The News Rundown
- The Bank of Canada this past week raised their prime interest rate to 5%. It has not been this high since April 2001.
- Banks such as RBC, CIBC, BMO, and TD have announced they will match the Bank of Canada increases.
- Simply, inflation is taking more time to come down than it was initially thought it would take.
- As of now the Bank of Canada expects it could take until mid-2025 for inflation to fall to its 2% target.
- The bank says that there is “persistent excess demand” in the economy and Bank of Canada governor Tiff Macklen said, "We've been clear about the indicators we are watching, and it's clearly too early to be talking about interest rate cuts.”
- The bank is also engaging in quantitative tightening, reducing the amount of money flowing through the Canadian economy.
- This is the opposite of quantitative easing which adds money to the economy when government spending programs borrow money to spur on new projects.
- Inflation is a measure of how quickly things are increasing in price across the country and by region.
- Inflation is calculated based on a basket of items that most people will purchase.
- Inflation can rise when the economy is overheated or there is a huge demand pushed onto the economy.
- Governments stimulate the economy by borrowing money and investing it into projects and programs. Prior to the pandemic the Trudeau government was running spending at stimulus levels.
- That combined with the surge in demand following pandemic shutdowns has led to inflation, not only in Canada but in most countries.
- Now, what we do about it and how we got here are worthy points of discussion.
- In his press conference, Tiff Macklem said, “A little over half the components of the CPI basket, their prices are rising more than five per cent,” he said at a news conference after the rate announcement… If you look across the basket, meat is up six per cent, bread is up 13 per cent, coffee is up eight per cent, baby food is up nine per cent … rent is up six per cent.”
- This puts the finger on groceries and housing.
- Interest rate increases can take anywhere between 12 and 18 months to work their way through the economy.
- Grocery prices have been something we’ve talked about extensively and depending on the media frame, it’s either due to corporate greed or an increase in the prices of raw materials.
- The former would suggest that grocery giants are setting prices to pad their pocket books.
- The latter would suggest that something is increasing the prices that the farmers pay, that the truckers pay, that the food processors pay, and the prices that the grocers pay. This could be anything from an increase in fuel prices to an increase in regulation cost to impacts caused by climate.
- We know from profiles of small businesses in Alberta that the carbon tax has an impact on every link in the chain. That in turn raises prices for the end-consumer.
- This chain is what those like the NDP miss when they blame the grocery CEOs for padding their pockets, they miss the increase in prices that the Conservatives focus on.
- Fuel prices are an external factor that are harder to control but we also need to be very clear that government policy, specifically the carbon tax and deficit spending does impact inflation.
- Conservative leader Pierre Poillievre said, "After eight years of Trudeau, life costs more. The culprit is Justin Trudeau.”
- The carbon tax increases the price of fuel for everyone from the farmer to grocer.
- A report by the Bank of Canada earlier this year estimated that since the carbon tax’s inception, it boosts the inflation rate by 0.5%.
- Deficit spending adds more money to the economy creating more demand raising prices.
- Listeners of Western Context will know that we like to provide the full story. While yes Justin Trudeau’s policies have definitely had an impact, there is also an impact caused by global growth and demand after the pandemic.
- But as with most things and the way people view things today, if anything can be done to make a positive impact, we should do it. That’s the case for getting our fiscal house in order.
- It was 8 years ago this summer that Prime Minister Stephen Harper was mocked for his commentary on Justin Trudeau’s “3 modest little deficits, modest $10b deficits to start with” that would be so small that you could barely even see them.
- At this point we know that $10b was modest and just a drop in the bucket.
- Housing prices, in particular rent, have also been going up and recent reporting from Bloomberg suggests that the increase in house prices are being driven by newcomers from abroad.
- This makes sense since immigration is at record levels under Justin Trudeau, up to 500,000 per year spread through the entire country.
- Despite positive job growth and decent employment, a recent survey, opinion, not voter intention, says that 56% consider the economic condition in the country “bad” or “very bad”
- 42 per cent of British Columbians and Atlantic Canadians hold positive views about the current economic conditions. Factoring in margin-of-error, Quebec is directly ahead and leads the nation at 45%.
- The survey shows that when it comes to the perception of “bad” there’s still room to move and increasing prices due to rising interest rates and lingering inflation could move more people into the “bad” camp.
- With this there is still potential for a public backlash to arise over what has become a recurring trend in the economy, stubbornly high inflation whether caused by external factors, government spending, or immigration.
- LNG, or liquefied natural gas, has been the talk of BC over the past week, and it even ties in with several other stories we have discussed over the past month or so on Western Context. It all started with the LNG Conference, which meets somewhere in the world every 3 years since 2012. This past Monday to Thursday, Vancouver played host to some of the industry's biggest names, in a conference designed to promote the industry worldwide, along with some key aspects of the future, such as energy security, commercial practices, operations, affordability, and decarbonization.
- By all accounts, the meeting was a success, as the last one in 2020 had to be done by video, it was another chance for Vancouver to show off its world class tourism destination chops to the world, and a chance to show the world that Canada has a role to play in the future of LNG, especially as a reliably stable energy source in the transition to renewable power.
- Tengku Muhammad Taufik, president and group CEO of the Malaysian state-owned firm Petronas, said that a lot of the potential lies in Canada’s ability to compel lower-emissions production of the fuel from an industry under increasing pressure to demonstrate it is interested in becoming less of a problem from the greenhouse gas emissions perspective.
- Taufik said: “The key message has to be that in producing natural gas, we cannot do it business as usual. In today’s environment — (that) word [is] chosen very carefully — we need to make sure we care for the environment.”
- To Petronas, that means “baking in” emissions-reduction targets for its own LNG production, including from the $40-billion LNG Canada project under construction in Kitimat, which is 85-per-cent complete and scheduled to start delivering liquefied gas to the market “mid-decade.” The project is a joint venture between Shell PLC, Petronas Nasional Berhad, PetroChina Co. Ltd., Mitsubishi Corp. and the Korea Gas Corp.
- Canada can start delivering LNG at the same time countries such as Malaysia and China begin more aggressively pursuing their own emissions-reduction targets by ditching coal-fired electricity. With Germany seeking to shore up gas supplies following Russia’s invasion of Ukraine and the energy crisis that followed, they bought up LNG at high prices, and Octavio Simoes, CEO of American natural gas producer Tellurian argued that this dynamic edged Pakistan, Indonesia, Vietnam and the Philippines to forego LNG for coal power due to a lack of supply.
- Qatari Energy Minister Saad Sherida Al-Kaabi told the conference earlier that global energy markets were already suffering from a lack of stability in supply, which was made worse by the war in Ukraine and subsequent energy crisis in Europe.
- Multiple LNG projects are in the early stages of development on the West Coast of BC, including the First Nations-led Cedar LNG in Kitimat, B.C., that will export gas to Asian markets. The Haisla Nation is invested in the project. The next two to three years will be critical in deciding the fate of Cedar LNG. It’s unclear if similar large Asian gas corporations will invest in Cedar LNG, too, but Johnston said gas import infrastructure already exists in gas- and coal-dependent countries like Japan, Taiwan, Korea and China.
- It also remains to be seen whether other coal-dependent countries in Asia like India, Indonesia and Vietnam will invest in LNG infrastructure or instead hopscotch to clean energy like renewables. Currently, the most important consideration for those countries is price, and coal’s cost has remained low due to the war in Ukraine. Nuclear development is also expanding in places like China, but it remains controversial in Korea and Japan after the Fukushima disaster in 2011.
- LNG Canada Project CEO Jason Klein says price and supply volatility worldwide since Russia’s invasion of Ukraine shows the value of his company’s project as a source of “affordable, reliable” and “responsibly produced” liquefied natural gas. He says the best example of the value of Canadian energy can be seen in the conference itself, which was originally planned to take place in St. Petersburg in Russia, but was moved to B.C. because of the war in Ukraine.
- One major theme heard at the LNG2023 conference this week was how LNG produced in B.C. will have some of the lowest carbon intensities in the world, due in part to electrification. The proposed First Nations-led Ksi Lisims LNG project in Prince Rupert announced at the conference it had selected Siemens Energy to provide the electric motors for its project.
- Most LNG plants in the world use natural gas powered turbines. Using electric power dramatically lowers the emissions that would be created in the process of chilling natural gas to minus 160 degrees Celsius.
- HaiSea Marine, a partnership between the Haisla First Nation and Seaspan ULC, would be the group serving the LNG Canada project in Kitimat, are planning for three of five tugboats to be fully battery electric, with the other 2 running on LNG.
- The electric tugboats were designed by Vancouver’s Robert Allen marine architects and built in Turkey. They use Corvus Energy batteries, a former B.C.-headquartered company that specializes in making marine batteries. It is now headquartered in Norway but still has an office in Richmond.
- Ksi Lisims said in a press release: “Designed to connect with B.C.’s renewable hydro-electric power supply, Ksi Lisims LNG’s emissions will be over 90 per cent lower than a conventional LNG facility powered with gas turbines, resulting in one of the lowest carbon intensities of any other LNG export terminal in the world. The project is designed to be the largest net-zero LNG export facility in the world. Once operational, Ksi Lisims LNG will produce 12 million tonnes of LNG per year. It is expected to create thousands of jobs, provide substantial financial benefits to the Nisga’a Nation, and to Indigenous nations across B.C.’s northwest.”
- The Nisga’a First Nation, Haisla First Nation and Halfway River First Nation are partners in the Ksi Lisims project, and are also members of the First Nations Climate Initiative (FNCI), which is urging both provincial and federal governments to amend their climate change plans to factor in emissions reductions that might occur outside of Canada as a result of using LNG from B.C.
- In a press release: “The FNCI is calling for federal and provincial governments to recognize that Canadian LNG exports play a critical role in global GHG reductions while providing a meaningful pathway for reconciliation—as well as economic and environmental benefits for all British Columbians,”
- Haisla First Nation Chief Crystal Smith said: “We don’t live in a bubble here on the West Coast. What happens in Asia happens to us. We must work with Asian countries to help them reduce their GHG emissions while we build our own decarbonized economy. This means providing them with low to zero-carbon alternatives to the energy they currently depend upon.”
- The topic of LNG is also something that has brought the vastly different governments of BC and Alberta together. Alberta Premier Danielle Smith said her province has begun talks with British Columbia as part of a push to greatly expand the reach of Canadian natural gas to more foreign markets.
- Speaking on the final day of the international LNG 2023 conference in Vancouver, Smith said delegates told her that many countries in Asia cannot meet emission reduction goals without natural gas, and the goal should be for Canada to fill — and benefit from — that gap. She also expressed frustration about the lack of federal infrastructure that would allow Alberta producers to fulfil global market needs.
- Smith touted the short time it would take to ship LNG from Canada to market: “Shipping LNG from Canada’s West Coast to Asia takes 11 days, compared to 20 days from the U.S. Gulf Coast. With the completion of proposed projects in Atlantic Canada, shipping Western Canada’s gas to Europe would take seven to eight days, and that would be less than any other North American LNG project.”
- In an attempt to spur more LNG export projects on the West Coast, Smith said she and B.C. Premier David Eby began a discussion two weeks ago to explore leveraging Article 6 of the United Nations Paris Accord, which allows Canada to gain carbon credits for reducing emissions abroad.
- Smith said she wants to see Alberta and B.C. “pioneer” a way to use Article 6 to create more interest in export infrastructure that would supply Asia with LNG, while Canadian jurisdictions gain the credits that are generated from displacing more polluting fuels such as coal in those markets.
- Speaking earlier this week, Eby confirmed he was speaking with other premiers about the LNG opportunity and the awareness that there is a global demand for Canadian natural gas internationally.
- However, Eby said he is “not at all confident” that B.C. is on track to provide the necessary electricity to move the natural gas industry locally away from fossil-fuel usage, something that companies such as Malaysian energy giant Petronas mentioned as a key part of the Canadian LNG brand.
- Eby said: “It takes eight to nine years to fulfil a request from industry for the kind of electricity that they’re looking for. It takes about the same time to go through the call for power all the way through to generation and transmission. We have to speed that up.”
- Eby said a task force had been set up to do exactly that, to ensure B.C. does not miss LNG’s economic opportunity.
- Smith said Alberta is not stopping at talking to B.C., identifying the Yukon-Alaska corridor through Skagway, a Saskatchewan-Manitoba corridor to Churchill and possible links to James Bay in Ontario as ideas to explore.
- “I’m looking at all of those options,” she said. “I think our best option, since we already see so many LNG projects underway with partnership of Indigenous communities, is making sure we can tie in our gas into those project lines.”
- However, not everyone was a fan of the LNG conference in Vancouver. The David Suzuki Foundation is accusing backers of Canadian LNG of “greenwashing”, and members of the environment group joined protesters from Frack Free BC to stage a ‘die-in’ at the Vancouver Convention Centre at the opening of the conference to urge the BC government “to stop LNG expansion and instead focus on the transition to a healthy, affordable and safe renewable energy future.”
- Calgary-based Enbridge Inc. last week announced off take agreements for the smaller Woodfibre LNG project near Squamish that is expected to come online in 2027. Enbridge said it is David Suzuki and his ilk that are “out of touch” on the issue, especially when they claim “exporting Canadian LNG will make climate change worse since it will lock out investments in renewables… no further expansion of fossil fuel infrastructure is compatible with a climate-safe future.” That’s contrary to the UN’s Intergovernmental Panel on Climate Change (IPCC), which admits that gas power produces 50% less emissions than coal, even when methane emissions are factored in.
- Another group that is out of touch on LNG is the federal government, who were conspicuously absent from the conference. A year ago, during a visit by German Chancellor Olaf Scholz last August, who was in Canada looking to source LNG from a NATO ally and fellow western democracy in the face of Russian aggression in Eastern Europe, Prime Minister Justin Trudeau questioned the long-term business case for Canadian LNG, and directed the bewildered Scholz to look at renewables instead.
- Imagine being the federal minister in charge of the energy file and skipping a major world conference on lower carbon that was happening in your own backyard. Jonathan Wilkinson, Justin Trudeau’s minister of natural resources, who's riding is just across the water from the conference center in North Vancouver, was a no show at the conference, despite several attempts to invite him and other senior government leaders.'
- LNG2023 Executive Director Mel Ydreos explained regarding Wilkinson’s absence: “Unfortunately, there are a couple of domestic and international events that are in conflict with our event.”
- Key among those domestic events keeping Wilkinson away was his need to campaign for Elliott Weinstein, the Liberal candidate in the Calgary Heritage riding currently in the middle of a byelection. Wilkinson was out there for an event with Weinstein on July 11, the same day he announced funding for an Alberta solar project, while on July 11 he was meeting with a group called Student Energy, a youth climate change movement.
- All of these events can be important in a politician’s schedule, but when a major industry conference that you have known is coming for some time is in your hometown, you should probably attend. What all of this tells you is that LNG isn’t a key industry for the Trudeau government.
- While Wilkinson was too busy to attend, Alberta Premier Danielle Smith was able to make it, despite having spent three days in Winnipeg for the premier’s meetings. Smith and Wilkinson were even spotted at the Calgary airport at the same time as Smith was headed to Vancouver for the conference. Looks like Wilkinson’s driver couldn't find the Vancouver Convention Centre, that really big, iconic building down on the waterfront.
- The government began receiving invites in late 2022 according to organizers. While it’s understandable that Trudeau himself couldn’t attend, it’s not understandable that a minister from Vancouver, who is responsible for the file, could not attend.
- The Trudeau government has already shown its hand on the LNG file through neglect. Proposals for LNG export facilities on both coasts have been abandoned as often due to regulatory reasons as economic ones. Attempts to get pipelines built face bigger hurdles today than ever before thanks to Trudeau’s regulatory environment.
- LNG is a cleaner fuel than oil or coal and Canada exporting it could be a way to reduce global emissions. It could also be replacing Russian natural gas, which is funding Putin’s invasion of Ukraine. None of these arguments fly with Trudeau though. He claims there is no business case and he would rather Canada reduce our meagre emissions than help get India and China off their dependence on burning coal.
- So, the fact that Wilkinson didn’t show up at LNG2023 shouldn’t shock anyone, he’s just confirmed what we already suspected: That Trudeau does not care about climate change, developing Canada's resources, improving the economy and securing jobs, projecting Canadian power abroad, First Nations reconciliation, or even about Western Canada in general. At the end of the day, we will be fighting an uphill battle until we get a federal government that actually listens to what needs to be done.
- Back on episode 313 we discussed the random stabbings in Vancouver and Toronto and the need for something to change somewhere.
- Last Friday Karolina Huebner-Makurat was killed by a stray bullet in Toronto by a man who was out on bail after stabbing a man during a physical attack in Scarborough in 2018. The shooter’s criminal history goes back more than a decade and includes assaults, robberies, firearms offences, and failing to comply with probation orders.
- Random stabbings are also back in the news this week, this time in Edmonton.
- Earlier this week a 52 year old man died after being stabbed in the chest at the Belvedere LRT station in north Edmonton.
- The offender was arrested and charged with second degree murder. He has a length rap sheet including conditions for assault, forcible entry, and robbery.
- He was also charged with three counts of breaching bail conditions.
- This has spurred Edmonton Mayor Amarjeet Sohi to write to federal Justice Minister David Lametti urging for changes to bail programs to come quickly.
- Edmonton Police Chief Dale McFee also agrees that the federal government needs “…to take immediate action on bail reform and to reduce recidivism to make our city safer for all of us.”
- We also have the random killing of a mom and child outside a Mill Woods elementary school in May and the beating of two men last year in Chinatown.
- Sohi also met with Alberta Public Safety Minister Mike Ellis to work on reducing crime in the city.
- Ellis issued his own set of statements on Twitter saying, “We have been clear that our government will not tolerate crime in this province. [Albertans] have the right to ride public transit without exposure to such violence.”
- He also suggested that safety on transit be transferred to the Edmonton Police and called for the House of Commons to come back and pass Bill C-48 to tighten up bail conditions.
- This is an interesting yet very disturbing turn of events since previously it was seen as a “conservative” policy idea that bail was the problem. Now with Sohi saying, "It's very important for the federal government to have more stringent requirements when people are released on bail, but at the same time having a very effective and workable plan in place that will help integrate people back into society.”
- Lametti aims to have C-48 passed when Parliament returns in September but that is still 2+ months away.
- To aid in this the province is building therapeutic living units at correctional facilities, creating more shelter spaces and looking to run more long-term residential addiction treatment programs.
- The story goes on and on with more cases appearing throughout the entire country, multiple Premiers, multiple mayors, all asking for the bail system to be tightened.
- Absent to this is the discussion of how we got here.
- Despair, homelessness, increasing amounts of substance abuse have all contributed over the last number of years.
- But also present are the changes to bail brought forward by the Trudeau government in 2019 based on a Supreme Court decision that pushed for the earliest reasonable opportunity for someone to be released and on the “least onerous conditions.”
- It also required a streamlining of the process and that judges consider whether people come from Indigenous or vulnerable populations.
- This is how we got here and the federal government needs to fix it ASAP. More blood is being spilt and innocent lives are being lost.
- Last month's Toronto mayoral election, spurred on after the resignation of John Tory due to his affair with a staffer, produced the first Chinese-Canadian mayor of Toronto, Olivia Chow. Chow, the wife of former leader of the NDP from 2003-2011 Jack Layton, was elected after a close race with former deputy mayor Ana Bailão. Likely, this means that the policies of Toronto will shift from a centrist-esque lean by Tory to more NDP-like, after Chow's election.
- Chow was inaugurated this past week on July 12th, and much of the media coverage was very positive. Indeed, a lot of coverage on her first day as Mayor of Toronto was devoted more to what she was wearing than what she intended to do in office.
- The Toronto Star's headline writes: "Mayor Olivia Chow’s first-day-of-work skirt was both playful and loaded with symbolism" and the article describes Chow's skirt as "a practical one for the 66-year-old cycling enthusiast, but also set a tone of ageless playfulness at the beginning of her tenure."
- For those interested, the skirt, decorated with an illustration of a Dundas West streetscape, is by Toronto fashion designer and textile artist Anu Raina. Chow also wore it during her 2014 mayoral race. Pictures of Chow wearing the skirt went viral on social media this past week.
- The Star wants to portray Chow in the most favourable light possible. Take this excerpt for example: "The bold yellow sleeveless dress that she wore on her byelection victory night was echoed by the sunny yellow blazer she wore yesterday. This is fashion deployed for purpose: Chow is dressing to stand out, so she can get her message across. She’s waited a long time for this platform, and she is using everything at her disposal to telegraph her intentions."
- It's clear that the local media is doing all it can to boost Chow's image, yet is ignoring a lot of what happened during her successful campaign to become mayor. Two prominent community groups aligned with the Chinese government — including one that allegedly hosted a Chinese police station in Ontario — “went all out” to support Chow’s push to be mayor, supplying numerous volunteers to the effort, a letter from one of the groups claims.
- A post last month on WeChat from Felicity Guo, deputy secretary general of the Canada Toronto Fuqing Business Association (CTFBA), one of the two groups, urged followers to back Chow. The message was accompanied by a photo of Guo, Chow and another woman. The mayor-elect’s staff stressed that Chow never requested the two groups’ help, nor did they enquire if she wanted it.
- Shirven Rezvany, a spokesman for Chow said “We did not ask for or co-ordinate any volunteers from either organization.” He also pointed to the mayor-elect’s long standing support for opponents of the Chinese crackdown on Hong Kong, and her history of speaking out against Beijing’s human-rights abuses.
- Chow was supported during the campaign, in fact, by two of Toronto’s fiercest critics of the Chinese regime: Gloria Fung of Canada Hong Kong Link and Cheuk Kwan of the Toronto Association for Democracy in China.
- But evidence that the Fuqing Business Association and the Confederation of Toronto Chinese Canadian Organizations (CTCCO) worked to help get Chow elected on June 26 — even if their participation was not requested (or, arguably, needed) — raises further questions about the involvement of Beijing and its local allies in Canadian politics.
- Jonathan Fon, a Toronto-based commentator and Beijing critic, said it’s unlikely Chow would have any motivation to promote groups aligned with the Chinese Communist Party.
- But “it is a concern that those pro-Beijingers really have the capacity of mobilization among Chinese diasporas,” he said. “Those Chinese mainlanders have been programmed with Chinese communist propaganda, brainwashed.”
- The groups’ participation is worrying because “they work too close to the Chinese government,” said an immigrant from mainland China and small-business owner in the Greater Toronto Area, who asked not to be named for fear of retribution. “I want to ask them, ‘What is your purpose, why did you try to help Olivia Chow?’ … We don’t want any outside power to influence this country.”
- A series of intelligence leaks in recent months alleges Chinese interference in Canada’s federal and provincial politics, but there is evidence that Beijing targets municipal-level politicians, as well. A leaked handbook for cadres of the United Front Work Department — a huge branch of the Chinese Communist Party at the forefront of foreign influence and interference efforts — urged officials to “work with” several candidates of Chinese descent elected in Toronto in the early 2000s.
- A recent Globe and Mail report cited a Canadian Security Intelligence Service briefing that said Chinese diplomats tried to get sympathetic candidates elected in last year’s Vancouver municipal vote, in part by using diaspora groups that represented Beijing’s interests. Ken Sim, who won the Vancouver mayor’s race in a landslide, has denied that such interference played any part in his victory.
- While our municipal elections may not be changed a great deal from foreign influence, it's clear that foreign agents are still operating in Canada, and are trying to sway how things go. Regardless of the results, it's still a problem that requires discussion.
Quote of the Week
“We don’t live in a bubble here on the West Coast. What happens in Asia happens to us. We must work with Asian countries to help them reduce their GHG emissions while we build our own decarbonized economy. This means providing them with low to zero-carbon alternatives to the energy they currently depend upon.” - Haisla First Nation Chief Crystal Smith on the need to develop Canadian LNG projects.
Word of the Week
Conference - a gathering of individuals who meet at an arranged place and time in order to discuss or engage in some common interest
How to Find Us
Episode Title: Conferring and Obstructing
Teaser: The Bank of Canada raises interest rates again, a conference on LNG takes place in Vancouver, and Edmonton’s mayor pleads for bail reform. Also, Toronto’s new mayor Olivia Chow was helped by pro-China groups.
Recorded Date: July 15, 2023
Release Date: July 16, 2023
Edit Notes: None
Podcast Summary Notes