Prince Edward Island Yes, but - Atlantic Business Magazine
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State of the Region
Prince Edward
Island
Yes, but…
In the space between an unprecedented economic boom
and COVID’s pandemic panic, Islanders strive for balance
BY DAWN CHAFE
If there was a competition for the title of Prince Edward Island’s most positive person,
Shawn McCarvill would be a serious contender. Reached by phone in the midst of a
global pandemic that’s triggering a worldwide economic crisis, the president of Slemon
Park Corporation repeatedly said he had much to be thankful for.
Topping his list of ‘gratitudes’ is the federal and provincial governments’ manage-
ment of COVID-19. “Yes, we’ve had to wear masks and socially distance, but there
aren’t many people in the world whose lives have been as minimally affected as ours
have been here,” he said. As of December 14, there had been no hospitalizations or
deaths on the Island related to the coronavirus.
The province has done so well in fact, that two of McCarvill’s daughters—one’s a
physician and the other’s a CPA—relocated from highly-infected Ontario to the safety
of P.E.I. They didn’t come empty-handed either. The doctor brought her doctor-
husband with her, along with their four children, which goes a long way to explaining
the smile in this grandfather’s voice.
ATLANTICBUSINESSMAGAZINE.COM | 51
STATE OF THE REGION
Still, it’s hard to imagine what
would inspire that positivity in
Shawn McCarvill’s professional life.
The economic development crown
corporation he leads is essentially a
property management organization
renting space to commercial and
residential tenants. Those commer-
cial tenants include manufacturing
companies, public safety training
organizations and P.E.I.’s aerospace
industry.
That’s right, aerospace—a sector
that has been all but grounded by
the travel restrictions necessitated
by COVID-19. Last May, passenger
traffic at the Charlottetown airport
was down 97 per cent compared to
the same month in 2019. It decreased
a further 94 per cent between April
and November 2020. On the day Shawn McCarvill and his wife Joanne with their seven grandchildren at home in Prince Edward
this article was written, there was Island. Four of the grandkids, along with their parents and an aunt, moved to the Island from
exactly one flight coming into YYG Ontario when COVID infections tore through that province. “It’s an ill wind that blows no good,”
and one flight going out. Surely said McCarvill, expressing his gratitude for seeing his family safe on P.E.I.
McCarvill must be weighed down
with concern for his clients, specifi-
cally StandardAero and Honeywell…
except, he isn’t. Concerned? Yes. Dimming the lights
Weighed down? Not so much. In the six years B.C. (before COVID), things to return to normal.
According to McCarvill, P.E.I.’s Prince Edward Island recorded Always a conduit between govern-
aerospace industry isn’t in the record gains in its tourism industry. A ments and its business members, Walsh-
commercial airline business; it’s in the statement issued by the Department McGuire’s association has been espe-
MRO business (that’s maintenance, of Economic Growth, Tourism and cially active during the pandemic. They
repair and overhaul, in case you were Culture on November 26, 2019 noted communicated business needs to policy
wondering). Yes, he confirmed, there tourism accounted for “over 8,500 makers and, in turn, kept their members
have been some layoffs and those have full-time equivalent workers and informed about rapidly-changing poli-
been both significant and unfortunate contributes more than $486 million to cies and programs. “Taking the volume
for the families affected. And yes, he the provincial economy.” Simply put, of concerns and really emotional
acknowledged, the long-term implica- tourism is one of the main actors on conversations we were having with our
tions could be devastating (“Making P.E.I.’s economic stage. members, then condensing it into some-
sure we have a strong commercial That main actor was reduced to thing that government could action in
airline industry when this is all done a bit part in 2020. A Q4 Tourism terms of timely and effective policy was
is an important thing for governments Indicators report identified signifi- one of the biggest roles the chamber
to manage and support.”), but… cant traffic declines across all areas played. I’m really proud of that,” she
But, he contended, even now, planes compared to 2019: bridge traffic, told Atlantic Business Magazine.
are flying—“Cargo still needs to get -52.3 per cent; air, -80.5 per cent; Among the things they learned
from here to there”—and as long as cruise, -100 per cent. As night follows along the way was that while working
there are planes in the air, he said, day, so too did fewer travelers result from home kept people safe and
there will be a need for the Island’s in fewer accommodation bookings. enabled many businesses and govern-
MRO services. Fixed-roof accommodations (hotels, ments to continue operations, “the
What about the residential arm motels, resorts, inns, cabins/cottages, impact on our downtown, on our main
of Slemon Park’s operations? Hasn’t B&Bs, tourist homes, trailers and street, has been significant,” said
that been hurt by the pandemic? “Our hostels) saw a 65.6 per cent decline. Walsh-McGuire.
homes are filled,” he said. “And the According to Penny Walsh- She explained that downtown areas
real estate market on PEI has been McGuire, CEO of the Greater depend on the business from daytime
really strong this year as well.” Charlottetown Chamber of commuter and foot traffic—think
He finally admitted to worry when Commerce, the mass work-from-home office workers stopping into a restau-
pressed about the travel and tourism transition exacerbated the problem. rant for lunch or shopping at a retail
market; Slemon Park administers a When COVID crashed onto Atlantic boutique. When those workers were
hotel with restaurant and meeting/ shores back in March 2020, govern- forced to stay home, their consumer
banquet facilities. “A lot of that industry ments across the region put physical spending locked down with them.
is pretty marginal to start with. Let’s distance rules in place and ordered “Businesses that rely on that traffic
just say I wouldn’t want to be reliant on the closure of non-essential business are struggling,” Walsh-McGuire said.
our food and beverage operation to be premises. Those that could operate But…
paying the bills right now.” with home-based staff, did—many But, she added, it could have been
In that, he truly is fortunate. continue to do so as they wait for worse. The Atlantic bubble, which
52 | JANUARY/FEBRUARY 2021
PRINCE EDWARD ISLAND
allowed people to travel throughout
the region without having to quar-
wrong. Looking at its 2019 Provincial
Economic Update, P.E.I. led the
“Regional airports
antine, helped offset the loss of country across a number of key fiscal and national airports
traditional markets. So, too, did the indicators.
support for local businesses from Recording a 2.2 per cent increase need to be supported
local consumers. Walsh-McGuire
said people really turned out to show
over 2018, population growth was the
fastest among all provinces. Its labour so whenever we do
their appreciation for the companies
that support them as a community,
income was also a national front-
runner, growing 4.7 per cent from
get to the point where
recognizing that “local business is the 2018 to 2019 (the national average we reopen and people
backbone of our economy.” And while for the same period was 3.9 per cent).
January is usually a tough time for In fact, Prince Edward Island led have the confidence
the tourism industry and the hospi-
tality sector in general, she’s hopeful
the provincial pack for retail sales
growth (3.0 per cent higher than the
to travel, then the
that Islanders will continue to get year before), housing starts (up 50 per industry is ready for
out and support their own over the cent), seasonally adjusted manufac-
winter months. turing shipments (plus 22.1 per cent) that to happen.”
and international exports (a 10.6 per Shawn McCarvill
cent increase). President
Even in areas where it didn’t Slemon Park Corporation
The difference lead the country, P.E.I. still posted
impressively positive gains in 2019.
a year makes Total overnight stays? Up 2.8 per
It could be argued that much of cent, according to the Department
P.E.I.’s glass-half-full attitude is due of Economic Development and
to the strength of its economy heading Tourism. Employment, too, saw a
into the pandemic. “We were on a 2.1 per cent increase with average
positive trajectory, which has helped weekly earnings up 2.6 per cent.
us to weather this storm,” said the Motor vehicle sales grew in value (9.3
Chamber’s Walsh-McGuire. She’s not per cent) and volume (3.7 per cent)
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ATLANTICBUSINESSMAGAZINE.COM | 53
STATE OF THE REGION
while private sector forecasts (read:
non-government sources) predicted
When metrics don’t slightly to 140,000 in the early 2000s,
then jumped over 20 per cent from
an average real GDP growth of 2.2 tell the whole story 2010 to 2020, but that still put it just
per cent. One Islander who wasn’t taken off guard shy of 160,000.
Things were so good that the newly- by the quick downturn is Jim Sentance, What happened to push the Island’s
elected Progressive Conservative associate professor of economics at the economic metrics so far, so fast?
government did something that University of Prince Edward Island. He Sentance believes the HST played a
might actually be unprecedented in agrees that P.E.I. was “pretty well firing role (in 2013, P.E.I. became the last
Canada: in their inaugural 2019-20 on all cylinders” and leading the rest of province in the country to adopt the
Budget Address, they commended the country across a number of growth Harmonized Sales Tax). “From a tax
the previous Liberal administration indicators, but—there’s always a but in point of view, that really was a disad-
for having bequeathed them a sound this story—at the same time, he said it vantage for a lot of our businesses, not
economic environment. “Responsible was still one of the poorest provinces in being able to claim the tax on inputs
bottom lines, as well as strategic the country. The value of products and to the same degree as you can under
investments over the past four years services produced, otherwise known as the HST. You look at the period in
have ensured that our province is in a GDP, doesn’t take population numbers which we’ve been doing really well
position of relative strength.” into account, said Sentance. “If you and it’s post the adoption of the HST.”
The province was on an historical look at growth in GDP per capita, I The tax transition’s impact as
high. Backed by anticipated GDP imagine we would have been closer to an economic driver has dwindled
growth via immigration-driven popu- the middle of the pack.” in recent years, but the boom has
lation increases, Premier Dennis In actual fact, according to continued. How, then, does Sentance
King’s good-news budget prom- Statistics Canada data, P.E.I. had explain the current prosperity?
ised to lower taxes while increasing the lowest per capita GDP in the “Construction.”
spending for healthcare, education, country in 2018 ($45,439). They were Why is there so much construction?
infrastructure, affordable housing followed by Nova Scotia ($46,226), “Immigration.”
and to combat climate change. The New Brunswick ($47,950) and According to Sentance, Prince
extra expenditures totaled $117.6 Quebec ($52,384). Next in line Edward Island is one of the fastest
million, an amount that still allowed were Manitoba ($53,708), British places in the country for immigrants
for shrinkage in P.E.I.’s net debt to Columbia ($59,066) and Ontario to obtain permanent resident status.
GDP ratio, from 31.3 per cent in 2019 ($59,879). The top GDP producers Permanent residency is an essential
to 29.1 per cent in 2021-22. included Newfoundland and Labrador precursor for Canadian citizenship. He
But just when it seemed like ($63,243), Saskatchewan ($69,373), said he’s noticed that P.E.I. is partic-
nothing could slow P.E.I.’s forward Yukon ($75,002), Alberta ($80,175), ularly popular with academic immi-
momentum, a TD Economics report Nunavut ($89,698) and Northwest grants. In 2019-20, for example, UPEI
from June 26, 2019 was frighteningly Territories ($105,214). had 1,426 international students from
prescient: “With the global back- “I guess,” Sentance explained, over 93 countries. All of those new
drop growing increasingly uncertain, “when you’re that far behind, any kind student residents require housing,
downside surprises to P.E.I.’s growth of economic growth seems larger.” which is why real estate, rental and
outlook are a palpable risk.” It’s true. In a province the size of leasing was the Island’s largest GDP
By the end of September, 2020—a P.E.I., with a record-high population contributor in 2019 at 12.26 per cent.
mere six months into the pandemic— that’s barely equivalent to an average- That, combined with construction at
P.E.I.’s employment had declined size town in many parts of the world, 7.02 per cent, made up a full fifth of
2.1 per cent, food and beverage sales it doesn’t take a lot to move the needle Island economic activity.
were down 24.3 per cent for the year- in a big way. P.E.I.’s population had Now that COVID restrictions
to-date and GDP was forecast to settled around the 130,000 mark for have slowed immigration to a trickle,
contract by 3.9 per cent. roughly a hundred years. It climbed Sentance is concerned about what that
means for the construction industry.
“As the population pressure eases,
it won’t be driving the building of
apartments and houses the way it was.
“The announcements of a There’s going to come a point when
vaccine are very positive construction eases off.” That point
may not be too far into the future:
but I don’t think it will be P.E.I.’s fall 2020 Economic Update
realistic to say tourism is noted that while housing starts were
going to bounce back next up 13 per cent, housing completions
had increased 90.4 per cent.
summer at the levels we’ve What happens to the Island economy
seen. We are in a little bit when the number of homes matches
of a longer recovery phase, market demand? “There’s reasons why
we’re one of the poorest provinces in
maybe two to three years is the country—our size, resources, power
what I’m hearing.” rates, transportation costs—and those
Penny Walsh-McGuire reasons aren’t going to go away.”
CEO, Charlottetown Chamber of Commerce But, he countered with predictable
(Photo: Brady MacCloskey) P.E.I. panache, “we’re not in a bad place.”
54 | JANUARY/FEBRUARY 2021
“PEI is sort of a
high volume, low
retention rate
place as far as
immigration goes.
Part of the problem
is that an immigrant
can’t really tell if
P.E.I. is a fit for
them until they’re
here.”
Jim Sentance
Associate Professor, Economics
UPEI
Rebuilding blocks
Outside of tourism and hospitality,
Sentance noted that a comforting
number of sectors on the Island have
been holding their own during the
pandemic.
There are a fair number of federal
government workers in P.E.I. —public
administration makes up 11.82 per BRIDGING THE GAP: Engineering consultants with
focus on service, quality and
innovation:
cent of GDP—and while that’s not
a growth sector, it hasn’t declined
either.
INNOVATIVE SOLUTIONS BASED ON STRUCTURAL
P.E.I.’s food brand and products
have grown figuratively and liter-
KNOWLEDGE AND EXPERIENCE Bridges • Marine and Coastal • Defence •
Buildings • Construction
ally, with farm cash receipts for Q2 of
2020 up 16.3 per cent over the same CIVIL
time in 2019. “We’ve really estab- Highways • Municipal Services Design
lished our agriculture sector as more
HYDRAULICS
of a brand—P.E.I. potatoes, mussels.
Culvert Design • Stormwater Modelling •
When Martha Stewart cooks mussels,
Subdivision Design • Environmental
she uses P.E.I. mussels. We’re getting
recognition and that’s been to our Permitting • Seawall Design • Ice Analysis
benefit,” said Sentance.
OTHER SERVICES
He’s also impressed with the manu-
Unmanned Aerial & Robot Inspection •
facturing sector, identifying the
Construction Layout & Survey • Forensic •
production of Paderno cookware and
Project Management • Estimates •
micro-brewery machinery as positive
indicators. Biotech, too, received his Inspections • Wetland Delineation
nod of approval. “The university is
producing a lot of people with exper-
tise in that industry,” he said.
Slemon Park’s Shawn McCarvill
finds inspiration in the Island’s
capacity to fight climate change
through sustainability, referencing
the efficiency of P.E.I.’s waste
management regime for keeping more
420 York St • Fredericton, New Brunswick • E3B 3P7
waste out of landfills per capita than 506.454.4455 | hilcon.ca | info@hilcon.ca
anywhere else in Canada.
ATLANTICBUSINESSMAGAZINE.COM | 55
STATE OF THE REGION
“When you have an twice during a half-hour interview).
“If we want to attract entrepreneurs
economy whose growth and families to come to P.E.I., there
does not translate into needs to be basic services to support
them when they get here, like reliable
the well-being of the communications, accessible health-
citizens of that area, care and education.”
Pressed for answers on how his
that’s not healthy or small province can afford to pay for
sustainable. Neither those services, Bevan-Baker said
there are opportunities to be had
economically or through a regionally-managed and
socially.” regionally-based economy. He’s
not advocating P.E.I. step out of
Peter Bevan-Baker the global marketplace—“I’m not a
Leader of the Official Opposition
protectionist politician”—but he does
Green Party of P.E.I.
think it wouldn’t hurt the Island to
become more independent. “I think
He also applauded the Island’s lack ment in the new year, in the hopes we’ve seen how vulnerable one can
of fossil fuels because it encourages that it will be seen “as a roadmap to be if you’re too dependent on the
reductions in energy consumption support economic recovery.” global community. There are reasons
as well as investment in alternative The organization’s vision, as to become more independent, more
power sources like wind and solar. outlined in its consultation docu- self-sufficient, more regionally devel-
While P.E.I. has to import most of ment, notes that “Prince Edward oped here.”
the energy it uses, 98 per cent of all Island is a leader in entrepreneurship The City of Summerside is an apt
energy produced on the Island comes and sustainable economic growth— example of how small-scale local
from wind. And in September 2020, attracting people, technology, and projects can work on P.E.I.—46 per
the provincial government approved a capital to a growing economy where cent of its electricity comes from wind
30-megawatt expansion at its Eastern businesses and all Islanders can power generated by the city’s own
Kings wind farm. “In fact, P.E.I. succeed. Where the health and well- utility company.
Energy Corporation is doing a major being of our people, economy, and Bevan-Baker’s ultimate dream
solar installation here at Slemon Park environment are all important for would be to see Prince Edward Island
in 2021,” said McCarvill. long-term sustainable growth.” join the ranks of the so-called “have”
If you’re keeping track of wins, Atlantic Business Magazine doesn’t provinces, those that don’t need the
said Penny Walsh-McGuire of the know what Premier Dennis King support of federal transfer payments.
Charlottetown Chamber of Commerce, thinks of the initiative; despite a He acknowledged it wouldn’t be easy,
“in August, we had the highest retail number of requests between November but he believes it could be accom-
growth in the country.” 9 and 25, we weren’t able to secure an plished with “some very targeted and
All of which is to say, yes, P.E.I. has interview. But it’s fair to say the topics determined efforts to grow small busi-
been thrown off track by COVID, but raised will be brought to his attention, nesses here.”
the foundations for economic stability not just by PFG members but also by That’s a high level and far-reaching
are still in place. the Leader of the Official Opposition, ambition indeed. The more immediate
Peter Bevan-Baker. question is this: can P.E.I. rebound to
Asked to share his vision for Prince its pre-COVID economy?
Edward Island’s ideal future, the Sentance believes a return to the
Forecasting the future retired-dentist-turned-Green Party pre-boom normal is more realistic. “I
Few could have predicted that 2020 leader echoed the language of the didn’t see the rate of growth as being
would be an international year of PFG’s vision document. He sketched sustainable in the long run,” he said.
crisis. Or that surviving that crisis an enviable image of an advanced Penny Walsh-McGuire, meanwhile,
would depend on reactionary ad society rich with cultural diversity, is cautiously optimistic. “Though I
hoc decision-making. After a year of built to complement P.E.I.’s rural think we will get back to where we
circumstances beyond its control, P.E. scale, hosting remote workers in were, our economy won’t look like it
Islanders are determined to have more pastoral security, powered by a green did, nor will every business look like it
control over their future. economy and supported by a mutu- did. There will be some businesses that
The newly formed Partnership for ally beneficial social safety net. “I don’t make it through. We know that.”
Growth (PFG) was founded, not by would love to see a community which But?
government, but by 21 business and is progressive, compassionate, is more “We have a fantastic entrepre-
industry associations representing equitable and where we have a distri- neurial and innovative spirit here.
chambers of commerce, real estate, bution of the wealth that’s produced We have a diverse economy and
construction, agriculture, tourism in our economy so that nobody gets COVID-19 didn’t change that.”
and more. After consulting with more left behind.” But?
than 200 individual, organizational Poetic dreamer though he is, Bevan- But nothing.
and public sector stakeholders, PFG Baker is also a pragmatist. The first
organizers are crafting an economic obstacle to his idyllic vision is what he FEEDBACK
action plan for 2021 and beyond. They bluntly describes as “shitty Internet * dchafe@atlanticbusinessmagazine.com
plan to present their plan to govern- service” (we lost our connection a @AtlanticBus
56 | JANUARY/FEBRUARY 2021
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