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California introduces new laws for online privacy, gig economy – CBC.ca

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California’s long tradition of advancing nation-leading legislation continues into the new year, with laws reining in the gig economy, boosting online privacy and discouraging shootings by police, among other potential trend-setters.

The laws have sent businesses including Uber, Lyft and Google scrambling, not to mention U.S. President Donald Trump.

The state dominated by Democrats has delighted in tweaking the Republican president on immigration and other issues, though legislation requiring Trump to reveal his tax returns backfired when the California Supreme Court unanimously ruled it unconstitutional.

Some of the higher-profile new laws taking effect Jan. 1 include:

Online privacy

The nation’s most sweeping data privacy law takes effect with the new year. The law passed in 2018 requires companies to tell consumers what data they collect about them, why it was collected and who sees it. Consumers can refuse to let companies sell that data, and companies are barred from selling data from children younger than 16 without consent.

San Francisco real estate developer Alastair Mactaggart, seen in Oakland, Calif., Dec. 20, used a ballot initiative — a provision that allows private citizens to propose legislation — to establish stricter laws protecting online privacy. (Ben Margot/The Associated Press)

Facebook and other technology and internet giants have been heavily criticized for sharing, selling or targeting personal information that customers thought was private. The San Francisco developer who pushed for the law, Alastair Mactaggart, is now advancing a 2020 ballot measure to protect the law by creating a new state agency to enforce the privacy protections and requiring greater protections for users under age 16 to opt in.

Gig economy

California is making it harder for many industries to treat workers like contractors instead of employees who are entitled to minimum wage and other benefits such as workers’ compensation. The legislature carved out certain exemptions after the state Supreme Court ruled in favour of workers at the delivery company Dynamex in 2018.

The California Trucking Association and two associations representing freelance journalists and photographers have already sued on behalf of their members. The ride-sharing company Uber has said it will defend its current model from legal challenges. And Uber, Lyft and DoorDash have said they’ll spend $30 million US to overturn the law at the ballot box in 2020 if they don’t win concessions from lawmakers.

In this March 22, 2018, file photo, Anita Ross holds a photo of 22-year-old Stephon Clark, who was fatally shot by Sacramento police, as she and other protesters block the entrance to Sacramento City Hall. The shooting death of Clark helped spur the passage of two laws giving California one of the nation’s most comprehensive approaches to deter shootings by police. (Rich Pedroncelli/The Associated Press)

Police shootings

Two new laws together give California one of the U.S.’s most comprehensive approaches to deterring shootings by police. One changes the legal standard for when police can use deadly force, while the companion law increases officers’ training on how to handle confrontations.

California’s old standard was based on the doctrine of “reasonable fear,” meaning officers were unlikely to face charges for even questionable uses of lethal force if prosecutors or jurors believed they had a reason to fear for their safety. The new law allows police to use deadly force only when “necessary” to defend against an imminent threat of death or serious injury to officers or bystanders. But it doesn’t define necessary.

In this image taken from a video provided by SNJToday.com, Buena Regional High School wrestler Andrew Johnson gets his hair cut courtside minutes before his match in New Jersey this week after a referee told Johnson he would forfeit his bout if he didn’t have his dreadlocks cut off. Johnson went on to win the match, and the incident helped inspire a new law against hair discrimination. (Michael Frankel/Associated Press)

Hair discrimination

California becomes the first state to bar workplace and school discrimination against black people for wearing hairstyles such as braids, twists and locks. The new law says hairstyles are associated with race and therefore protected against discrimination.

Federal courts have historically ruled that, unlike characteristics such as race, hair can be changed, so there are no grounds for discrimination complaints based on hairstyle. The California law says “race” also includes “traits historically associated with race.”

The issue came to wide public attention a year ago when Andrew Johnson, a black high school wrestler in New Jersey, was told by a referee that he had to cut off his dreadlocks if he wanted to compete.

Vaccinations

State public health officials have new tools to crack down on doctors who write fraudulent medical exemptions for schoolchildren’s vaccinations, after the most emotionally charged legislative debate of the year repeatedly drew hundreds of supporters and opponents to the Capitol.

Officials can investigate doctors who grant more than five medical exemptions in a year and schools with vaccination rates under 95 per cent, the threshold that experts say means a population is resistant to a disease like measles.

It includes a phase-out period for existing medical exemptions similar to one allowed when California eliminated personal belief vaccine exemptions in 2015. For instance, a kindergartner with an exemption can retain it through sixth grade, while a seventh-grader can be exempted through high school.

Supporters of a rent control initiative calling for more rent control march on the Capitol in Sacramento, Calif., on April 24, 2018. A new law to take effect in 2020 will bar landlords from raising yearly rent prices by more than five per cent plus the cost of inflation. (Rich Pedroncelli/The Associated Press)

Rent control

Landlords will be barred from raising yearly rent prices by more than five per cent plus the cost of inflation under a new law that drew supporters who said they can no longer afford the state’s soaring housing costs. Landlords also won’t be allowed to evict someone without a reason or refuse to rent to someone solely because they have a federal Section 8 housing voucher.

Gov. Gavin Newsom called it the “strongest package in America,” though the restriction follows Oregon’s slightly higher statewide rent cap. A previous law still bans local governments from adopting their own rent control policies, though opponents want to overturn that restriction with a 2020 ballot measure.

Child sex assault

California is joining several other states in giving adults who were sexually assaulted as children more time to sue, a measure expected to trigger multitudes of new lawsuits against the Catholic church, Boy Scouts of America and other organizations.

The law gives victims of childhood sex abuse until age 40 to sue, up from the current age of 26. It alternately gives adults five years to sue after discovering they suffered psychological or other damages from a sexual assault, whichever is later. And it gives victims three years to file past claims that missed earlier deadlines.

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China’s Birth Rate Not A Problem For Economy–Now – Forbes

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China’s birth rate continues to fall. “Last year’s 10.62 million births, down from 12.02 million in 2020, barely outnumbered the 10.14 million death,” according to the Wall Street Journal. China’s rate of births per female is now down to 1.3, well below the replace rate of 2.1. The country’s low population growth, both now and in the future, has caused worry about China’s future economic growth. That worry is much overdone, though it’s clear that China’s fastest growth is past.

Any nation’s economy depends simply on total population multiplied by production per person. That arithmetic is right but hides some important insights. Many people are not productive. That’s not an insult, but a recognition that children and many elderly people produce little of economic value. The arithmetic offers more insight if restated: A nation’s economy depends on total working population multiplied by production per working person.

In the immediate future, babies are a drain on the economy, not a boost. Every parent knows this. Twenty years from now, today’s baby will be important to the economy, but that is of little value to forecasters looking out a few years into the future.

China’s economic boom started when Deng Xiaoping too over political control in late 1978. He instituted numerous reforms including tolerance of entrepreneurial activity. That tolerance started with small steps but eventually led to massive industrialization, especially in coastal cities.

China’s rapid growth period came not from population growth but from population migration. The movement of people from poor rural areas to China’s cities may be the largest migration in human history. This migration shifted people from low productivity farm work to higher productivity factory work, and it was enabled by the government’s tolerance of entrepreneurship.

The rural farmers of Chinas were not bad farmers, but they produced relatively little because they lacked tools and, in the earlier years of communism, worked communally. The higher productivity of the urban factory employees led to higher wages, as businesses competed with one another for the available workers.

In previous articles I argued that due to current politics, China’s Economic Miracle Is Ending. Even before that, though, I had seen that China Is Too Mature For Rapid Economic Growth because the easiest opportunities for expansion had been used. The two points of view are compatible. The first is not necessary, while the second is inevitable.

In the coming years, China’s economic growth could rebound. A rebound would require the government to substantially relinquish the control over the economy that they have increasingly exercised in recent years. Even then, the growth would not match the ten percent rate achieved in many of the past 40 years. That’s not a forecast but rather a description of a possibility that seems unlikely at this point in time.

A nation does not need a growing population to have a high and growing standard of living per person, though a larger population will certainly swell the gross size of the economy.

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22 things you need to know about B.C. business and the economy in 2022 – BCBusiness

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Business and economic outlook

Credit: iStock

From inflation and supply chains to climate change and housing prices, we explore how things could unfold, with help from an expert panel

Well, that wasn’t always so fun. As they put 2021 behind them, with the COVID-19 pandemic still very much alive, business decision makers face another challenging year. What’s coming our way in 2022? To tease out some key themes for B.C. organizations of all sizes, we assembled a panel of seven experts.

Of course, it wouldn’t be a business and economic outlook without a big disclaimer. Several of the interviews with our panel took place before the floods that brought so much destruction, as well as the arrival of the Omicron variant. Here’s hoping for a better 2022.

Our panel of experts

Economic outlook panel(Left to right): Ryan Berlin, John Davis, Fiona Famulak, Alex Hemingway, Ken Peacock, Bryan Yu, David Williams

Ryan Berlin, senior economist and director of intelligence, Rennie Intelligence

John Davis, senior vice-president and regional manager, commercial banking, B.C. region, Wells Fargo

Fiona Famulak, president and CEO, BC Chamber of Commerce

Alex Hemingway, senior economist and public finance policy analyst, Canadian Centre for Policy Alternatives

Ken Peacock, chief economist and senior vice-president, Business Council of British Columbia

David Williams, vice-president of policy, Business Council of British Columbia

Bryan Yu, chief economist, Central 1 Credit Union

22 things you need to know about B.C. business and the economy in 2022

1. The big picture is mixed

Several forces are converging to deny B.C. and the rest of the world a smooth COVID recovery. “The economy is improving because the pandemic is ebbing and the economy is reopening,” says David Williams of the Business Council of B.C. “But we are running into some headwinds and difficulties with supply chains and global supply.” So the outlook for global and Canadian economic growth has been downgraded for 2022, with some of that expansion pushed back to 2023. “At the same time, inflation has ended up being far higher, broader and more sustained than many central banks had projected.”

2. An economic rebound hides fundamental flaws

As of December, the BCBC forecast the province’s real GDP growth at 5 percent for 2021 and 4 percent this year, versus 4.3 percent for Canada as a whole. Still, the economic fundamentals are much softer than those relatively strong numbers suggest, Ken Peacock stresses. “If you look across different industry sectors, for nine of the 16 broad industry categories, employment levels are still below pre-pandemic levels,” he says of B.C. “So more than half the industries have not seen jobs recover to where they were, and we’re almost two years out now.”

3. Inflation looks like its here to stay

Anyone convinced that the current wave of inflation is a passing phase could be disappointed. After the Bank of Canada upgraded its year-average inflation forecast by a full percentage point, Williams says, the Consumer Price Index (CPI) rose 4.7 percent year-over-year in October. “So these are very difficult times for Team Transitory.”

With inflation not expected to return to 2-percent levels until 2024, Peacock holds out hope that higher prices will ease somewhat. “But if we see 5-, 5.5-, 6-percent inflation stick around for two or three or four years, purchasing power is going to be severely eroded,” he says. “Households will fall behind. And this, I think, is a potential problem for this provincial government, which, from the day it was elected, has been very interested in raising well-being and prosperity for households, personal incomes.”

Economic inflation 2022 graphSources: Statistics Canada, BC Stats, Business Council of B.C.

 4. Interest rates have nowhere to go but up

Uncomfortably high inflation means that businesses should plan for rising interest rates, says Central 1’s Bryan Yu. He thinks the market’s call for three rate increases this year and two in 2023 is aggressive, though, given that the economy isn’t fully healed. “It’s heading in the right direction, but whether that warrants three hikes is debatable.”

In real terms after inflation, Williams notes, Canada’s policy interest rate is –4.5 percent. “Interest rates affect the economy with a lag of about two quarters to six quarters,” he says. “So you’ve got to ask whether a real policy rate of –4.5 percent is what the economy really needs in six to 18 months. It doesn’t look like it needs that kind of stimulus.”

With real interest rates at an all-time low, the Bank of Canada has promised not to change the policy rate until the second half of 2022. “With inflation now at 4.7 percent, it’s very difficult to believe that the central bank will leave interest rates on hold for that period of time,” says Williams, who points out that the BoC recently hinted at a second- or third-quarter hike. “But that still seems an awfully long time to leave interest rates, in real terms, being very significantly negative.” If real rates quickly move closer to zero, “that would be a very contractionary effect on the economy, and I don’t think the economy is all that strong and robust.” 

5. Fintech could help save small business

The pandemic hasn’t been kind to smaller companies in need of financing. “Access to capital when you’re Jimmy Pattison is very different than if you’re some small business,” says Wells Fargo’s John Davis, whose firm typically provides loans and other services to companies with annual revenue north of $350 million. “And small businesses fell through the cracks a little bit here because they don’t have the access to capital that big companies have.” 

As interest rates rise and labour constraints continue, those smaller outfits will face challenges in 2022, he predicts. Because the big Canadian banks have always had trouble figuring out that space, credit unions and other smaller financial institutions have tried to fill the gap, he says. But they want to move upmarket, too, because such loans don’t yield much of a return. “I’m wondering if some of the fintechs or non-bank solutions might be the ultimate credit providers and service providers to smaller businesses.”

READ MORE: Leadership 2021: Jim Pattison reveals the secret of his success, shares his eco-friendly agenda and explains why he keeps on working

6. Labour supply pains will continue, with a twist

“Without a doubt, the severe skilled labour shortage B.C. is experiencing is our biggest challenge in the next year,” the BC Chamber’s Fiona Famulak says. “There are jobs out there but not enough people to fill them. This is already impacting businesses and communities both large and small. In addition, the increasing cost of doing business and supply chain challenges are adding to the issues that small and medium-sized businesses are trying to manage.”

On the labour front, Davis has watched forest products companies hold job fairs to find mill workers. “One of our biggest clients is a hotel operator,” he says. “Getting people to do that kind of work is incredibly hard.” Davis attributes some of the shortage to the Canada Emergency Response Benefit (CERB), which made it relatively easy for workers with low-paying jobs to stay home. “It’s not just new people,” he says of the labour shortage. “It’s the people that have left and trying to get them to come back.”

At the same time, there’s still plenty of slack in the labour market, says Ryan Berlin of Rennie Intelligence. Before COVID, Metro Vancouver was home to 70,000 people looking for work—a number that has since grown to 100,000. “So there’s an excess of 30,000 people above what we had seen pre-pandemic who are wanting to work but can’t.”

Given that surplus, you’d think employers would have their pick, Berlin says. But even with Canada’s job vacancy rate at a record high, “they’re struggling to connect the skills and people out there to the needs that they have.”

Business and economic outlookiStock

7. Employment levels arent what theyre cracked up to be

Climbing out of what Peacock describes as a big hole, B.C. saw a 7-percent increase in jobs from January through October 2021, putting it ahead of the rest of the country. But distorting that picture is public sector employment growth, which spiked by about 16 percent, he notes. 

And remember, employment throughout the province fell significantly in 2019, Peacock says. “So we went into the pandemic at a lower level of employment, which has made it much easier for B.C. to regain that pre-pandemic level of February 2020 that everybody’s been focused on.”

Peacock sees reason for concern about relatively muted hiring conditions in the private sector. “When I look at some of the additional costs that are being heaped on employers, going back to the employer health tax and then all these costs associated with managing the pandemic, some difficulties and challenges in hiring people and then sick-pay costs added on, one does wonder to what degree we’ll see stronger private sector hiring activity over the next couple of years.”

8. Expect supply chain woes to stretch on…and on

For B.C. businesses in a wide range of industries, global supply chain disruptions keep making it tough to serve their customers. “The view that they’ll soon sort themselves out seems a fairly optimistic assumption at this point,” Williams says of those troubles. “They look like they’re going to be around for quite some time.”

Just ask one of Wells Fargo’s biggest manufacturing clients, which recently announced that because it can’t get all the parts to fill its orders, it needs at least 18 months’ relief from the banks. “This is the market leader in North America for what they do, and they’re worried about that,” Davis says. Besides absorbing the cost of borrowing capital, the publicly traded company could see its market capitalization shrink, which makes it harder to borrow, he explains. Also, frustrated customers might look elsewhere—and a rival could step into the void. “That’s terrifying.”

9. Business investment is flagging—but theres hope

As the saying goes, you have to spend money to make money. But in Canada, business investment per worker has been falling for several years, according to recent research by the Toronto-based C.D. Howe Institute. “So we are becoming less industrialized—we have less capital equipment, less technology, less innovation, less research and development per worker than we did the previous year or five years ago,” Williams says.

Lately, with help from deep-pocketed foreign investors, several B.C. businesses have reached unicorn status. “But what matters for the country and what matters for real incomes across the country is what’s happening at the average firm,” Williams says. “At the average firm, there’s less investment per worker going on over time, and the capital stock is actually shrinking on a per-worker basis.” 

Yu expects the tide to turn in B.C. “As businesses get more certainty in the market—they understand where the demand is, things are reopening and they’re not going to close—they are going to move back into reinvesting in their operations,” he says. Yu also thinks that given labour shortages, some companies will look at software and equipment to boost productivity. “Possibly they’ll have less of a need for as many employees.”

10. Either way, climate change will cost us

If there was ever any doubt, last year’s raging forest fires and catastrophic floods made it clear that climate change is a major threat to B.C. But not everyone is happy about our policy responses to this existential crisis. For his part, Peacock sees the provincial carbon tax adding to already soaring energy costs. “At the end of the day, the carbon tax in B.C. is going to hit consumers’ pockets, and it’s going to hit businesses as well.”

Companies with a domestic customer base can pass on those extra costs, Peacock adds. For exporters, though, there’s no such option. “Most of our big exporters, the ones that really matter, are not in a position to adjust their prices,” Peacock says. 

Among jurisdictions with a price on carbon, B.C. is one of the few without a cap-and-trade system or other mechanisms to shield exporters, he explains. “Over time, what this means is a less productive export sector, and companies are going to be less willing to deploy capital and make investments in B.C., unless the policy framework is realigned,” Peacock says. “I think that weighs on the export sector over the next three, five, seven years here in B.C.”

For the CCPA’s Alex Hemingway, high oil prices are yet another reason to move to renewables. “One of the issues that’s happening in terms of the lagging climate progress is the power of the fossil fuel industry,” he says, also citing lobbying efforts against employer-paid sick says and a wealth tax. “It gets at the power of these lobby groups to shape the policy agenda and throw some dirt in the gears when there’s a fear that it’s going to affect their interests.”

11. Like the rest of the world, we’ll keep an eye on China

To put economic pressure on other countries, an increasingly assertive China doesn’t hesitate to slow or halt imports, whether that’s Canadian canola or Australian coal. How vulnerable is B.C., given frostier-than-ever relations between Ottawa and Beijing? 

In Wells Fargo’s local client base, the biggest single industry is forest products, which Davis calls the best example of a B.C. sector tied to China. “We’ve yet to hear—I’m touching wood as I say this—any concerns with that,” he says. “Are they going to be looking for that lumber supply from Russia? Are they going to be looking for it from Scandinavia? Maybe it’s too early for us to really see it, but I haven’t seen any fallout from that yet.”

Business Council of B.C. Economic OutlookSources: Statistics Canada and BC Stats; Business Council of B.C. forecasts

12. As government supports wind down, businesses must find ways to add value

“Overall, pretty good,” the BC Chamber’s Famulak says when asked how we’re doing with government supports for businesses still navigating the pandemic. “But let me be clear: the federal and provincial governments need to look at ways they can continue supporting businesses that include easing tax burdens and slowing down the layering-on of costs as we have seen over the last few years. We need to deal with our skilled labour shortage, and governments need to explore all channels available to them, from enhancing immigration policy to essential skills training.”

Peacock suspects that many companies have been sustaining themselves on government programs. “When they’re wound down, we probably are going to see more businesses fail,” he says. “If these were struggling businesses, maybe shifting to another industry or sector or line of work will in the long term, in the medium term, be an improvement. But there’s pain associated with this turnover process.”

Williams suggests that businesses think about how to add value. “If they’re able to offer higher-value-added goods and services for their customers, they should do pretty well,” he says. “But the businesses that are in low-value-added sectors where they’re dependent on a low cost of labour and easy access to pools of low-cost labour, clearly that’s going to be more difficult.”

13. Land-based industries keep taking a hit

Peacock makes a distinction between the province’s tech sector, which is concentrated in Metro Vancouver and parts of Vancouver Island and the Interior, and land-based industries such as forestry and mining. For those businesses, the regulatory climate, Indigenous issues and the carbon tax make life complicated, he says.

Peacock singles out the provincial government’s recent announcement that it plans to defer logging on as much as 2.6 million hectares of old-growth forest. That policy decision could prompt the closing of 10 to 14 sawmills, plus a couple of pulp mills, he says. “This is going to lead to the shuttering and loss of high-value-added jobs.”

14. Indigenous economic reconciliation faces roadblocks

With the province and many businesses committed to economic reconciliation with Indigenous Peoples, what can we expect in 2022? “It’s mixed, because I think the reconciliation and economic development and First Nations’ involvement in economic projects is clearly a positive,” Peacock says. “And I think businesses have for many years been keen, as long as they know the rules and the relationship and who owns the land, to get on with doing business.” 

But events like the blockade of the Coastal GasLink pipeline by a Wet’suwet’en Nation clan pose challenges, Peacock maintains. “I think it’s prompting companies to take a closer look at deploying hundreds of millions of dollars or half a billion dollars in the province and wondering what that investment return might be over a decade or two, given some of the complexities related to the land base.”

B.C. Housing Market 2022 graphSource: Central 1 Credit Union

15. Dwindling choices spell more housing crisis

One of the biggest pandemic stories is the red-hot provincial housing market. With help from low interest rates, B.C. home sales remain well above pre-pandemic levels, Yu says. But for 2022, Central 1 forecasts a 21-percent drop. 

Don’t expect prices to follow suit, though. “The pricing conditions are going to remain very strong because there’s no supply,” Yu says. “There’s not a lot of choice or options for a lot of buyers right now, so they’re kind of rushing toward the market.” 

To tackle its shelter shortage, B.C. needs to massively increase not just public and not-for-profit housing but also the overall supply, the CCPA’s Hemingway contends. “Every time we make a gain in another area—if people’s wages rise a little or if their costs go down for child-care investment—it can still quickly get eaten up by increased rents.”

READ MORE: Pandemic helps push Metro Vancouver home sales to record high in 2021

16. The COVID immigration boom could turn out to be a blessing

Rennie Intelligence’s Berlin was one of many observers left puzzled by the federal government’s pandemic immigration moves. At first, he was shocked to see Canada boost its target in the midst of COVID, given that it would inevitably result in a surplus of workers. The feds, who have set a quota of 1.2 million immigrants for 2021-23, welcomed some 220,000 during the first eight months of last year. So the year-end total could be an all-time high of 370,000. 

For B.C., which gets about 14 percent of national immigration, that’s good news, Berlin maintains. Besides potential labour, he says, immigrants bring diverse cultures and perspectives. “So I think that bodes well for setting us up as we turn the corner and put COVID in our rear-view mirror.”

B.C. also stands to benefit from robust interprovincial migration, Berlin says. From April 2020 through last June, we attracted a net 43,000 new residents from other parts of the country while most other provinces lost people. “If you look at it from, again, a labour supply perspective, to me, that’s a good thing.”  

With that population growth comes demand for new housing, Berlin adds. “Over the next six months, we’re not out of this, but I think there’s some tailwinds for our part of the world in particular that will put us in a pretty good position to begin to actually grow in the next year.”

Business and economic outlookiStock

17. For some, taxes remain a steep price to pay 

Peacock doesn’t mince words about provincial taxes on people and businesses. “Top marginal tax rates are at a high for individuals,” he says. “Effective marginal tax rates on investment in B.C. are among the highest, if not the highest, in Canada. So it’s starting to shape up like the investment climate is pretty good for some industries, but it’s pretty bad for land-based operators and maybe some manufacturers here in B.C.”

18. Taxing the rich calls for getting creative

In Hemingway’s view, this is a good time to do something about growing economic disparity: “The public appetite for action in terms of reducing inequality, including taxing the rich, seems to be higher than at any point I can remember.” He cites a recent national survey by Ottawa-based Abacus Data in which 89 percent of respondents backed a 1-percent tax on the wealthiest Canadians to support pandemic recovery.

At the provincial level, Hemingway sees a big opportunity to redistribute wealth by taxing property, whose value in B.C. has climbed by more than $1 trillion since the mid-2000s. Today, property tax applies to individual parcels of land. “But now that we have the beneficial ownership registry online, what you could do is apply the tax to the total holdings of any specific landowner above a given value,” Hemingway says, suggesting that the provincial government use different brackets.

READ MORE: Tax the rich—well, the richest of them, anyway: report

19. Cities and the climate need more public transit

Post-pandemic and in an era of rising inequality and climate change, there’s a growing recognition the government must play a bigger role in several areas, Hemingway says. For example, B.C. needs to “massively and much more quickly invest in public transportation,” he argues. “We’ve been moving at a pace of maybe building about one SkyTrain line a decade in Metro Vancouver. If we’re serious about this climate thing and we’re also serious about city-building, we need to be looking at ramping that up considerably.”

20. Watch for a retail reconfiguration

At Central 1, Yu expects a B.C. retail slowdown this year, for two reasons. “No. 1, the sales numbers are being boosted by higher prices,” he says. The second factor: as the economy fully reopens, much of the demand related to housing should rotate back into services. “So we’ll see that in the GDP, but the retail numbers will suffer.”

During COVID, the property class that Wells Fargo has been most worried about is retail, Davis says. It remains a concern as shoppers keep moving online. Davis flags what he calls the barbell effect: big-box stores like Costco and Walmart are doing well, along with luxury retailers. “But if you’re in the middle category—if you’re the Gap or Old Navy or whatever it is—you’re getting slaughtered.”

However, experiences still matter, Davis says. Take Vancouver’s Robson Street, which now has less typical retail and more Asian-style service businesses such as tea shops and dessert spots. “I think you’re going to see a reconfiguration of retail in a big way.”

21. Natural resources have a big role to play in the recovery

Tech may grab all the headlines, but Williams contends that other sectors are better equipped to deliver us from the pandemic. “You really need your big economic engines to pull you out of this, and our big economic engines are the natural resources industries,” he says. “For every hour worked in the natural resources sector across Canada, we get $330 of value added.” In unconventional oil and gas, that number is $1,300—23 times the national average of $56.

Given their broader economic benefits, it doesn’t make sense to replace such industries with those that generate only $30 to $90 per hour worked, Williams says. “So it’s a really delicate balance, I think, for policy makers to address our carbon challenges but at the same time recognize Canada’s comparative advantages on international trade.”

22. As the economy rebounds, slow and steady might win the race

“We’re entering into a very delicate time in the economic recovery,” Williams says. “And so I think it’s important for the federal government, for central banks, also for the provincial government, to avoid any more policy mistakes,” he argues. “Change the game.” Although some government interventions in the economy were necessary, they might not be appropriate now, he adds. “And so we need to be a bit more nimble, I think.”

Still, Peacock believes B.C. will enjoy solid growth this year, noting that the pandemic recession was especially unusual in one way. In a typical downturn, spending on goods such as cars and appliances drop off while services remain fairly stable. But during 2020, services fell 7 percent while sales of goods grew. 

“I don’t think that’s been regained or even half regained in 2021 because of the ongoing closures,” Peacock says. “So that lift does stretch out into 2022, along with the getting back of some international tourism. I don’t think it’s going to be a huge surge but rather a slow, steady grind. And that’s going to help provide a boost.”

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Economic outlook: 'They say it's not, but it's hot!' – Export Development Canada

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Prices are rising at a faster rate than we’ve seen in almost 40 years.
Waved off at first as a temporary problem, central banks are tackling this head-on with tighter monetary policy. Expectations are now aligned around the fast tapering of quantitative easing programs, earlier and more rapid interest rate increases, and possible balance sheet reductions. This has financial markets and consumers braced for imminently tighter access to financing. A risk to the outlook is that current demand-led price growth moves into wage and other contract settlements, which will be harder for central banks to neutralize or reverse without more stringent monetary action.

Fiscal policy is also likely to become more stringent. This won’t be just in Canada; almost every Organisation for Economic Co-operation and Development (OECD) nation will be in the same fix. Pandemic stimulus has caused debt to balloon well beyond previously acceptable limits and governments everywhere will be under pressure to roll back stimulus and get their finances on a more sustainable trajectory before higher interest costs exacerbate the problem. Thankfully, they’ll be able to do this at a moment of economic strength, which will at least help on the revenue side.

International trade is generally benefiting from a strong world economy and consequently, Canada experienced surging growth in the dying months of 2021. Pent-up demand will power trade activity through 2022 and 2023, especially as supply chain constraints begin to diminish toward mid-year. Protectionism, in its many overt and more subtle forms, is expected to gradually give way to strong demand conditions. There’s definitely enough activity for everyone for at least the next two to three years.

This all adds up to impressive forecast numbers. Developed markets are projected to grow well above their long-term trend, collectively rising by 4.1% this year and by 3% in 2023. Likewise, emerging markets will see impressive growth in the wake of last year’s rebound, together expanding by 5.3% in 2022 and a further 5% next year. This puts 2022 global growth at a robust 4.8%, which will then moderate to a still-high 4.3% for 2023.

Demand conditions will keep commodity prices higher than initially expected and definitely higher than sustainable levels in the long term. The price of West Texas Intermediate crude oil is projected to average US$71 this year and US$65 in 2023. Gas prices will follow the same pattern, coming off current highs as Western European supplies are replenished. Copper prices will face continued upward pressure owing to immediate supply constraints, and increased structural demand as a result of higher global resolve to shift from fossil fuels to cleaner, copper-intensive forms of energy generation and transportation. Copper prices are projected to average US$8,997 this year, edging down slightly to US$8,287 in 2023.

Higher commodity prices are putting upward pressure on the Canadian dollar, although that’s being offset somewhat by shifts in expectations for monetary policy movements here and elsewhere. The Bank of Canada was initially more hawkish in its policy actions, boosting the loonie’s value against the U.S. dollar and the euro. But with the Federal Reserve and the European Central Bank now messaging tighter monetary actions, the Canadian dollar has eased back and is now expected to average US$0.79 this year and US$0.80 in 2023.

The bottom line?

Pandemic-fuelled uncertainty created broad expectations of a sluggish recovery. In contrast, growth is booming. Caught by surprise, global business is scrambling to ramp up production to meet demand. Supply chains, normally fine-tuned to perfection, are a mess, but will soon pull themselves back together. Inflation, perhaps the clearest signal of the economy’s strength, will moderate as central banks swing into action. At the same time, the effects of the Omicron variant threaten to delay the economy’s progress—and perhaps create space to better prepare for the inevitable upswing in activity. It’s all a bit chaotic, but the core story is a good one: There are clear rewards for those who are more prepared to deliver the goods over the next two years. Check out EDC Economics’ latest Global Economic Outlook and discover more valuable insights.

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