It will be a plan for a province that was looking at a $7-billion budget deficit this year before the COVID-19 pandemic drained away jobs and business activity, and a global oil price war collapsed profits for its wellspring industry.
The budget deficit for this year is now pegged at $20 billion.
In March, Kenney announced a 12-member economic advisory panel, including former prime minister Stephen Harper, to provide guidance on the relaunch.
Kenney has been sharply criticized by the NDP Opposition for pursuing growth strategies in oil and gas while ignoring emerging industries such as high-tech and artificial intelligence.
Kenney’s government, when it took power, cancelled tax incentives designed to grow high-tech. He said those programs were ineffective as they reached a small percentage of the tech market.
On Thursday, Kenney said part of Monday’s plan will include the outline of a new program to incentivize job-creating investment in the information technology, digital and innovation sector.
“We will be outlining a number of sectoral strategies in areas of our economy that we need to grow in order to diversify while also articulating policies that ensure a strong future for the oil and gas sector.”
Kenney won last year’s election on a promise to galvanize Alberta’s economy, struggling even then with low oil and gas prices. He promised a pan-economic, less-is-more approach, championing broad incentives and then letting the free market take its course.
To that end, his government cut the corporate income tax rate, reduced the minimum wage for those under 18, and scrapped the provincial consumer carbon tax, though that levy was later replaced with a federal version.
Albertans have the lowest overall tax burden among Canadian provinces, and Albertans do not pay a provincial sales tax.
Since then, as the oil and gas economy has continued to struggle, Kenney has assumed a more direct interventionist approach.
In March, his government agreed to provide $1.5-billion to Calgary-based TC Energy Corporation, enabling the completion of the KXL pipeline to ultimately take Alberta crude across the United States to refiners and shippers on the Gulf Coast.
The $1.5 billion in equity investment will be followed by a $6-billion loan guarantee next year.
Kenney has said Alberta will be able to sell its shares for a profit after the pipeline is built and it will generate a net return of more than $30 billion through royalties and higher prices for its oil over the next two decades.
This report by The Canadian Press was first published June 26, 2020
— By Dean Bennett in Edmonton
Fed survey says economy has picked up but outlook cloudy – CKPGToday.ca
The information in the report will provide guidance for Fed officials at their next meeting on July 28-29. Economists expect the central bank to keep its benchmark interest rate at a record low as it tries to cushion the economy from the pandemic downturn.
The Beige Book found only modest signs of improvement in most areas, noting that consumer spending had picked up as many nonessential businesses were allowed to reopen, helping to boost retail sales in all 12 Fed districts but construction remained subdued.
Manufacturing activity moved up, the report said, ’but from a very low level.”
The economy entered a recession in February, ending a nearly 11-year long economic expansion, the longest in U.S. history. Millions of people were thrown out of work and while 7.3 million jobs were created in May and June that represented only about one-third of the jobs lost in March and April.
And now, in recent weeks with virus cases surging in many states, there are concerns that the fledgling recovery could be in danger of stalling out.
The Beige Book reported that employment had increased in almost all districts in the latest survey, which was based on responses received by July 6, but layoffs had continued as well.
“Contacts in nearly every district noted difficulty in bringing back workers because of health and safety concerns, child care needs and generous unemployment insurance benefits,” the Fed said.
The report said that many businesses who had been able to retain workers because of the government’s Paycheck Protection Program said they might still be forced to lay off staff if their businesses do not see a pickup in demand.
The Fed in March cut its benchmark interest rate to a record low of 0 to 0.25% and purchased billions of dollars of Treasury and mortgage-backed bonds to stabilize financial markets.
But Fed officials have recently expressed concerns that a resurgence of the virus in many states may require more support from the central bank and from Congress.
Fed board member Lael Brainard said in a speech Tuesday that the economy was likely to “face headwinds for some time” and that continued support from the government will remain “vital.”
The Trump administration has said it plans to negotiate another support package once Congress returns from recess next week. Republicans and Democrats remain far apart on what should be in the new package with Democrats pushing for a package of around $3 trillion while GOP lawmakers have called for smaller support of around $1 trillion.
Congress will only have two weeks to reach a compromise before two of the most popular programs providing paycheque protection for workers and expanded unemployment benefits expire. The unemployment support provided an extra $600 per week but many Republicans say that amount was too high and kept some people from returning to work
Martin Crutsinger, The Associated Press
Bank of Canada pledges to keep rates low through recovery; forecasts economy shrinking 7.8% this year – The Globe and Mail
The Bank of Canada has pledged to keep its key interest rate near zero throughout the economy’s recovery from the COVID-19 pandemic, which it said will be protracted and uneven.
In its interest-rate decision on Wednesday, the central bank held its key rate steady at 0.25 per cent, reiterating that it considers this effectively to be the bottom. But it added a promise to keep it there “until economic slack is absorbed” so that inflation can be sustainably maintained at 2 per cent, the target the bank uses to guide its interest-rate policy.
“We recognize that households and businesses are facing an unusual amount of uncertainty,” Bank of Canada Governor Tiff Macklem said in a news conference. “Against that background, we are being unusually clear that interest rates are going to be low for a long time.”
The bank also reaffirmed that it would continue its other major approach to economic stimulus – its minimum weekly purchase of $5-billion worth of government of Canada bonds – “until the recovery is well under way.”
The explicit commitment on rates – a policy strategy known in central banking as “forward guidance” – came as the bank released its first economic forecasts since the COVID-19 crisis began. It estimated that the economy shrank by 15 per cent in the first half of the year, and projected that even with the sharp postlockdown rebound, the economy will decline by 7.8 per cent for 2020 as a whole.
“Our message is that it’s going to be a long climb back, and the Bank of Canada is going to be there through the full length of the recovery, until economic slack is absorbed,” Mr. Macklem said.
People who have a mortgage or are considering a major purchase, or businesses thinking about making an investment can be confident interest rates will be low for a long time, he said. “Low interest rates make spending and investment more affordable, and spending and investment will support the recovery.”
Arlene Kish, director of Canadian economics at research firm IHS Markit, said in a commentary that Mr. Macklem’s forward guidance “points to interest rates remaining unchanged until 2023.”
The news conference followed the publication of the bank’s quarterly Monetary Policy Report (MPR) – Mr. Macklem’s first as head of the bank. He succeeded Stephen Poloz just six weeks ago. The bank usually updates its economic forecasts in each MPR, but Mr. Poloz opted against specific projections in April, citing extreme uncertainty at the height of the crisis.
In the report, the bank estimated that real gross domestic product plunged 13.1 per cent in the second quarter, on top of a 2.1-per-cent contraction in the first quarter. It expects a bounce-back of 7.1 per cent in the third quarter, reflecting the rapid return of activity as more containment restrictions are lifted. The forecast assumes that “about 40 per cent” of the drop in output in the first half of the year will be recouped in the third quarter.
However, it cautioned that it expects this initial rebound to be followed “by a more prolonged recuperation phase, which will be uneven across regions and sectors.” It forecast that the economy would grow by 5.1 per cent in 2021 and 3.7 per cent in 2022 as the impact of the crisis dissipates – but it doesn’t see economic output returning to prepandemic levels until well into 2022.
The bank called its new outlook a “central scenario,” rather than a projection, emphasizing the continued uncertainty surrounding the numbers. The central scenario assumes no widespread second wave of COVID-19 in Canada or globally, and that the pandemic will have run its course by mid-2022.
“There are a multitude of scenarios both stronger and weaker than the central one presented here,” the bank said. Yet it cautioned that, over all, the bigger risks in the alternative scenarios appear to be an even weaker recovery, largely because of the potential for a second wave of the virus.
It estimated that the inflation rate – a key measure for the bank – fell to -0.1 per cent in the second quarter. The bank forecast that even as the economy reopens, inflation would be a thin 0.4 per cent in the third quarter, and just 0.6 per cent for the year as a whole, before picking up modestly to 1.2 per cent in 2021 and 1.7 per cent in 2022.
“The dramatic decline in [energy] prices in March and April will hold inflation down until early 2021. After that, the inflation outlook depends primarily on the speed and strength at which demand and supply recover,” the bank said. “Firms report that capacity could return quickly as the economy reopens and containment measures are lifted. They expect the recovery in demand to be more muted, especially in the services and energy sectors.”
In his short time on the job, Mr. Macklem has generally struck a more cautious tone than his predecessor Mr. Poloz, who was relatively optimistic about the potential for the economy to recover. Wednesday’s rate-decision statement, Monetary Policy Report and news conference reflected that subtle shift under the new leader, although the bank broadly remained consistent with the crisis-fighting policy stand Mr. Poloz put in place in his final months in office, which included deep rate cuts and the introduction of large-scale bond purchases.
But Charles St-Arnaud, chief economist at Alberta Central, the province’s credit-union association, said Mr. Macklem’s call for Canadians to rely on a long period of low rates to finance consumption seemed at odds with the bank’s long-standing concerns about elevated consumer debt.
“I find it interesting that missing from that statement is the risk of pushing already extremely leveraged households and businesses to even more extreme levels,” he said. “It feels a bit like the BoC is somewhat contradicting itself.”
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Future-proof Canada's economy by investing in youth hard-hit by pandemic – Corporate Knights Magazine
By Puninda Thind, George P.R. Benson, Daniela Pico, Dominique Souris, Ana Gonzalez Guerrero, Rita Steele, Alyssa McDonald
The COVID-19 pandemic has upended our global economic and social systems and laid bare their inequities. Some of our society’s most vulnerable populations and most undervalued professions have been hit hardest during this crisis. While youth are largely presumed to have avoided many of the worst health impacts of the coronavirus, the pandemic has affected them severely in other ways.
The youth unemployment rate in Canada rose to 29.4% in May, up from 16.8% in March. Young people who have kept their jobs since the onset of COVID-19 have experienced steep reductions in the number of working hours. And Canadian youth aren’t alone. A recent International Labour Organization survey on youth unemployment found that young people around the world have been severely and disproportionately affected by the COVID-19 crisis, especially young women. For those young people who are still pursuing education, the pandemic is likely to result in unprecedented new inequalities upon graduation.
All of this is compounding one of the greatest workforce challenges of the 21st century: the skills gap for young workers, in Canada and around the world. Youth are on the frontlines of major transformations across the global economy, including digitalization, automation and climate action. Skills-proofing will be essential as the speed of change and disruptions transforms the future of work. As the latest Jobs of Tomorrow report from the World Economic Forum notes, demand for jobs in the care and green economies in particular is on the rise. It’s important to ensure that young people are equipped and empowered to combat longstanding challenges to our society, particularly the threat of climate change.
There are more young people in the world than ever before, and they are critical members of the global society driving ideas, innovations and movements. Investing in, training and retraining young people now can help get them back to work immediately while building a more just, inclusive and resilient Canada – one that’s on a path to carbon neutrality. Prior to the COVID-19 pandemic, Canada had been preparing for a skills revolution, as noted by Employment and Social Development Canada, RBC, the Brookfield Institute and many others. The Canadian government has already made some meaningful commitments, such as investing in creating green jobs and training opportunities for Canadian youth in the natural resources and clean technology sectors.
In light of this, as youth leaders and allies from across the country, we have written an open letter to the Government of Canada, urging leaders to invest in youth training and skills development, as well as ensuring equitable access to these opportunities, as part of its COVID-19 response and economic recovery plan. This proposal lays out the rationale for this investment and breaks it down into three streams of recommendations:
- Invest in future-proofed and essential skills for youth entering the workforce and people whose work is in transition.
- Invest in sector-specific skills and technical training to address the most pressing problems facing our society, particularly the climate crisis.
- Invest immediately in job-creation programs, such as expansion of the Student Work Placement Program (SWPP) and increased funding for developing innovative work-integrated learning (WIL) opportunities for students.
Young people are crucial to economic recovery efforts. We believe that we have a once-in-a-generation opportunity to reshape the foundations of Canada’s economy, prepare our youth to thrive in the future of work, generate widespread prosperity and lay the groundwork for a safer, cleaner, more equitable world. Our letter presents detailed solutions to build back better by increasing Canada’s collective human capital.
We believe that now is a time to significantly increase these efforts to achieve a resilient, inclusive economic future. During these challenging times, the best investments will be made in people.
Puninda Thind is a sustainability professional, climate justice organizer and World Economic Forum Global Shaper.
George P.R. Benson is a resilience thinker and practitioner working on economic development, urban planning and climate change.
Daniela Pico is a community builder, marketer and entrepreneur. She is director of external relations at Riipen, a technology company on a mission to end graduate underemployment; a World Economic Forum Global Shaper; a mentor with Girls in Tech; and a connector with League of Innovators.
Dominique Souris works to enable youth to create just and climate-resilient futures as the co-founder and executive director of Youth Climate Lab, a youth-for-youth global organization focused on transformative climate action.
Ana Gonzalez Guerrero is the co-founder of and managing director at Youth Climate Lab, where she works alongside youth to build a more inclusive and sustainable future.
Rita Steele is a sustainability professional, food systems activist and World Economic Forum Global Shaper who is passionate about transforming the global supply chain into systems that centre equity, justice and the environment and support a circular economy.
Alyssa McDonald is an organizational psychology consultant who advances sustainability through her work with the Canadian Collaboration for Sustainable Procurement and the World Economic Forum’s Global Shapers Community.
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