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Alberta

China’s ban on Canadian beef still in place year-and-a-half later; industry in dark

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CALGARY — A Chinese ban on Canadian beef that industry officials expected would be short-lived remains in place 17 months later, and industry representatives say they remain in the dark about the reasons.

China has been blocking beef shipments from Canadian processing plants ever since an atypical case of BSE, or mad cow disease, was found on an Alberta farm in December of 2021.

At the time, Canadian officials expressed little concern that the case would have lasting market impacts. Atypical BSE develops spontaneously in about one in every one million cattle and unlike the classic BSE strain — which has been linked to the fatal neurological disorder Creutzfeldt-Jakob disease — it poses no health risk to humans and is not transmissible.

While most of Canada’s trading partners did not respond with any form of trade restrictions after the discovery of the case, South Korea and the Philippines joined China in suspending beef imports from this country.

However, both South Korea and the Philippines lifted the restrictions less than two months later, while China — which in 2021 was Canada’s third-largest beef export market, importing $193 million worth of product — has still not resumed trade.

“Most countries do not close when you find an atypical case,” said Dennis Laycraft, executive vice-president for the Canadian Cattle Association.

“It’s just a few that did and you know, all those other countries opened up fairly quickly. So yeah, really the outlier here is China.”

Adding to the confusion, Laycraft said, is the fact that both Brazil and Ireland have also recently had their beef blocked by China due to cases of atypical BSE in those countries. But China has resumed beef trade with both of those countries, and it took only a short time — in the case of Brazil, only four weeks.

Laycraft said he doesn’t know what the sticking point is when it comes to Canada, adding only that he doesn’t believe there is a scientific explanation.

“We’re pretty confident all of the technical requirements and information that was needed has been provided, to allow the decision to reopen,” he said.

“We certainly don’t believe there’s, on that side, any reason for it not to be. They just, you know, haven’t responded.”

In 2019, China blocked canola shipments from two major Canadian companies, not long after Huawei executive Meng Wanzhou was arrested by Canadian authorities. That ban lasted for three years.

Tensions between Canada and China have recently ratcheted up again, with the Canadian government on Monday expelling Chinese diplomat Zhao Wei, alleging he was involved in a plot to intimidate Conservative MP Michael Chong and his relatives in Hong Kong.

The renewed tensions have even led the canola industry to express concern that China will retaliate to Canada’s expulsion of its diplomat by blocking agricultural shipments.

But Gordon Houlden, director emeritus of the China Institute at the University of Alberta, said the beef industry’s ongoing issue demonstrates that some of Ottawa’s trade challenges with Beijing are pre-existing.

“Some people are jumping to the wrong conclusions and because of this latest exchange, the question of the diplomatic expulsions, they assume that it’s going to immediately lead to a whole series of further restrictions,” Houlden said. 

“But some of these problems go back a long way.”

Houlden said it’s not abnormal for China to move slowly on the regulatory front, due to a combination of “bureaucracy and lethargy.” He added that China is not always keen to wield trade as a weapon because it is a major exporter itself and knows such tactics can backfire. 

However, he said the fact that China has lifted similar restrictions against beef imports from other countries suggests that at some level, politics is likely playing a role in the delay. Houlden added that while it’s hard to know for certain what China’s motivation is on any given issue, it’s fair to say that Canada’s current relationship with China is frosty enough that Beijing is unlikely to make an effort to fast-track the beef issue.

“I think we can surmise that right now politics is not in a position to help solve the problem, and in fact may be part of the problem,” Houlden said.

Laycraft said during the year-and-a-half that the Chinese market has been closed, the Canadian beef industry has seen increasing sales into Japan, South Korea, Vietnam and other Asian countries. He said this has been due in large part to the Comprehensive and Progressive Agreement forTrans-Pacific Partnership, a free-trade agreement between Canada and 10 other countries in the Asia-Pacific region.

“We’d like to see things get back on a more normal track with China. We had some really good customers there that we were starting to build relationships with,” Laycraft said. 

“At the same time, we’re doing very well in other markets in Asia … So we’re not in the same vulnerable position that potentially other products from Canada are.”

This report by The Canadian Press was first published May 11, 2023.

Amanda Stephenson, The Canadian Press

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Alberta

Alberta’s fiscal update projects budget surplus, but fiscal fortunes could quickly turn

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From the Fraser Institute

By Tegan Hill

According to the recent mid-year update tabled Thursday, the Smith government projects a $4.6 billion surplus in 2024/25, up from the $2.9 billion surplus projected just a few months ago. Despite the good news, Premier Smith must reduce spending to avoid budget deficits.

The fiscal update projects resource revenue of $20.3 billion in 2024/25. Today’s relatively high—but very volatile—resource revenue (including oil and gas royalties) is helping finance today’s spending and maintain a balanced budget. But it will not last forever.

For perspective, in just the last decade the Alberta government’s annual resource revenue has been as low as $2.8 billion (2015/16) and as high as $25.2 billion (2022/23).

And while the resource revenue rollercoaster is currently in Alberta’s favor, Finance Minister Nate Horner acknowledges that “risks are on the rise” as oil prices have dropped considerably and forecasters are projecting downward pressure on prices—all of which impacts resource revenue.

In fact, the government’s own estimates show a $1 change in oil prices results in an estimated $630 million revenue swing. So while the Smith government plans to maintain a surplus in 2024/25, a small change in oil prices could quickly plunge Alberta back into deficit. Premier Smith has warned that her government may fall into a budget deficit this fiscal year.

This should come as no surprise. Alberta’s been on the resource revenue rollercoaster for decades. Successive governments have increased spending during the good times of high resource revenue, but failed to rein in spending when resource revenues fell.

Previous research has shown that, in Alberta, a $1 increase in resource revenue is associated with an estimated 56-cent increase in program spending the following fiscal year (on a per-person, inflation-adjusted basis). However, a decline in resource revenue is not similarly associated with a reduction in program spending. This pattern has led to historically high levels of government spending—and budget deficits—even in more recent years.

Consider this: If this fiscal year the Smith government received an average level of resource revenue (based on levels over the last 10 years), it would receive approximately $13,000 per Albertan. Yet the government plans to spend nearly $15,000 per Albertan this fiscal year (after adjusting for inflation). That’s a huge gap of roughly $2,000—and it means the government is continuing to take big risks with the provincial budget.

Of course, if the government falls back into deficit there are implications for everyday Albertans.

When the government runs a deficit, it accumulates debt, which Albertans must pay to service. In 2024/25, the government’s debt interest payments will cost each Albertan nearly $650. That’s largely because, despite running surpluses over the last few years, Albertans are still paying for debt accumulated during the most recent string of deficits from 2008/09 to 2020/21 (excluding 2014/15), which only ended when the government enjoyed an unexpected windfall in resource revenue in 2021/22.

According to Thursday’s mid-year fiscal update, Alberta’s finances continue to be at risk. To avoid deficits, the Smith government should meaningfully reduce spending so that it’s aligned with more reliable, stable levels of revenue.

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Alberta

Premier Smith says Auto Insurance reforms may still result in a publicly owned system

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Better, faster, more affordable auto insurance

Alberta’s government is introducing a new auto insurance system that will provide better and faster services to Albertans while reducing auto insurance premiums.

After hearing from more than 16,000 Albertans through an online survey about their priorities for auto insurance policies, Alberta’s government is introducing a new privately delivered, care-focused auto insurance system.

Right now, insurance in the province is not affordable or care focused. Despite high premiums, Albertans injured in collisions do not get the timely medical care and income support they need in a system that is complex to navigate. When fully implemented, Alberta’s new auto insurance system will deliver better and faster care for those involved in collisions, and Albertans will see cost savings up to $400 per year.

“Albertans have been clear they need an auto insurance system that provides better, faster care and is more affordable. When it’s implemented, our new privately delivered, care-centred insurance system will put the focus on Albertans’ recovery, providing more effective support and will deliver lower rates.”

Danielle Smith, Premier

“High auto insurance rates put strain on Albertans. By shifting to a system that offers improved benefits and support, we are providing better and faster care to Albertans, with lower costs.”

Nate Horner, President of Treasury Board and Minister of Finance

Albertans who suffer injuries due to a collision currently wait months for a simple claim to be resolved and can wait years for claims related to more serious and life-changing injuries to addressed. Additionally, the medical and financial benefits they receive often expire before they’re fully recovered.

Under the new system, Albertans who suffer catastrophic injuries will receive treatment and care for the rest of their lives. Those who sustain serious injuries will receive treatment until they are fully recovered. These changes mirror and build upon the Saskatchewan insurance model, where at-fault drivers can be sued for pain and suffering damages if they are convicted of a criminal offence, such as impaired driving or dangerous driving, or conviction of certain offenses under the Traffic Safety Act.

Work on this new auto insurance system will require legislation in the spring of 2025. In order to reconfigure auto insurance policies for 3.4 million Albertans, auto insurance companies need time to create and implement the new system. Alberta’s government expects the new system to be fully implemented by January 2027.

In the interim, starting in January 2025, the good driver rate cap will be adjusted to a 7.5% increase due to high legal costs, increasing vehicle damage repair costs and natural disaster costs. This protects good drivers from significant rate increases while ensuring that auto insurance providers remain financially viable in Alberta.

Albertans have been clear that they still want premiums to be based on risk. Bad drivers will continue to pay higher premiums than good drivers.

By providing significantly enhanced medical, rehabilitation and income support benefits, this system supports Albertans injured in collisions while reducing the impact of litigation costs on the amount that Albertans pay for their insurance.

“Keeping more money in Albertans’ pockets is one of the best ways to address the rising cost of living. This shift to a care-first automobile insurance system will do just that by helping lower premiums for people across the province.”

Nathan Neudorf, Minister of Affordability and Utilities

Quick facts

  • Alberta’s government commissioned two auto insurance reports, which showed that legal fees and litigation costs tied to the province’s current system significantly increase premiums.
  • A 2023 report by MNP shows
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