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LANGFORD — The squeeze of global inflation has prompted the B.C. government to spend $600 million to boost a tax credit and increase family benefits for low- and moderate-income residents.
Premier John Horgan announced the province is also capping rent increases at 2% for 2023 instead of the rate of inflation.
Horgan says inflation is driving up the costs of groceries, gas and other goods and services, and the next support measures will offer families a cushion during challenging times.
About 85% of people in B.C. are expected to benefit from the increase in the Climate Action Tax Credit payment, estimated to be worth up to $1,500 a year for a family of four.
The B.C. Family Benefit will also rise by as much as $58.33 a month for each child under 18 years old.
No one needs to apply for the enhanced credit and family benefit because the temporary increases will be automatically received if a person’s income tax filing is up-to-date.
The government said last month it was preparing to introduce a series cost-of-living initiatives, starting with a $60-million education affordability fund to ease the burden of back-to-school costs.
That fund will expand school meal programs and help families pay for supplies and field trips in an effort to take the sting out of school costs.
Finance Minister Selina Robinson foreshadowed the government’s cost relief plans last month when she delivered last year’s final budget numbers, which included a surplus of $1.3 billion after earlier projections of a deficit nearing $10 billion.
VANCOUVER — Lululemon Athletica Inc. says revenue climbed 29% in the second quarter compared with the same period last year as it saw sales climb across its operations including higher gains in both online and international segments.
The Vancouver-based athletic clothing company, which reports in U.S. dollars, said Thursday it had revenue of US$1.9 billion for the quarter ending July 31, up from US$1.45 billion last year, as sales increased 28% in North America and 35% internationally.
Sales climbed as the company saw higher traffic both in stores and online, and it was better positioned for inventory than last year, said company chief executive Calvin McDonald on an analyst earnings call.
“Much of last year we were under-inventoried and not able to fully maximize our business. This year, we are in a much better position.”
The sales translated into net income of US$289.5 million, or US$2.26 per diluted share, up from US$208.1 million or US$1.59 per share for the same quarter last year.
Lululemon was expected to earn US$1.87 per share on US$1.77 billion of revenue, according to financial data firm Refinitiv.
Total comparable sales were up 23%, including 16% for in-store and 30% for direct-to-consumer net revenue. Traffic to stores were up over 30%, and to its online store up over 40%, said McDonald.
“Importantly, we are not creating this traffic through markdowns or price promotions. Lululemon remains predominantly a full-price business,” he said.
Lululemon has set a goal of doubling 2021’s net revenue by 2026, including a quadrupling of international net revenue.
In that aim the company is especially focused on China, where it recently launched a digital flagship store on online retail giant JD.com and in the quarter added eight stores in China.
Lululemon will also shortly be opening stores in Spain, it’s first new market in the region in three years.
Overall the company opened 21 net new company-operated stores during the second quarter, ending July with 600 stores.
VICTORIA — B.C.’s economic recovery last year was stronger than forecast with the province’s audited budget numbers showing a surplus of $1.3 billion, in contrast with an earlier projection of a deficit nearing $10 billion.
Finance Minister Selina Robinson says the province’s economy in 2021-22 outperformed both public and private sector predictions.
The April 2021 budget, delivered during some of the darkest days of the COVID-19 pandemic, originally forecast a deficit of $9.7 billion, but revenues improved throughout the year.
Robinson says the improvement can be attributed to reopening the economy and the resultant increase in tax revenue, one-time federal contributions for COVID-19 and disaster events, higher natural resource revenues, and higher Crown corporation earning, especially at the Insurance Corp. of B.C.
She says in a press release that the “economic strength” demonstrated by the surplus will be put toward new inflation-fighting measures next month.
The province introduced a $60-million education support fund this week to help schools expand meal programs and assist families with school supplies and field-trip costs.
Robinson told a news conference that the “unexpected surplus” was a positive development, but uncertainties ranging from the global economy to COVID-19 and inflation continue to loom.
“Today is different than it was last year and the year before that,” Robinson said.
In the press release, Robinson said that instead of implementing “cuts and austerity” amid the pandemic, the government had opted to invest and that had paid off.
“Last year was an incredibly challenging year for British Columbians with the pandemic, coupled with devastating climate disasters,” she said.
“Through the challenges we’ve faced together, we’ve made record investments to ensure targeted supports were available to those who needed them most and to continue building the services and infrastructure people count on.”
A University of British Columbia researcher is kicking development of a credit-card-sized, disposable “biomedical sensor” – capable of detecting not only COVID-19 and other ailments – into high gear.
Sudip Shekhar, who is currently an associate professor in electrical/computer engineering at UBC, received recognition earlier this month in the form of a $3-million Schmidt Science Polymaths Award that is aimed at supporting tenured researchers around the world in driving interdisciplinary research.
Shekhar, the first Canadian to receive the award, will receive the funding over a five-year period in his quest to bring his biomedical sensor device into market. An early proof of concept, using the technology that would go into an eventual miniaturized device, has already proved successful in detecting COVID-19 in people.
“It’s a pleasant surprise,” Shekar said of winning the award grant. “There’s lots of work to be done, but definitely, this is a very generous gift and a nod to encourage [researchers] to go and do risky research.”
The device Shekhar envisioned, he said, would be something that can be readily carried by any individual person for testing for ailments anywhere he or she goes. The devices – which accept a sample of body fluids such as blood, saliva or urine – would include chipsets connected to Bluetooth networks that would instantly transmit the data collected from the sample to online analysis/diagnosis systems.
The results would then be transmitted back to the device to relay the results of the test, Shekhar said.
“My background in chip design,” said Shekhar, a former circuits research scientist at tech giant Intel. “I build chips that have now been used in data centres all around the world. What the Schmidt Award wants researchers to do is to take the funds and do research that’s risky and maybe even a pivot [out of one particular discipline].
“And when COVID hit, the only work you could do is COVID-related work. My colleagues – engineering professor Lukas Christowski and biomedical devices researcher Karen Cheung – were working on biosensors. And once we started working together, we started looking at things in a different perspective in realizing that what would really impact the world isn’t another large, expensive device but a smaller, very inexpensive one – something that people can use readily in their own homes.”
Through Dream Photonics Inc., a company co-founded by Christowski and Shekhar, the researchers created the proof of concept this year that detected COVID-19 in a sample. Shekhar added he is hopeful that – within a year’s time – the group will be able to deliver a credit-card-sized prototype to show to potential business partners for an eventual market-entry a few years down the line.
The possible applications, he added, is endless. The devices can be used to monitor the health of people living in remote communities, for example, where access to doctors and medical laboratories may be non-existent.
Alternatively, the devices can be made available at hospitals and doctors’ offices to be given out to individual patients for a closer, more timely access to diagnosis. While it doesn’t replace the need to see real doctors, the devices to create alternatives that may improve health outcomes of people who may not be able to see their physicians immediately.
What is needed now, Shekhar said, is for interested partners to reach out – because such research isn’t cheap even with the award grant funding.
“In Vancouver and B.C., we have a lot of people who have taken technology out of university and commercialized it successfully,” he said. “We’d love to chat with these people; maybe they would bring expertise that we don’t have right now. Maybe they will tell us about applications that we haven’t realized yet… We’d really like to expand out collaborative efforts.”
The biggest hike yet in interest rates this year will complicate valuations for residential and investment properties and prevent builders from proceeding with projects.
The central bank’s policy rate is now 2.5%, up a percentage point from the last announcement in May and 10 times what it was at the beginning of March.
“An increase of this magnitude at one meeting is very unusual. It reflects very unusual economic circumstances,” Bank of Canada governor Tiff Macklem said in making the announcement. “Things are not normal right now. After 30 years of low, stable inflation, many Canadians are experiencing the pain of high inflation—and the uncertainty that comes with it—for the first time.”
Macklem said the decision to raise rates rapidly was meant to “frontload” the pain rather than risk high inflation from becoming entrenched in the economy. The bank is targeting a 2% inflation rate versus the 8% currently reported.
Real estate and mortgage rates did not factor into the bank’s statements, but the direct and indirect effects will be significant.
“If you got a mortgage four or five years ago and you’re being reset in this environment, the Bank of Canada recently estimated that your payment’s probably 30 or 40 percent higher,” said Brendon Ogmundson, chief economist with the B.C. Real Estate Association. “As households get reset at a much higher payment, it just leaves a lot less room for other spending.”
Ogmundson says mortgage rates have largely factored in a target rate of 3.5%, and sales have slowed accordingly. Residential sales were down 28% province-wide in the first half of this year versus a year ago, totalling 51,202. Ogmundson expects a total of 85,000 and 90,000 by the end of the year.
“That’s really reflecting a really strong first half of the year. It’s going to be a pretty weak second half,” he said. “We’re heading for pretty slow activity over the next year.”
BCREA forecasts call for sales in the range of 70,000 next year, but much will depend on where interest rates head—how high and how quickly.
“We’re on our way to being a 3.25 to 3.5 percent rate sometime over the next year,” Ogmundson said of the Bank of Canada. “The big thing is how aggressive they’re going to be from here.”
The effects will also be felt in the development industry and by commercial real estate. Pricing for several residential projects was cresting fresh peaks this spring, and the new, higher cost of borrowing for both builders and buyers will push developers to pause projects.
Metro Vancouver condo apartment starts have declined by nearly 40% this year compared to 2021, according to Canada Mortgage and Housing Corp.
In the first five months of 2022, 3,969 condo apartments broke ground, compared to 6,511 starts in 2021.
Higher interest rates combine with soaring construction costs to put some residential towers in questions.
“The market-driven condo landscape right now is challenging,” Kindred Construction president Bryan Reid said. “They’re all delayed. Nobody’s pushed ‘go’ on a project that was supposed to start for us this summer or fall.”
Several retail developments have also been paused, according to Colliers International, and builders of strata industrial projects say the urgency among buyers has cooled as they readjust to the higher cost of space.
“As central banks have increased interest rates, you layer that on with the price increases we’ve seen over the past couple of years, and I think purchasers need to digest what the new costs look like,” said Jason Kiselbach, managing director with brokerage CBRE Ltd. in Vancouver.
Cap rates could also increase as buyers’ expectations of return shift. This hasn’t been seen to date, however. CBRE will be releasing its quarterly cap rate report next week and is leaning towards holding cap rates steady until transactions prove otherwise.
Susan Thompson, associate research director with Colliers International in Vancouver, expects a clearer picture come fall.
“We expect there will be some pause in decision-making and project commencement as owners, purchasers, developers and tenants run their calculations on how this is going to impact costs and their ability to access capital,” she said. “Deal activity getting over the finish line may slow for the next few months as prices adjust but will likely return in the fall as the market adapts to the change.”
Summer job season is here. With it comes a warning from WorkSafeBC to young workers about their vulnerability to injuries when entering a new workplace.
In 2021, WorkSafeBC accepted 7,125 young worker injury claims, according to a recent news release.
This number, up 17% from 2020, represents a number of issues young workers can face when starting a new job, according to Jacqueline Holmes, manager of prevention field services at WorkSafeBC.
“More than half of all serious injuries occur during the first six months of employment,” Holmes said. “Injuries can result from inadequate training, orientation, and supervision, inexperience, or a reluctance to speak up, ask questions, and raise health and safety concerns.”
According to data from WorkSafeBC, young workers in the service sector were injured the most in 2021, with 2,801 claims accepted. The retail and wholesale sector had the second-most claims, followed by construction, manufacturing, and transportation and warehousing.
The number of claims was up 17% from 2020, during which there was an abnormally low number of injury claims that can likely be attributed to the COVID-19 pandemic, said Alexandra Skinner, a WorkSafeBC media relations person.
Since 2017, 16 young workers have died in workplace incidents in B.C.
Despite the most recent increase in claims, data shows that injuries have actually decreased significantly over the past 20 years.
In 2007, the Occupational Health & Safety Regulation was introduced to help protect young workers. Since this regulation was introduced, the injury rate per 100 young has dropped from 3.5 in 2007 to 2.2 in 2020, according to data from WorkSafeBC.
However, with more than 7,000 injury claims still being accepted almost every year for the past five years, WorkSafeBC is cautioning young workers to be vigilant about their rights.
“It is every worker’s right to refuse unsafe work. Young workers should speak to their supervisors if they feel a task might be hazardous,” Holmes said.
Punishing or firing employees for refusing unsafe work is illegal, according to Canada’s Labour Code. Employers also have a legal responsibility to ensure adequate training and supervision are given to all new workers under the Workers Compensation Act.
WorkSafeBC is encouraging young workers to speak to their supervisors if they’re concerned for their safety.
“Trust your gut. It’s OK to say, ‘I need more training before I am comfortable’ or ‘This doesn’t feel safe,’” Holmes said.
Telus Corp.’s president and chief executive says the company has managed to weather recent economic challenges and even report a profit increase in its most recent quarter because its mix of products spans the internet, data, agriculture and health industries.
“That level of diversification gives us a better backbone of resiliency, whether it’s inflation or supply chain pressures that we’re dealing up simultaneously,” Darren Entwistle said on a Friday call with analysts.
He said the company’s proactive response to challenges, and its investments in technology, have helped it navigate numerous external pressures in the past couple of decades.
“Whether it’s equity market meltdowns or credit crunches or regulatory decisions or inflationary periods, we seem to navigate that turbulence very well.”
Entwistle’s remarks came as public health measures are being lifted in Canada and abroad after more than two years of the COVID-19 pandemic, but the long-awaited reopening has coincided with a series of global pressures weighing on companies.
Among those pressures are rising interest rates, an inflation level not seen in many years, Russia waging war on Ukraine, supply chain difficulties and even labour shortages.
Telus has not been unscathed, though Entwistle said, to deal with the conditions, the company has a “pretty resilient strategy” focused on Telus International and bundling.
Telus International (TI) was created to operate call centres, but has since shifted to selling information technology and business services like content moderation and mobile app development.
“We have the benefit of being able to access labour arbitrage at TI, so yes, we’ve got pressure. They’ve got pressure,” Entwistle said. “But to the extent to which we can use the TI asset to support, buttress the economics of TELUS Corp., I think all the better.”
VICTORIA — B.C.’s health minister says the province has almost caught up with the backlog of surgeries from the pandemic and weather events while it sets new targets to whittle down the existing waiting lists.
Adrian Dix says 400 nurses and 100 technicians had received training under the surgical renewal program to bolster staffing.
He says the province is also working to hire specialty nurses, anesthesiologists, surgeons and other staff to sustain the health-care system and ease the workloads for current staff.
The province has completed 99.8% of surgeries that were postponed up to the fifth wave of COVID-19 and weather events such as the heat wave and floods last year.
Dix called the progress stunning, saying the whole system has performed exceptionally well, considering the circumstances of the pandemic and last year’s weather events.
More than 52,000 urgent scheduled surgeries were completed last year, while another 72,549 unscheduled procedures were performed because Dix says the government greatly increased operating room hours.
VANCOUVER — Canfor Corp. is reporting a 25% increase in net profits in its latest quarter on near record high North American lumber prices that also boosted revenues.
The Vancouver-based company said it earned $534 million of $4.29 per diluted share in the first quarter, up from $427.8 million, or $3.42 per share a year earlier.
Adjusted profits were $529 million, or $4.25 per share, compared with $434.2 million, or $3.42 per share in the first quarter of fiscal 2021.
Revenues for the three months ended March 31 were $2.2 billion, up 14% from $1.9 billion in the prior year quarter.
Canfor was expected to earn net income of $584.2 million on $2 billion of revenues, according to financial data firm Refinitiv.
The company says North American lumber market conditions remained very strong for much of the quarter led by continued strength in new home construction along with tight supply stemming from supply chain disruptions.
“We are very pleased to see the sustained strength in global lumber markets continuing into 2022, and while our pulp business continued to face challenges we also saw improved results (from the fourth quarter),” CEO Don Kayne said.
Canfor Pulp Products Inc. lost $19.9 million on $219.7 million in sales due to ongoing transportation challenges and pulp supply disruptions. That compared with a net loss of $101.1 million on $249.3 million of revenues in the fourth quarter and profit of $8.4 million on $262.4 million of revenues in the first quarter of fiscal 2021.
VANCOUVER — Demand for housing in B.C. still far outstrips supply, experts say, even as the latest census figures show growth in the number of homes was higher than the increase in population countrywide.
Statistics Canada reported Wednesday that growth in apartments in a building with five or more storeys has far outpaced other types of dwellings across the country, though single-family homes remain the dominant form, making up about half of all dwellings.
There are 866,340 single-detached homes in B.C., representing 42.4% of the housing distribution and an increase of 1.7% since the last census in 2016.
There are also 221,850 apartments in buildings with five or more storeys, which make up a total of 10.9% of all dwellings in the province. This grew from 177,830 such units in 2016, which then made up 9.4% of all B.C. housing.
Across Canada, there are nearly 1.6 million apartments in buildings with five or more storeys, or 10.7% of all homes, up from 9.9% in 2016.
Andy Yan, director of the City Program at Simon Fraser University, expected the rise of the condominium. He said he expected the trend of young people being unable to “climb the property ladder” to continue, largely due to land space and price.
“Everything is expensive now,” Yan said. “(Millennials) may not be able to afford the cost of land, but want to purchase something, so it mostly comes in the form of a condo.”
Nathanael Lauster, associate professor of sociology at the UBC, said housing is a “major barrier to growth,” but also noted that the census does not measure demand or need.
“We’re just not building new, additional single-family houses anymore, so that’s going to become just an increasingly distinct and sort of luxury kind of market here,” Lauster said, referring to Metro Vancouver.
Leo Spalteholz, a housing analyst at Homes for Living, a group of community volunteers trying to make Greater Victoria more affordable for renters and owners, noted the influx of people moving to Canada’s coasts during the pandemic also boosted competition in the real estate market.
“It doesn’t take a lot of people arriving to overwhelm the housing. Even before the pandemic hit, inventories of properties for sale in Canada were actually quite low, and then suddenly we had these people moving.”
Statistics released by the B.C. Jobs Ministry earlier this month show more than 100,000 people moved to the province in 2021, the highest annual total since 1961.