It’s been almost impossible to keep up with the news of the past few days, from the oil-price crash of last weekend to the COVID-19 pandemic that is escalating at breakneck pace.
And it’s been equally impossible to assess, precisely, what any of this means for Alberta’s already fragile economy. The province has been on an economic roller coaster over the past decade, with each of its ups and downs defined by oil prices, but this latest plunge feels like something altogether different.
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First, there was the 2008 financial crisis that battered the global economy. As the province was shaking off the effects of that, oil prices took another steep dive in 2014, setting off a two-year recession that caused unemployment to spike and provincial revenues to dry up.
And now, as Alberta continues to crawl out of that downturn, the province has been hit by a double-whammy of COVID-19 and a Russia-Saudi price war that caused oil prices to crash.
I teamed up with my colleagues in Calgary, Jeff Jones and Emma Graney, to take stock of where Alberta was at before the events of the past few weeks. It’s a grim starting point that has left many Albertans exhausted and wondering if things will ever turn around, And more important, we look at happens now as we enter a period of enormous uncertainty (and, as Premier Jason Kenney warns, a potential global recession).
The novel coronavirus outbreak has depressed oil demand, as international travel grinds to a halt. The dispute between Russia and Saudi Arabia has meant that prices are now well below what many producers in Alberta need to break even. Further downsizing will put more pressure on real estate, tourism and overall economic growth.
And all of that will place significant strain on the province’s budget, which is already projecting multibillion-dollar deficits.
As Martin Pelletier, portfolio manager at Trivest Wealth Counsel in Calgary, put it: “This is the worst I’ve seen in energy in my 20-year career. And it’s getting worse, so buckle up.”
Across Western Canada, the public-health situation has been changing rapidly. As of Friday afternoon, Alberta had 29 confirmed cases (all added in a little over a week) and B.C. had 64, including one death. Saskatchewan had two confirmed cases and Manitoba had four.
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Only B.C. has had a confirmed case of community transmission.
At the same time, governments in this region and across the country are imposing restrictions to curb the spread of COVID-19, such as banning mass gatherings. The federal government is banning large cruise ships from docking at Canadian ports.
Manitoba plans to cancel public schools on March 23, joining Ontario and New Brunswick. So far officials in B.C., Alberta and Saskatchewan haven’t gone that far.
Health officials are now recommending Canadians don’t travel outside the country and, if they do, to isolate themselves for 14 days upon their return.
For more on the outbreak, sign up for our new Coronavirus Update newsletter with the day’s most essential coronavirus news, features and explainers written by Globe reporters. In addition, we’ve has dropped the paywall on our coronavirus news stories. We have a large team of journalists working to bring readers the most up-to-date information and applying high standards to make sure each story is factual and does not feed in to panic.
This is the weekly Western Canada newsletter written by B.C. Editor Wendy Cox and Alberta Bureau Chief James Keller. If you’re reading this on the web, or it was forwarded to you from someone else, you can sign up for it and all Globe newsletters here. This is a new project and we’ll be experimenting as we go, so let us know what you think.
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Around the West:
SURREY POLICE: This week, the province released a heavily redacted report on issues around replacing the RCMP in Surrey with a new municipal police force by April, 2021. It flagged financial risks and whether officers could be trained quickly enough. The report, prepared by a municipal-provincial committee chaired by former B.C. attorney-general Wally Oppal, says the police board for the new force will also have to reach agreements with other agencies, including the province and an expected police union.
GRETA STICKER: Amnesty International says it’s not enough for political leaders to condemn a sexually suggestive decal appearing to show teenage climate campaigner Greta Thunberg and they should do more to protect human-rights activists. ”While there have been many expressions of dismay and disgust about this particular sticker … it is imperative to recognize and acknowledge that this is not a unique or singular incident,” Alex Neve wrote in the letter dated March 5. “It is reflective of a wider concern for which much more serious and concerted action is urgently needed.”
CONSTRUCTION COSTS: Construction costs rose more in Vancouver than in any other city in Canada during the past two years and were predicted to go up about 4 per cent this year, says a national tracking study. The costs are increasing at a time when the province is on a massive drive to deliver big infrastructure projects, including two SkyTrain lines and a new Pattullo Bridge, along with thousands of units of low-cost housing. Vancouver’s costs increased by 5.19 per cent in 2018 and 6.39 per cent in 2019, with slightly more than 4 per cent anticipated for 2020.
ALBERTA PUBLIC-SECTOR COURT CASE: The Supreme Court won’t hear a case involving the rights of public-sector workers in Alberta in a labour dispute with that province’s government. The union was challenging legislation passed last summer by Premier Jason Kenney’s government to delay binding arbitration in collective agreements affecting thousands of workers. The province passed the law in June, saying it needed the delay to gain a better understanding of the province’s finances.
CALGARY’S PLUS-15: Calgary wants to expand the system of elevated walkways that links many of its downtown buildings and make it easier to navigate the much-loved network, despite a continuing economic downturn that has stalled most new construction in the city. Calgary’s officials are nearing the end of a study that is looking at making the system larger, with a proposal to broaden it north toward the Bow River and an expected station on a new light-rail line being planned. Officials are also looking at changing the rules for the Plus-15s for the first time in 36 years, with a focus on improving navigation and increasing the hours the network is open to pedestrians.
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Opinion:
Annalise Klingbeilon cuts to Alberta parks: “Whether it’s a family vacation, a junior high school field trip or a first date, we have fond and formative memories in our parks – and so these cuts hit at the heart of who we are as Albertans and Canadians. We are deeply proud and protective of our world-renowned natural spaces, these threads that tie us together.”
Thomas Kerron blood-borne infections in Canadian prisons: “A critical step to eliminating HCV and HIV as public health threats is to prioritize the health of prisoners. Most people in prison do not stay there forever; they return to their communities after serving their sentence. And all too often, they return carrying the burden of HCV, HIV or another needless infections acquired behind bars.”
Kelly Cryderman on hoarding during the coronavirus pandemic: “Hoarding is despicable, and especially so in the midst of a global pandemic that threatens lives, social stability and the economy. News reports of stores being sold out of basic cold and flu medications are worrying. Stores will need to implement more limits on certain key products to keep some online hustlers-cum-vultures from swooping in. “Don’t be a jerk” needs to be a guiding mantra.”
Alexandra Gillon Richmond’s Dolar Shop: “More importantly, the Dolar Shop broths are amazing. Don’t bother with the standard pork leg, tomato-oxtail or spicy Sichuan. Go straight for the “exquisite” golden or silver soups. The golden is dark yellow and thickly gelatinous from slow-simmered rooster comb, chicken feet and pork-neck bone. The silver, although less of an edible emollient, is more balanced with the subtle burn of white pepper, sweetness of Chinese dates and umami depth of Jinhua ham. Seriously, these two milky broths rank above and beyond any other hot-pot soup in Metro Vancouver.”
VICTORIA – British Columbia is forecasting a record budget deficit and a rising debt of almost $129 billion less than two weeks before the start of a provincial election campaign where economic stability and future progress are expected to be major issues.
Finance Minister Katrine Conroy, who has announced her retirement and will not seek re-election in the Oct. 19 vote, said Tuesday her final budget update as minister predicts a deficit of $8.9 billion, up $1.1 billion from a forecast she made earlier this year.
Conroy said she acknowledges “challenges” facing B.C., including three consecutive deficit budgets, but expected improved economic growth where the province will start to “turn a corner.”
The $8.9 billion deficit forecast for 2024-2025 is followed by annual deficit projections of $6.7 billion and $6.1 billion in 2026-2027, Conroy said at a news conference outlining the government’s first quarterly financial update.
Conroy said lower corporate income tax and natural resource revenues and the increased cost of fighting wildfires have had some of the largest impacts on the budget.
“I want to acknowledge the economic uncertainties,” she said. “While global inflation is showing signs of easing and we’ve seen cuts to the Bank of Canada interest rates, we know that the challenges are not over.”
Conroy said wildfire response costs are expected to total $886 million this year, more than $650 million higher than originally forecast.
Corporate income tax revenue is forecast to be $638 million lower as a result of federal government updates and natural resource revenues are down $299 million due to lower prices for natural gas, lumber and electricity, she said.
Debt-servicing costs are also forecast to be $344 million higher due to the larger debt balance, the current interest rate and accelerated borrowing to ensure services and capital projects are maintained through the province’s election period, said Conroy.
B.C.’s economic growth is expected to strengthen over the next three years, but the timing of a return to a balanced budget will fall to another minister, said Conroy, who was addressing what likely would be her last news conference as Minister of Finance.
The election is expected to be called on Sept. 21, with the vote set for Oct. 19.
“While we are a strong province, people are facing challenges,” she said. “We have never shied away from taking those challenges head on, because we want to keep British Columbians secure and help them build good lives now and for the long term. With the investments we’re making and the actions we’re taking to support people and build a stronger economy, we’ve started to turn a corner.”
Premier David Eby said before the fiscal forecast was released Tuesday that the New Democrat government remains committed to providing services and supports for people in British Columbia and cuts are not on his agenda.
Eby said people have been hurt by high interest costs and the province is facing budget pressures connected to low resource prices, high wildfire costs and struggling global economies.
The premier said that now is not the time to reduce supports and services for people.
Last month’s year-end report for the 2023-2024 budget saw the province post a budget deficit of $5.035 billion, down from the previous forecast of $5.9 billion.
Eby said he expects government financial priorities to become a major issue during the upcoming election, with the NDP pledging to continue to fund services and the B.C. Conservatives looking to make cuts.
This report by The Canadian Press was first published Sept. 10, 2024.
Note to readers: This is a corrected story. A previous version said the debt would be going up to more than $129 billion. In fact, it will be almost $129 billion.
NANAIMO, B.C. – Former Bank of Canada governor Mark Carney says he’ll be advising the Liberal party to flip some the challenges posed by an increasingly divided and dangerous world into an economic opportunity for Canada.
But he won’t say what his specific advice will be on economic issues that are politically divisive in Canada, like the carbon tax.
He presented his vision for the Liberals’ economic policy at the party’s caucus retreat in Nanaimo, B.C. today, after he agreed to help the party prepare for the next election as chair of a Liberal task force on economic growth.
Carney has been touted as a possible leadership contender to replace Justin Trudeau, who has said he has tried to coax Carney into politics for years.
Carney says if the prime minister asks him to do something he will do it to the best of his ability, but won’t elaborate on whether the new adviser role could lead to him adding his name to a ballot in the next election.
Finance Minister Chrystia Freeland says she has been taking advice from Carney for years, and that his new position won’t infringe on her role.
This report by The Canadian Press was first published Sept. 10, 2024.
HALIFAX – The Nova Scotia government has introduced a bill that would kick-start the province’s offshore wind industry without federal approval.
Natural Resources Minister Tory Rushton says amendments within a new omnibus bill introduced today will help ensure Nova Scotia meets its goal of launching a first call for offshore wind bids next year.
The province wants to offer project licences by 2030 to develop a total of five gigawatts of power from offshore wind.
Rushton says normally the province would wait for the federal government to adopt legislation establishing a wind industry off Canada’s East Coast, but that process has been “progressing slowly.”
Federal legislation that would enable the development of offshore wind farms in Nova Scotia and Newfoundland and Labrador has passed through the first and second reading in the Senate, and is currently under consideration in committee.
Rushton says the Nova Scotia bill mirrors the federal legislation and would prevent the province’s offshore wind industry from being held up in Ottawa.
This report by The Canadian Press was first published Sept. 10, 2024.
