The immigration slowdown hits home

Here’s the?Atlantic?news we’re tracking this week, including a new forecast on the economic impact?of immigration cuts, the fight for exemptions from ‘knee-jerk quotas’ and oil ups and downs in Newfoundland.?

Slowing down

Falling immigration and slower population growth will stunt economic growth in three of the four Atlantic provinces next year, according to a new forecast from the Atlantic Economic Council.??

Real GDP growth in Nova Scotia is expected to fall to 1.6 percent in 2025, from 1.9 percent this year, and from 1.5 percent to 1.3 percent in New Brunswick. P.E.I., the fastest growing Atlantic economy this year, will see real GDP drop from 3.0 percent to 2.3 percent.? Employment growth for the region is expected to fall as well, from 3.4 percent this year to below two percent in 2025.? ?

The Council blames the “demographic drag” of lower immigration for most of the slowdown. The federal government is making aggressive cuts to the number of permanent residents it will accept, starting next year, on top of cuts already announced to the number of temporary foreign workers and international students admitted. Worker shortages are likely to re-emerge, the Council warned, particularly in industries that rely on foreign workers, such as retail and hospitality. ?

The good news, if there is some, is that the explosion in housing starts the region has seen this year, together with slowing population growth, will take pressure off the housing market. And major project investment in the region is expected to rise 15 percent, driven by a 28 percent rise in Nova Scotia, thanks to the money pouring into renewable energy projects.??

Oh, and the other good news is that Newfoundland and Labrador is expected to buck the trend. The Council forecasts real GDP growth in the province to jump to 2.9 percent next year thanks to a rise in oil production, though the rest of the economy is expected to slow down. ?

The province is having a decent 2024 as well, with GDP growth expected at 2.6 percent thanks to rising employment and consumer spending. In her fiscal update last week, Finance Minister Siobhan Coady?noted that it’s rare for the province’s economy to grow when oil revenues fall — production is seven percent below government projections. “Oil production is down, but it will come up,” she said. “The oil is still in the ground so it will come up eventually.”?

Let ’em in, part II?

At that same fiscal update, Coady made a plea for the federal government to exempt Newfoundland and Labrador from cuts to immigration. “We still have a significant need for more population in the province,” she said.?“There are a lot of businesses still looking for workers so we will continue to press the federal government to ensure that we have more Newfoundlanders and Labradorians.” ?

Her comments echoed those of her boss, premier Andrew Furey, who criticized the cuts in his state of the province address on Tuesday. ?

Federal immigration minister Marc Miller hinted that he may well be receptive, telling the CBC: “[There’s] no reason to believe that we can’t make this work for Newfoundland and Labrador, particularly in taking a more surgical approach. We’re asking them to work with us, and I have every indication that we can actually work something out with Newfoundland.”?

The minister may find others at his door looking to work something out. The Atlantic Canada Trucking Association said the immigration cuts have its members worried. Many trucking companies rely on newcomers to Canada, and many have hired drivers whose work permits are expiring and have heard nothing about their fate. ?

“You pull 200, 300 people out of our industry in just Nova Scotia and New Brunswick alone, it’s going to have huge implications on the speed at which we can move freight,” said Chris McKee, the association’s executive director. “These are people who have joined these companies, that are model employees. They are people that we want to retain but unfortunately, due to knee-jerk quotas and knee-jerk reactions to immigration programs, this is affecting them and it’s affecting our members.”?

Bubbling crude

The increase in oil revenue Newfoundland and Labrador is looking for in the next few years is likely to come in part from Cenovus Energy Inc.’s offshore operations. Its White Rose oilfield is expected to restart before year’s end, and its Terra Nova operation is still ramping up production after coming back online less than a year ago. CEO John McKenzie provided an update last week on the company’s West Rose Extension Project, which has been eating up $700 million to $800 million per year in upfront costs.??

Upgrades to the SeaRose, its production, storage and offloading vessel, are complete and its concrete gravity structure — essentially the base of the platform — is effectively ready to go. The project is about 85 percent complete, McKenzie said, and is on track to produce its first oil in 2026. By 2027, it should be producing more than $1 billion a year in cash flow. ?

“It’s a huge inflection point, from consuming close to a billion a year to producing close to a billion a year,” McKenzie told analysts.?

Things were a bit less hopeful for Equinor, which revealed a second exploration well drilled in the Flemish Pass basin had come up dry. The Norwegian company has put its Bay du Nord project on hold pending a final investment decision, and it was hoped the two wells drilled this year could bolster the case for proceeding. Equinor has estimated Bay du Nord could hold 500 million barrels of oil — the province’s offshore energy regulator says it could be more like one billion. Though the exploration wells were unsuccessful, the company said “the information gathered during this campaign has strengthened our understanding of the Flemish Pass basin.”?

Promises,?promises

Party leaders in Nova Scotia spent week one of the provincial election campaign making expensive promises to address affordability, mostly through the tax system. Premier Tim Houston’s Progressive Conservatives had already promised a one percentage point cut to the HST, which he said would save the average household $850 per year, and last week vowed to increase the basic personal exemption on provincial income taxes from $8,744 to $11,744. (Those who make less than $75,000 also get an adjustment to their personal exemption; those who make less than $25,000 already benefit from the level of exemption being promised.) The two tax changes would cost the provincial budget some $370 million.??

The Liberals have gone one better, so to speak, promising a two-percentage point cut to the HST. Last week leader Zach Churchill said that, if elected, his government would raise the basic personal exemption to $15,705 and double the adjustment for people who earn less than $75,000. ?

The CBC reported that documents from the Liberals put the total cost of all three tax changes at $945 million. The Liberals threw in a promise to remove the HST from grocery items that are still subject to it (think pre-made salads, rotisserie chickens?and other ready-to-eat items). Put together, these measures would save families on average of $3,000 a year, the party said.?

All of which is good news for Nova Scotians struggling to make ends meet, though it’s not such good news for the province’s budget, especially if the economy slows down.

The New Democratic Party had yet to make its taxation plan public by week’s end, but leader Claudia Chender took aim at HST cuts as mostly benefitting “people with enough disposable income to buy really expensive things.” Chender focussed on housing affordability, promising to abolish fixed-term leases that allow landlords to put an end date to a lease, and then hike the rent for new tenants without restriction. She also said a New Democrat government would cut the province’s rent cap in half, to 2.5 percent.????

Gypsum and salmon

Soaring demand for housing is sparking growth all along the supply chain, right down into the mining industry. CertainTeed Canada Inc. won environmental approval last week for its planned open pit gypsum mine in Cooks Brook, Nova Scotia, meant to supply 1.5 million tonnes of gypsum per year to its drywall plants in Toronto and Montreal. The company, a subsidiary of French manufacturer Saint-Gobain, will hire 65 people and start construction next year, with production beginning in 2027.?

Nova Scotia has the “only known major gypsum resources” in eastern North America, said Peter Clark, senior public relations manager for Saint-Gobain. And miners are rushing in to take advantage. The Gold Bond gypsum mine in Milford Station recently got environmental approval for a major expansion, and USG Corp. announced last year that it would spend $104 million to restart a quarry in Little Narrows. A spokesman for USG told allNovaScotia last week it should complete equipment installation this year and reach full production capacity in 2025.?

The CertainTeed mine will also help the company get to net zero by 2050. Nova Scotia gypsum will replace product currently shipped over from Spain, as well as synthetic gypsum which is derived from the by-products of smokestack desulfurization at coal-fired power plants and has much higher carbon footprint.?

Another Nova Scotia mining project is meeting some environmental pushback, however. The Nova Scotia Salmon Association, comprised of anglers and conservationists, is worried that a project comprised of three gold mines put forward by Australian-based St. Barbara will threaten the river ecosystem on the province’s Eastern Shore. ?

The association has worked with First Nations and other agencies to deacidify the West River by adding limestone powder, a process that has revitalized its salmon and brook trout populations. The association’s former lead scientist has co-founded a tech start-up called CarbonRun that opened its first river deacidification facility in Pictou County in October. Its technology also helps rivers pull more carbon out of the air, convert it to into a carbonate molecule and flush it into the ocean; CarbonRun recently won a $25.4 million investment from a U.S. carbon credit firm.?

Mike Bardsley, vice president of the Salmon Association, told allNovaScotia that healthy rivers are “worth more than the gold mining industry, and the short-term profit that comes from digging and destroying and trying to maximize a return on the resources ... It’s less about not-in-our-backyard and it’s more about not in the areas where there’s substantial investment, and decades of work and collaboration with many partners.”?

The best defence

Lockheed Martin Canada last week won a 10-year $1.85-billion contract to provide maintenance and support for the combat systems onboard the Navy’s Halifax-class frigates. The contract will support 680 jobs at facilities in Halifax, Esquimalt, B.C. and the National Capital Region, and it includes an annual option that could push it as far as 2047. ?

That means Lockheed will be effectively servicing the ships until the end of their life expectancy. They are to be replaced over the next three decades by new River-class destroyers being built at J.D. Irving’s Halifax shipyard; three of the 15 destroyers are already under construction.?

St. John’s-based PAL Aerospace, meanwhile, won a different sort of defence contract — a 15-month deal to provide airborne intelligence, surveillance and reconnaissance (ISR) support for a “domestic security agency in an allied European nation.” ?

PAL didn’t name the agency or the country, but it’s thought to be the U.K. The company won a contract last year that sees its “Force Multiplier” aircraft patrol U.K. waters looking for smuggling and illegal immigration. PAL does similar work for the Netherlands Coast Guard, and is looking for more.?

It's already been a good year for PAL. Along with an affiliated company called Air Borealis that’s partnered with Innu and Inuit economic development agencies, PAL recently took over Newfoundland and Labrador’s integrated road and air ambulance service. Late last month, Air Borealis won a contract for whale monitoring for the Department of Fisheries and Oceans, and in early October, PAL reached an agreement with Air Canada to operate flights between St. John’s and Halifax under the Air Canada Express banner.?

— By Mark Stevenson

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