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November 16, 2021

Your CFA Update on COVID-19

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Bank of Canada sees labour-market uncertainty clouding rate path

A top Bank of Canada official warned the central bank’s ability to gauge when the nation’s economy has reached full employment, and when interest rates need to rise, has become highly uncertain.

Deputy Governor Lawrence Schembri said policy makers are striving to bring the economy to full capacity with employment at its maximum sustainable level. But measuring that level has become more difficult because of structural changes and the uneven effects of the pandemic on the labor market. 

“Our assessment of labor market conditions and underlying capacity and inflationary pressures is now more difficult,” Schembri said in prepared remarks to the Canadian Association of Business Economics on Tuesday. “Consequently, more uncertainty exists around the timing of when the output gap will close and inflation will return sustainably to our 2 per cent target.”

The Canadian dollar was little changed after Schembri’s speech, trading 0.3 per cent lower at $1.2557 per U.S. dollar as of 1:53 p.m. in Toronto. Yields on Canadian two-year bonds were up 3 basis points from Monday’s close to 1.04 per cent.

The speech represents a reminder to markets that the path to normalization remains fundamentally unknown, contingent on the economic trajectory and health of the labor market. Governor Tiff Macklem gave a similar notice to global investors in an opinion piece Monday for the Financial Times, in which he pointed out that while the timing of the next rate hike is “getting closer” it will be dependent on economic outcomes.

Altogether, the Schembri and Macklem comments represent an effort by Bank of Canada officials to re-emphasize critical elements of their current forward guidance, which is not to raise interest rates before capacity is fully absorbed. At a policy decision last month, the Ottawa-based central bank brought forward the timing of when that’s expected to happen to sometime between April and September.

Previously, the bank had been expecting the output gap to close no earlier than July. 

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Support for businesses implementing Alberta’s Restrictions Exemption Program

Eligible organizations participating in the Restrictions Exemption Program (REP) can now apply for a $2,000 grant to help offset some of the implementation costs.

To apply for the implementation grant, organizations must:

  • be on the list of eligible in-scope operators of organizations
  • implement the Restrictions Exemption Program consistently as part of daily operations
  • verify proof of vaccination, a recent negative COVID-19 test or proof of medical exemption for patrons age 12 and older
  • be a permanent establishment in Alberta
  • employ fewer than 500 employees

Organizations must ensure all of their information is complete and correct when applying. Incorrect or incomplete information may delay receipt of payment or cause the applicant to be denied payment.

The Restrictions Exemption Program allows businesses, cooperatives and non-profit organizations to remain open without the majority of public health restrictions.

It came into effect on Sept. 20.

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Alberta proof of vaccination requires QR started Nov. 15

Alberta’s vaccine record with a QR code is now required in order to access venues implementing the Restrictions Exemption Program (REP).

Immunization records, without a QR code, will no longer be accepted as proof of vaccination by the program effective Nov. 15. 

Businesses and operators can use the AB Covid Records Verifier app to confirm vaccination status meets the program’s requirements.

Alberta’s verifier app can now scan records with QR codes issued by other provinces and territories. Currently, other provinces and territories are testing using their apps to scan Alberta’s vaccine records.

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Alberta legislative changes to clear the way for shifting recycling costs to producers

Alberta is introducing legislative changes that clear the way for a regulatory framework that will transfer the cost of recycling from municipalities onto companies.

The province is developing an extended producer responsibility program which will make producers responsible for recycling costs of single-use plastics, packaging and paper products, along with hazardous materials such as batteries and pesticides. 

While the EPR program has not been finalized, the province is amending legislation so the framework can be adopted in the spring of 2022.

Changes to the Environmental Protection and Enhancement Amendment Act introduced Monday would give the province the legal ability to exempt certain designated materials, activities, companies and industries from the regulations.

The amendments would also allow for Alberta regulators to collect operational data on producers to determine which companies are eligible for such exemptions, the province said. 

Exemptions are necessary to ensure certain companies, such as small businesses and charities, do not face an undue regulatory burden, the province said. 

The bill will ensure that subsequent regulation is reasonable and enforceable by allowing for exemptions, the province said. 

The province has touted the framework as a way to transfer the cost and management of recycling away from municipalities and municipal taxpayers to the companies that produce the packaging.

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Manitoba introduces limits on youth sports, religious gatherings because of rising COVID-19 numbers

Manitoba is introducing several new pandemic measures aimed at kids in sports, hospital capacity and some unvaccinated churchgoers. This comes as the province tries to clamp down on a COVID-19 surge that has seen a near-doubling of new cases in the space of three weeks.

The latest rules mean people ages 12 to 17 will have to be vaccinated or regularly tested starting Dec. 5 to participate in indoor sports, officials said at a Friday news conference.

Hospitalizations in Manitoba have already jumped significantly over the last few weeks. The 87 COVID-19 patients in hospital on Oct. 20 shot up to 143 by the middle of this week, a rise of 64 per cent. Manitoba's daily caseload has seen a similar rise. As of Friday, the seven-day average for daily cases was 164, up from 85 on Oct. 20. Roussin said cases are increasing most rapidly among people under 20. (You can see the COVID-19 trendlines for the province in a graphic further down in this newsletter.)

Ottawa, Alberta reach deal for $10-a-day child care

The federal government and the Alberta government have agreed on a $3.8-billion, five-year funding agreement that should create 42,500 new regulated non-profit and day home spaces for tots by 2026.

Like most other agreements the federal government has already inked with provinces, the federal investment should reduce by half the cost of licensed child care for kids age six and under beginning in January. The average cost of that care will be $10 a day by 2026.

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Manitoba Hydro seeks 5% electricity rate increase

Manitoba Hydro is seeking a five per cent electricity rate increase that would start Jan. 1 if approved. 

The utility says the request is because the ongoing drought the province is experiencing has put a strain on its finances. 

The lack of significant precipitation and lower water flows have weakened Manitoba Hydro's ability to generate surplus energy to sell in markets outside Manitoba, president and CEO Jay Grewal said in a news release.

The utility is projecting a $190-million loss this year as a result, versus the net income of $177 million it had projected in its 2021-22 budget, its application says. 

Manitoba Hydro estimates the five per cent increase will result in a $5/month cost hike for the average customer using natural gas or other heat sources, assuming they are using an average of 1,000 kilowatt-hours (kWh) a month. 

The request will have to be approved by the Public Utilities Board, the third-party watchdog that approves electricity rates through public hearings.

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COVID-19's impact on the world is creating waves across all sectors and industries.

Every member of the CFA community is dealing with an issue that is affecting the world, our industries, our communities, our businesses, and our people.

We would like to hear from you if you have any topics, issues or questions to navigate turbulent times in order to support you further: 

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