Last year, a major topic of conversation and concern was the 2,000-plus wildfires burning in British Columbia, and polluting the air in places such as Vancouver to the extent that it was said to be “worse than that in Beijing.”

This year was very different, at least in BC where there were few forest fires. But it was a different story in the Province of Alberta, where, from March 1 to June 24, there were a total of 1,985,228 acres burned. 

Buy Canadian

A year ago, a Canadian movement called “Buy Canadian” was in place, as a response to the U.S. president’s imposing strict tariffs on lumber, aluminum, and steel. It looked like that movement would be around for a while. Did it continue?

The Chuckegg Creek Fire in northern Alberta was the size of the state of Rhode Island, and 50% larger than last year’s record-breaking Mendocino Complex Fire in California. It jumped rivers with ease, blackened the rain with soot, and colored sunsets as far away as Great Britain.

“People have accepted the political situation in the U.S. They might not like it, but they are tolerating it. Most Canadians know that we are joined at the hip with the U.S. We are dependent on you, and the U.S. is, to a degree, dependent on Canada. There is so much synergy that we just have to make this work – so we do.”

Housing

“The average price of a home is going down in most Canadian provinces, and thank God for that! But it needs to be by a lot more. Or it needs to be stagnant for 10 years to rectify it so that people can get into the market.”

Zero Net

“The HPBA, HPBAC, and other participants lobbied against the removal of natural gas from Vancouver, and they were successful. The approach by the regulators has been changed, and that was directly attributable to the natural gas companies and the campaigning by industry with the various managers and/or politicians. 

“But I don’t think this is going away. There are a lot of new conversations, such as, ‘In this house you can only have two fireplaces, and a barbecue, and a cooker, etc.’ But that’s still progress, to a certain degree. Now we’re all here just wanting to settle down and be stable for a while; we want to get back to normal business. 

“We spent five years recertifying all of our products for 2020, at an enormous cost. Now we are in the position where we can actually start to look at new products and new innovations. Hopefully we can settle down to good business in the future.”

Monthly High/Low for U.S. Dollar to Canadian Dollar Spot Exchange Rate 2019
Recently, the U.S. dollar has been worth around $1.30 or so in Canada. That’s a range that has been prevalent for many years, with a few anomalies.

Average Canadian House Prices – Provinces July 2018 to July 2019
Source: CANADIAN REAL ESTATE ASSOCIATION.

Average Canadian House Prices – Cities July 2018 to July 2019
Source: CANADIAN REAL ESTATE ASSOCIATION.

Climate Change

“Climate change is the most important issue we have right now, and it drives other issues as well, such as using natural gas. There’s the whole question of how wood-burning fits into Zero Net program, and that has been overlooked thus far. We definitely have a lot of regulatory issues, all centered around either air quality or green house gas emissions. 

“There’s also energy efficiency with the new Amendment 15 to the Canadian Energy Efficiency Act, introducing 50% minimum efficiency for heating appliances. That will have an affect. The concern is, will that 50% change? Will it increase? 

“We also spent a lot of time and money this year delivering troubleshooting electronic ignition sessions across Canada to help people be prepared for adjusting to installing gas appliances without standing pilots. Plus, just getting people up to speed on how the NSPS is going to affect Canadian jurisdictions has taken time and money, because it does vary from province to province.

“The current trade war with China is having an affect because a lot of products that are shipped to Canada come through the U.S., which means that tariffs apply to them before they get to Canada. That is having an affect. Plus the volatility of the situation; we just don’t know what to expect.”  

City of Vancouver

“A year ago, the City of Vancouver was close to restricting use of natural gas. They are continuing to work toward a renewable city, as they call it. Their long-term goal is to be carbon neutral. But they are allowing the installation of gas fireplaces and barbecue grills in their new building code changes. They are being reasonable. 

“You can install at least one gas fireplace and a grill in a home and, at this point, it only affects homes over 3,500 sq. ft. They are talking about bringing in a cap on green house gas emissions for smaller homes, but that will be probably in 2021. 

“They have gone from planning to phase out natural gas, to understanding that people still want natural gas. They are focusing more on increasing renewable natural gas, and other ways of dealing with it without actually making it virtually impossible to put gas lines or gas fireplaces in. Now they contact us as they are formulating regulations and involve us in the code creation; we have a much better relationship with them. We really have made a lot of progress.”

Canada Unemployment Rate
As in the U.S., Canada’s rate of unemployment is extremely low, and the economy is doing well. Source: Tradingeconomics.com. statistics canada.

Canada Housing Starts
Canadian seasonally-adjusted housing starts decreased to 222,013 units in July of 2019 from a downwardly revised 245,000 units in June. Source: Tradingeconomics.com. statistics canada.

The dynamic of slowing growth this year before a modest pickup in 2020 will be shared by most provinces. However, the amplitude will vary substantially across the country. The slowdown will be most acute in Alberta, where mandated production cuts and elevated unemployment restrained growth to near stall speed after topping 2% last year.

A rebound in investment related to higher oil prices and a recovering housing market should enable the provincial economy to return to healthy growth next year.

Dependence on global commodity markets will limit growth in Saskatchewan, as Chinese restrictions on agricultural imports from Canada will reduce growth to about half a point. Growth is expected to then accelerate to 1.5% as unemployment declines and consumers spend.

Growth in Ontario and British Columbia will be nearly halved this year, to 1.2% and 1.3%, respectively, on housing-market woes and weak exports. Healing housing markets and a modest rebound in exports should boost the pace thereafter, but at less than 2%, growth will be modest by historical standards.

Provincial real GDP growth
Source: Statistics Canada. Forecast by Deloitte Economic Advisory, as of July 2019.