Edmonton (Alta.) - 1987-2000 - Socio-economic forecasts_2000-2005, City of Edmonton (2000-04)

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PLANNING AND DEVELOPMENT

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?repared by the City Forecast Committee

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Edmonton Socio-Economic Outlook 2000- 2005

Prepared by: City Forecast Committee

April 2000

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Copyright Š 2000 by the City of Edmonton Planning and Development Department c/o: 3 rd Floor, City Hal 11 Sir Winston Churchill Square Edmonton, Alberta, Canada TSJ 2R7

The City ofEdmonton provides this information in goodfaith but it gives no warranty nor accepts liabilityfrom any incorrect, incomplete or misleading information, or its use for any purpose.

SEdmonton Soclo-Economic Outlook, 2000 - 2005

Jong Huang (Chairperson) Chief Economist Planning and Development Department

K.L. Siu Senior Infrastructure Officer Office of Infrastructure Asset Management & Public Works Department

Dana Oikawa Forecast Manager EPCOR Power Generation

Susan Ancel Director Network Services EPCOR Water Services

Rick Hersack Director of Research Economic Development Edmonton

Doug Kostashuk Strategic Planner Community Services Department

Alan Brownlee General Supervisor, Forecasting & Assessment Transportation and Streets Department

Staff Sgt. Joe Rodgers Planning & Evaluation Services Section Edmonton Police Services

Audra Jones General Supervisor, Traffic Planning Transportation and Streets Department

Don Pilling Fire Protection Engineer Emergency Response Department

Greg Kliparchuk Operating Budget Coordinator Corporate Services Department

Christina Ionescu Economist Corporate Services Department

Patrick Walters Senior Economist Planning and Development Department

Stan Dilworth Director, Standards & Appeals Corporate Services Department

For more information contact: Jong Huang

phone: (780) 496-6068; fax: (780) 496-8450 email: iong.huang@gov.edmonton.ab.ca

Patrick Walters

phone: (780) 496-6070; fax: (780) 496-8450 email: patrick.walters@gov.edmonton.ab.ca

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Preparedby: City Forecast Committee,April 2000

IaEdmonton Socio-Economic Outlook, 2000 - 2005

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OF CONTENTS

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EXECUTIVE SUM MARY .............................................

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...................... 11 Output........................................

Demographic Changes .......................................... 12

ECONOM IC G ROWTH .....................................................

1

Employment............................

Canada......................................... ....... .................. 1 A lberta..................... ... ................ .......... 1 Edm onton.......................................... .................... I IL & G AS.....................................................................

1 INTEREST RATES AND EXCHANGE RATES.....................2

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DEMOGRAPHIC CHANGES .............................................. 2 LABOUR M ARKET..........................................................2 CONSTRUCTION SECTOR................................................3 SINFLATION ............................... .....................................

SOCIAL O UTLOOK ..........................................................

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IMPLICATIONS OF THE OUTLOOK ....................... 4 BUSINESS SECTOR .........................................................

4 GOVERNMENT AND THE PUBLIC SECTOR.......................4 FAMILIES AND INDIVIDUALS..........................................4

Prime Lending Rate..................................................6

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Oil and G as...........................................................

9 Net Migration......................................................

10 EDM ONTON ..........................................................

10 Economic Environment...........................................10 Economic Growth...............................................10

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GRAPHS AND TABLES.................................................. 32

gExchange Rate........................... ................

7......................36 . . .................... 7APPENDIX II ................................................................ 36 ...................

ALBRTA A LBERTA ..............................................................

7 Economic Growth.................................................7

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Real Estate Market..................................................

ECONOMIC OUTLOOK RISKS..............................17 Downside Risks to the Outlook............................... 17 Upside Risks to the Outlook.................................... 17 PART 2: SOCIAL OUTLOOK3................22 PARSOCIALCIOUOUTLOKK..............................3 AA...................................

22 22 ...................................................................

CANADLBERTA A LB ERTA .......................................

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EDM ONTON ............................................................. 26 Employment and Unemployment............................27 DemographicChanges..........................................27 Housing and Homelessness ................................... 28 INTRODUCTION...........................................................5 Poverty .................................................................

28 PART 1: ECONOMIC OUTLOOK..............................5 Education................................................................

29 Health and Social Well-Being ............................... 30 UN ITED STA TES .....................................................

5 CriminalActivity.................................................. 30 C A N A D A .................................... .........................

5 5.............................32 .......................

Economic Growth ......................................

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Unemployment Rate.............................................. 14 Inflation .................................... ....................... 14 B uildingPermits............................. ................ 15 H ousing Starts ........................................................

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EDMONTON CENSUS METROPOLITAN AREA MAP ....... 36

Edmonton Soci o-Economic Outlook, 2000 - 2005 SUMMARY EXECUTIVE ET4.0% Economic Growth Canada

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The Canadian economy grew by 4.2% in 1999, up from 3.0% in 1998, as it benefited from the continued expansion of the United States economy.

The U.S. served as a growing market for Canadian manufactured goods.

The forecast assumes that the Canadian economic growth will average 3.6% in 2000 and 3.0% in 2001, in response to slower growth in the United States, higher short-term interest rates and a stronger Canadian dollar. Slower growth in the U.S. and a stronger Canadian dollar will result in a moderation in the growth of the export sector.

Growing labour incomes and lower borrowing costs

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economic growth will fall to 3.5% per year from 2001 to 2003. The growth rate will accelerate to in 2004 and 2005, as the world economic recovery gathers momentum and the province benefits from stronger resource prices and increased disposable incomes arising from lower income taxes. Also, increased government spending will contribute to economic growth.

Edmonton The economy in the Edmonton Census Metropolitan Area (Edmonton region) grew at 2.5% in 1999 up from 1.3% in 1998. Economic growth in the region was restrained by the continuing instability in the world economy.

The total value of all goods and services produced in the Edmonton region will grow by 4.5% in 2000 and 3.7% in 2001, as energy prices firm and businesses provide services to a thriving energy sector. The region's growth will be slightly higher than the provincial average. With the construction

in progress on the Scotford refinery and other major

will boost domestic demand. Lower unemployment rates will lead to higher wage settlements and this combined with tax cuts will result in increasing disposable incomes.

heavy oil projects and the City builds facilities to host the 8 th World Championship in Athletics in 2001, net migration to the region will increase as the local labour market becomes relatively attractive to

Alberta

job-seekers. With the completion of these major construction projects, Edmonton will grow, below the provincial average rate, from 2002 to 2005.

h The Alberta economic growth in 1999 was estimated at 2.5% up from 1.8% in 1998. Consumer spending, government expenditures and business spending on machinery and equipment drove the economic expansion.

The growth in Alberta will average 4.0% in 2000.

The economy will be driven by stronger gas prices, increased business investment in petro-chemical and government higher and plants, electricity expenditures. Households will enjoy larger incomes ex tue ouehad wileno arerComes as both employment and wages increase. Consumer expenditures will increase, as net migration remains positive. In addition, lower federal and provincial income and business tax rates will lead to higher disposable incomes and corporate profits. As the U.S. and Canadian economic performance moderates from 2001 to 2003, export growth from Consequently, Alberta will also moderate.

Prepared by: City Forecast Committee, April 2000

Oil & Gas Given strict compliance with announced production cuts, the global supply of crude oil dropped below world demand by as much as 2.5 million barrels per day through the winter months. This forced buyers to run down inventories and drove the price for West Texas Intermediate (WTI) up to more than US$32 per barrel in March, 2000 - a level not seen since Faced since the the Persian Persian Gulf Gulf War. War. Faced with with considerable pressure from consuming nations, the considerable pressure from consuming nations, the Organization of Petroleum Exporting Countries (OPEC) recently agreed to increase production.

When combined with anticipated production increases among non-OPEC producers, analysts believe that world supply could increase by as much 1

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Edmonton Soc io-Economic Outlook, 2000 - 2005

as 2 million barrels per day this spring.

Consequently, the price for WTI is expected to fall to around US$21 per barrel by the end of the yearaveraging US$24 for the year as a whole.

Thereafter, assuming that producers are largely successful in balancing global supply with demand, WTI prices are expected to increase gradually,

The Canada/US exchange rate averaged US$0.67 in 1999, unchanged from 1998, but down from US$0.72 in 1997. With economic growth resumed in the world economy by 2000, the currency will strengthen and recover to average US$0.69 in 2000 and US$0.73 by 2005.

rising to around US$23 per barrel in 2005.

Demographic Changes With the re-linking of Canadian natural gas prices with U.S. prices in 1998 and the sharp recovery in world oil prices helping to drive up U.S. gas prices in 1999, Canadian gas prices have risen sharply over the last two years. Thus, prices at the AECO storage facility in southern Alberta increased from around $1.10 per GJ in October 1997 to a high of close to $4 in October 1999,with last year's prices averaging $2.76 per GJ. Gas prices last year will have been higher still, but for another unusually mild winter across North America. Assuming a return to a more normal winter heating season and continued economic growth in Canada and the United States, gas prices are expected to remain firm over the next two years, averaging $3.20 per GJ. By 2002, the availability of increased supplies of U.S. Gulf Coast gas in Chicago and the reemergence of bottlenecks in Alberta's export pipelines will cause prices to moderate until, once again, new pipeline capacity can be added.

The City of Edmonton's population is expected to increase by about 44,000 people by 2005 reaching 702,500 (Table 2).

The population of the Edmonton CMA (Edmonton Census Metropolitan Area) is expected to increase by some 61,000 over the same period reaching 1.004 million (Table 3) (See Appendix 11 for the boundaries of the Edmonton CMA). Net-migration is expected to range between 5,000 and 6,000 people per year for the City of Edmonton and between 7,000 and 8,400 for the Edmonton CMA. Net migration for the Edmonton region is strongly linked to the relative differences in the unemployment rates between the region and the rest of Canada. Unemployment rates for Edmonton and Alberta are expected to continue to decline relative to the rest of Canada. The other component of population change, natural increase, is expected to continue to decline as the number of deaths increases as the population ages.

The Edmonton region's population, like the rest of

Interest Rates and Exchange Rates

Canada, continues to age. The number of people

The prime rate averaged 6.4% in 1999, down slightly from 6.6% in 1998, but up from 5.0 in 1997.

aged under 40 is expected to remain unchanged over the forecast period while the number of people aged 40 and over is forecast to increase by some 61,000

As the U.S. Federal Reserve attempts to control inflation, U.S. short-term interest rates will increase.

with most of the increase occurring in 50s age group (28,000) and 40s age group (13,000). The trend is

The Bank of Canada will respond by increasing its bank rate in order to protect the Canada/U.S. exchange rate. The prime rate will increase to 7.0% in 2000. As the U.S. economy slows in response to higher borrowing costs, short-term interest rates will

similar for the City of Edmonton.

be lowered in the United States. The Bank of Canada will match these short-term interest rate cuts. Therefore, the prime-lending rate will average 6.8% in 2001 and decline to 6.0% in 2003 and 5.8% by 2005.

The forecast calls for employment to grow by 16,000 persons to a total of 499,000 in 2000, as the Edmonton region adjusts to firmer energy prices.

By 2001, total employment will average 509,000 persons and this will increase to 537,000 persons by 2005.

Labour Market

April by: 2000 City Forecast Committee, Prepared by: City Forecast Committee, Apri2000

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Edmonton Socio-Economic Outlook, 2000 - 2005

The Edmonton unemployment rate is expected to fall slightly to 5.6% in 2000 from 5.9% in 1999, before rising to 6.0% in 2002 and 2003. As the provincial growth rate improves to 4.0% in 2004 and 2005, the Edmonton regional unemployment rate will fall to 5.8% in 2004 and 5.6% in 2005.

Construction Sector *record-high The construction activity in the Edmonton region in 2000 will be slightly higher than the 1999 level.

Housing starts are expected to range between 5,000 and 6,700 units per year in the region and 3,200 to 4,200 units in the City over the forecast period, Office space vacancy rates will decline gradually over the forecast period as the economic activity and employment opportunities continue to improve, resulting in higher net office absorption rates, The apartment vacancy rate will decline in the early phase of the forecast period, as positive net migration to the region remains relatively strong.

Further into the forecast, the apartment vacancy rate will trend upwards as the rate of net migration moderates and new apartment units are placed on the market.

Inflation The inflation rate will range between 2.0% to 2.8% over the forecast period as the increased demand for resources and labour exert upward pressures on resource prices and labour costs.

Social Outlook The federal and provincial governments have both recently announced taxation reductions along with funding initiatives for health, education and social programs.

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The province has instituted a number of enhancements to programs and services for children, particularly children in low-income families and children at risk.

Prepared by: City Forecast Committee, April 2000

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Although the majority of new jobs created recently have been full-time, most families have not yet seen significant increases in their incomes. The pattern of household income distribution in Edmonton has changed relatively little over the 1990s.

The 1999 average price of a detached resale home in Edmonton is expected to increase 6% this year to a of $141, 450.

Recent nation-wide trends, over the past three years, have revealed that the price of housing in urban locations is increasing at a greater rate than those of outlying suburban areas, a trend that is opposite to that which has been predicted.

Although the number of owner-occupied residences has increased since 1991, the stock of rental units has declined slightly over the same period.

Nationally, crime rates continue to fall, but are still almost double those of thirty years ago.

The increase in the number of persons in the 75+ age category and in the city's Aboriginal population will see additional demand for health services and supportive housing over the forecast period.

The improved economy, increasing number of jobs, increased Child Tax Benefit and Alberta Family Employment Tax Credit will result in a decrease in the depth and extent of poverty for some of the working poor with children. These developments may, however, have mixed impacts on some low income families. Some families may find that they are no better off when supported by insecure, lowpaying jobs than they were when they were dependent on social assistance. Low income will remain a significant issue for a large segment of Edmontonians.

Over the next few years, Edmonton will host several national and international sporting competitions, and possibly several world championships. While the City will attain many benefits from such events, there will be an increasing demand to maintain and acquire parkland for more passive pursuits.

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Edmonton Socio-Economic Outlook, 2000- 2005 , *

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improved oil and gas prices.

IMPLICATIONS OF THE OUTLOOK

However, over the same period, the public sector must deal with:

Business Sector

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Over the forecast period, Edmonton's business community is expected to benefit from:

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relatively low inflation, increased spin-off from investment activity in energy, pipeline and resource-related projects in northern Alberta, a modest growth in housing construction, modest employment and income growth, a large supply of relatively low-cost downtown office space, and modest population growth.

However, during the same period, Edmonton businesses must adjust to: an uncertain economic environment, as fluctuating resource prices affect cash flows, investment and hiring plans, * a relatively slower population growth, * a reduction in the number of individuals in the 15-24 age group, * the ageing of the "baby-boomers", an increase in the 55-64 age group, * a shrinking pool of new labour market entrants, and * a growing pool of potential retirees.

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continued municipal infrastructure shortfalls, excess supply of space and a slower increase in real estate prices in the downtown nonresidential markets, the number of potential retirees will exceed the number of first-time labour market entrants, an increasing demand to maintain and acquire parkland for more passive pursuits; rising child welfare case loads; homelessness; and a health and social support system under some stress due to increased demand arising from the demographic change in the population.

Families and Individuals Over the forecast period, expected to benefit from:

Edmontonians

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greater employment opportunities and a healthy rise in wages due to shortages in skilled labour; and

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some moderation in the depth of poverty for the working poor with children.

However, Edmontonians must also deal with: However, Edmontonians must also deal with: *

increasing housing prices and tighter apartment

vacancy rate;

Government and the Public Sector Over the next few years, Edmonton's government and public sector will benefit from: * an improved economic outlook for the province

and an increase in employment opportunities, * increase in the assessment base, Slow inflation, * increased spending on education, health care and transportation by the provincial government, and

Prepared by: City Forecast Committee, April 2000

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providing more care for aged relatives;

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health care and education systems in a slow recovery from deep funding cuts; and

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families that are under greater stress, because of insecure jobs offering low or no benefits, plus

the added concern of high debt and depleted

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Edmonton Socio-Economic Outlook, 2000 - 2005

INTRODUCTION INTRODUCTION

pressure on commodity prices as excess supplies in world commodity markets are absorbed.

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This report provides an economic and social analysis of current and future changes in the City of Edmonton and the Edmonton Census Metropolitan Area (C.M.A.) for the years 2000 to 2005. The outlook is used as a reference for the preparation of the 2001-2003 corporate and departmental business plans and 2001 departmental budgets. In addition, other public agencies, citizens and businesses could use the forecast for planning purposes.

The City Forecast Committee undertakes monitoring and forecasting for economic and social

activities throughout the year. The outlook report . is prepared semi-annually, in the spring and in the fall. * 0

PART 1: ECONOMIC OUTLOOK *

UNITED STATES *

The U.S. economy will grow at 3.5% in 2000 and slow to 3.0% per yearfrom 2001 to 2005.

The U.S. economy grew by 4.2% in 1999, down from 4.3% in 1998. Consumer spending (5.3%) and business investment (5.8%) supported economic growth in 1999. Despite the 1999 unemployment rate being significantly below its inflation "safe" level of 5.0%, the inflation rate in 1999 remained relatively modest. Strong growth accompanied by low inflation is unusual in the late stages of the business cycle, when resources are tight. This raises the question, how long could the U.S. economy continue to expand above its long-term growth potential of 3.0% without experiencing significant inflation?

The forecast assumes that the recovery, which began in Southeast Asia (except Japan), will gather momentum in 2000 and for the rest of the forecast period. Also, the Latin American and European economies will continue to expand. Consequently, growth in the world economy will place upward Prepared by: City Forecast Committee, April 2000

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Economic Growth

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The forecast also assumes that the recovery of the Southeast Asian economies will reduce the the flow of capital from that area to the U.S. treasury market and this will place downward pressure on the U.S. exchange rate. Since a depreciating currency will be unable to insulate the U.S. economy from

imported inflation; these pressures will become evident in the U.S. economy. The U.S. consumers and producers will be forced to import products, whose prices are escalating, with a depreciating currency.

The U.S. Federal Reserve Board will continue to hike short-term interest rates as a pre-emptive strike against inflation in 2000. The consumer and business purchase of interest sensitive items, such as homes and automobiles, will be negatively affected.

This will result in a moderation in the growth of aggregate demand.

Consequently, the U.S. U.S. economy will grow by 3.5% in 2000 and trend downward to its long-term potential of 3.0% per year from 2001 to 2005.

CANADA The Canadianeconomy will grow at 3.6% in 2000, slow to 3.0% in 2001 and rebound to 3.5% by 2005.

Economic Growth The Canadian economy grew by 4.2% in 1999, up from 3.0% in 1998 and 3.7% in 1997.

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,Edmonton Socio-Economic Outlook, 2000 - 2005 ,

Canadian economy benefited from continued expansion of the U.S. economy, as Canadian manufacturers faced a growing market for their products in the U.S. Manufacturers experienced significant earnings growth in 1999. This occurred mainly in motor vehicles, electronics, telecommunications, wood and paper products.

Also, increasing oil prices boosted earnings in the energy sector. Consequently, increased cash flows resulted in strong investment growth in 1999.

Business investment in plant and equipment grew by 10.4% in 1999.

In 1999, additional 390,800 jobs were created in Canada, led largely by hiring in the manufacturing sector, particularly in the computer and electronic parts industries. Almost all the new jobs were fulltime positions. The number of people working fulltime increased by 382,600 compared to 8,100 for part-time. The full-time employment is expected to continually increase faster than part-time employment over the forecast period, With the U.S economy losing momentum in 2000 and with a higher exchange rate, export growth to the U.S. will moderate.

In addition, higher borrowing costs will have a negative impact on the purchase of big-ticket items.

However, faster growth in the rest of the world, increased government spending and lower personal and business taxes, stemming from improved government finances, will support economic growth. The forecast calls for economic growth in Canada to decline to 3.6% in 2000 from 4.2% in 1999.

Economic Growth

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Canadian economic growth is expected to average 3.0% in 2001, as economic growth decelerates in the U.S. Growth in the world economy and strong domestic demand will drive Canadian economic growth. Lower unemployment rates will lead to higher wage settlements and this combined with tax cuts will result in increasing disposable incomes.

Growing labour income and cheaper borrowing cost will boost domestic demand.

With growth gaining strength in Southeast Asia and other emerging markets, commodity prices will firm and begin to increase and export volumes will also grow.

The run on the Canadian dollar will moderate. This will permit the Bank of Canada to loosen monetary policy as the Canadian dollar appreciates in 2001 and beyond. With interest rates at lower levels again, consumers will be able to restructure their debts at reduced rates. This will lower borrowing costs and further increase personal disposable incomes. Therefore, the sales of interest sensitive items such as cars and homes will benefit.

In addition, increased government spending will boost domestic demand, as governments that have controlled their finances will re-invest in the economy. Canadian businesses will continue to upgrade their plant and equipment, in order to keep pace with technological change and maintain or increase their international competitiveness. The Canadian economy will grow by 3.2% in 2002 and accelerate to 3.5% by 2005.

The forecast assumes that political stability will prevail throughout the forecast period. The issue of Quebec's place in Canada will not have an impact on Canadian short-term interest rates and economic

growth.

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Prime Lending Rate

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The prime rate averaged 6.4% in 1999, down slightly from 6.6% in 1988 but up from 5.0% in 1997. The U.S. Federal Reserve, concerned over a possible outbreak of inflation in the U.S., increased short-term interest rates in the spring and summer of

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its bank rate by 25 basis points. The U.S. Federal

Reserve is expected to increase short-term interest rates several times in 2000, as the U.S. economic

Prepared by: City Forecast Committee, April 2000

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Edmonton Socio-Economic Outlook. 2000. .2005 growth continues to be robust and the inflation rate begins to creep higher. In order to defend the Canadian dollar, the Bank of Canada will also increase Canadian short-term interest rates. The prime rate will increase to 7.0% in 2000. As the U.S. economy slows in 2001 in response to higher borrowing costs, short-term interest rates will be lowered in the United States. The Bank of Canada will match these short-term interest rate cuts.

Therefore, the prime-lending rate will average 6.8% in 2001 and decline to 6.0% in 2003 and 5.8% by 2005.

With economic growth resumed in the world economy by 2000, the currency will strengthen and recover to average US$0.69 in 2000 and US$0.73 by 2005.

Canadian Dollar Exchange Rates 0.74 0.73 Rising DoPar

0.72 0.71 0.70 c.) 0.69 0.68

Prime Lending Rate

0.67 0.66 0.65 0.64 96 97 98 99

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ALBERTA Alberta will grow above the national average. The economy will grow at 4.0% in 2000 and slow to 3.5% annually from 2001 10 2003 and rebound to 4.0% by 2004 and 2005.

Exchange Rate

The Canada/U.S. exchange rate averaged US$0.67 in 1999, unchanged from 1998, but down from US$0.72 in 1997. The dollar fell from US$0.74 in January 1997 to US$0.65 in December 1998 and rebounded to US$0.69 in January 2000. The downward slide of the dollar was halted by the recovery of world commodity prices. The Bank of Canada's commodity price index showed commodity prices rose 29.8% between December 1998 and January 2000. The firming of commodity prices resulted from the recovery of the Southeast Asian economies and the continued expansion of the rest of the world's economies. This exerted upward pressure on commodity prices, as excess supplies of commodities were absorbed. In addition, the OPEC countries' ability to restrict petroleum production resulted in a sharp increase in world oil prices as oil inventories fell to extremely low levels.

Prepared by: City Forecast Committee, April 2000

Economic Growth

The Alberta economy expanded by 1.8% in 1998, the last year for which data is available, down from 8.0% in 1997. The export sector acted as a drag on the province's overall economic performance in 1998, as the province adjusted to slower growth in Southeast Asia and Latin America. The recession in those countries resulted in lower oil prices, smaller export volumes for commodities and reduced cash flows for some sectors of the Alberta economy.

In 1998, commodity exports totalled $30.5 billion, down from $33.7 billion in 1997, or by 9.4%.

Agricultural products (-24.1%), refined petroleum and coal (-16.7%), primary metal products (-16.3%) and oil, gas and sulphur (-16.3) suffered the largest declines. Corporate profits fell from $15.9 billion in 1997 to $11.4 billion in 1998. Non-residential 7

REdmonton

construction fell from $13.0 billion in 1997 to $11.4 billion in 1998. For example, the number of rigs drilling in Alberta fell from 310 in 1997 to 223 in 1998. Consumer spending grew by 3.0%, after adjusting for inflation. Retail sales reached $28.1 billion in 1998, up from $26.9 billion in 1997.

Consumer spending was driven by growth in wages and salaries, which rose to $51.8 billion in 1998 from $48.7 billion in 1997 or by 6.6%.

Employment in 1998 averaged 1,533,400 up from 1,483,400 in 1997 or by 3.4%. The total value of building permits issued in 1998 was $5.5 billion up from $4.4 billion in 1997, or by 25%. Business spending on machinery and equipment remained strong, up by 19.9%, as businesses updated their plant and equipment to fix problems posed by the Y2K bug. Also, government fixed capital spending grew by 14.5%.

Economic Growth Alberta & Edmonton mmmumlmll Gro

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Socio-Economic Outlook, 2000 - 2005 average number of rigs active in Alberta increased to 252 in the second half of 1999. However, the total value of building permits declined by 13.6%.

Building permit values fell by 22.9% in the Calgary region and by 3.7% in the Edmonton region Alberta's economic growth will average 4.0% in 2000 as construction commences on several major petrochemical, pipeline, electricity and heavy oil projects, and consumer spending increases in response to improved job prospects, growing labour incomes and lower income tax rates. The firming of energy prices will be a positive factor in the province's economic expansion, since this will contribute to increased cash flow for the energy sector and the provincial government. In turn, this will enhance the ability of the business and government sectors to spend.

Both the Alberta and the Canadian government finances have improved in recent years. This has allowed both levels of government to produce budgets that provide for a mixture of tax cuts and health

government spending in such areas as

care

and

education.

Government

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Economic growth in Alberta for 1999 was estimated at 2.5%, up from 1.8% in 1998 as the province

recovered from the effects of low oil price in 1998.

The existing data paints a mixed picture of the province's economic performance in 1999. For example, retail trade, unadjusted for inflation, grew by 4.3% in 1999. The value of manufacturing shipments totalled $35.3 billion in 1999, up by 5.8% over 1998. Natural gas production grew by 1.9%, while crude oil production declined by 7.0%, for the first eight months of 1999, compared to the same period 1998. The average number of rigs drilling in Alberta was 263, in the first six months of 1998 and this fell to 178 in the second half of 1998 and 172 in the first half of 1999, as oil prices remained low.

With prices firming in the latter part of 1999, the Prepared by: City Forecast Committee, April 2000

expenditures, which in recent years were a retardant on growth, will be a stimulant and influence economic activity in other sectors of the economy.

The provincial government's investment in Alberta's new economy includes $500 million for establishment of the Alberta Heritage Science and Engineering Research Endowment Fund as well as an additional $95 million in research funding in areas such as agriculture, energy life sciences and areas such as agriculture, energy life sciences and information and communications technology.

Non-residential construction is expected to grow significantly over the forecast period. Business and consumer confidence will improve and lead to increased domestic spending.

Businesses will continue to invest in newer technologies so as to maintain their international maintain international competitiveness. competitiveness.

Alberta Economic Development estimates the total projects in in Alberta, Alberta, worth $2 $2 million value of major projects or more, that are planned, underway, or have been recently completed, at $51.9 billion, as of December 1999.

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Edmonton Socio-Economic Outlook, 2000 - 2005

From 2001 to 2003, the growth rate will decelerate to 3.5% per year, as the U.S. and Canadian economies grow at a slower pace. Export growth to the U.S. and the rest of Canada will moderate.

Increased government spending which will add further stimulus to the economy will counteract this.

Higher oil and commodity prices, precipitated by an improvement of the world economy, along with lower interest rates will also act as a boost to economic growth. In addition, growth will be stimulated by strong gas sales, investment in the energy sectors, more stable provincial government expenditures, positive net migration, growing labour incomes, and declining income tax rates leading to increased consumer spending.

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From 2004 to 2005, the growth rate will accelerate to 4.0% per year, as economic growth in Canada and the rest of the world gathers momentum. World commodity prices will increase and the Canadian As short-term exchange rate will appreciate. interest rate falls, borrowing costs will decline; consumer and business spending will be stimulated.

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Oil and Gas *

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0

*

0 S

*

0

0 0

Given strict compliance with announced production cuts, the global supply of crude oil dropped below world demand by as much as 2.5 million barrels per day through the winter months. This forced buyers to run down inventories and drove the price for West Texas Intermediate (WTI) up to more than US$32 per barrel in March, 2000 - a level not seen since the Persian Gulf War. Faced with considerable pressure from consuming nations, the Organization of Petroleum Exporting Countries (OPEC) recently agreed to increase production.

When combined with anticipated production

World Oil Prices (US$/Barrel)

20

15

10 .

0 96

97

99

98

0

1

2

3

4

5

sou.rce: Ciy Forca....stCommitee

With the re-linking of Canadian natural gas prices with U.S. prices in 1998 and the sharp recovery in world oil prices helping to drive up U.S. gas prices in 1999, Canadian gas prices have risen sharply over the last two years. Thus, prices at the AECO storage facility in southern Alberta increased from around $1.10 per GJ in October 1997 to a high of close to $4 in October 1999,with last year's prices averaging $2.76 per GJ. Gas prices last year will

have been higher still, but for another unusually mild winter across North America. Assuming a return to a more normal winter heating season and continued economic growth in Canada and the United States, gas prices are expected to remain firm over the next two years, averaging $3.20 per GJ. By 2002, the availability of increased supplies of U.S. Gulf Coast gas in Chicago and the reemergence of bottlenecks in Alberta's export pipelines will cause prices to moderate until, once again, new pipeline capacity can be added.

Alberta Natural Gas Price ($/G.J.)

increases among non-OPEC producers, analysts believe that world supply could increase by as much

3.so50.

as 2 million barrels per day this spring.

Consequently, the price for WTI is expected to fall to around US$21 per barrel by the end of the yearaveraging US$24 for the year as a whole.

Thereafter, assuming that producers are largely successful in balancing global supply with demand, WTI prices are expected to increase gradually, rising to around US$23 per barrel in 2005.

2.50

Sle. ..

3.00

..P..

.

1.oo00 0.so50

o.o.

96

97

98

99

0

1

2

3

4

5

Source: Alberta Energy, City Forecast Committee

Preparedby: City ForecastCo0ittee,April 2000

9

Preparedby: City ForecastCommittee, April 2000

9

I

D Edmonton

Net Migration The net migration to Alberta from other provinces and countries was estimated at 45,800 persons over the period of May 1997 to April 1998, up from 36,300 over the same period of 1996-1997.

However, net migration is estimated to have fallen to 26,000 over 1998-1999 as the pace of economic expansion in Alberta moderated, economic growth in Ontario strengthened and the British Columbia economy began to recover. As the rest of Canada continues to experience positive economic growth over the forecast period, Alberta will find it increasingly difficult to attract migrants from other provinces. Consequently, net migration will total 30,000 in 2000 and fall to 26,000 by 2005. The forecast assumes that the Alberta unemployment rate will remain below the Canadian rate for the entire forecast period.

Net Migration Alberta so ,

ma mill

oPuiv.

N&, * * n.

40

*

Socio-Economic Outlook, 2000 - 2005

30 20.

is slowing, businesses will still enjoy an expanded market. Specifically, businesses and individuals will benefit from: * * * * *

expansion of the U.S. and Canadian economies; the Alberta economy will grow above the Canadian average; investment in northern Alberta will remain strong; short-term interest rates, such as the prime rate, will decline over the forecast period; and synthetic oil investment, with its long lead-time and huge budgets, will continue to be a source of stability as well as a key support for Edmonton's role as the service hub for northwestern Canada.

0

Economic Growth The Edmonton economy will benefit from the growth in consumer and government spending and the economic spin-off from investment in northern Alberta.

Economic Development Edmonton estimated the proposed and planned northern Alberta Major Projects at $43.2 billion in December 1999. The projects listed represent roughly 83% of the value of all major projects planned for the province of Alberta.

0 0

0

10

0

96

In addition to the investment projects in the energy 97

98

99

0

1

2

3

4

5

Canada, CityForecastCommittee Source: Slatistlics

forestry sectors as mentioned above, the following projects will have a significant impact on the Edmonton economy over the next five years: and

*

The 8th World Championships in Athletics in

EDMONTON

2001 planned to occur inEdmonton isexpected

The Edmonton economy will grow at 4.5% in 2000, 3.7% in 2001, 3.0% in 2002 and3.5% in 2005.

to have a net impact (direct, indirect and induced) of about $203 million in Alberta. Of this amount, $157 million will be spent in the Edmonton region. In addition, Edmonton will also be hosting the 2001 World Triathlon championships.

Economic Environment external business The Edmonton region's external business environment is expected to expand over the forecast period and this will cause businesses and individuals in the region who trade with the rest of the world to benefit from an expanding world market for their

*

The City of Edmonton is spending $145 million to upgrade and expand its sewer system.

*

EPCOR plans to spend $115 million between 2000 - 2002 to upgrade the Rossdale Generating Plant.

goods and services. Even though the U.S. economy Prepared by: City Forecast Committee, April 2000

10

0

I

Edmonton Socio-Economic Outlook, 2000 - 2005 *

Northern Alberta Major Projects

(Sm

N orth

Alberta

626

626

1,051 1,051

Convergys Corp, a major call centre operator

2.806 940 140

2.823 2,450 1450

based in Cincinnati, is opening a $4 million call

1,420

centre in Mill Woods in April 2000. This will

2,452 2,452

4,843 4,843

create 1,000 new local jobs.

578

1,540

85

142

258

258

26,220

26,890

1,1an)

Sector Agriculture &Related Agriculture & Related Chemicals & Petrochem.

Com m erciallR etail Coesr /Retla Forestry & Related

Infrastr&ucture

Infrastructure

Ins titu tio nal Manufac turing M ining Oil, gas & Oilsands Other Industrial

Ford Credit Canada will open a national call

centre in Edmonton that will employ 350 persons. 300 persons will be employed to construct an 80,000 square-foot facility.

Summary

1,420

*

TD Waterhouse Investor Services is spending

$7 to $8 million to renovate Edmonton Centre to house a call centre. The centre will add 250 newjobs at completion.

322

366

P ip e lines

5,234

5,669

Power

1,640

1.623

million for the completion of the Anthony

284

703

0

61

Henday Drive from Whitemud Drive to Calgary Trail. Construction will last from 2000 to 2005.

Res id en tia

I

Telecom m unications Tourism /R ecreation Total Sources: I. Alberta E conom ic Development, 2.

380 43,245

12,092

*

*

51,930

LiveBridge Inc. of Portland is set to open a call center in west Edmonton. 300 persons will be

employed in the 15,000 square-foot centre.

Decem ber 1999

Economic Development Edmonton,

The provincial government is spending $140.5

March 2000

* The federal government announced on February 28, 2000 a multi-year plan to strengthen the federal provincial infrastructure; to promote environmental technologies and practices, and to assist the homeless. *

The consolidation of all scheduled passenger flights at the Edmonton International Airport and construction of the terminal is expected to increase traffic from 1.9 million passengers to about 2.7 million at the airport.

The construction of the airport will cost $170 million to $250 million over the next five years. * Camrose Development Ltd. is building a $250 million retail complex on a 300-acre site at 23 Avenue and Calgary Trail.

About 3,500 construction jobs will be created over the next five years. * Christenson Developments is constructing a $40 million commercial and townhouse complex in the downtown. Construction will last to 2001.

*

The City of Edmonton will spend approximately $50 $50 million in the next seven years to upgrade Gold Bar the the Gold Bar wastewater wastewater plant plant to to the the tertiary tertiary treatment level.

Prepared by: City Forecast Committee, April 2000

Output The economic growth was estimated at 2.5% in 1999, up from 1.3% in 1998. The firming of energy prices in 1999 resulted in increased revenues for the provincial government and a further strengthening of the province's fiscal position. The economy was also driven by business spending and increased government expenditures in the areas of health care, education and transportation. In addition, growth in consumer spending remained positive in response to an increase in employment and wage income. an increase in employment and wage income.

The region's economy will grow by 4.5% in 2000 and 3.7% in 2001. Economic growth in the region will be slightly higher than the provincial average of 4.0% in 2000 and 3.5% in 2001. The region will benefit from the construction of Shell Canada's $1.8 billion heavy oil upgrader, the Air Liquide's $150 million gas processing and electricity generating complex at Scotford, located 40 km northeast of Edmonton and EPCOR's $115 million dotnadECRs$1 nrhato of the upgrade Rossdale Generating Plant. ilo In ln.I the fte.sdleGnrtn uprd addition, the construction of facilities for hosting 8 th

World Championship in Athletics in 2001 will add additional stimulus to the local economy. The 11

I

Edmonton Socio-Economic Outlook, 2000 - 2005

increased investment activity in northern Alberta will increase job opportunities in the Edmonton region. Consequently, individuals will migrate to Edmonton to take advantage of available job openings. This will add to the region's customer base and therefore have a positive impact on consumer spending.

to decline relative to the rest of Canada. The other component of population change, natural increase, is expected to continue to decline as the number of deaths increase and births decline as the population ages.

Edmonton population City & C.M.A.

Economic Growth

1200

Alberta & Edmonton

1000

llnl illll

C!

Soo .

1-

too.

gpEdmonto

0i-k

ITA'ben 6

City CA.

2000 good yea

400

4' 20

U 2

or

99

0

1

2

3

4

Source: Planning & Development, City Forecast Committee 0 96

97

U8

3

0

1

2

3

4

5

Sour.Statisics Canada, City Forest Commfteo

With the end of construction for Scotford and the 2001 World Games in 2001, the region will grow below the provincial average. Economic growth will average 3.0% in 2002 and 2003. Economic growth will increase to 3.5% in 2003 and 2004, as the provincial economy grows at faster pace and the Edmonton region benefits from the economic spinoff.

The Edmonton region's population, like the rest of Canada, continues to age. The number of people aged under 40 is expected to remain unchanged over the forecast period while the number of people aged 40 and over is forecast to increase by some 61,000 with most of the increase occurring in 50s age group (28,000) and 40s age group (13,000). The trend is similar for the City of Edmonton.

The City of Edmonton's population is expected to

Our ageing population has direct impact on the size of the working age population (ages 15 to 64) and the labour force (which is comprised of people either working or looking for work). A labour shortage is likely to occur.

As the working population ages, more people will leave the labour market than enter it. This trend is noticeable over

Demographic Changes

increase by about 44,000 people by 2005 reaching

the short-term.

702,500 (Table 2).

The population of the Edmonton CMA (Edmonton Census Metropolitan Area) is expected to increase by some 61,000 over the same period reaching 1.004 million (Table 3) (See Appendix II for the boundaries of the Edmonton CMA). Net-migration is expected to

The population of the City of Edmonton and the Edmonton CMA have similar age profiles except for the age groups under 25.

The 1999 City of Edmonton Census indicates a higher percentage of people aged 20 to 24 and a smaller percentage of

range between 5,000 and 6,000 people per year for

people in the age groups under 20 than the

the City of Edmonton and between 7,000 and 8,400 for the Edmonton CMA. Net-migration for the Edmonton region is strongly linked to the relative differences in the unemployment rates between the region and the rest of Canada. Unemployment rates for Edmonton and Alberta are expected to continue

Edmonton CMA. This difference in the age profiles of the City of Edmonton and the Edmonton CMA explains why the number of young adults (ages 20 to 24) in the City of Edmonton is expected to decrease over the forecast period while the same age

by: 2000City Forecast Committee, Prepared by: City Forecast Commitee, April April 2000

12 12

0

0Pr

0

I

Edmonton Socio-Economic Outlook, 2000 - 2005

group is expected to increase in the Edmonton CMA. *67,600

*

_ Edmonton C.M.A.Population Growth 1999-2005

Manufacturing Manufacturing

*employment

increased from 9.15% in 1987 to in 1999. Comparing the Edmonton region against Canada, Edmonton region's manufacturing industry had a smaller share of total employment than Canadian equivalent, in both 1987 and 1999.

Also, manufacturing employment's share of total employment declined from 16.5% in 1987 to 15.26% in Canada. This trend is opposite to that which was observed in the Edmonton region, where manufacturing employment's share of total employment increased from 11.32% in 1987 to 15.25% in 1999.

*mmi -11.32%

u

ill

20000.

10ooo .

S1000.F* --

I

leaders in the service-producing sector. In this period, part-time employment increased from in 1987 to 97,500 in 1999.

. 000 0 .,

-100.

AgeGroup

-15000

Soue: Staistics Canada. City FoecastComittee

This changing age structure has important implications for various sectors of the economy: * Minimal growth in the 15 to 24 age group,

Etcn

IM-

rGx&nta

1970

2a71

2281

2M05

1.60

3a87

1.35

282

20B

238

209

1.84

1.0a

097

072

080

rm

581

53

7.31

533

iuntatir

9.15

16s

and older groups will support 'empty nester' and retirement housing. * High growth in the number of people aged 65 and over will increase demand for social and health care services.

EIrotei3

Employment Total employment in the Edmonton region in 1999

S S

was estimated at 483,100, up from 399,000 in 1987, or by 21.1%. The goods producing sector grew by 40.2% while the service-producing sector expanded by 16.4%. Construction (52.2%) and manufacturing (49.9%) were the fastest growing industries in the goods-producing sector. Whereas, professional, scientific and technical services (58.2%) and health care and social assistance (53.4%) were the growth Preparedby: City ForecastCommittee,April 2000

0

tm Cara

atn

,giaolue

FRdirg Mrir

r,

adGas

Liis

* The large increase in the 45 to 54 year age

more expensive housing while growth in the 55

1

17

IM

among employers for entry-level workers.

group will support continued strong demand for

total total

T-

entrants, will result in increased competition

0apartment and first-time buyer housing.

of of

crea s 0 M

ra

twenties will provide only modest support for

share share

C.M.A. Ehplynet

Ye

which is the source of first time labour market

* Low growth in the number of people in their

employment's employment's

S ma8irgSar Trad

11.32

1s52

M7029 77.19

7a95

17.6

1613

1584

1547

Traitatatnrdte-rg

637

518

503

512

Fir

581

614

580

594

521

389

681

623

a45

640

7 7.60

676

682

9.32

11.18

994

469

4.01

464

434

irsuamt

P

Es

Letrg =aerd

R:eiord,Seiificad TedT'icl

R reStd

resiAis

Edmaair Se oes

Ot es irdIaebanl Q oAmrna

ad Swmrs

iais

23 6

216 6

319

349 a

574

569

6a11

63

QhT Sries

617

512

538

497

RanicAshiriOns

a72

624

563

5s33

Professional, scientific and technical services' share of total employment grew from 5.21% in 1987 to 6.82% in 1999 in Edmonton.

In Canada, the comparable industry grew from 3.89% in 1987 to 13

Edmonton Socio-Economic Outlook 2000 2005 6.23% in 1999. Also in 1987, 8.72% of Edmonton's employed labour force worked in public administration versus 6.24% for Canada as a whole.

By 1999, 5.63% of Edmonton's employed labour force was employed in public administration compared to 5.33% for Canada.

In 1987, manufacturing in the Edmonton region had 36,500 employees while public administration had 34,800. By 1999, manufacturing employment increased to 54,700 while public administration plunged to 27,200. In terms of employment, manufacturing currently contributes approximately twice as much to the local economy as public administration.

labour force participation rate' remained virtually unchanged at 71.0%. However, the female participation rate rose to 65% in 1999 from 64% in 1998 and the male participation rate fell from 78.8% in 1998 to 78.1% in 1999.

Stronger employment growth, in the short-term, will attract individuals who had given up looking for work back to the labour market. This will be reflected in a slightly higher labour force participation rate. Therefore, the forecast expects the unemployment rate to fall slightly to 5.6% in 2000, before rising to 6.0% in 2002 and 2003. As the provincial growth rate improves to 4.0% in 2004 and 2005, the Edmonton regional unemployment rate will fall to 5.8% in 2004 and 5.6% in 2005.

The forecast calls for employment to grow by 16,000 persons to 499,000 in 2000, as the Edmonton region benefits from firmer energy prices, construction of the Scotford refinery and development of facilities to host the 2001 World Games. By 2001, total employment will average 509,000 persons and this will increase to 537,000 persons by 2005.

Unemployment Rate Edmonton CMA

10 8 -I 6 .4 0

Employment Edmonton CMA

- 4 -I 2 -I

MUNIMMI•11111111

600

100

96

H11111111 96

97

98

99

0

1

2

3

4

5

Source: Statistics Canada. City Forecast Committee

Unemployment Rate The unemployment rate fell to 5.9% in 1999, down from 6.1% in 1998 and 6.7% in 1997. The unemployment rate, for individuals 25 years and over, declined from 5.0% in 1998 to 4.4% in 1999.

Whereas, the unemployment rate for individuals in the 15 to 24 age group rose from 11.4% in 1998 to 12.6% in 1999. In the same period, the overall Prepared by: City Forecast Committee, April 2000

97

98

99

0

I1111 1 2 3 4 5

Source: Statistics Canada, City Forecast Commtnee

Inflation

The inflation rate will range between 2.0% and 2.8% over the forecast period.

Edmonton's inflation rate was estimated at 2.3% in 1999 up from 0.9% in 1998 and 1.8% in 1997. The sharp rebound in the inflation rate was caused by a firming of world commodity prices, which translated into higher prices for consumer goods and services. For example, the price for West Texas

I The participation rate represents the number of persons in the labour force expressed as a percentage of the total working age population.

14

I

;Edmonton Socio-Economic Outlook, 2000 - 2005

Intermediate crude oil rose 127% November 1998 and February 2000.

between

The inflation rate for 2000 will average 2.8%. The rebound in the inflation rate will be caused by the increased demand for resources and labour, arising from a growing world economy. This increase will be reflected in higher transportation costs and heating bills. In addition, an expanding regional economy will result in an increased demand for labour, as work proceeds on major construction projects such as the Scotford oil refinery in Strathcona County. The unemployment rate in the Edmonton region that averaged 5.9% in 1999, the lowest level in eighteen years, will be pushed lower by stronger economic growth in 2000. Similarly, the already low apartment vacancy rate will be pushed lower by increased demand for rental accommodation. The larger demand for resources and labour will result in price and wage increases in different markets. These increases will be passed on to the consumers in terms of higher prices. In the residential housing markets, renters and home buyers will exert upward pressure on rental rates and house prices as they compete for a limited supply of accommodation.

Also in the labour market, employees will demand and obtain higher wage settlements, as labour supply remains tight.

the inflation rate will move slightly higher to 2.5% as the provincial economy grows at a faster rate.

Building Permits

The building permit values will range between $525 - $700 million over theforecast period.

The value of building permits for the City in 1999 totalled $657.5 million, down from $688 million in 1998. In 1999, building activity was slightly less than in 1998 as the Edmonton region's economy adjusted to moderate growth in its economic environment. The number of net migrants to the Edmonton region fell from the 1998 level, as employment growth weakened. Consequently, the demands for residential and non-residential space fell from 1998 levels. As the economy rebounds in 2000, the building permit values should range between $600 and $700 million. The region will grow at a slower pace as construction projects are completed and the growth in the demand for building space will moderate over the rest of the forecast period. The building permit values will fall within the range of $525 to $625 million in 2004 and 2005.

Building Permits Inflation Rate Edmonton CMA

City of Edmonton

.MmMMMMM1llll

nllllmlllnl 2000 good year

750

2.5%

2.0%

2.0%to 2.5%. 2.50

2.50

600

2.00 S1.50

oC 450.

1.00I

300

0.50

150 .

0.00 96

97

98

99

0

1

2

3

4

5

0 .

96

Comm9tte2 Canada.City Forecast Source:Statistics

The inflation rate will average 2.5% in 2001, down from 2.8% in 2000. The inflation rate is expected to ease further to 2.0% in 2002 and 2003. The completion of the major construction projects in the region will result in a reduction in the employment and economic growth rates. This will result in lower wage and price inflation. By 2004 and 2005, Prepared by: City Forecast Committee, April 2000

97

" 98

99

a

0

a

" 1

" 2

3

4

5

Source: Planning & Development, City Forecast Committee

Housing Starts The City's housing starts totalled 3,932 units in 1999, up by 9.5% from 1998, but well below the 1993 level of 4,235 units. Housing starts will increase to 4,200 units in 2000, as work commences 15

I

:Edmonton Socio-Economic Outlook, 2000 - 2005 on the Scotford refinery and other projects, and the City prepares to welcome visitors and athletes to the 8 th World Championship in Athletics and the 2001 World Triathlon Championships. These events will result in an influx of construction workers to the This will create a demand for rental region. accommodation. With the completion of the games and the construction of the refinery, the demand for rental accommodation will grow at a slower rate.

The housing starts will total 3,200 units by 2005.

construction of new apartments, the apartment vacancy rate will climb to 2.2% in 2001 and 2.5% from 2002 to 2005.

Vacancy Rate IlllWWllll City of Edmonton ,,

Aprtent

,E

efce Space

_ 12

Housing Starts City & C.M.A. nllllHMlll 8000

2000goodyear

, 96

7000

[3.A

97

98

99

0

1

2

3

4

5

Source:CMHC. City ForecastCommittee

6000 5000

The vacancy rate in the downtown office market declined to 12.9% in 1999 from 14.0% in 1998.

This is a continuation of the downward trend in the vacancy rate. In 1999, 120,706 square feet of office

4000 3000

2000

1000 96

97

98

99

0

1

2

3

4

s

0

space was absorbed

Source: Planning& Development, City Forecast Committee

The total housing starts in the Edmonton region was 6,489 units in 1999, up from 5,947 in 1997. The housing starts will total 6,700 units in 2000.

Thereafter, it will decrease to 5,000 units by 2005.

Real Estate Market

The downtown office market will be affected by the conversion of current office space to other uses as owners attempt to add value to their properties. It is also expected that space will be released to the market as public and private sector leases expire.

This will place upward pressure on the office space vacancy rate in the short run.

The apartmentvacancy rate will average 2.0% in 2000 and then climb to 2.5% in 2005. The downtown office vacancy rate will average

The office space vacancy rates will decline over the forecast period as economic activity and employment opportunities continue to improve, resulting in higher positive net absorption rates.

12.5% in 2000 andfall to 11% by 2005

The forecast calls for the downtown vacancy rate to

Edmonton's apartment vacancy rate averaged 2.2% in October 1999, up from 1.9% in 1998. The increase in the vacancy rate is attributable to a slowing in the rate of net migration to the Edmonton region and apartment completions exceeding apartment absorption.

fall to 12.5% by December 2000 and then decline slowly to 11.0% by 2005.

The apartment vacancy rate will fall to 2.0% in 2000, as Edmonton experiences improved labour market conditions and positive net migration. With the reduced net migration to the region and Prepared April by:2000 City Forecast Committee, Prepared by: City Forecast Committee, April 2000

16 16

0

I

Edmonton Socio-Economic Outlook, 2000 - 2005

~

This assumption could be changed by the following events:

ECONOMIC OUTLOOK RISKS *

continued political uncertainty future of Quebec, and

Agreement on Global Greenhouse Gas Reductions

*

a much lower than forecast Canadian dollar.

may impact the economic growth. The current evidence is not clear as to the direction and magnitude of these impacts. Therefore, the forecast is unable to provide precise estimates of these risks,

Any or a combination of the above two events will exert downward pressure on the Canadian dollar and thus force the Bank of Canada to

some of the other risks to the are following The

increase interest rates; interest rates higher than

athose fo dekst

forecast will curtail economic activity and result in a lower growth rate.

The resolution of issues relating to the Kyoto

eforecast.

over the

Downside Risks to the Outlook An economic recession in the United States could result in a sharp reduction in the volume of Canadian exports, since the United States is Canada's major trading partner. If this occurs, the Canadian economy will follow the American economy into recession.

Alberta Savings Rate 30 30

restructure, the forecast for the Edmonton region should be revised downwards.

iil

eti

lcasa

25

02

The forecast assumes that the worst of the public and private sector restructuring in the Edmonton region is over. If these organizations continue to

m

C15

a

s

10

snIIk

urce

t'e

0

'1'

Soubie:

0te

Tmasury

0

6

dMo

A breakdown in producer discipline or a delayed recovery in the global demand for oil could weaken oil prices once again. In either case, planned bequity ed ng e tr c oul egain iv resn nc e invetmen nery inthe setorcoul be significantly curtailed and provincial government revenues reduced.

Under these circumstances, economic in Alberta activity and Edmonton could

be much weaker.

e c a r rlevenues reducedl

Undbaer thesemicumstandcers. than expected of higher Although the possibility natural gas ecnic ct pricest will be beneficial to gas producers and provincial government revenues (see Upside Risks), it will erode the competitive position of Alberta's natural gas-based chemical producers.

This could lead to reduced exports and production in

0this sector.

The Canadian forecast assumes that interest rates

oreastperod. he forecast oer the reatielystale willsta will stay relatively stable over period.

Prepared by: City Forecast Committee, April 2000

lget

spes

ace

rat ha

ropet

d

prices on the stock markets will cause a significant reduction in individuals wealth. The sina inf v willis result w iineath cosmThel combination tion of thndi these events consumers restraining their spending as they attempt to rebuild their savings or reduce their debts. As a result, the forecast will have to be revised downwards if a TecmltoofheAiaepplnerstngn prolonged slump takes place on equity markets. gas

rodbertare carenlydfcinginnacessngd

eportonedsup taeslc

on eqit arketcesei

The completion of the Alliance pipeline resulting in the elimination of the difficulty that Alberta natural gas producers are currently facing in accessing a sufficient supply to meet expected domestic and export suld ret in alr etican

export needs, could result in a larger increase in Alberta natural gas prices. This could lead to 17

I

0 iEdmon ton Socio-Economic Outlook, 2000 - 2005I

increase drilling activity and higher provincial government revenues.

The unexpected increases in provincial revenues may allow the Alberta government more freedom to reduce provincial taxes or increase spending, or a combination of both. If this scenario materialises, Alberta economic growth and local employment will be higher than forecast.

If the anticipated oil sands and other resourcerelated projects proceed earlier than expected, economic growth in Alberta and Edmonton over the next five years will be higher than the forecast.

A much higher than forecast Canadian dollar will allow the Bank of Canada to lower interest rates further than forecast. Lower interest rates will stimulate business investment and consumer spending, resulting in higher economic growth than forecast.

Over the medium or longer term, a concerted effort to meet the greenhouse gas objectives of the Kyoto protocol through a mandated increase in the reliance on natural gas will increase both its demand and price. While clearly inflationary, such a move will require expanded drilling programs and pipeline facilities in the province. Whether such a change will increase overall economic activity in Alberta and Edmonton will depend on the extent to which other industries might be damaged by these and other climate change provisions.

Prepared by: City Forecast Committee, April 2000

18

Edmonton Socio-Economic Outlook, 2000 - 2005

, S

Table 1 Forecast for Selected Economic Indicators

r

1 *

Indicator

World Oil Price (US S/Banel) 0 0

I

Actual 1997 20.60

1998

1999

Forecast

2000

2001

2002

2003

2004

2005

USA, Canada and Alberta 14.40 19.22 24.00

21.00

21.50

22-00

22.50

23.00

Alberta Natural Gas Price ($/G.J)

1.62

1.95

2.76

3.20

3.20

3.10

3.00

3.00

3.10

Economic Growth Rate (%) USA

4.2

4.3

4.2

3.5

3.0

3.0

3.0

3.0

3.0

Canada

3.7

3.0

4.2

3.6

3.0

3.2

3.3

3.5

3.5

Alberta

8.0

1.8

2.5

4.0

3.5

3.5

3.5

4.0

4.0

5.0

6.6

6.4

7.0

6.8

6.5

6.0

6.0

5.8

S Exchange Rate (US$/Can$) Net Migration (Alberta) (000)

0.72 36.3

0.67 45.8

0.67 26.0

0.69 30.0

0.70 28.0

0.71 25.0

0.72 25.0

0.72 26.0

0.73 26.0

Net Migration- CMNA(000) - City (000)

7.7 5.0

10.0 7.5

7.0 5.0

8.4 6.0

7.8 5.5

7.0 5.0

7.0 5.0

7.3 5.1

7.3

Population- CMA (000)

NA

NA

929

943

956

968

980

992

1,004

- City (000)

624

633

648

658

668

677

685

694

703

Economic Growth Rate (CMAX%) Employment (CMA)

6.0 466

1.3 475

2.5 483

4.5 499

3.7 509

3.0 515

3.0 521

3.5 529

3.5 537

Unemployment Rate (CMA) (%)

6.7

6.1

5.9

5.6

5.6

6.0

6.0

5.8

5.6

Inflation Rate - CPI (CMA) (%) Vacancy Rate (City %) Apartment (Oct)

1.8

0.9

2.3

2.8

2.5

2.0

2.0

2.5

2.5

4.6

1.9

2.2

2.0

2.2

2.5

2.5

2.5

2.5

14.8

14.0

12.9

12.5

12.0

120

12.0

11.5

11.0

Prime Lending Rate (%)

Edmonton

Downtown Office (Dec) Housing Starts (Units) City - Total

0

5.1

3,015

3,591

3,932

4,200

3,800

3,400

3,400

3,500

3,200

- Single Family

1,945

2,032

2,141

2,300

2,100

2,000

2,000

2,100

2,000

- Multi-Family

1,070

1,559

1,791

1,900

1,700

1,400

1,400

1,400

1,200

4,962

5,947

6,489

6,700

6,000

5,500

5,500

5,700

5,000

3,685

4,080

4,075

4,400

4,100

3,900

3,900

4,000

3,700

1,277

1,867

2,414

2,300

1,900

1,600

1,600

1,700

1,300

500

500

525

525

600

600

625

625

C.MA. - Total - Single Family - Multi-Family

Building Permit Value - Low 600 550 - (City) ($million) - Hi-gh 547 688 658 700 650 Sources: 1. 1996-99 actual: Statistics Canada, Bank of Canada, Canada Mortgage and Housing Corporation, Colliers Macaulay Nicolls Inc., Canadian Petroleum Association, Alberta Economic Development and Edmonton Planning and Development Department.

2. 2000- 2005 forecasts: City Forecast Committee, March 2000 Notes: 1. World oil prices are for West Texas intermediate crude at Chicago in U.S. dollars.

2. Natural gas prices are Alberta average market prices in Canadian dollars 3. Net-migration estimates are for the period May of previous year to April of the next.

Prepared by: City Forecast Committee, April 2000

19

Edmonton Socio-Economic Outlook, 2000 - 2005

0

Table 2 Population Forecast, 2000-2005:City of Edmonton

1999

2000

2001

2002

2003

2004

2005

Actual 0-4

38,457

39,731

40,735

41,940

43,101

44,526

44,486

5-9

42,313

41,940

41,667

41,360

41,178

40,583

41,777

10-14

42,079

42,999

43,548

44,023

44,118

44,314

43,882

15-19

44,345

43,155

43,248

43,815

44,379

44,718

45,589

20-24

55,629

55,601

53,983

51,490

49,540

48,157

46,873

25-29

52,078

52,816

54,577

56,574

57,923

58,934

58,740

30-34

52,945

52,455

52,336

52,357

52,855

53,059

53,662

35-39

57,690

58,015

57,434

56,823

55,533

54,530

53,950

40-44

56,022

56,707

57,354

57,611

58,314

58,818

59,080

45-49

45,392

48,1 I1

50,777

53,077

54,983

56,460

57,094

50-54

36,103

38,426

40,398

41,711

43,245

45,383

48,033

55-59

27,123

28,177

29,482

31,649

33,649

35,665

37,904

60-64

23,872

24,083

24,441

24,971

25,822

26,692

27,687

65-69

23,814

23,749

23,536

23,344

23,134

23,034

23,227

70-74

19,512

20,174

20,714

21,117

21,550

21,795

21,735

75-79

15,378

15,811

16,181

16,362

16,667

17,036

17,588

80-84

8,556

9,058

9,816

10,603

11,257

11,882

12,196

85+

6,976

7,419

7,698

7,946

8,212

8,493

9,013

648,284

658,428

667,926

676,773

685,462

694,077

702,515

Net-Migration

6,000

5,500

5,000

5,000

5,100

5,100

Natural Increase

4,144

3,998

3,847

3,689

3,515

3,338

Total

0 0

0

Prepared by: Planning and Development Department, City of Edmonton. April 2000

Sources: Edmonton civic census for 1999 population.

Aprilby: 2000City Forecast Committee,

20

0 0Pr 0 0 0 0

Q

Edmonton Socio-Economic Outlook, 2000 - 2005 STable

3

*

Population Forecast, 2000-2005: Edmonton C.M.A.

0

1999

0 2000

2001

2002

2003

2004

2005

Actual 0-4

57,748

57,913

57,836

58,424

59,122

59,622

59,778

5-9

65,172

64,398

63,599

62,409

61,388

60,734

60,802

10-14

66,655

67,201

67,731

68,130

68,177

67,802

66,955

15-19

66,748

67,880

68,898

69,368

69,481

69,941

70,430

*

20-24

68,038

68,591

68,817

69,361

70,698

72,075

73,089

*

25-29

70,113

70,713

71,681

72,638

72,911

73,185

73,530

*

30-34

72,849

72,212

72,085

71,827

72,152

72,473

72,905

-

35-39

84,555

83,504

81,575

79,601

77,083

75,276

74,526

40-44

82,544

83,999

85,381

85,934

86,461

86,165

85,046

.

45-49

68,932

72,236

75,529

78,610

81,223

83,170

84,554

-

50-54

56,462

59,775

62,481

63,821

65,736

68,868

72,084

55-59

41,296

43,181

45,425

49,327

52,745

55,707

58,894

60-64

33,415

34,322

35,464

36,818

38,570

40,411

42,192

65-69

30,108

30,284

30,508

30,863

31,435

32,022

32,851

70-74

24,819

25,594

26,308

26,804

27,194

27,450

27,603

75-79

18,930

19,445

19,995

20,379

20,944

21,569

22,209

80-84

11,384

11,867

12,549

13,350

13,983

14,553

14,923

85+

9,377

9,921

10,281

10,601

10,898

11,233

11,786

929,145

943,035

956,143

968,263

980,200

992,256

1,004,156

Net-Migration

8,400

7,800

7,000

7,000

7,300

7,300

Natural Increase

5,490

5,308

5,120

4,937

4,756

4,600

0

0

Total

0

0

Prepared by: Planning and Development Department, City of Edmonton. April 2000 Sources: Statistics canada for 1999 population.

Prepared by: City Forecast Committee,April 2000

21

Preparedby: City ForecastCommittee, April2000

21

0

S~'Edmonton Socio-Economic

Outlook, 2000 - 2005 Despite this growth in numbers, the growth rate of those reporting self-employment income has been

OUTLOOK PART 2: SOCAL

PART 2: SOCIAL OUTLOOK

declining since 1994-1995 for women and 1995-

CANADA Disposable income in Canada is expected to rise by more that 5% this year, almost double the ratefor the past threeyears.

In 1999, full-time wages in Canada were up 2.6% on average, more than double the wage increase in 1998. In December 1999, average weekly earnings for all employees across Canada were estimated at $620, an annual increase of 1.8%. In Alberta the average weekly earnings were $636, a 1.3% increase over the previous year. in 1999, the enjoyed biggest White-collar managers, in1999, enjoyed the biggest gain in average earnings at almost 10%. However, the highly unionized blue-collar utility employees remained the best hourly paid workers in the country, earning an average of $23.70 an hour, as opposed to their management co-workers who earned $23.63 per hour.

The 1997 median total income of individuals in Canada remained virtually unchanged from 1996 at $19,400, after adjusting for inflation. Taxfilers in Alberta had higher median total incomes than the nation as a whole. The median total income for women was $14,800 or about 57% ($26,100) of that for men. This ratio has remained the same since 1994. The lowest female-to-male ratio in terms of income was in Alberta at 52%, although the

median

total

income

was

relatively

1996 for men. In 1997, men earned on average $15,000 from self-employment while women earned an average of $8,000. Among the provinces and territories, Alberta (5.6%) and Saskatchewan (2.4%) had the highest percentage increases. The contribution of employment income to total income was higher for men (77%) than for women (66%).

In 1997, government transfers were the second largest component (13.2%) of total income, followed by private pensions (5.5%). Income from private pensions increased since 1996 when it made up only 5.2% of total income.

Investment income, which comprises both interest and dividend income, was the next largest component (4.7%). British Columbia, at 5.4%, had the highest proportion of investment income to total income followed by Saskatchewan and Alberta, each at 5.0%.

Although Canadians are dependent more on employment income, transfer payments are still an important source of income for many. While social assistance showed a decrease of 50,000 recipients from 1996, it was the third largest dollar component of transfer payments (13.7%) in 1997. El payments continued to decline for the fourth year in a row.

Alberta and Saskatchewan, respectively, led the provinces and territories in percentage decreases at 24.5% and 20.1%.

high

at $28,900 for men and $15,100 for women.

The major source of income for both sexes was employment income. In 1997, the number of Canadians reporting income from employment rose 2.4%, due to continued growth in the number of self-employed, particularly among women. than men Although there were still fewer women reporting self-employment income in 1997, the number of self-employed women has grown 45% since 1992 compared with about 19% growth for men.

Prepared by: City Forecast Committee, April 2000

Economic Dependency Rates Alberta and Canada

m m mu

0

2 o

20

E

-Z 1996

100 1997

Source: Statistics Canada

22

Q Edmonton Socio-Economic Outlook, 2000 - 2005 The 2000 Federal Budget, aside from re-indexing the personal income tax system, introduced a number of tax initiatives that total $58 billion over the next five years. These include: reducing the middle tax rate to 23% from 26%, increasing the threshold at which middle and top tax rates kick-in, eliminating the 5% surtax, raising the amounts that individuals can earn tax-free and, increasing the Child Tax Benefit. On the corporate side the corporate income tax rate will be cut by 7 percentage points to 21% over the coming years. In addition, capital gains taxes will be lowered from three-quarters to two thirds.

Consumer spending is expected to be one of the engines of growth in Canada, yet many families are under considerable stress due to uncertain employment and benefits, reduced savings and increasing household debt.

Canadian Savings Rate Hlluull WmW NW

0 20

18 16

Canadians' real disposable income has been dropping. Nationally, estimated family income after tax remained essentially unchanged in 1997 for the third consecutive year, after adjusting for inflation.

Apart from a modest increase in 1994, the average had declined throughout the early 1990s.

The 1997 average after-tax family income was estimated at $45,605, about 6% less than in 1989, the peak year for income. Transfer payments averaged $6,474, about 10% lower than the peak in 1993, while the average income tax was $11,541, down slightly from the high in 1996. Employment grew 1.9% in 1997, while average hours worked per week increased 0.5% to 37.9 hours. Average weekly earnings in 1997 were essentially unchanged.

Families experienced only modest improvements in earnings.

Statistics Canada figures from 1998 revealed that in low income households, food and shelter accounted for half of all spending, contrasting with upper income households that devoted one quarter of their budgets to these two basic categories. Interestingly enough, the upper income households claimed approximately one-third of their budgets to personal income while the lowest income households claimed

only 3%.

14 S12

2 10

2

2.0

4

II, 10

4

., 4!4,

10

4

Source:Statistics Canada

Canadian Total Household Debt * m mumWmWlli

According to Statistics Canada, out of every $100 of retail spending in 1999, Canadians purchased $35.70 worth of motor vehicles and related parts and services, $19.50 worth of food and nonalcoholic beverages and $9.70 worth of clothing, accessories and footwear. The next largest expenditure was on home furnishings and electronics at $7.60. In fact, sales of home furnishings and electronics were strong with the latter registering a 14% increase, compared with the previous year.

120

100

Additional expenditures were directed to alcohol

so

and tobacco ($5.70), prescription and over-the-

counter drugs ($4.10) and sporting and leisure goods ($3.80).

60 40 1

IM

20

S "4le 1p *

(

30

People have become busier, and the cost of

0

14,

4,

* ,0participation

Source:Statistics Canada

Preparedby: City ForecastCommittee,April 2000

has become more important. Low-cost health-promoting activities that people can do spontaneously have remained popular. More

23

.

Edmonton Socio-Economic Outlook, 2000 - 2005I

expensive activities, or activities that have to be planned in advance or require greater time commitments have dropped in popularity. Ageing of the population is probably also a factor influencing people's choice of activities.

Canadians' personal savings rate (disposable income minus consumer spending) has turned negative for the first time on record. Because of slow growth in wages over the last several years, many Canadian families have gone increasingly into debt to maintain their lifestyles. Since 1995, the consumer bankruptcy rate for Alberta has risen dramatically from 2.1 to 3.6 per 1000 in 1996.

While education standards, already high by international standards, improved substantially during the past decade there has been a downside.

An ongoing study of children and youth across Canada found that the majority of children were growing up healthy and well adjusted, and were progressing well in school. However, a significant proportion lived in difficult family circumstances and faced other disadvantages that put their development at risk. This, in turn, can be linked to family structure, the age of the parents and whether one or both parents are employed.

Family breakdown often leaves children living in lowerincome situations.

Children in single-parent families, regardless of income, were also more likely to exhibit behavioural and relationship problems.

According to a study on Canada Student Loans, post-secondary students are borrowing more money than ever to pay for their education and are finding it harder to pay it back. About half of 1995 postsecondary graduates borrowed from student loan programs to finance their education, a figure that is unchanged from the class of 1986. The 1995 graduates have however, accumulated larger debt loads and were paying them off over a longer period. Two years after graduation, the average debt load for these graduates was $8,300 (in constant dollars) twice the amount owed by their 1986 counterparts. Both the rate of default and the average value of loans in default increased during the six-year period.

Prepared by: City Forecast Committee, April 2000

The youth unemployment rate (15-24 age group) has been significantly higher than the overall unemployment rate in recent years. However, figures released by Statistics Canada show marked improvement in youth employment over the last year.

An interesting manifestation is that many youth are volunteering their time, in the hope this will create job opportunities for themselves in the volunteer and not-for-profit sector.

In 1997, an estimated 33% of youth in that age group were volunteers, almost double the proportion of 18% a decade earlier. These young volunteers, however, contributed fewer hours than their counterparts 10 years ago. Nearly two-thirds (65%) of unemployed young volunteers aged 15 to 24 believed that their volunteer effort would increase their chances of finding ajob.

The willingness to volunteer appears to increase with levels of income and education, and is greatest in the 30 to 44 year age groups, particularly in households with school children. Volunteers with higher household incomes generally contribute less time than those with lower incomes.

Seniors with considerable disposable time are less likely to do volunteer work than younger adults.

Those seniors who do, however, are more active in terms of the amount of time they commit to volunteer work. The pending retirement of large numbers of baby boomers could have a positive affect on volunteerism. Albertans still lead the nation in active volunteer work. Just over 40% of Albertans volunteer their time, compared with the national rate of31%.

The demographic and economic trends will create conditions that are likely to slow the current rate of criminal activity. The crime rate across Canada fell for the seventh consecutive year in 1998. The 4.1% drop resulted in the lowest rate in almost 20 years.

Most crimes declined in 1998. Among the few crimes showing an increase were drug offences (6.0%) and prostitution (1.7%). While the national crime rate has declined 21.7% since 1991. This rate is still almost double that of 30 years ago.

24

.

"Edmonton Socio-Economic

Youth crime continues to be proportionally, more property-oriented than crimes committed by adults.

Violent crimes accounted for 20% of youth crime compared with 29% of all crimes committed by adults. Over the past decade, the violent crime rate of female youths has increased twice as fast as for male youths. The rate of female youths charged with violent crime is still much lower (474 per 100,000 population) than that for male youths (1,310).

A*LBERTA Albertans are expected to enjoy robust gains in living standards, as tight labour market conditions will spur healthy wage growth.

The following are some highlights from the 2000 provincial budget: Albertans will see their taxes cut by $52 million a year by year 2001. Families with two children who earn less than $31,000 a year will pay no provincial income tax. This includes about 132,000 lowincome Albertans and is in addition to the benefits that families receive under the Alberta Family Employment Tax Credit.

Outlook, 2000 - 2005 2000-01, lottery revenues will continue to flow into the Alberta Lottery Fund, which will increase by $68 million to $838 million. The budget includes a 5% increase to $53.3 million in the Community Lottery Board Grant program which puts lottery dollars back into communities. Alberta Lottery Fund dollars for problem gambling will increase by 6% to $3.6 million.

For the year 2000/2001 and for local distribution 2 , the Edmonton Community Lottery Board has received $11.7 million, an increase of $0.8 million over last year. About $1.37 billion was played in legal gaming in Edmonton in 1997/98, including lotteries, charitable casinos, bingo, raffles, horse racing, pull tickets, and video lottery terminals.

Total Gaming in Alberta

aui

3100llmm

o 2500 2 150

1000

500 0

89

90

91

92

93

94

95

96

97

Source: Alberta Oaming and Liquor Commission

Health and Wellness spending will increase by nearly $1.1 billion to $6.2 billion, an increase of 21% over three years. In 2000-01, spending will increase 9.3% ($482 million) over the current year's budget. Increased funding is being directed at increasing front-line staff and services.

On education, total spending will reach $4.6 billion in 2000-01 and will grow to more than $4.9 billion by 2002-03. As part of base funding ($2.8 billion), $66 million will be available in the 2000-01 school year for jurisdictions participating in the Alberta Initiative for School Improvement to improve student learning. This will allow school boards to implement initiatives like stay in school programs, early literacy programs or smaller class sizes for early early grades. grades.

Gaming has become a major source of revenue for the Province and now surpasses oil royalty. In

Leisure Activities Walking for pleasure Bicycling Attending sports events, etc.

Crafts, etc.

Visiting a museum, etc.

Swimming in pools Gardening Playing video games, etc.

P ig am t Overnight camping

Pionicking in City

Households Participating (%) 89.2 61.7 55.7 55.6 53.6 53.3 50.9 47.5 4.

43.6 43rainS4e

Source: Alberta Recreation Survey A recent survey of 87,000 Canadians found that nearly 20 million people, or about 85% of the 2 Source: Edmonton Community Lottery Board

Prepared by: City Forecast Committee, April 2000

25

'in onion Socio-Economic Outlook 2 000 .

population aged 15 and over, participated in one or more nature-related activities during 1996.

Albertans had the highest participation rate, at 89%.

overall, the 1997 index 3 had declined by almost 5% from the baseline year of 1993.

What has improved?

The economic benefit of nature-related activities was immense. Across Canada, people spent an estimated $11 billion on nature-related activities, an average of $550 per participant. These expenses represented about 2% of total household spending in 1996.

•

Property crime dropped from 103 per thousand in 1993 to 81 per thousand in 1997.

•

Violent crime went from 1,723 per 100,000 in 1993 to 1,379 per 100,000 in 1997, although most of the change occurred between 1993 and 1994 and change has been very gradual since.

EDMONTON

•

Edmonton is increasing its profile as a venue for major cultural, sporting and music events. The City of Edmonton will be the host to several major sporting events over the next three years.

The teen birth rate, measured as the rate per 1,000 females between ages 15 and 19, dropped from 29.7 in 1993 to 25.2P in 1997.

•

The suicide rate had been dropping since 1993 (21.9 per 100,000), but showed a sharp increase in 1996 (20.1 per 100,000).

•

The incidence of sexually-transmitted disease has fluctuated somewhat since 1993 (when there were 431 cases per 100,000) but is generally declining (402P cases per 100,000 in 1997).

•

Life expectancy for Edmontonians has been steadily improving — from 77.58 years in 1993 to 78.24P years in 1997. Although not as high as for Calgarians, Edmontonians have one of the highest life expectancies in the world. The rate for Edmonton men is fifth highest in the world and the rate for women is sixth highest.

In 2000, Edmonton will host a major international Triathlon and the World Youth "AAA" Baseball Championships. In 2001, Edmonton will host the 8th World Championships in Athletics and the World Triathlon Championships.

These events bring tremendous benefits to Edmonton. They also are increasing an already competitive market for corporate sponsorships, volunteers and to a lesser extent, special event equipment. Many events are looking for long term commitments from their sponsors and suppliers to try and ensure their own success over this period of time.

What has deteriorated since 1993?

•

Reports of domestic violence declined in the years after 1993 (285 reports per 100,000), but increased sharply in 1997 (to 350 reports per 100,000).

•

Personal bankruptcies are up drastically— from 2.2 per 1,000 population in 1993 to 5.11 P per 1,000 in 1997.

•

In 1997 the use of the Food Bank (30,658 per 100,000) dropped back to 1995 levels, but was still higher than it was in 1993 (19,622 per 100,000).

As the growth in the number and scope of events

continues, the demands on existing parkland are increasing. Some parks, most notably Edmonton's North Saskatchewan River Valley, are reaching their capacity both from an environmental and a social perspective. The increasing need for passive use of parkland must be balanced against the desire to produce events in city parklands.

In 1998, the Edmonton Social Planning Council examined a number of different social factors to assess changes in Edmonton's social health since 1993. The index showed that social conditions in Edmonton have improved in some ways but that

3 Many of the 1997 figures are projections, as noted byP. An update of these figures should be available later in the spring of year 2000.

Prepared by: City Forecast Committee, April 2000

26

Edmonton Socio-Economic Outlook, 2000 - 2005,I *

The number of crisis support calls increased from a low of 691 per 100,000 in 1993 to 1,112 per 100,000 in 1996.

*

The Child Welfare caseloads have climbed steadily since 1993, from 433 per 100,000 to 654P per 100,000 in 1997.

*

The proportion of babies born with low birthweight has also increased steadily since 1993, to 6.5%P in 1997. from 5.6% of births fage

* *

S

In summary, there is still considerable potential for stress on Edmonton families, from insecure jobs, reduced disposable income, depleted savings, higher debt load. Often this stress is manifested through disputes, abuse and family breakdown.

At the other end of the population spectrum, the 75+ At the other end of the population spectrum, the 75+ group in Edmonton is expected to increase by about 6,509 persons (20.2%). It is expected that the increase will largely occur in the older, central areas of the city and that a high proportion of this age group will be women living alone. The demand for services such as health care, exercise programs, seniors housing, and aids to daily living will increase significantly. Isolation and conflicts with adult children and other caregivers may affect this group.

Employment and Unemployment

Sandwiched between these age group are the "babyboomers" who are currently in their 40s and 50s.

*

The number of premature deaths (i.e., those that occur before age 75) is rising steadily, from 315 per 100,000 population in 1993 to 347P per 100,000 in 1997.

*They

are becoming the overriding demographic

Canada-wide the employment increase primarily focused on full time jobs. Between 1998 and 1999 Metro Edmonton reverted to this trend with a 1.8 percent increase in full-time and an 8.7% decrease in part-time employment. As of February 2000, the unemployment rate in Metro Edmonton is 4.8 percent, a 1.2% drop from a year ago.

group of interest over the long term. While this age group is not at present considered to be as vulnerable as are others, from a social and economic perspective, the group warrants consideration due to its sheer numbers. The older component of the group may begin to experience significant stresses over the forecast period.

Positive social impacts will come from decreasing unemployment, low inflation, and low mortgage rates. This environment will result in increased financial independence, improved health status for those Edmontonians obtaining full-time jobs with benefits, and those successful with small business ventures. Therefore, demand for some elements of social services may be reduced.

The 45 - 54 age group in Edmonton is expected to increase by about 18,590 persons (21.5%). This increase will likely have implications for that portion of the age group that needs to find new employment and for the specific health services used by this group. Social issues will include coping with the stresses of finding new employment, caring for ageing parents, and helping to meet needs of adult children not in the workforce.

Demographic Changes

The net migration is forecast to remain positive. Inmigrants will generally be young and the increase will create some additional demand for housing, childcare, and other human services.

The increase in the 45-64 and over 75 age groups will be the most significant demographic trends during theforecast period It is estimated that over the forecast period in the City of Edmonton, the 0 - 9 age group will increase

0 0

by 6,375 persons (4.8%). The proportion of mothers in the workforce is greater than the proportion of working women who are not caring for children.

This may result in an increasing demand for additional child care services, particularly if women choose to take advantage of more employment opportunities.

Prepared by: City Forecast Committee, April 2000

Edmonton is becoming a more ethnically diverse city with an increasing percentage (18%) of the population being representative of a visible 27

S.Edmonton.Socio-Economic Outlook, 2000 - 2005 minority. In 1991, there were 46,785 non-Canadian citizens in Edmonton's population. By 1999, there were only 31,161, a decrease of 33.3%, suggesting that immigrants are becoming citizens and making their home here.

Next to Winnipeg, Edmonton has the highest number of aboriginal people (25,280 persons) of major Canadian cities. Although Aboriginals make up only 4% of the population, their numbers are rapidly increasing. Canada-wide, between 1991 and 1996, the Aboriginal population increased by 24.6%, compared to the general population at 5.2%.

In Edmonton, the percentage of Aboriginals in the 0-14 age category (34.7%) almost doubles that of the overall population in this age group (20.7%).

The distribution of household incomes in Edmonton has changed relatively little over the 1990s. This suggests that the improving economy has not yet brought much financial benefit to the majority of households, although moderate wage increases are anticipated over the forecast period,

Housing and Homelessness The 1999 average price of a detached resale home at $133,442 is expected to increase 6% this year to a record-high of $141, 450.

Recent trends over the past three years have revealed that the price of housing in urban locations is increasing at a greater rate than of outlying suburban areas. This trend is opposite to that which has been predicted for decades Edmontonians are living in the same residence for a longer period. Forty-six percent of Edmontonians had lived in their current place of residence for five years or longer in 1999 in contrast to 40.6% of Edmontonians in 1993. This suggests that Edmonton neighbourhoods may be becoming somewhat more stable now than they were in 1993.

In 1993, 77.3% of Edmonton residents who had lived in their current dwelling less than one year came from elsewhere in Edmonton while in 1999, o n ly 6 9 .6% ha d liv e d e ls e w h e re i n E d m on to n.

The total number of housing units in Edmonton has increased from 236,100 in 1991 to 260,200 in 1999, a 10.2% increase over the period. While the number of owner-occupied dwellings in Edmonton has also consistently increased during this period (from 123,200 units to 148,000 units, a 20.1% increase); the stock of rental dwelling units decreased from 113,000 in 1991 to 112,100 in 1999. According to the Canadian Mortgage and Housing Corporation, between year 2000-2001, Edmonton's apartment vacancy rate is expected to tighten slightly from 2.2% to 2.0%.

Low income renter households (the number and proportion of which increased between 1991 and 1996) may experience increased difficulty obtaining adequate shelter at reasonable cost as the shortfall in rental accommodation is felt and rents increase.

Homelessness continues as a significant problem across Canada. The Government of Alberta and Edmonton City Council jointly appointed a task force on homelessness for Edmonton. The task force will identify ways the community, private and public sectors can co-ordinate support for homeless people.

Spending to provide shelter for Alberta's homeless will total $13 million this year. This includes $3 million in new money toward a public-private partnership to address homelessness and an increase of $500,000 for operating emergency shelters - a total budget of $10 million.

In November 1999, 1,114 persons were identified as being homeless in Edmonton 4 . The number of homeless persons and families may increase if some Edmontonians have increased difficulty meeting rental payments.

Poverty The income gap between rich andpoor is widening in Edmonton and across Alberta.

Twenty-six percent of all Edmontonians had an income below the Low Income Cut-Off (LICO) in 4 D f E o nS i P a S r g 4 Draft Edmonton Social Plan, Spring 2000

Prepared by: City Forecast Committee, April 2000

28

SEdmonton Socio-Economic Outlook, 2000 - 2005 1995; a significant factor when compared with the nation-wide figure of 20% and Alberta (18%)5.

Figures for some of the sub-groups, below the LICO level, were more alarming: * *

*

* * * *

61.6% of aboriginals 49.4% of recent immigrants.

S35.0% of youth (ages 15 to 24).

34.9% of persons in visible minorities.

32.1% of children (under 14).

24.8% of seniors.

27.9% of women, but only 24% of men.

somewhat during the forecast period, given the historically close association between the unemployment rate and the poverty rate.

Consequently, the number of food bank users may level off (food bank usage more than doubled between 1991 and 1996).

Average Monthly Food Bank Use City of Edmonton 20000ll 20000

16000 16000

The poverty gap for poor families in the City of Edmonton is greater than for poor families in

Canada, in Alberta and even within Greater Edmonton. Couples with children under age 18 have the largest poverty gap. In 1995, an average lowincome Edmonton family required an additional $11,585 to raise their income to the LICO level.

Between 1991 and 1996 the proportion of singleparent families in the city increased from 16.2% to

'"2000 zt 10000.

0

8

ampersons m

00 000

o0o 2000

.90

'90

' '93 '94 9 ', '97

'918'2 93 '94'95

968'7

'99

'98 99

Source:EdmontonGleanersAssociation

Education

17.2%. Compared with the rest of Canada (55%) and Alberta (51%), Edmonton's single-parent families, at 61%, fell within the poverty level status 6 .

The opportunity to attain an education is elusive for

Incidence of Children Under 18 Years in Low Income Families

a significant proportion of Edmonton families living

mmulullll

*third -% ts

C_. andraA []CalgaryCMT~A

'I

, SOfl ... ....

The improving economy and increasing job opportunities arefuelling the demandfor training more closely tied to employment opportunities.

Edmonto.cMA

lfrom

at or below the poverty level. In 1994, about oneof persons aged 18-21 from low-income backgrounds had not completed high school, compared with one-quarter of their counterparts from higher income backgrounds. Furthermore, while university participation rates rose for people from all socio-economic backgrounds between 1986 and 1994, the increase was smallest amongst those lower income backgrounds

Source: Statiscs Camada, Sures of ConsumRnamces

s

One quarter of children in the greater Edmonton region 7 live in families with incomes below the low-income cut-offs. This rate may decrease

In recognition of this fact, a Canada Millennium Scholarship project will begin in 2000 and will provide an average of $3,000 per year for 5,000 low and middle income post-secondary students in Edmonton.

5 No Safeguards: A Profile of Poverty in Alberta 6 No Safeguards: A Profile of Poverty in Alberta

Alberta Budget 2000 has also indicated that

7 The City of Edmonton makes up 71% of the Edmonton CMA, the

spending

incidence for the City alone would be significantly higher as the CMA contains a number of more affluent communities.

Prepared by: City Forecast Committee, April 2000

in 2000-01, for post-secondary apprenticeship and student assistance, will increase 29

I

~

Edmonton Socio-Economic Outlook, 2000 - 2005

9% to about $1.1 billion. Applied degree programs will continue to serve as a part of Alberta's college and technical institutions program. These study programs differ from traditional degree programs in that they include work experience activities, and employers are involved in the design, delivery and funding of the work experience portion of the studies. This initiative should have a direct, positive effect on employment, particularly for youth and young adults, although it will take some time for the effects of the new programs to be felt.

Health and Social Well-Being The reinvestment of additional funds by the Province in the recent budget offers some promise that concerns in these areas may be mitigated

In the area of child welfare and care services, total spending increases by $37 million bring the budget for Alberta Children's Services to approximately $537 million. Of this, $2,7 million is targeted for the continued protection of children involved in prostitution and $1 million to address fetal alcohol syndrome.

Although child welfare caseloads in the city are increasing, they are not rising as fast as for the province as a whole.

The Child Tax Benefit increase and the Family Employment Tax Credit, along with a decreasing unemployment rate and recently announced tax cuts will help reduce the depth and extent of poverty for working poor families with children who are not on welfare.

Over the forecast period, the health care system can

expect increased demand from specific populations,

Average Monthly

such as the 75+ age group and aboriginal people.

Child Welfare Caseloads

m14000

These groups, as well as low-income individuals

MmUENE

and families, both have relatively poor health status and high health care usage.

00

lll

Edmonton IAlberta

12000 10000

ooo

Alberta Budget 2000 has added an additional $21 million to the province's income-support programs for lower-income seniors - the Alberta Seniors Benefit Program and the Special Need Assistance

-0

o

The current short supply of supportive living and group homes for vulnerable populations (e.g., frail elderly, mentally ill, disabled individuals, abused children, and troubled teens) will need to be addressed by local groups and provincial agencies during the forecast period.

Additional funding will be provided for the Child Health Benefit Program, which provides 100% coverage for dental and optical, prescription drugs,

emergency diabetic

ambulance

services

and

0

80

4000 200

for Seniors Program. The $162 million spent on

these programs will mean a 10% increase in monthly benefits to program clients. This program provides emergency cash grants to low-income seniors who can't meet their basic needs.

8000

4

95

96

97

98

99

Source:Albeta Family and Social Sarvics

Criminal Activity Criminal activity in all categories continued the downward trend in 1999. Crimes of violence, which generally includes homicide, attempted murder, robbery, abduction, sexual and non-sexual assault; all showed a significant decline in the number of offences reported. Since 1998, homicide showed the most dramatic decline of 25 to 18 murders (25%).

As for property crimes, there was also a decline in most categories 8 , most notably being that of theft

essential

supplies of children of lower-income

families,

8 Property crimes include break and enter, motor vehicle thelt, theft over $5000, theft $5000 and under, processing stolen property and

fraud.

Preparedby: City ForecastCommittee, April 2000

30

0

Edmonton Socio-Economic Outlook, 2000 - 2005

over $5000. In this category there was a 14% decrease.

Percent of People Who Avoid Going Out Because of the Fear of Crime

mmmm80Fil

Family disputes is up for Edmonton (3,411 reported cases in 1996, 5,357 in 1997), the numbers of reported child abuse cases are actually down from previous years (695 cases reported in 1996, 543 in 1997).

More protection is now available to victims of family violence under the provincial Protection Against Family Violence Act, which took effect June 1, 1999. This includes improved bail notification and protection to victims of serious domestic violence.

The proportion of the population in the 15-24 age group is projected to decrease by 8% by the end of the forecast period. Since this age group is more crime prone than other age groupings, crime rates, especially those related to property, may decrease accordingly.

80

N Time [Some of thever then1me

the Time Most of 60

e

40

20

o

.

93

94

96

98

Source:Edmonton Police Services

Percent Feeling Safe Walking Alone in the Neighbourhood at Night 80

60.

0.

Seniors, the fastest growing age group, are generally more fearful of crime than are others in the general population. Efforts directed at reducing the fear of crime will need to consider this demographic trend.

20

93

94

96

98

Source:Edmonton Police Services

Due to an aging society, more elderly people will be cared for by, or will be living with their adult children. Stresses caused by intensive care giving, without respite, may increase violence within multigenerational families. The impact of an aging population will also need to be considered in family violence initiatives.

The citizen surveys conducted by the Edmonton Police Service in 1994, 1996 and 1998 indicate stabilization in the perceived levels of neighbourhood crime. This is accompanied by a steady increase in the perceived safety walking alone at night and an increased use of discretion when assessing personal safety.

Preparedby: City ForecastCommittee, April 2000

31

I

lEdmonton Socio-Economic Outlook, 2000 - 2005

APPENDIX I Graphs and Tables Ehploynment by Industry - Edmanton C.M.A. (000) Industry

1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

Total

399

410

416

424

428

429

422

429

441

441

466

475

483

Goods-Producing Sector

79

82

84

80

81

83

81

84

94

91

96

100

110

6

2

3

4

3

3

4

3

10

6

8

8

7

8

10

10

7

8

8

6

8

11

12

14

15

10

Utilities

4

4

6

5

4

6

6

5

4

5

3

3

4

Construction

23

28

28

29

30

29

27

26

28

31

27

31

35

Manufacturing

37

38

37

35

35

38

37

41

41

37

44

44

55

320

328

332

344

348

346

341

345

347

350

370

375

373

Trade

71

74

72

77

78

74

74

76

76

74

77

76

77

Transportation and Warehousing

25

24

24

23

23

22

21

22

23

26

27

25

24

Finance, Insurance, Real Estate and Leasing

23

23

27

28

29

30

28

27

27

23

26

29

28

Professional, Scientific and Technical Services

21

22

22

21

19

20

22

26

21

26

29

30

33

Management of Cnompanies & Administrative & Other S

11

10

11

13

11

13

13

12

15

15

17

17

15

Educational Services

34

33

34

33

35

37

36

31

34

31

33

30

37

Health Care and Social Assistance

35

38

43

43

49

45

43

50

46

51

48

54

54

Information, Culture and Recreation

19

23

19

20

18

19

20

23

24

22

21

28

22

Acccarodation and Food Services

23

24

21

28

27

28

28

26

28

29

32

31

30

Other Services

25

21

20

21

22

23

25

22

26

25

31

28

26

Public Administration

35

36

39

37

38

37

32

33

27

28

30

27

27

Agriculture Forestry, Fishing, Mining,

Oil &Gas

Services-Producing Sector

Source: Statistics Canada, Labour Force Historical review 1999,

71f004xcb

Prepared by: City Forecast Committee, April 2000

9 0 0 **

00 00 0 * 9 0 0 0

32

0 0*

0

D 09

*q* 0 0 0

00D 000

0

I

Edmonton Socio-Economic Outlook, 2000- 2005 EDMONTON GROSS DOMESTIC PRODUCT AT FACTOR COST BY INDUSTRY

(1)

Constant (1992) Dollars (2) (Millions) 1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

131

41

68

87

78

61

101

91

277

177

228

230

Forestry, Fishing, Mining

1,264

1,540

1,545

1,119

1,328

1,352

1,146

1,599

2,081

2,224

2,553

2,798

Construction

1,719

1,910

1,831

2,000

1,877

1,627

1,679

1,685

1,673

1,878

1,978

2,119

Manufacturing

1,778

1,922

1,913

2,026

2,098

2,210

2,332

2,820

2,814

2,590

3,179

3,079

Transportation, Storage & Communication

1,656

1,888

1,775

1,841

1,945

1,952

1,998

2,076

2,164

2,138

2,282

2,406

670

703

1,052

784

725

936

1,084

1,062

895

1,096

992

961

Trade

2,327

2,528

2,515

2,608

2,519

2,493

2,627

2,752

2,691

2,704

3,308

3,249

FIRE

2,857

2,834

3,077

3,173

3,189

3,408

3,346

3,421

3,287

3,028

3,480

4,003

967

1,039

1,002

1,043

945

923

1,048

1,116

1,088

1,211

1,349

1,389

Educational Services

1,541

1,465

1,430

1,308

1,352

1,521

1,403

1,263

1,365

1,257

1,325

1,209

Health and Social Services

1,840

2,094

2,468

2,556

3,315

3,162

2,976

2,965

2,651

2,553

2,337

2,627

Accommodation, Food & Beverage Services

812

861

792

1,111

1,061

982

1,090

999

977

1,078

1,242

1,084

Other Services

548

514

473

496

499

537

577

520

609

543

663

591

2,121

2,171

2,338

2,022

2,022

1,897

1,630

1,494

1,195

1,108

1,048

906

20,230

21,509

22,280

22,173

22,953

23,062

23,037

23,863

23,768

23,583

25,964

26,650

Edmonton Growth Rate

N.A

6

4

0

4

0

0

4

0

-1

10

3

Calgary Growth Rate

N.A.

5

0

3

2

1

5

1

5

4

8

1

Alberta Growth Rate

N.A

7

1

2

2

1

6

5

3

2

7

3

Industry

Agriculture

Utilities

Business Services

Government Services GDP

(1) GDP at Market Prices is obtained by adding Indirect Taxes Less Subsidies

Preparedby: City ForecastCommittee, April 2000

33

Participation Rate 1987-99 Edmonton C.M.A.

Exchange Rate & Commodity Price Index

lili

mmMil

mimmnHIIi 90 120

0.76

110-

0e74 (.72

X -- 100

80 -

m

a le

d8M

75 0. 770

0.7

-o- Total Female

0.68

65

90 0.66

60 80

0.64

...............

Source: Statistics Canada, City Forecast Corn mmittee Source: Statistics Canada, City Forecast Committee

Estimated Market Value Assessment and House Price % Change

Alberta Personal Disposable Income Per Capita

imiiiiiill

unnimmill

30

15

18,500 25

17,500

0 20

10

16,500 15

S15,500 14,500

5

13,500

o

12,500

Ae*'

iouse Pce ---

Assessment

App

11,500 10,500

,

. .

.

' ' <" -\' 1* ,Cb

.

.

%" P

.

.

.

'b Ct

.

.

.

.

10. " 4'

-lo

-10...

15

Source: Bank of Canada, City Forecast Committee

Source: Alberta Treasury

34

Preparedby: City ForecastCommittee, April 2000

S. . . .

***

I

.

****** 0

0

***

l

ee

I

Edmnoo Socio-Economic Outlook, 2000

-2005

Unemployment Rate 1987-99 Edmonton CMA MMWWWMMill 18 16 14.

1

2 10

IExperienced 1 Youth []O Average

4

Source: Statistics Canada, City Forecast Committee

Preparedby: City ForecastCommittee,April 2000

35

Edmonton Socio-Economic Outlook, 2000 - 2005

[

Appendix II Edmonton Census Metropolitan Area

°

__

L

REDWATER

71

-0--

City

-

geo nty

Primary Highway

- -

Town

Secondary Highway Railway

Village

County Boundary

BON ACCORD MORINVILLE

*

.

GI ONS aA

Urban Service Area Boundary

k

F1F :ratlcona

S.

"tCounty Entywsd F

c

t

Al

20

waeman

DM

*

--

!

Parkland

County swan

w.....

2 DEO

EAUMONTF

=-1 PiLeduc County

i

2

no

Cry

OF,

JE0fonon Prepared by: City ForecastCommittee, April 2000

O

-PAR

PR t t

.

<

SHER

O

10

25

Lamon0o10 kilometre

36