The B.C. government is preparing for the possibility of running a deficit budget amidst global economic uncertainty connected to COVID-19.
Premier John Horgan says the recent drops in the stock market and drops in expected growth rates will have an impact. The province is currently projecting budget surpluses for the next three years.
“I did not want to form a government just to balance the budget. It was to deliver services for people and I said during the election campaign when those questions came that our objective was to make sure that people had what they needed to prosper and thrive in B.C. and that remains unchanged,” Horgan said.
The B.C. government relies heavily on the tourism industry to keep the economy strong. The industry has been hit hard due to the spread of the coronavirus.
The film industry has been hit in British Columbia with The Flash,Riverdale and other productions shutting down over fears associated with the virus.
“I am not misleading anybody by saying that the activity on the stock market alone has had a profound impact on a whole host of sectors. That will have an impact on revenues going forward,” Horgan said.
“So as we look at where we can find relief for people, whether it be on property taxes for small businesses or a host of other initiatives that we can look at to stimulate or at least take the pressure off, if that means that the budget will be changed then we will do that but at this point, we are going day-by-day.”
Economist Ken Peacock from the Business Council of B.C. says he has never seen such a quick decline in the economy.
Peacock says British Columbia’s economy will be somewhat protected because the province has been effective at testing people for the virus. But B.C. is in no way immune and that will effect almost everyone.
“Weak economic conditions. Widespread implications. Obvious sectors that are going to be hit the hardest are tourism, the airline industry,” Ken Peacock said.
“The impact is going to be huge. Households are going to feel this and people are going to be laid off hopefully what proves to be a temporary impact.”
Peacock says what is still unclear is how long this will go on and what the overall impact will be on the long-term health of the economy.
“The pace and speed of change is unprecedented,” Peacock said.
“The key aspect in trying to determine when we come out of this thing and if we can recover is how how widespread this becomes.”
Many of the hospitality sectors are seeing major loses due to fears of gathering in public.
Zambri’s and Big Wheel Burger co-owner Calen McNeil said they have seen a big drop in group events, which is having an effect on the bottom line.
“We have lost probably $30,000 in the last couple of weeks on private parties.” McNeil said.
“There is a lot of insecurity and people are unsure what to do either because of a lack of information or because of a clear definitive message.”
With so many friends in the restaurant industry — and a very clear directive from health officials to do our part with #SocialDistancing and #FlattenTheCurve – let’s all commit to “to go” or “delivery” twice a week? Tag your favourite restaurant here. Let’s keep folks working!
B.C. Provincial Health Office Dr. Bonnie Henry is encouraging British Columbians to go to restaurants and enjoy the outdoors. She says there are no safety concerns around eating in public.
Dr. Henry says outdoor activities are also very safe.
But McNeil says it’s a challenge to calm everyone’s nerves.
“The biggest thing is just to keep everyone calm. We have heightened our cleaning protocols. We are pretty stringent anyways. We have increased our cleaning of critical services every 30 minutes. We have removed condiments from the table and will deliver it when needed,” McNeil said.
“We have a lot of employees who live paycheque to paycheque and are worried about how they will pay their bills. We are too.”
The cruise industry has been particularly hard hit. On Friday, the federal government announced a ban on cruise ships with more than 500 passengers arriving in Canadian ports.
The industry contributes around $3 billion to Canadian economy of which $2 billion is in Vancouver, Victoria and other areas in British Columbia supporting the industry.
The ban means 114 cruise visits will be cancelled in Victoria and 287,593 passengers will not arrive in the provincial capital. Cancelling these arrivals with cost the Victoria economy around $65 to $70 million.
“This will have a significant economic impact on Victoria with Victoria being the country’s largest cruise port of call. This will have an impact,” Greater Victoria Harbour Authority CEO Ian Robertson said.
“We are in uncharted waters. This is unprecedented.”
The Cruise Lines International Association issued a statement Friday saying it respected Canada’s decision to suspend operations, but said it was “disappointed by the extended-length of the suspension” and appealed to Canadian officials to reconsider “this arbitrary timeline.”
On Friday, BC Hydro introduced a COVID-19 Customer Assistance Program to help customers experiencing financial hardship during the pandemic. The program provides customers the option to defer bill payments or arrange for flexible payment plans with no penalty.
“We recognize the financial impact COVID-19 may have on our customers due to changes in employment from workplaces closing, or reducing staffing levels and want to provide some relief during this challenging time,” BC Hydro president and CEO Chris O’Riley said.
“In addition, some customers may experience higher electricity bills due to increased consumption from spending more time at home.”
TORONTO – Canada’s main stock index was higher in late-morning trading, helped by strength in energy stocks, while U.S. stock markets also moved up.
The S&P/TSX composite index was up 34.91 points at 23,736.98.
In New York, the Dow Jones industrial average was up 178.05 points at 41,800.13. The S&P 500 index was up 28.38 points at 5,661.47, while the Nasdaq composite was up 133.17 points at 17,725.30.
The Canadian dollar traded for 73.56 cents US compared with 73.57 cents US on Monday.
The November crude oil contract was up 68 cents at US$69.70 per barrel and the October natural gas contract was up three cents at US$2.40 per mmBTU.
The December gold contract was down US$7.80 at US$2,601.10 an ounce and the December copper contract was up a penny at US$4.28 a pound.
This report by The Canadian Press was first published Sept. 17, 2024.
OTTAWA – Canada’s inflation rate fell to two per cent last month, finally hitting the Bank of Canada’s target after a tumultuous battle with skyrocketing price growth.
The annual inflation rate fell from 2.5 per cent in July to reach the lowest level since February 2021.
Statistics Canada’s consumer price index report on Tuesday attributed the slowdown in part to lower gasoline prices.
Clothing and footwear prices also decreased on a month-over-month basis, marking the first decline in the month of August since 1971 as retailers offered larger discounts to entice shoppers amid slowing demand.
The Bank of Canada’s preferred core measures of inflation, which strip out volatility in prices, also edged down in August.
The marked slowdown in price growth last month was steeper than the 2.1 per cent annual increase forecasters were expecting ahead of Tuesday’s release and will likely spark speculation of a larger interest rate cut next month from the Bank of Canada.
“Inflation remains unthreatening and the Bank of Canada should now focus on trying to stimulate the economy and halting the upward climb in the unemployment rate,” wrote CIBC senior economist Andrew Grantham.
Benjamin Reitzes, managing director of Canadian rates and macro strategist at BMO, said Tuesday’s figures “tilt the scales” slightly in favour of more aggressive cuts, though he noted the Bank of Canada will have one more inflation reading before its October rate announcement.
“If we get another big downside surprise, calls for a 50 basis-point cut will only grow louder,” wrote Reitzes in a client note.
The central bank began rapidly hiking interest rates in March 2022 in response to runaway inflation, which peaked at a whopping 8.1 per cent that summer.
The central bank increased its key lending rate to five per cent and held it at that level until June 2024, when it delivered its first rate cut in four years.
A combination of recovered global supply chains and high interest rates have helped cool price growth in Canada and around the world.
Bank of Canada governor Tiff Macklem recently signalled that the central bank is ready to increase the size of its interest rate cuts, if inflation or the economy slow by more than expected.
Its key lending rate currently stands at 4.25 per cent.
CIBC is forecasting the central bank will cut its key rate by two percentage points between now and the middle of next year.
The U.S. Federal Reserve is also expected on Wednesday to deliver its first interest rate cut in four years.
This report by The Canadian Press was first published Sept. 17, 2024.
FREDERICTON – New Brunswick‘s finance minister says the province recorded a surplus of $500.8 million for the fiscal year that ended in March.
Ernie Steeves says the amount — more than 10 times higher than the province’s original $40.3-million budget projection for the 2023-24 fiscal year — was largely the result of a strong economy and population growth.
The report of a big surplus comes as the province prepares for an election campaign, which will officially start on Thursday and end with a vote on Oct. 21.
Steeves says growth of the surplus was fed by revenue from the Harmonized Sales Tax and federal money, especially for health-care funding.
Progressive Conservative Premier Blaine Higgs has promised to reduce the HST by two percentage points to 13 per cent if the party is elected to govern next month.
Meanwhile, the province’s net debt, according to the audited consolidated financial statements, has dropped from $12.3 billion in 2022-23 to $11.8 billion in the most recent fiscal year.
Liberal critic René Legacy says having a stronger balance sheet does not eliminate issues in health care, housing and education.
This report by The Canadian Press was first published Sept. 16, 2024.
