All posts by Oliver Sachgau

Atlantic Provinces suffering in Non-Residential Investment

Database assignment three
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Photo by Dennis Jarvis
George’s Island in Halifax Harbour | Photo by Dennis Jarvis

What province you live in might make a big difference in how healthy you think Canada’s economy is.

Generally, investment in non-residential building construction is up in Canada, but those increases are not distributed evenly across the provinces.

Prairie provinces such as Alberta and Manitoba have seen investment rise dramatically over the past three years. But in the four Atlantic provinces, Newfoundland and Labrador, Nova Scotia, New Brunswick, and Prince Edward Island, investments are down.

And some economic experts say this is a sign of future trouble for the Atlantic provinces.

Investment in non-residential buildings is a measure of how much money is being spent on constructing anything that isn’t a residential household,  excluding engineering work such as bridges, roads or dams, according to Mahamat Hamit-Haggar, a research economist with Statistics Canada. The numbers are derived from building permits, he said.

Non-Residential Construction – Daily (Text)
The latest figures released by Statistics Canada are from the third fiscal quarter of 2014. When compared with the same quarters in previous years, back to 2011, Alberta has seen an increase of almost $300 million. Nova Scotia, by contrast, has seen a decrease of almost $50 million. Newfoundland and Labrador has seen investment in that province cut in half since the third quarter of 2011.


 

Unlike residential construction, which usually is tied to interest rates, non-residential construction is tied to overall economic health, according to Mario Seccareccia, a professor of economics at the University of Ottawa.

“If you have a big increase in say, oil prices are a good example, that would simulate some investment in that sector or around it. Fort McMurray and all these places in Alberta would be feeling the growth,” Seccareccia said.

Hamit-Haggar said the changes between the most recent quarter and the one before are not noteworthy.

“If you compare the figures in the latest release … I do not describe the declines in the Atlantic provinces as significant decreases,” he said.

But it’s not quarter-to-quarter or year-to-year where trends are seen, according to Talan Iscan, a professor of economics at Dalhousie university,

“It’s a highly volatile component of GDP … You’ll see in any arbitrary year they’ll go up and down,” he said.

A long-term decline over several years, like the ones the Atlantic provinces are seeing, are easier to read, he said.

“When you go to the long-term trends, the news is pretty bad for all four [Atlantic] provinces,” he said.

Finding causes is hard. Because non-residential construction can be impacted by the health of any sector, it’s hard to pinpoint which ones are responsible, Iscan said. However, one known factor is oil.

Since the late 1990s, Canada’s economy has become closely tied to the oil sector, Seccareccia said. How the Canadian dollar trades is usually a good indication of where oil prices are, he said.

“We’ve become a petro-currency. Our Canadian dollar has been falling and guess what oil prices have been falling too. Once the international price of oil goes up or down, we tend to move in tandem with it. Not one-to-one, but close enough,” he said.

But this wasn’t always the case. In fact, it used to be that the opposite was true, Seccareccia said.

“Until the late 1990s, when you saw an increase in the price of oil, if anything, our dollar went down rather than up. This is because oil was not a big export,” he said.

Atlantic provinces had a little bit of oil in the past, but that has stopped in recent years, Iscan said.

“Newfoundland has reached a plateau, they’re not drilling any new platforms. Nova Scotia had a bit of … Natural gas but that has plateaued. In fact they’re thinking of closing some of these things by 2020,” he said.

“It has been about natural resources in most provinces,” he said.

Oil also has an impact on other sectors, such as manufacturing, Seccareccia said. In recent years, manufacturing has had an inverse relationship with oil. If one is doing well, the other suffers, he said, because of how oil and the Canadian dollar are linked.

“If the Canadian dollar goes up, it stifles the export of manufacturing goods,” he said.

Oil has been dropping in recent months, which would provide benefits for provinces with strong manufacturing bases like Ontario. But the Atlantic have provinces, who can’t benefit from strong oil economies, also don’t have much in the way of manufacturing.

“In the case of Atlantic Canada I think it’s a bit of a chronic situation there,” Seccareccia said.

Whether the Atlantic provinces make it out of the rut is hard to say, according to Iscan. Nova Scotia’s hope, he said, is a federal shipbuilding contract awarded in 2011 that will bring jobs in over the next years.

“I think everyone here is betting on the federal contract flowing in the way it has been announced,” he said.

For the other provinces, Iscan said he’s not expecting major changes.

“It’s not very optimistic, other than the shipyard contract. It’s going to chug along … no one is expecting a stellar next three to five years around here,” he said.

 

 

 

Instances of counterfeiting triple in 2013, but few get solved

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Paper bills like these are easier to counterfeit, but they're going out of circulation soon.
Paper bills like these are easier to counterfeit, but they’re going out of circulation soon.

Instances of counterfeiting currency nearly tripled in Ottawa between 2012 and 2013, a number that might signal a last push by criminals to counterfeit paper bank notes before they are completely replaced by new, more secure polymer notes.

There were 162 reported instances of counterfeit currency in Ottawa in 2013, compared to 66 in 2012, according to data compiled by Ottawa police. The wards with the highest instances in 2013 were Bay, with 21, followed by Somerset, with 18.

Those rates matched national numbers by the RCMP, which saw a slight increase in the number of counterfeit notes passed in 2013 compared to 2012.

The introduction of polymer banknotes in Canada in late 2012 and 2013 may factor in to the rise. Marie Terrien, a senior analyst at the Bank of Canada, said the new notes have pushed would-be counterfeiters to target old paper notes, as the security features on the polymer notes are harder to reproduce.

Out of a million notes, 29 were counterfeits in 2013, Terrien said. Although she declined to comment on the Ottawa data beyond saying counterfeiting wasn’t an issue in Ottawa, she said the rate of counterfeiting of polymer notes compared to paper ones was very small.

“Once we introduce new bank notes, the counterfeiters usually target the outgoing series. That’s what we’re seeing right now. The vast majority of counterfeiting is on paper bank notes,” she said.

As the bank introduces polymer notes, the paper ones are taken out of circulation, which means there’s a limit on how much longer paper notes can be counterfeited, Terrien said.

“Pretty soon we’ll just be left with polymer notes,” she said.

Though the number of counterfeiting incidents changed dramatically, the rate of solvency did not. In both 2012 and 2013, counterfeiting was the second least-solved crime in Ottawa, second only to failure to stop and remain. Out of the 162 instances in 2013, 13 were solved, a solvency rate of about eight per cent. In 2012 the solvency rate was about six per cent.

Ronald Melchers, a professor of criminology at the University of Ottawa, said the nature of how counterfeiting is reported to police makes it harder to solve.

“[Police] report instances when a bank or business reports a counterfeit bill, and not necessarily when they’re investigating,” Melchers said.

Another important note about the numbers, Melchers said, is that the total number of instances is comparatively small, making changes harder to track. While there were 162 cases of counterfeiting in 2013, by comparison there were over 2000 instances of breaking and entering. Melchers said when categories with small numbers like counterfeiting see changes, they are usually much more noticeable.

“They go up or down … those kinds of things vary. When you track numbers that small, we don’t draw conclusion, really,” he said.

Instances of counterfeiting can spike in certain seasons, according to Christine Leadman, executive director of the Downtown Bank Street Business Improvement Area, which is in the Somerset ward, one of the wards with the highest number of reported counterfeits.

The Ottawa police data is divided by year, which doesn’t allow for an analysis by season. But anecdotally, Leadman said, she’s seen instances of counterfeiting spike in the holiday season.

“It’s important that (businesses are) more attentive, (and) that the part-time and seasonal staff they hire are trained as well,” Leadman said.

Terrien said it’s important for consumers to check if bills they are handed are counterfeit, and if they are hand them back immediately.

“Don’t try to pass it somewhere else, because that’s illegal. That’s knowingly passing a counterfeit,” she said.

“The best protection is to check your note,” she said.

Rideau-Vanier sees most building code complaints

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Rideau Vanier saw the highest number of building code complaints, which councillor Mathieu Fluery attributes to its proximity to the Ottawa U campus. Mike Gifford|Flickr.com
Rideau Vanier saw the highest number of building code complaints, which councillor Mathieu Fleury attributes to its proximity to the Ottawa U campus. Mike Gifford | Flickr.com

More people complained to the city of Ottawa over the summer about building codes in Rideau Vanier than in any other ward in the city, an analysis of city data shows.

Out of 221 total building code complaints made to the city between May and July of 2014, 32 came from the Rideau Vanier ward. Ward 16, River, came in second place, with 22 requests over the same period.

The data comes from the city’s collection of all completed requests through the ServiceOttawa channels. These include calls to 311, as well as requests through client service centres or on Ottawa.ca. The requests also differentiate between building code complaints and building code inquiries.

When someone calls in or notifies the city about illegal construction or demolition, unsafe building or parts of a building, as well as changing class, such as when a homeowner converts a house into a retail store, it is classified as a building code complaint, according to Donna Gray, director of Service Ottawa. Through a spokesperson, Gray said some complaints are then investigated.

“Complaints regarding an unsafe building or building element such as brick veneer or porches and balconies detaching itself from the building, or a building that has sustained damage or one that may collapse … are investigated by Building Code Services,” Gray said.

Mathieu Fleury, city councillor for Rideau-Vanier, said he thinks Rideau Vanier has a high number of complaints for one reason – the high number of conversions. Because of the ward’s proximity to the University of Ottawa, property owners in the past would buy buildings in the area and convert them for students, Fleury said.

“Those were problematic types of buildings. A lot of construction has happened over the last couple of years through that,” Fleury said.

These conversions were possible because of bylaws that allowed converted dwellings, Fleury said. Converted dwellings are buildings that originally had up to three units, and are then renovated to contain four units or more.

If a property owner wanted to convert a building this way, they could request that building permit without needing a structural planning review or public consultation.

“They would go right in to doing the work. Our issue is that these buildings were box-like structures, lot line to lot line, causing a lot more angers and issues in the community,” Fleury said.

Converted dwellings were removed as permissible from the zoning by-law in April 2014. However, the area still sees a large number of renovations and construction, which leads to a larger number of building code complaints, Fleury said.

“Vanier has seen high uptake of building permits in the past few years … there’s always work that’s ongoing. Generally, it’s … demonstrating that we are an area where there’s renewal, especially in the Vanier portion,” he said.

Fleury said he’s unsure whether the bylaw changes will lead to a reduction in building code complaints.

“We think we’ve put the right tools in place. Is it sufficient? Is it going to change? Are we going to require more enforcement because people will be doing it illegally? There’s two angles to that, for sure,” Fleury said.