavirus is a very serious issue and everyone needs to be careful about the spread of the disease. A BC woman has been infected with coronavirus despite having not recently travelled or come in contact with anyone who has the virus that she is aware of, according to CTV News. Before this incident, all of Canada’s recorded cases of the virus had been found in individuals who had made recent trips to countries like China, Iran, Italy and Egypt.
- While Princess cruises have been in the news a lot recently, it's "business as usual" so far. If the government lets these cruises go unimpeded, it could have a catastrophic impact on the transmission of the virus in BC. On the other hand, if all cruises and sports events are cancelled outright, that's billions lost in the economy. The Canadian government must tread carefully.
- Conservative party leadership showcase
- Peter MacKay was an elected MP from 1997 through 2015 representing Nova Scotia. He also served as numerous Ministers in the Harper government including justice, defence, and foreign affairs. He was also the deputy leader under Stephen Harper and founding partner of the Conservative Party of Canada in 2003 with Stephen Harper. Prior he was the leader of the Progressive Conservatives.
- Has the endorsement of many MPs including Alberta MPs Blaine Calkins and Mike Lake. As well as former MPs Monte Solberg and Laurie Hawn as well as Tom Flanagan, former chief advisor to Prime Minister Harper.
- Peter MacKay has pledged that Huawei won’t feature as part of Canada’s 5G infrastructure, he’ll also end the carbon tax, attempt to trigger an October election, repeal Bills C-48 and C-69, meet Canada’s NATO spending target of 2%, and end any illegal blockades that come up.
- Electability: Likely the frontrunner, a first ballot choice for moderate conservatives, seen as the unifier using united conservative party language, and best known candidate.
- Won the Durham, Ontario riding in a by-election in 2012, re-elected in 2015 and 2019.
- Lawyer, and member of the Royal Canadian Legion and Canadian Forces.
- Has the endorsement of a small number of MPs including Garnett Genuis from Sherwood Park, Greg McLean from Calgary, and Stephanie Kusie, also from Calgary who occupies the former seat of Stephen Harper and Preston Manning.
- O’Toole also has the endorsement of Alberta Premier Jason Kenney who said, “no one will have their deeply-held beliefs dismissed as ‘stinking albatrosses’ under Erin O’Toole’s leadership.
- O’Toole is running under the slogan true blue leadership who pledges to fight for the Canadian energy industry, build pipelines, defend the rule of law in preventing illegal blockades, repeal Bills C-48 and C-69, end funding for CBC digital, cut funding for CBC English and CBC News Network by 50%.
- He also wants to axe the carbon tax, stand with law abiding gun owners, and be a champion for religious liberty and conscience rights.
- Electability: Choice amongst pure ideological conservatives, military backers also like him. Has positioned himself as the hardline candidate and has increased his visibility since 2017.
- Ran in Scarborough - Rouge Park in 2015 and lost, she’s a lawyer and also the first woman of colour to run for the leadership of a political party in Canada.
- Lewis is a relative unknown and has received a paltry amount of media coverage considering how the media loves to elevate candidates of visible minorities when they run for other parties.
- She has received the endorsement of former MP Brad Trost who is a known social conservative, and the Campaign for Life coalition.
- We don’t have any direct policies that Lewis would implement but her campaign website pledges to “hold fast to the values that make up the foundation of our democracy” and that government should support citizens “in the most unobtrusive manner.”
- This also means no government deficits, no value tests, and no interference in commercial interests.
- She also speaks of tolerance in terms of those who hold different views, referring to schisms even in the Conservative party.
- Environmental stewardship, developing our resources, displacing oil from countries with lower environmental standards, and ensuring needs within Canada are properly addressed.
- Electability: Relatively unknown for the Canadian public and media despite her impressive credentials. If she were a Liberal she would receive wall to wall media coverage because of her ethnicity. Has the potential to surprise.
- Rick Peterson finished 12th in the 2017 Conservative leadership race and has been seen as the western voice in this leadership contest.
- He ran for the leadership of the BC Conservative Party but lost and has primarily focused his life in the private sector including work as a venture capitalist, principal of Peterson Capital, and founded Suits and Boots, a group of investment industry and resource sector workers.
- He plans to eliminate corporate income tax, introduce a 15% flat personal income tax, end supply management, and deregulate the banking and telecom sectors.
- He also wants to repeal C-48 and rewrite C-69.
- He’ll also eliminate the carbon tax on individuals and small businesses while focusing it on large industrial emitters.
- He also plans to not touch the abortion debate and wants to fully support Canada’s LBGTQ communities.
- Electability: Has an impressive sum of money (read: advertising), has an economically conservative future for Canada but unlikely to gain traction as he currently lacks visibility in the political sphere.
Word of the Week
Quarantine - a state, period, or place of isolation in which people or animals that have arrived from elsewhere or been exposed to infectious or contagious disease are placed.
How to Find Us
Episode Title: Quarantining the Economy
Teaser: Berkshire Hathaway pulls funding from LNG in Quebec, Alberta details its health and education plan, and the government is silent on cruise ships in the wave of coronavirus. Also, we detail the major candidates of the 2020 Conservative Party Leadership race.
Recorded Date: March 6, 2020
Release Date: March 8, 2020
Edit Notes: None
Podcast Summary Notes