The News Rundown
- Data has started to come in showing the depth of job losses that Canada and all provinces face as a result of the government issued shutdown of the economy.
- 1,993,800 jobs were lost in the month of April. This is almost double the number lost in March. The unemployment rate jumped to 13% in April from 7.8% the month prior.
- No province fared well. Quebec and Newfoundland took the biggest hit with unemployment hitting 17% and 16% respectively.
- Ontario, Saskatchewan and British Columbia did the best, if there is a best situation in this, at 11.3% for both Ontario and Saskatchewan and 11.5% for British Columbia.
- Alberta came in at 13.4%.
- As with all things statistical there are variants and different ways that one can count.
- If the people who had stopped looking for work had been counted the national unemployment rate would’ve been 17.8%. It’s estimated that 1.1 million people stopped looking for work.
- Small businesses with less than 30 employees have lost 30.8% of their workers, medium sized have let go 25.1%, and large companies have let go 12.6%.
- As expected the hardest hit sectors were retail, hotels, restaurants and bars. This represents a 9.6% decline in the services industry or tertiary economic sector.
- The manufacturing and construction sectors dropped 15.8% in April showing that this is widespread throughout the economy.
- Economist and professor Trevor Tombe from the University of Calgary estimates that the actual effective unemployment rate is probably closer to 32% nationally.
- This calculation is derived based on what the rate would have been had the participation rate and average hours worked per week stayed the same between February and April. These factors normally don’t change month to month.
- The numbers for Quebec and Newfoundland are stark as their numbers hit the 40% marker. And it becomes even worse when broken down by gender with young women seeing over 50% unemployment and young men near 45%.
- The math used to calculate the effective unemployment rates can be found in a Twitter thread by Trevor Tombe for those interested.
- Historically these numbers are worse than what was seen at the height of the Great Depression when unemployment hit 25%.
- The massive deficits being accumulated to keep workers fed and aid them in paying their mortgages in order to keep families afloat has put Canada on a path where a fiscal reckoning will be required.
- The question will be do we become a nation like the United States that continues to take on debt and deficits and don’t give any care to balancing the books.
- Or will we make the decisions needed once the economy starts firing again to reduce the debt and deficit to ensure that for the next recession, we are able to weather it with a stronger fiscal framework.
- Because for every dollar into debt and deficit we go, we will be paying interest on that and reducing the amount of money that we could be spending on other things.
- A decision has to be made and Canadians aren’t getting the right information from their media.
- How do refineries in Canada get oil supplies if there's no pipelines shipping oil to them over land, and a global pandemic is curtailing shipping from foreign countries? That's a question that Irving Oil, by far New Brunswick's biggest company, had to answer recently, and they came up with what was at the time the best solution for them: to buy Alberta Oil piped down the Trans Mountain Pipeline to Burnaby, BC on the west coast, then use foreign oil tankers to ship that oil down the west coast, through the Panama canal, through the Caribbean, and then up the east coast to Newfoundland refineries.
- Sounds like a stupid idea? It's hard to blame Irving for their circuitous route plan. After all, if there was a cross country pipeline to deliver oil through to the refineries on the east coast, then the lengthy shipping plan would not need to be used. Why doesn't Canada have one? Well the short answer is because of the federal Trudeau government and Quebec. For the long answer, we have to time travel back to 2011, back to when Prime Minister Stephen Harper had just won a majority government, and US President Barack Obama was a few years into his first term, and was already implementing an environmental policy that would help sabotage Canadian energy.
- In a November 10, 2011 phone call, then-President Barack Obama told then Prime Minister Stephen Harper that the Keystone XL approval process was on hold. In response, then New Brunswick Premier Frank McKenna, suggested a west-east pipeline bypassing the need for America.
- After stalling in the courts for ages under Obama, in July 2013, he expressed reservations and said he "would reject the Keystone XL pipeline if it increased carbon pollution" or "greenhouse emissions." On February 24, 2015, Obama vetoed a bill that would have authorized the pipeline. It was the third veto of Obama's presidency and his first major veto.
- January 24, 2017 In his first week in office, new President Donald Trump signed a presidential memorandum to revive both Keystone XL pipelines, which "would transport more than 800,000 barrels per day of heavy crude" from Alberta to the Gulf Coast.
- As you can see, it took about 8 years for the Keystone XL pipeline to even get off the ground due to a hostile attitude from the USA's leader. Obama's attitude towards Keystone XL would later have parallels to Trudeau's policy towards pipelines.
- In June 2013, because of the lack of progress on Keystone XL, Irving Oil's Arthur Irving and Frank McKenna discussed the TransCanada negotiations on Keystone which have frustrated Irving, and the province and the refineries come to a deal with TransCanada on sourcing Canadian oil through rail and through Keystone. The lack of an east-west pipeline would be put under the microscope just a month later.
- On July 6, 2013, the Lac-Mégantic rail disaster, the deadliest rail accident since Canada's confederation in 1867, took place. It was caused by the derailment of a freight train carrying crude oil, the destination being the Irving Oil Refinery in Saint John, New Brunswick. Forty-two people died. About half of Lac-Mégantic, Quebec downtown area was destroyed immediately and almost all the remaining downtown buildings had to be demolished because of petroleum contamination.
- Ultimately, in October 2015 Justin Trudeau was elected, along with new Liberal MPs along most of the eastern portion of the route. Trudeau's position on the pipeline was very similar to Obama's, and like the President, he instituted a much stricter regulatory system that would include downstream emissions in the environmental overview. Downstream emissions refer to what happens after the oil has left the pipeline and is consumed by its end-users, and Canada is one of the only countries in the world that includes this regulation when deciding to build a project.
- Energy East was ultimately scrapped in 2017 due to objections from self-interest groups in the province of Quebec and the over the top regulatory system implemented by the Trudeau government after their 2015 election win. That same regulatory system unnecessarily forced taxpayers to buy the Trans Mountain Pipeline Expansion to BC, after Trudeau's dithering and roadblocks saw investment capital fleeing the project. The Liberal government has the legislative power to build infrastructure across Canada, but has utterly failed to do so in their 5 years in power.
- Fast forward back to now, and with the decade-long history of obstructionism in the rear view mirror as well as in front, it's more understandable that Irving would make the decision they did to ship oil around the continent. That said, it's utterly insane that it has come to this point.
- Currently, western Canadian oil is selling at a 20-30% discount to U.S. oil and a 25-35% discount to overseas foreign oil. Irving is no doubt envious of refineries on the west coast and the U.S. gulf coast who have access to this discounted Canadian oil price that Irving is prevented from accessing due to pipeline objections from Quebec. By being innovative, they have now found a way to gain better access to Canadian oil resources which should have always been shared readily coast to coast. It is disappointing yet understandable why Irving has to resort to this strategy.
- Canada’s vulnerability to international supply chains for PPE was exposed during the COVID-19 pandemic. Witnessing this circumstance unfold, the Irving’s have no desire to be unprepared in the event foreign oil supplies to their east coast refinery are disrupted by any unforeseen events. Thinking forward, the Irving’s have gained permission to source additional western Canadian oil and permission to transport via the Panama Canal to New Brunswick. This will help Canada’s largest refinery firm up its domestic oil supply chain in the event foreign deliveries are interrupted.
- Irving spokesperson Candice MacLean said the company had received approval from the federal government for “sourcing additional Canadian crude for our refining operations. From Western Canada to offshore Newfoundland, we’re expanding our reach as we continue to pursue solutions that help create energy security for our country,”
- The company was already in discussions “for prompt acquisition” of Canadian oil “for immediate delivery to its refinery through the Panama Canal,” via medium-sized crude tankers known as Aframax.
- Irving chief refining and supply officer Kevin Scott wrote in the application that “It is critical to our customers, to our business, and to energy security throughout Atlantic Canada that we are able to use foreign crude oil tankers to access Western Canadian crude oil on an urgent basis and going forward for one year to allow for effective and flexible supply chain planning and to strengthen the link between Canadian oil producers and our refinery in this challenging and uncertain time.”
- Scott said they hope to receive their first barrels from Western Canada by ship in late June or early July. The company wants to increase the mix of Canadian crude it uses, which is currently in the range of 20 per cent. Scott said the refinery uses a "significant" amount of oil from the United States.
- Scott said "part of this is really opening up the option for us to run more Canadian crude. We have limited options today. And, really, when we're being challenged to be creative in terms of Canadians helping Canadians, this was one way that we said it was possible for us to do that. And, of course, all of the approvals and issues around the ships is really what we're working to get in place ... so that we have that option to buy Canadian crude as easily as we buy crudes from anywhere else in the world."
- Irving Oil is also looking to source Canadian oil delivered through ports in Texas and Louisiana, to "maintain flexibility with crude suppliers".
- TC Energy CEO Russ Girling has previously stated that the Energy East project, which was proposed when Keystone XL was in regulatory limbo in the U.S., would likely not be revived given uncertainties associated with pipeline regulation on Bill C-69, a controversial legislation governing the energy sector that was approved by Ottawa last year.
- The Energy East pipeline was forecast to be 4,600 km in length, with approximately 70 percent (3,000 kilometres) being existing pipeline that would have been converted from carrying liquified natural gas to carrying diluted bitumen.. The shipping route from B.C. to New Brunswick via the Panama Canal will be nearly 12,000 km. It is a classic case of Canada shooting itself in the foot by allowing Quebec and a timid prime minister to inflict unnecessary added costs to Atlantic Canada drivers and home heating users in this case.
- The Trudeau government’s focus has always been on adding more social programs and less on economic growth, employment and fiscal responsibility. Those hostile policies will continue to devastate the Canadian energy sector.
- Our country is in desperate need of a nation builder prime minister to guide us out of this economic crisis. Trudeau has only ever aspired to be the prime minister of central Canada where most of the federal vote resides. Bloc leader Yves-François Blanchet only really cares about Quebec, and so his policy is expected and predictable. Elizabeth May has left the leadership of the Green party and NDP’s Jagmeet Singh is lost in an altruistic vacuum. As for the Conservatives, who knows if their new leader will put forward a platform that garners the interest of not just Western Canada, but the rest of the country as well, as Stephen Harper once did?
- National projects like Energy East, much like our national railway system of the day, are what unites countries. Our prime minister clearly missed an opportunity for nation-building. It is unfortunate when the Irvings are forced to find dramatic alternatives to access a national resource that should be readily available to every Canadian. At this point in time, Canada badly needs a unifying Prime Minister. What we have is unfortunately the exact opposite.
- This week Green Party leader Elizabeth May said that “oil is dead” and her “heart bleeds for people who believe the sector is going to come back, because it’s not.”
- In her opinion it’s due to the current recession, falling prices of oil due to the actions of Saudi Arabia and Russia, and a growing demand for green technology.
- We know that oil demand will continue to grow through 2040 and oil will be a commodity needed well into the 2050s based on economic projections.
- The current recession is likely to end quickly once the pandemic is over and there will be a great amount of capital available.
- Bloc Quebecois leader Yves-François Blanchet joined in on the chorus said that western leaders need to tell their people that the “tar sands won’t be back” and that any money going to Alberta should be geared towards trying to stabilize its “fiscal crisis” and building a green economy.
- At this point one could point out that Quebec is the greatest recipient of equalization within Canada and prior to this recession, if equalization and transfers were taken away Quebec would be running a big big deficit.
- These remarks from the outgoing leader of the Greens and the leader of the sometimes separatist but maybe nationalist Bloc don’t do anything to help the feelings of western alienation and the brewing Wexit debate.
- The Alberta Independence Party and Freedom Conservative Party are voting at the end of June to form the Wildrose Independence Party in Alberta.
- Albertans and those in other western provinces see leaders acting in such a way and automatically assume that this is the sentiment of those in the east.
- In the past we have seen countless media outlets say that Jason Kenney as Premier was stoking the flames of separatism when he was answering questions from Albertans in one of his common Facebook town hall live streams.
- This week he said, “Please stop kicking us while we’re down… we Albertans have been generous and we will continue to be generous but… these attacks on our natural resource industries are unwarranted, they are divisive [and] they are, I believe — in a way — un-Canadian at a time like this. It’s like blaming the victim”
- He went on to tout the strength of the Alberta economy which has contributed over $600b in recent decades to the federal coffers.
- For those listeners who see this as a reason to pursue separation, know that following that path today is similar to knocking down the house when all that’s really needed is some reinforcement on the foundation and a new kitchen and bathroom.
- It is also similar to letting the school yard bullies prevent you from playing with your friends.
- There’s no reason why the leader of any political party or a Prime Minister should be able to raise such feelings that a province and its people feel pushed out of confederation.
- For Trudeau on this he said that he doesn’t share that same assessment and committed to developing the energy sector with lower emissions and clean processes.
- Federal leaders in all national mainstream parties have a duty to hear this. The Conservatives with their current leadership race, Trudeau and the Liberals, and even the NDP.
- Let’s also remember in our previous story that the need for oil is so great in New Brunswick that Energy East could’ve met that demand but instead oil is being shipped from the west, through the Panama Canal to New Brunswick.
- Canada needs a national energy strategy and economic reasons aside, this is one of the most important reasons to push for it. And this combined with some minor tweaks around the framing of Canada can make a country we’re all proud of.
- The National Capital Commission, a federal agency tasked with managing the government’s official residences in the capital region, relocated an abandoned and rundown building at the Prime Minister’s Harrington Lake retreat in Quebec’s Gatineau Hills and rebuilt it into a $2.5-million lakeside mansion for friends of prime ministers or visiting dignitaries.
- The “Caretaker’s House” originally built in 1850, has been renamed the “Farmhouse,” and is currently being used by the Trudeau family while $6.1-million in restoration work is being done to the main cottage, a country home for Canadian prime ministers since the late 1950s. Interestingly, it was believed that Trudeau's family was located at Rideau Cottage, where the Prime Minister has been doing daily press gatherings outside. So, it seems that instead of a full time residence and a summer home, taxpayers are maintaining two full time homes.
- The 16-room main cottage sits on what The Globe and Mail calls "secluded Harrington Lake", which in reality is a 30 minute drive from downtown Ottawa. Restoration work has been suspended because of the pandemic, according to Jean Wolff, a spokesman for the NCC: “The NCC has asked the Prime Minister to use the Farmhouse temporarily, pending completion of renovations at the main cottage. Once these renovations are complete, the Farmhouse will serve as a guest house.”
- There is already another guest cottage on the 5.4-hectare property that is situated across the lake from the Prime Minister’s residence. During the Stephen Harper years, the guest cottage was used by then-governor-general Michaëlle Jean and her family.
- Sources say the Caretaker’s House, which was originally located across a main road and lacked a view of Harrington Lake, had deteriorated to the point that the back of the building had collapsed, the trim had been removed and the inside was down to the rafters.
- The Caretaker’s House was considered a heritage property and the NCC decided in 2018 to spend millions of dollars to reconstruct it. Wolff said: “The original building was dismantled, with heritage components integrated into the new structure, and moved to a site closer to the main cottage.”
- He initially insisted that the new Farmhouse, which from satellite imagery appears much larger than the ramshackle Caretaker’s Cottage, was not a new and bigger building: “There are no new buildings being constructed. NCC completed rehabilitation and relocation of the old Caretaker’s House. No, it is not bigger. I do reiterate that it is inappropriate, for me, to comment on images that are not our own or that cannot be validated by the NCC.”
- However, Mr. Wolff later confirmed that the Farmhouse had indeed been significantly expanded to meet what he called new “building-code standards.”
- The floor area of the original Caretaker’s House was 260 square metres. The new building now has significantly more floor space, almost double at 450 square metres.
- 450 square metres is a little shy of 5,000 square feet, which is a five-bedroom house, easy. In fact, the so-called “Farmhouse” is fully one-fifth larger than the 2017 Children’s Hospital of Eastern Ontario Dream Home, which raised big lottery bucks for the hospital and was described as “featuring 10-foot ceilings on the main floor, a grand front entrance, curved open staircase, gourmet kitchen, and a luxurious master bedroom and ensuite bathroom.” Quite clearly, if the "Farmhouse" is bigger than this by a fifth, they sure make their farmhouses big at Harrington Lake.
- Mr. Wolff said the overall bill for rehabilitation of the Harrington Lake residence and all its buildings has been estimated to cost $17.8-million of capital investment. So far, $8.6-million has been committed to the effort.
- Conservative MP Pierre Poilievre accused officials of obscuring the facts. On April 19th he tweeted out a before and after image, asking "Did Justin Trudeau secretly build himself a brand new lakeside mansion at Harrington Lake with our money?"
- His tweet was lambasted by Liberals on Twitter, asserting that the Conservative MP was delusional or fraudulent and that no substantial new construction could possibly be going on. This included Toronto MP Adam Vaughan who said that the after photo was doctored and that it was "obviously the Millenium Falcon" from Star Wars, providing his own photoshop to mock the story. David Khan, ineffectual leader of the Alberta Liberal Party used the tweet to rail at Poilievre, calling him "dishonest, petty and cynical" for bringing the matter up "in the midst of a global pandemic health crisis, and called him an "absolutely dishonourable MP" who "brings disrepute" to Poilievre's Calgary high school, for some reason.
- Ben Harper, a former occasional resident of the "cottage" during his father's time as Prime Minister, said on Twitter that it looked like a "completely different" building from when he used to stay there.
- A few weeks later, and the story appears in the media, and Poilievre is vindicated: “It sounds like they have effectively built the Prime Minister a new waterfront mansion while his old mansion is renovated. And they are trying to cover it up with complicated stories about how they have just moved the caretaker’s derelict cottage up the road. What they should have just said is the Prime Minister needs a lakeside mansion while his existing one is renovated and we’re going to spend $2.5-million to build one.”
- NDP MP Charlie Angus criticized the NCC for trying to hide the fact that it had built an entirely new building as a guest house: “I don’t have a problem with the Prime Minister staying in good, proper digs,” he said. "Why not be upfront and tell us because when you are spending $6-million to fix a cottage and over $2-million to move a guest house and double its size, Canadians have a right to know.”
- When Robert Fife, the Globe's Ottawa bureau chief dug into the story more, Adam Vaughan took to Twitter again to say "Harrington Lake belongs as much to Fife as it does to Trudeau... it belongs to the public... or asked another way... who is paying for Fife's home repairs?" The answer is not the taxpayers, obviously. Guess Vaughan’s previous "it’s a Millennium Falcon har-har" line didn’t wear well. Quite clearly, governmental residences might be paid for by the public, but they certainly aren't owned by the public.
- This Prime Minister cannot for the life of him be straight with Canadians. He makes a show of speaking from the front step of a “cottage” while his family spends time at a “farmhouse” because he is, we are told, too frugal and focused on other things to get the main residence of prime ministers for 80 years fixed properly.
- And this incorrigible Justin Trudeau habit of believing that you deserve only the information he deigns to give you is absolutely germane to this moment and the bigger story. This government is, by the nature of the crisis, now presiding over the fastest peacetime expansion of the Canadian federal state since Confederation, at lightning speed. With unforeseeable effect. With stacks of rulebooks bent or ignored, with outside scrutiny badly hampered and many tens of billions of dollars sloshing about.
- It will go badly. Somewhere amid the billions, it will certainly go badly, as sure as you breathe. Bad people will skim money, good people will spend it badly, ordinary people will have their economic incentives wildly distorted. It’s certainly an argument for resisting the urge to hide in the fine print and the delay and the loathsome Adam Vaughan mockery of legitimate questions.
- Justin Trudeau once made a show of demanding that his cabinet ministers be “transparent by default.” That’s not the same as being transparent when caught. Trudeau says there is no timeline for when his government will table a federal budget because of the “extraordinary” uncertainty posed by the coronavirus pandemic.
- The government had been scheduled at the end of March to release its first budget since winning re-election as a minority. But that release was scrapped when the House of Commons suspended on March 13 as part of a nationwide shutdown to try to limit the spread of COVID-19.
- With Trudeau's penchant for not being direct with answers, it's clear that with a lack of parliamentary scrutiny, something in the government's spending promises is being hidden from the public, and it's not just farmhouses and cottages, it's a lot bigger.
Word of the Week
Circuitous - a route or journey that takes longer than the most direct way.
How to Find Us
Episode Title: The Circuitous 12,000
Teaser: Canada’s unemployed may number much higher than reported, Irving Oil sources Canadian oil overseas from coast to coast, while May and Blanchet decry our most important industry. Also, renovation costs to a government farmhouse and cottage are hidden.
Recorded Date: May 9, 2020
Release Date: May 10, 2020
Edit Notes: Internet drops
Podcast Summary Notes