The News Rundown

B.C. finance report flags deep economic downturn in 2024

BC's quarterly financial report was released on September 27th and surprisingly, hardly anyone is talking about what this report says about the future, which for British Columbians is not as rosy as we would like.
The fiscal update predicts B.C. is headed for a period of weak economic growth as the export sector slows and the massive lift flowing from the construction of large capital projects fades. The economic growth outlook for this year was revised upwards, but the outlook for 2024 was significantly downgraded.
Instead of growing by 1.5 per cent, the government now expects B.C.’s economy to grow by a mere 0.8 per cent next year. This moves British Columbia from being one of Canada’s growth leaders to close to the bottom of provincial growth rankings. Real per capita income is forecast to decline 2 per cent this year and another 2 per cent in 2024/25.
The Business Council of British Columbia (BCBC) says it is “deeply concerned about the expected economic slowdown and rapid deterioration in the province's fiscal position” as outlined in the B.C. government's report.
“Income declines of this magnitude only occur during recessions in B.C.; two large consecutive declines are particularly unusual,” the BCBC noted in a release.
Ken Peacock, the Business Council’s chief economist said: “The amount of income per person generated in the B.C. economy is on track to fall back to where it was five years ago in 2017-2018. This is moving us in the wrong direction and making many people at the grocery store and gas pumps feel they are falling behind, because the unfortunate reality is they are,” he continued.
The quarterly update also shows revenue shortfalls and higher than planned spending have pushed the projected deficit up significantly from $4.2 billion to $6.7 billion in fiscal 2023/24. The deficit is now forecast to be more than $1 billion larger than the deficit incurred during the 2020/21 pandemic year.
It's taken a while to get to it, but the BC NDP have now spent through the surpluses and strong economic position the now former BC Liberals left the province in in 2018. Premier David Eby seems happy to spend his way to solving every problem under the sun, something that we noted during his first week as premier in November of last year. Almost a year later, and the economic situation has deteriorated so much that the province will be looking at some hard decisions next year.
Laura Jones, President and CEO of the BCBC said: “The current path looks bleak but there is an alternative, we can get serious about fast-tracking projects in all sectors from LNG and mining to AI and biotechnology that create and sustain high-paying jobs. The importance of growing the economy can’t be overstated. Growth gives us hope and means more resources for everything from hiring more teachers to developing more social housing. Shrinking economies force tough trade-offs that no one wants to face like which programs get less.”
This is absolutely true. If governments want to spend more on programs and people and services, then they need to find ways to make that money to spend first. BC's huge natural resources sector, high tech sectors based in Vancouver and Victoria, and the very desirable tourist climate on the west coast means that there should be no problem with raising enough revenue. This clearly means the government has a spending problem.
Finance Minister Katrine Conroy acknowledged in her opening remarks that B.C. is facing a global economic slowdown, but added that it won’t change the government's focus.
When asked whether British Columbians should expect to see new taxes or cuts in services, she said: “At this time, what we are doing, is we are going to keep providing services to people the way we have been since 2017. We recognize that we need to invest in people in order to have a strong economy and that’s what we are going to continue to do.”
Conroy also rejected suggestions that the province’s financial path needs immediate correction in light of projected deficits totaling almost $14 billion by 2025/26. That means ongoing spending in various areas, including housing.
Conroy said: “There is an ultimate goal to balance. I wouldn’t say we are hemorrhaging money. What I would say is that we are investing in people…it’s not the right time to raise taxes and cut people’s services. The former government did that and we are not going to do this.”
And yet, lower revenues for natural resources including natural gas, and projected costs for fighting wildfires totaling nearly $1 billion have inflated the projected year-end provincial deficit by $2.5 billion to $6.7 billion.
The province is also downgrading its GDP forecast in the face of global economic uncertainty and elevated interest rates, which will depress new housing starts in the coming years, raising questions about the government’s housing agenda.
We talked last week about the government's task list for 10 municipalities to build over 60,000 new houses between them, and so we don't need to go over that again today. But, it is interesting to note that in spite of that goal, the ministry “prudently expects” housing starts to total about 46,700 units in 2023, 42,100 units in 2024 before averaging out at around 40,000 units per year over the medium-term. Current figures show B.C. on track for 51,312 units in 2023.
Projections also call for significantly lower royalties from various natural resources, including natural gas. The ministry predicts natural resource revenues to be down $2.2 billion over the next three years, mostly from lower natural gas royalties, which is expected to be down 58 per cent from initial figures.
This raises the question of how and why B.C. missed out on the natural gas boom that happened after Russia’s invasion of Ukraine. Conroy said that: “Our refineries aren’t quite up and running yet. Also, the United States has a significant supply and also they have the capacity for storage.” Conroy also said that warmer winters in Europe and the US have created less demand.
BC United’s shadow finance minister Peter Milobar said the projected deficit is well in excess of contingencies and forecast allowances in noting that the update does not include updated price tags for capital projects such as the new, second Surrey hospital, whose project cost has risen by $1 billion to $2.88 billion. The final bill for fighting wildfires is also not in yet, he added.
Milobar said: “Households in British Columbia have been making massive adjustments in their households over the last year and this provincial government seems unwilling to acknowledge that they can take steps to better manage and get a handle on their spending. It’s not about being opposed to capital projects being done — it’s about the efficient use of those tax dollars to make sure you are getting as many capital projects done for the same amount of money spent.”
Milobar noted that the government was already heading the wrong way and projected deficits are not going smaller but bigger. “This is worse than what they were thinking. They are going the wrong way here.”
Going the wrong way, is putting it simply for the BC NDP's fiscal approach. The provincial government is now on track to rack up a deficit of more than $14 billion over the next three years. There’s no plan to return to balance. Nor is there any plan to trim spending, look for additional savings or introduce new tax measures to try to shore up the worsening financial picture.
Conroy’s comments were fascinating. It’s not that long ago that a finance minister would have found themselves under fire from an angry electorate if they stood at a podium to defend growing, eye-watering, deficit spending for the entire length of a three-year fiscal plan, with no path to return to balance and record provincial debt. But it seems times have changed.
The public, under financial pressure on all sides from rising interest rates, gas prices, grocery bills, rent and housing, doesn’t seem to care all that much anymore about whether politicians in Victoria are spending beyond their means.
It’s possible then that the NDP government’s budget plans don’t really matter to voters. Which is good for the NDP, because there was no evidence Tuesday that there is an actual plan.
The more Conroy spoke, the more you realized the current government fiscal plan appears to be a series of recycled none-too-clever campaign slogans stitched together in preparation for next year’s provincial election.
Conroy's line of “There’s an ultimate goal to balance,” about when or even if the NDP would pull finances out of the red is reminiscent of the infamous 2014 comment by Justin Trudeau that “the budget will balance itself.” It feels like awful economic policy. Then again, Trudeau did go on to win the election after his remarks, and remains prime minister nine years later.
So maybe the B.C. New Democrats are on to something. Just keep spending, and either the public won’t care, the budget will balance itself, or both.
Supplementals:

Quarterly population numbers from StatsCan are in and it shows Alberta’s population is booming, the highest since 2006.
Migration statistics show almost 14,000 people from across Canada came to Alberta from between April 1 and June 30th of this year with over 6,700 coming from Ontario.
Alberta also received 31,371 new arrivals from outside of Canada during this same period.
Everywhere is growing, city to small town and it’s having an impact on housing in the province even more so than before.
Officials from the cities of Airdrie and Leduc say that the Alberta is Calling campaign worked and now want an increase in municipal funding. This resolution was passed this week at the Alberta Municipalities convention.
When the campaign was kicked off last year it drew scorn from the media and opposition NDP.
The stereotypical economic engine of the province is of course the energy industry. And while it’s very powerful and very big, economic diversification is important.
We’ve seen this through measures focused on the film industry, tech industry, and of course green energy through hydrogen and nuclear.
But another way to diversify the economy and increase provincial GDP is by increasing the provincial population.
Danielle Smith addressed the convention and took questions. The question came up about what Alberta’s end goal with population growth should be.
She said that there should be a future where Alberta grows to 10 million residents and when it does that it can rival the power that Quebec has federally.
As we talked last week in BC the housing issue truly does require a whole of government approach - and the Premier called out municipalities such as Leduc for lowering the time it takes for building permits to be issued down to 5 days.
The population in total has grown by 184,400 people over the last year. This was the highest demographic growth of all provinces.
It’s at this point we need to take a pause.
Alberta has always understood that people flowing into the province is a necessity but we have to ask are we able to exert enough control over external factors to bring people in sustainably?
Do we have control over who comes here and what pool of immigrants we pull from? Quebec does this, should Alberta?
Is it smart to continue the Alberta is Calling campaign when interest rates are high and inflation is being stubborn in its downward trek.
Will an influx of new Albertans change the character of the province in an irreversible way?
These are the questions that need to be asked by the government while continuing to bring people to the province.
Of course the most pressing is what happens to the cost of living and services available but we also need to ask what should the long term goal be?
Should the goal be as Danielle Smith said to increase Alberta’s population to become the second largest in Canada?
If so, we need bigger cities and more of them to make room for that growth.
Or should we focus on asserting more control federally first before attempting to grow the provinces in huge numbers?
Nonetheless, uncontrolled population growth is not good.
There are the pitfalls that haven’t been seen yet and nobody in the media or government is highlighting them.
Albertans deserve to know what the plan is before charging blindly ahead with population increases.
Supplementals:

https://www150.statcan.gc.ca/n1/daily-quotidien/230927/dq230927a-eng.htm

Federal ministers still lack mandate letters, two months after majority shuffled

Prime Minister Justin Trudeau has yet to issue mandate letters for his cabinet ministers, two months after announcing an overhaul to his front bench. On July 26th, Trudeau shuffled around almost all of his cabinet, giving 30 different ministers updated roles or brand new postings.
Shortly after taking office in 2015, Trudeau’s government announced it would publish the lists of tasks given to each minister, known as mandate letters. The documents lay out the priorities for each federal minister, and signal to public servants the timeline or scope of policies the government wants to advance. The last round of mandate letters was issued in December 2021, three months after the last federal election.
It's interesting to note this because when Trudeau shuffled his cabinet in the summer, he said it was to "Mak[e] sure that we have the best possible team, aligned to respond to Canadians' challenges with the supports necessary, but also show that optimism, that ambition for getting us through these consequential times... That's what we're focused on."
Trudeau's 'best possible team' has not been able to align properly to respond to Canadians' challenges, if it doesn't have a clear direction of what they are meant to do.
Senator Tony Dean, who used to oversee Ontario’s public service, says of mandate letters: “If you don’t do this, your government’s success is likely going to be compromised. It’s important for everybody to be on the same page, and to understand what the desired deliverables are.”
We know that new mandate letters haven't been given out because Defence Minister Bill Blair said last week that he hasn’t received a new mandate letter since taking on the role July 26th, and is acting on the list of commitments that Trudeau assigned to Blair’s predecessor.
Last month, The Canadian Press asked International Development Minister Ahmed Hussen what was in his mandate letter for his new role. Hussen listed priorities, but his office did not say whether he’d actually received a mandate letter.
Acadia University political scientist Alex Marland said mandate letters help clarify what a government wants to do outside of an election period or a new throne speech, for both the public and departmental staff.
Mandate letters can help clarify what priorities the government is introducing, and whether the government sees commitments listed in previous letters as ongoing, accomplished or abandoned. In the case of Blair, Trudeau has assigned the military new tasks in recent months, while asking it to cut $1 billion in spending.
Marland said: “In absence of them, it means that it’s probably harder for the government to advance its agendas. The further you get away from an election, the more things happen. And so when things change, then all of a sudden as a minister, what are your marching orders?”
Marland says the civil service can operate without letters being made public, but notes that ministers themselves have said they're eager to receive their marching orders, and some have new portfolios that never existed before.
For example, Dean and Marland both said they were perplexed that Citizens’ Services Minister Terry Beech has no public listing of responsibilities, given that this is a new role that spans multiple departments.
At his July 26 swearing-in, Beech said his job would include more than just tasks falling under Employment and Social Development Canada, adding that the top civil servant for that department had handed him “a piece of paper with a whole bunch of bullet points on it.”
Beech's own words show that the minister doesn't know exactly what his role is, or what he should be focussing on.
Asked about the timeline for new mandate letters, the Prime Minister’s Office noted that the existing mandate letters from December 2021 remain online. Spokeswoman Alison Murphy said in an email: “We have nothing new to confirm at this time, but will keep you updated as necessary.”
In an interview, the Bloc Quebecois' House leader Alain Therrien said it’s “very worrying” that the government seems too tired to outline a plan to deal with inflation and housing woes.
Therrien said: “A renewal would mean the ministers would quickly have on paper what exactly they had to do. It’s a way of showing that they have vision and that these ministers have a role to play, they have a job to do — and that’s not what we’re seeing right now. It’s not a government in action. It’s a government in reaction, and those reactions are extremely slow.”
A tired government that's only reacting to moves seems like exactly what we're seeing from the 8 year Trudeau government: shuffled cabinet ministers, but as a particular famous Western Canadian podcaster is so fond of saying: the more things change, the more they stay the same.
Supplementals:

Firing Line

Pierre Poilievre called out for Truth and Reconciliation Day photos with Inuk elder

Another marking of the annual Truth and Reconciliation Day has passed us this year and for people on both sides there has been little progress.
Indigenous people haven’t advanced yet in meaningful ways aside from symbols and governments haven’t taken concrete steps to address claims of mass graves or inequities in the system brought forward by the Indian Act.
Instead we see the media and government officials sniping for half truths regarding the activities of Conservative Leader Pierre Poilievre.
This weekend Pierre Poilievre alongside other leaders took part in Truth and Reconciliation day activities at the Eternal Flame in Ottawa and other landmarks.
He posted a photo online with the caption: “Honoured to join the Algonquin Elders and leaders at the eternal flame to mark National Day for Truth and Reconciliation. The path of truth and reconciliation is long but together we can begin to mend what has been broken and find true healing.”
The photo included elders and other dignitaries.
The photo drew criticism from the former Minister of Crown-Indigenous relations who said, "We are all learning some difficult truths, particularly today, and mistakes can happen… The Indigenous people in this picture are Inuit, not Algonquin, wearing Inuit traditional clothing, including Elder Manitok Thompson, who is very well known."
Here’s the issue, the tweet says “Algonquin Elders and leaders” but Pierre Poilievre did go to an event led by Algonquin leaders on the day.
News reporting from CTV, the Globe and Mail and other sources say this in the article covering Marc Miller’s criticism.
It’s at this point we should note that the title for CTV’s article on the matter is: “Pierre Poilievre called out for Truth and Reconciliation Day photos with Inuk elder”
The whole reason this article is our firing line this week is because of the fragrant media sensationalism in the story from the title down.
And the reason for this is that the article actually highlights the concerns and grievances brought forward by the Algonquin elders when they met with Poilievre.
But the article also highlights comments from Elder Manitok Thompson who was in the photos criticizing the Marc Miller post!
Thompson highlighted issues such as elder care, health, housing, economic development, hydro opportunities, carbon tax affecting Nunavut cost of living, food security, homelessness, addiction centres.
The article also explains that Pierre Poilievre took the time to listen to her and said, “[we] prayed for Canada and all the people who have been hurt by the residential school years.”
She also said that Miller was the one here who was being too partisan and that politicians should work together in a nonpartisan manner on these issues.
It’s clear there is an appetite amongst most Indigenous people for progress to be made, she said, "I speak for myself as an aboriginal, I'm not a people of pain, we want businesses, we want to own homes, we want to get ahead with our own independence, we don't want government handouts.”
It’s our hope that by highlighting the absurdity of the story that our listeners will see how these stories are crafted by the media.
At first there is a headline that is inflammatory or in this case false.
Secondly, the first third to half of the story will focus on telling us about that headline.
After that the story merges into something that tells what actually happened.
What makes this worse is that this wasn’t a story presented by CTV or the Globe and Mail.
This was another example of The Canadian Press, a wire service setting tone and agenda.
A wire service initially was what was used to get the core facts of what was happening out to media agencies. This follows another story recently where the Canadian Press has been deviating from the clear cut reporting of wire services of the past.
This of course leads us to ask the question, if the Canadian Press is doing it, the ones who are supposed to be unbiased, what’s the rest of the media doing and how much worse are they?
Supplementals:

Quote of the Week

"I speak for myself as an aboriginal, I'm not a people of pain, we want businesses, we want to own homes, we want to get ahead with our own independence, we don't want government handouts.” - Elder Manitok Thompson on a positive future for Indigenous People in Canada

Word of the Week

Truth - a state of being in accordance with facts and reality

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Show Data

Episode Title: Mandating the Truth

Teaser: BC’s economic future looks unstable, Alberta experiences record population growth, and Justin Trudeau isn’t giving his cabinet ministers mandate letters. Also, a post by Pierre Poilievre about First Nations gets misrepresented by the Liberals and media.

Recorded Date: October 3, 2023

Release Date: October 8, 2023

Duration: 52:20

Edit Notes: Ken Peacock

Podcast Summary Notes

Duration: XX:XX