Edmonton (Alta.) - 2001-2007 - Edmonton Socio-Economic Outlook, 2004-2009 (2004-10) by Edmonton Tower Resource Centre Online Library

Edmonton SocioEconomic --------

2004 - 2009

@THECITIOF

MORtOR PLANNING AND DEVELOPMENT

LIBRARY

ARCHIVES [A:00

DO NOT REMOVE FROM LIBRARY

Miinon DVEOPEN

EDMONTON SOCIO-ECONOMIC OUTLOOK 2004-2009

Prepared by: City Forecast Committee October 2004

Copyright ÂŠ 2004 by the City of Edmonton Planningand Development Department c/o: 3 rd Floor, City Hall Sir Winston ChurchillSquare Edmonton, Alberta, Canada T5J 2R7 The City of Edmonton provides this information in good faith but it gives no warranty nor accepts liabilityfrom any incorrect, incomplete or misleading information, or its use for any purpose.

Edmonton Socio-Economic Outlook, 2004 - 2009

TABLEOFCONTENTS E EXECUTIVE SUMMARY ................

ECONOMIC OUTLOOK .......................................... 5 SOCIAL OUTLOOK................................................5

IMPLICATIONS OF THE OUTLOOK ........... 6 BUSINESS SECTOR................................................6 GOVERNMENT AND THE PUBLIC SECTOR ............ 6

*Familiesand Individuals..................................6 7 INTRO DUCTION .................................................. *

PART 1: ECONOMIC OUTLOOK .....................

SUNITED STATES.................... ..................... 7 7 * CA N A DA .......................................................... * Prime Lending Rate...........................................8

Exchange Rate..................................................8 ENERGY M ARKETS .......................................... . 9 10 ALBERTA ......................................................... 10 ED M ON TON ..................................................... 10 Economic Growth........................................... Commercial/Retail/Residential...................... 10 ................. 10 Infrastructure................... Institutional................... ....... ...................... 11 Oil, Gas and Oilsands....................................11 11 Power .............................................................. ..................... 11In Deoraphics......... D em ographics ................................................. 11 ...................... 12 Housing Market...i .................... Building Permits..............................................12 ..... 12 Housing Starts.... ............. R ental Market.................................................. 13 Labour Market ................................................ 13 14 Prices...........................................................

S 0 0

oeat omteOtbr20 Prprd0:Ct P

Non-Residential Construction Price................ 15 ECONOMIC OUTLOOK RISKS.......................16 Upside Risks to the Outlook...........................16

Downside Risks to the Outlook.......................16 2: SOCIA OUTTLOOK.....................6 PALIRTON PART 2: SOCIAL OUTLOOK...................20 KEY SOCIAL ISSUES.................................20

Social Implications of Demographic Change..20 .................... 20 Immigration................................. Families............................................... 21 Employment andIncomes................................22 Household Spending.......................................22 The Aging Population......................................22 ....................... 23 H ealth...................... ... Social Services................................................23

Housing and Homelessness............................24 24 Crime ........................................................... Property Crime............................................... . 24 Violent Crime...............................................24 Traffic Crime and Collisions...........................24 Family Disputes and Child Abuse..................24 Recreation and Leisure ................................... 25 G am ing .................................. .................. 25 APPENDIX I - Edmonton Employment by ............. sty.................................................................. Industry

226

APPENDIX II - Edmonton Gross Domestic APPENDIX - Edmonton Gross Domestic Product by Industry ............................................

APPENDIX III - Map of Edmonton Census Metropolitan Area

Metropolitan Area

0 Edmonton Socio-Economic Outlook, 2004 - 2009

EXECUTIVE SUMMARY 0

This report is an update of the forecasts prepared in March 2004 for the preparation of the City of Edmonton's corporate and departmental business plans and budgets, the City's Capital Priorities Plan, and the City's Long Range Financial Plan.

Economic Outlook Ec Gwt Economic Growth Edmonton's regional economic growth rate is expected to reach 3.6% in 2004, up from the estimated 3.3% growth rate in 2003, as 3higne200 up, tro ivestme 3n gowtrteo m t, high energy prices, strong investment in construction projects,. healthy in-migration and low interest rates keep consumer spending strong. Growth will remain buoyant in 2005 at 3.6%, and will average 3% between 2006 and 2009, on the heels of continued strength in the energy industry.

0 0

Prices

1.2% i in average 1.2% index, will average price index, consumer price by the consumer, measured by measured 2004 below previous estimates of 27%,and lower than the 2004,' below previous estimates of 2* %,and lower than the 5.3% witnessed in 2003. A sharp decline in utility costs has led wl

world demand as evidenced recently. There are approximately $90 billion of construction projects in Alberta that have either

increase the inflation rate to 2.5% in 2005, before higher interest

in response sign of toshortage any of energy supply to meet

The total population of the Edmonton Census Metropolitan Area (CMA) is estimated to reach 999,770 people as of July 1of this year and may have already surpassed one million people today. It is estimated to reach 707,270 in the City of Edmonton by the middle of this year. By 2009, it is expected that the total will be 1,069,000 for the Edmonton CMA, and 751,000 for the City, with most of this increase occurring in the 55+ age category. Net migration is expected to remain strong for the Edmonton CMA, ranging between 8,500 and 9,500 migrants annually over the duration of the forecast period. y Housing Market Despite expected strong economic growth in 2004, the Edmonton

forecast period.

perity is its wealth of natural resources (oil, gas and the oil sands). The contribution of the energy industry to the Edmonriescothne t.ors oresiniicat isevn ton region is tonreio even more significant iff oilil prices continue to rise in response to any sign of shortage of energy supply to meet

Demographics

0 0

Employment in the city will also remain strong, with the anticipated creation of 8,000 jobs in 2004 and a further 8,000 positions in 2005. Employment is expected to increase again in 2006 with the creation of 8,500 new positions as the economy 2006 with the creation of 8,500 new positions as the economy enters into a new phase of energy investment. A total of 47,400 new jobs will be created between 2004 and 2009. The unemployment rate will fall to4.7% in 2004 from 5.1% in 2003, and remain in the 4.7% to 4.8% range for the remainder of the

It is anticipated that the Edmonton CMA inflation rate, as

northern Alberta and $13 billion in the Edmonton region alone. Approximately $65 billion will occur in Alberta's energy industry, particularyinyoil sands related projects.

Labour Market

The most significant influence in the region's'economic pros-

been announced, proposed or are already under construction. These projects will have a profound impact on the Edmonton economy. Of the $90 billion, approximately $77 billion will be in

at historically high levels. Housing starts in the city are expected to fall to 7,533 in 2004, down from 8,956 in 2003, as the market adjusts to increased supply brought on by strong construction activity during the last couple of years. Increasing interest rates in late 2004 and in early 2005 will soften the housing market further, bringing total city housing starts down to 6,732 in 2005. Over the 2006-2009 forecast period, housing starts are expected to average 6,000 in the city and around 8,500 for the Edmonton CMA.

housing market is expected to soften somewhat, but still remain

Prepared by: City Forecast Committee, October 2004

to the lower inflation outlook for 2004. Rising utility prices will

rates bring the inflation rate down to an average of 2.1% for the remainder of the forecast period.

Social Outlook The anticipated increase in Edmonton's population in the

forecast period will be centred around the elderly, with the number of people over the age of 40 expected to increase by 51,000, compared with an increase of only 18,000 of those below 40. This aging population will increase the demand for services such as health care,. exercise programs, seniors' housing, and homecare. At the other end of the population spectrum, the number of persons in the 10-14 age group will fall by 8% (5,100) and the 1519 age group will remain flat. This decline in the number of youths will begin to have implications for schools and other agencies providing services to this group. Alleviating some of the pressures associated with an aging population in Edmonton will be continued strength in employment growth, which should translate into continued strength in household incomes. Edmonton recorded a median

household among fourth highest highest among 2002, the the fourth $67,325 in in 2002, income of of $67,325 household income Page 5

S Edmonton Socio-Economic Outlook, 2004 - 2009 Canadian CMAs. Increased household income is expected to reduce the number of people living below the poverty line and should help to alleviate a broad range of social issues. The strong economic outlook for Edmonton will also result in continued strength in the level of net-migration, with migrants from other countries helping contribute to Edmonton's diverse population.

However, over the same period Edmonton's government and public sector must deal with: * * *

continued municipal infrastructure shortfalls, continued excess supply of space and a slower increase in real estate prices in the downtown non-residential markets, increased demand for municipal services as a result of growth pressures, e.g. roadways, transit, parkland, etc., continued demand for government services in the areas of health, education and infrastructure as a result of the aging population and positive net migration, the possibility of the number of potential retirees exceeding the number of first-time labour market entrants, a shortage of affordable housing, and homelessness.

IMPLICATIONS OF THE OUTLOOK

Business SectorBusiness Sector

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

Families and Individuals

* slightly higher population growth, population growth, slightly higher increase in wages and modest growth, employment strong * salaries, lower income and business taxes, thereforei salaries, lower income and.business taxes, therefore in: strength Sdisposable income growth, > disposable ing power growth, > purchasing power growth, > consumer spending, and > demand for housing/rental units, * continued spin-off from investment activity in energy, pipeline and resource-related projects in northern Alberta, * a large supply of relatively low-cost downtown office space, * moderate inflation; and * a strong housing market.

Over the forecast period, Edmontonians are expected to benefit frmm: fm: *

increased government spending on health and education, increased employment and income opportunities as well as higher after-tax incomes,

However, during the same period Edmonton businesses must adjust to: * * *

shortage of skilled labour in certain occupations, increased house prices and rental rates, increased security and insurance costs as a.result of

increased concerns over terrorist activities, and *

potentially higher energy costs.

Government and the Public Sector Over the next few years, Edmonton's government and public sector will benefit from: * * * *

continued strong economic growth in the province, higher level of grants from other levels of government, increased assessment base, and increased spending on education and health care by the provincial government.

Prepared by: City Forecast Committee, October2004

Page 6

Edmonton Socio-Economic Outlook, 2004 - 2009

INTRODUCTION 0 S S

S *

This report provides an economic and social analysis of the current and future changes in the City of Edmonton and the Edmonton Census Metropolitan Area (CMA - see map in Appendix III) for the years 2004 to 2009. This is an update report of the outlook used as a reference for the preparation of the City of Edmonton's 2005-2007 corporate and departmental business plans, 2005 departmental operating budgets, the 200509 Capital Priorities Plan, and the 2005-2014 Long Range Financial Plan. In addition, other public agencies, citizens and businesses use the forecast for planning purposes. The City Forecast Committee monitors economic and social activities/trends throughout the year. The Committee prepares an outlook report semi-annually, in the spring and in the fall.

High energy prices and the completion of the U.S. tax cut package that was implemented in 2003 could weigh on consumer spending during the second half of 2004. However, this will be mitigated somewhat by continued strength in gross private investment, which should help keep GDP buoyant for the remainder of the year. Growth in the United States is expected to reach4% in 2004, but fall back to 3.2% in 2005, as high energy prices and higher interest rates take their toll on consumer spending. Growth will settle to an average of 3% for the remainder of the forecast period as energy prices and interest rates stabilize.

nea I erceni chane

conmr

3.0

2.0

PART 1: ECONOMIC OUTLOOK UNITED STATES

UNITED STATES

The U.S. economy is expected to grow by 4% in 2004, up from 3.2% in 2003, led primarily by strong private investment. The economy is expected to grow by 3.2% in 2005 and average 3%for the remainder of the forecast period. The U.S. economy slowed from the beginning of this year, as quarterly Gross Domestic Product (GDP) growth dropped from 4.5% in the first quarter to 3.3% in the second quarter. This drop in economic performance was led primarily by a drop in the growth of consumer spending (approximately 70% of total U.S. GDP), which fell from 4.1% in the first quarter to just 1%by the second quarter. Employment growth has also shown signs of weakness, as the economy created only 32,000 new jobs in July, down from the 353,000jobs created in March. Despite these weaknesses, gross private investment (20% of the U.S. economy) increased 17.3% in the second quarter, up from 12.3% in the first quarter, keeping GDP buoyant.

Recent weakness in U.S. economic conditions has not deterred the U.S. Federal Reserve from raising interest rates. The Federal Reserve raised its Federal Funds rate to 1.5% in August, up from its 1% level at the beginning of the year in attempts to raise interest rates to more neutral levels. The press statement from the August 10 Federal Open Market Committee meeting stated that the current slowdown in U.S. economic activity was caused by the sudden rise in oil prices, but the economy is in position to resume growth for the remainder of the year.

Prepared by: City Forecast Committee, October2004

0... 2005

2006

2007

2008

2009 .

CANADA The Canadian economy is expected to grow by 3% in 2004, up from 1.7% in 2003 due to a strengthening export market. Growth will remain steady at 2.9% in 2005 and average 3% for the remainder of the forecast period. The Canadian economy grew by 3% in the first quarter of this year and by 4.3%. in the second quarter, the highest quarterly increase in the last two years. Leading the way in GDP growth was a surprising rebound in exports, which surged to an annual rate of 21.6% in the second quarter of this year on the heels of a strong U.S. economy at the beginning of the year and the depreciation of the Canadian dollar, which fell from an average of US$0.77 in January to an average of US$0.73 in May. Despite the good news in the export market, Canada's job market has been softening since the beginning of the year. Around 7,000 positions were lost in August, a sharp contrast to the 56,100 positions created in May. In addition, 38,900 full-time positions were lost in July, the first monthly decline in full time positions so far this year. In response to the strong appreciation of the Canadian dollar in late 2003, the Bank of Canada began decreasing its key lending interest rate (overnight target rate) from 3% in July 2003 to 2% in Page 7

Edmonton Socio-Economic Outlook, 2004 - 2009 August of this year, leading to the depreciation of the Canadian dollar over the first two quarters of this year. However, with exports and economic growth showing signs of strength, the Bank of Canada has reversed course on its interest rate policy, raising its key overnight rate to 2.25% in September, and also hinted at further rate increases this year and in 2005 to keep

FIIt

appreciate once again, reaching as. high as US$0.77 in early September.

5.3 5.

consumer spending brought on by low interest rates. Growth

will drop slightly to 2.9% in 2005 as interest rates begin to increase and the slowing U.S. economy acts as a drag on Canadian exports. Growth will average approximately 3% between 2006 and 2009.

-Pr

Lendin Rate hrecast

inflation under control. As such, the dollar has begun to

It is expected that the Canadian economy will expand by 3% in 2004 on the heels of a rebounding export sector and strong

inflation in check, which could prevent the Bank of Canada from raising interest rates further.

4.0 39 3.7 3

2004

2005

2006

2007< 2008

2009

Exchange Rate

,. Canada Economic Growth Foreca st (Percent Change in Real GDP)

â&#x20AC;˘

4.0 3.0

2.9

2.0

. 0.0

o20042005

20906

2007

2008

2009

i Prime Lending Rate by the The prime lending rate, which is primarily determined Bank of Canada's overnight lending rate, increased 0.5 percentage points to 5% between January and April 2003, before easing to 4.5% by the end of December averaging 4.7% for the year. The prime rate decreased a further 75 basis points between January and August to 3.75% as the Bank of Canada lowered its overnight target lending rate to combat the strong Canadian dollar. With the economy beginning to show signs of strength, the prime rate increased by 25 basis points in September, and

The Canadian dollar strengthened dramatically through most of 2003, rising from US$0.635 at the beginning of the year to US$0.77 by the end of December, averaging US$0.71 for the year. The strength of the dollar spilled into the first quarter of 2004 before receding to the US$0.73 level in May in the wake of lower interest rates in Canada and strong economic growth in the U.S. With oil prices increasing dramatically since the spring and U.S. employment weakening, the Canadian dollar has strengthened once again, reaching US$0.77 in early September. It is expected that the dollar will remain around this level for the remainder of the year, bringing the annual average to US$0.76, as continued "high oil prices and a weakening U.S. economy will keep investors away from the U.S. dollar. We expect the Canadian dollar to average US$0.76 in 2005 before settling to an average of US$0.71 for the remainder of the forecast period.

anada

. Exhange Rate

0 72

now sits at 4%.

It is expected that the Bank of Canada will further increase interest rates later this year in an attempt to keep inflationary pressures in check in light of strong export growth and high oil prices, bringing the prime rate annual average to 4% for 2004. Further rate increases early in 2005 to combat high energy prices will increase the prime rate average to 4.5% in 2005. However, weakening U.S. growth in the latter half of 2004 and the beginning of 2005 may dampen Canadian exports and keep

orecst

.6s

Committee, 4 City Forecast October2 Preparedby October2004 Prepared by: City Forecast Committee,

8 Page 8

*Edmonton

Socio-Economic Outlook, 2004 - 2009

ENERGY MARKETS

World Oil Pricus

Increased global demand and tensions in the Middle East will keep the average price per barrel of oil at US$38 for 2004 and US$37 in 2005. Naturalgas is expected to average $6.50 per GJ in 2004 and $6.70 per GJ in 2005.

Driven by strong global demand growth and a tight, uncertain

supply, world oil prices pushed well past recent highs in May, with the price for West Texas Intermediate (WTI) rising to a record US$50 per barrel on intra-day trading on September 281. Although opinions vary as to the near-term supply outlook, the U.S. Department of Energy projects that world oil demand, led by a surging Chinese economy, will grow in excess of 2 million barrels per day in both 2004 and 2005. They also note that May OPEC production, excluding Iraq, was only 1 million barrels per day below capacity, highlighting the need for a substantial increase in global production capacity if this demand is to be met.

317

2004

005

2006

2007

2008

2009

While natural gas prices remained well below the record levels achieved in the winter months of 2001 and 2003, they held firm at historically high levels for a second straight year, with the SAECO price averaging $6.49 per gigajoule over the first eight months of the year. This upward shift in prices reflects: the Adding to the anxiety of traders, these tight market conditions growing demand for natural gas associated with the economic were inflamed by a series of actual and potential supply Sdisruptions in recent months. Key among these were: recovery and the increased reliance on gas-fired power generation, the failure of continental gas supplies to keep pace

* Frequent and ongoing acts of sabotage against Iraqi oil

with demand, and the presence of high oil prices discouraging

export facilities. * A flurry of attacks on foreign workers in Saudi Arabia. * Concerns that the Russian government was arbitrarily forcing Yukos, producer of 2% of the world's oil supply, into bankruptcy. * Ongoing attempts by the opposition in Venezuela, a major supplier of crude oil to the United States, to remove President Chavez via the ballot box and political unrest. SRecurring labour disruptions at Nigerian oil facilities, and a possible rebellion,

any fuel-switching away from gas to oil.

Although some analysts maintain the view that continental gas production will recover, bringing prices down to more normal levels, the current forecast adopts a more guarded view that . abundant new supply will have to await the construction of the Alaska Pipeline sometime in the next decade. Thus, the forecast calls for the AECO gas price to rise from an average of $6.50 per gigajoule in 2004 to around $6.80 in 2006 and 2007. Beyond this, the gradual addition of new liquified natural gas facilities in the S United States could see some easing in prices during the latter There is widespread recognition that the risk represented by years of the forecast. these factors has added anywhere from $15 to $20 per barrel to world oil prices in recent months, and there is little indication that a lasting resolution to these issues is near at hand. Consequently, the forecast calls for only a gradual easing in oil Albrta Natural G.as Prices ( prices through the latter part of 2004 and into 2005, with the price for WTI averaging US$38 per barrel this year and $37 next year. While the risk of supply disruptions is expected to recede 67 6.8 6.7 65 the longer term, the forecast calls for WTI prices to

remain above $30 per barrel, as strong demand growth in the emerging Asian economies continues to stretch global production capacity to the limit.

further over

5 5 4

2004

2005

2006

2007

2008

2009

0 0

Prepared by: City Forecast Committee, October2004

Page 9

Edmonton Socio-Economic Outlook, 2004 - 2009 ALBERTA

EDMONTON

Due to high energy prices, growth in the Alberta economy is expected to reach 3% in 2004, 3.3% in 2005, and average 2.9%for the rest of the forecast period.

EconomicGrowth

The Alberta economy grew by only 2.2% in 2003 as the SARS outbreak and the BSE-related beef export ban weighed on the economy which otherwise experienced strong consumer spending and a robust housing market brought on by strength in the energy sector. Growth in Alberta is expected to increase to 3% in 2004, led by higher energy prices, low interest rates, and continued investment in the energy sector. The unemployment rate has been hovering around 4.7% so far this year, as both employment and the labour force have come down slightly in the last few months. Strong energy prices have led to a 4.6% increase in the number of rigs drilling in Alberta on a year-to-date basis, and have also been responsible for a large increase in the value of Alberta exports, which have increased by 11% for the first half of 2004 when compared to the first half of 2003. Growth in Alberta is expected to come down slightly between 2007-2009 as conventional oil and natural gas supplies decline, leading to reduced exports. The Alberta Energy and Utilities Board predicts natural gas production to decline by 2% each year in the forecast period.

The economy of the Edmonton region is estimated to have grown at 3.3% in 2003. It is expected to continue to expand at a solid 3.6% in 2004 and 2005 and average 3% over the 20062009 period. The strength in both consumer spending and a robust housing market, brought on by economic spin-offs from investment in northern Alberta, have given the Edmonton region an estimated growth rate of 3.3% in 2003. Continued strength in consunmer spendinig and investment in energy related projects will offset a slight decline in residential construction and give Edmonton an estimated growth rate of 3.6% this year and in 2005. Growth is expected to average a healthy 3% for the remainder of the forecast period on the heels of continued investment in mega-projects in Northern Alberta and sustained strength in consumer spending. The Major Projects List, published by Alberta Economic Development, shows that all proposed, announced, recently completed and under construction projects in northern Alberta total $77 billion, or 85% of the total value of major projects in all ofAlberta. The Edmonton region has approximately $13 billion in planned projects, with $4 billion belonging to projects in the energy sector.

The following projects will have a significant impact on the Edmonton economy over the next five years:

. . ,Commercial/Retail/Residential Alberta Economic Growth (Percent Change in

Rea

; Continued expansion of the $250 million South Edmonton

GD)

Common retail complex by Cameron Corp. and Grosvenor

, ii 4

3.0

International.

$100 million for the Shivam Park Auto Mall and Shopping Centre in Sherwood Park by Shivam

3.4

o ,.

2,6

.Developments.

* 1. 00 2004

20 2005

2006

007

2008

2009

$250 million for Station Lands Commercial Residential development by Qualico Developments. $120 million for the Centre in the Park retail/ commercial development in Strathcona County by various developers.

Infrastructure * *

Forecast Committee, 2004 by City October Prepared

Prepared by: City Forecast Committee, October 2004

$300 million for the Anthony Henday Drive extension in southeast Edmonton by Alberta Transportation. $100 million to extend the LRT to the Health Sciences Station by the City of Edmonton.

Page 10

Edmonton Socio-Economic Outlook, 2004 - 2009 Institutional $142 million for the Alberta Heart Institute byCapital Health. . $97 million for the Tower Wing at the Royal Alexandra Hospital by Capital Health. $165 million for the Health Innovation Research Centre. * by the University of Alberta. * Oil, Gas and Oilsands *

$1.2 billion for conversion to upgrade bitumen by PetroCanada Oil. $600 million for 'Alberta Heartland' Bitumen Upgrader project by BA Energy Inc. in Strathcona County. $160 million for a hydrogen plant for Petro-Canada's refinery feed conversion project by Air Products Canada Ltd. $250 million for sulphur reduction plants in Strathcona County by Petro-Canada. $200 million for sulphur reduction plants in Strathcona County by Shell Canada.

* * * *

The other.component of population change, natural increase, is expected to decline as the number of deaths increase and births decline as the population ages. The City of Edmonton and the Edmonton CMA population continues to age. The 2001 Census of Canada indicates that the median age for the City of Edmonton's population increased from 33.8 in 1996 to 35.3 in 2001. The median age for the Edmonton CMA is the second youngest (after Calgary) of the country's ten largest urban areas. The number of people aged under 40 in the Edmonton CMA is expected to increase by 18,000 over the forecast period compared with an increase of 51,000 for people aged 40 and over. The largest increase by 2009 is for people aged in the 50s age group (just over 26,000 for the CMA)

-A

(

2004-2009)

hin and 300 250

26.3

20 0 15.0

~1.019. Power S

$600 million for Genesee Power Plant Phase 3 (490MW)

-50

in Leduc County by EPCOR Utilities Inc.

. ,

Demographics The City of Edmonton's population is expected to increase by 44,000 by 2009, reaching just over 750,000 (Table 2 on page 17), while the population of the Edmonton CMA is expected to increase by 69,000 reaching 1.069 million (Table 3 on page 18). Net migration .for the Edmonton CMA is expected to range between 8,500 to 9,500 between 2004 to 2009.

The population of the City of Edmonton and the Edmonton CMA have broadly similar age profiles, with the CMA having a slightly larger share of people aged under 20 and the City having larger share of young adults and people aged 60 and over.

Forecast Population uonnd Nm in n'w)on

(us'ano

1,400

This changing age structure has important implications for

F Ci,

various sectors of the economy:

1200

1,000

751

7424

o 600

Our aging population has a 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. As the working age population ages, more people will leave the labour force than enter it.

2004

2005

2006

2007

2008

2009

Prepared by: City Forecast Committee, October2004

the growth in the number of people in the age group between 25 and 34 will increase demand for apartments and first-

time buyer housing; Sthe large increase in the 50s and 60s age group will support demand for more expensive housing and 'empty nester' or retirement housing, and â&#x20AC;˘* the high growth in the number of people aged 65 and over will increase demand for social and health care services.

Page 11

....111101MIIMMEMORM

a•nsam•ummuma

N■umtr

mmI

Edmonton Socio-Economic Outlook, 2004 - 2009

AILAMMO

Continued low mortgage rates and strong net migration contributed to a strong Edmonton housing market in 2003. Total housing starts in the city of Edmonton increased from 8,822 in 2002 to 8,956 units in 2003, while Edmonton CMA housing starts fell slightly to 12,380 from 12,582 units in 2002.

Housing Market Building Permits

It is expected that the value of building permits will increase to $1.35 billion in 2004, decline to $1.1 billion in 2005, and average approximately $950 million a year for the remainder of the forecast period. The value of building permits in the city of Edmonton fell 5.9% to $1.075 billion in 2003, due to a slight weakening in the single unit housing market. Commercial sector building permits decreased by 17%, while the value of residential sector permits decreased by 2.7%. Building permits have once again increased in 2004, as the total to-date value of building permits reached $921 million in August, an increase of 34% over 2003. As a result, the total value of building permits for the city of Edmonton is expected to increase by 26% this year to a total value of $1.35 billion. Higher interest rates and adjustments made by the market to increased housing supply brought on by increased construction over the past couple of years will lead to a 17% decline in building permits in 2005 to $1.1 billion. Permits will decrease further to an average of $950 million in each year between 2006-2009 as interest rates slowly increase and net-migration softens slightly.

.. Building Permit Forectit FAlmonln-n (C4) ' (S Millions) 1:60 1.40; 1.30--

According to the Edmonton Real Estate Board, average singledetached house prices in the Edmonton region also increased by 10.8% in 2003, double the general rate of inflation. Despite the increase in building permits so far this year, housing starts for both the Edmonton CMA and Edmonton City have been on the decline. According to the Canada Mortgage and Housing Corporation (CMHC), total Edmonton CMA housing starts have decreased by 19% for the first eight months this year compared to the same time period in 2003, led primarily by a 37.3% decline in multiple housings starts. Total housing starts in the city of Edmonton have decreased 22.3% for the first eight months this year compared to the same time period in 2003, led by a 38% decline in multiple units.

I otal Housing Start,'

Edmonton ■ C.N1.A (Thousands) 1,400

2003

1,300

O 2004

1,200 1,100 1,000

900 Boo 700 600 500'; 400

Jan

Feb

Mar

Apr.

May

Jun

Jul

1 '3" ' ril

1.30.. ;

' -.- 1.118 „.

According to the Monthly Residential Construction Digest 01413:':

0.9,12-4„

0.920

0.90 0.80

family housing units for the city of Edmonton have increased

0.70 0.60

- 050

released by CMHC, the inventory of finished but unsold single

2009

Housing Starts

Housing starts remained strong in 2003, reaching 12,380 in the Edmonton region and 8,956 in the city. We expect housing starts in the city to fall to 7,530 units in 2004, 6,730 in 2005, and average approximately 6,000 units between 2006 and 2009. Prepared by: City Forecast Committee, October 2004

by 73% for the first 7 months of this year compared to the same time period in 2003. The inventory of finished but unsold multiple units are up 1.7%, led primarily by an increase of 55.4% for condominiums. Despite the increase in single-family inventories, average residential selling prices for single-family dwellings has held firm so far this year, reaching an average of $205,028 for the month of August, up 11.5% from 2003. Condominium average selling prices reached $136,514, up 8.9% from 2003.

Page 12

• • ■ •••

pa mmem og

•• • •• •• ••

nasmaTAV■ ao

nomassomat ell101:1111111111

Edmonton Socio-Economic Outlook, 2004 - 2009

It is expected that total housing starts for the Edmonton CMA will reach 10,664 units this year, a 14% decline from 2003, led primarily by a 27% decline in multiple units, as the market adjusts to increased supply brought on by construction activity over the past couple of years. Similarly, total housing starts for the city of Edmonton are expected to decline by 16% to 7,533 units. Increasing interest rates in 2005 will soften the housing market further, bringing total city housing starts down to 6,732 units. Over the 2006-2009 forecast period, housing starts in the city are expected to average 6,000 units and for the Edmonton CMA around 8,500.

The downtown office vacancy rate decreased to 11.8% in 2003 from 12.3% in 2002. According to the most recent Market View Update from CB Richard Ellis, downtown office vacancy rates

Strt Forcst sin Edmonton-(cit6)

Fninton to'f

M.A.0

(]

(Ts..... ") I

.to

fell to 10.7% in the second quarter of this year, as the level of

office absorption increased for the fourth consecutive quarter 134,400 square feet. Vacancy rates are expected to moderate to 10.5% by the end of 2004, 10.3% in 2005, and average 11% between 2006 and 2009.

E12

According to the CMHC, average rental rates in Edmonton moderated in 2003, rising 1.8% to an average rental rate of $722 per month, after two consecutive years of large rent increases. In their Spring 2004 edition of the Housing Market Outlook, the CMHC is expecting rents to increase by a further 2.5% by October 2004, as higher-priced units come on stream and landlords deal with higher utility and insurance costs. However, increased competition from newly completed rental units, which increase the need for landlords to offer incentives, will alleviate the rise in rental rates.

'further

1.0

8,0

2004

2005

2009

2006

2007

2009

2008

10.0

7.0 Market enalRental

4.0.

2.00 The apartment vacancy rate in Edmonton reached 3.4% by the end of 2003 and is expected to increaseto 3.7% by the end............. 0 of 2004 and 4% by the end of 2005. The downtown office vacancy rate in 2003 was 11.8% and is expected to decrease to 10.5% in 2004 and 10.3% in 2005.,a

The annual Rental Market Survey by CMHC pegged the apartment vacancy rate in Edmonton at 3.4% in December 2003. This is up from the 1.7% rate in 2002 and the 0.9% rate in 2001. The 1.7 percentage point increase in 2003, the largest amongst all Canada's CMAs, can be attributable to the significant increase in the construction of rental units and low mortgage rates, which have lured renters into home ownership. It is expected that the apartment vacancy rate will increase to 3.7% by the end of 2004 and to 4% by the end of 2005 due to increased supply of rental units, brought on by increased construction activity in 2002 and 2003. Vacancy rates are expected to moderate for the remainder of the forecast period as the market continues to make adjustments to rising inventory levels, while increasing interest rates discourage home ownership.

arg,0

009 e.... exece t crea. o p ... yr

Labour Market The Edmonton region is expected to create 8,000 new jobs in 2004, and average 8,000 per year over the 2007-09 period The unemployment ratein the Edmonton region in 2003 was 5.1%. It is expected to reach 4.7% in 2004, 4.8% in 2005, and average 4.8%for the rest of theforecast period. Total employment in 2003 for the Edmonton CMA reached 537,000 with the creation of 14,600 net new jobs, primarily in the services producing sector, which represented 94% of this increase. High energy prices and strong investment in mega-projects in northern Alberta and the Edmonton region has keptemployment growth strong for the first quarter of 2004, as the seasonally adjusted level of employment reached 548,700 in April, up 0.7%

Prepared by: City Forecast Committee, October2004

Page 13

numuraugn iliongurn inn

Edmonton Socio-Economic Outlook, 2004 - 2009

from January and 3.6% higher than its level in 2003. However, employment has been on a declining trend since April, falling by 0.1% in both May and June, 0.7% in July and a further 0.3% in August. Despite these monthly declines, employment in August is up 1.4% from August 2003 and up 2.7% on a year-to-

and labour force growth will move in tandem for the remainder of the forecast period, averaging 1.4% growth each year, keeping the unemployment rate at around 4.8%

Prices

date basis. It is expected that employment will reach 545,000 in 2004, a 1.5% increase from 2003 with the creation of 8,000 new jobs-lower than the 14,700 created in 2003-as investment in older energy projects, particularly those that began construction a few years ago in northern Alberta, begin to wind-down. This trend will continue into 2005 as employment will grow by another 1.5% and produce 8,000 new positions. A new cycle of energy-related investment will begin to take hold in late 2005 and early 2006, keeping employment growth steady for the remainder of the forecast period at an annual average of 8,000 new positions. A total of 47,400 new jobs will be created in the Edmonton region between 2004 and 2009. After increasing for the first three months of this year, Edmonton's seasonally adjusted unemployment rate has fallen dramatically from 5.3% in March to as low as 4.1% in June. This was the lowest unemployment rate among all major Canadian cities, and one of the lowest rates in Edmonton's history. A large reason for this fall in the unemployment rate during the second quarter of 2004 can be attributable to a large fall in the labour force. Since the unemployment rate is equal to the number of people unemployed as a percentage of the labour force, a sharp drop in the labour force, coupled with a more modest decline in employment, has lowered the unemployment rate. It is expected that the unemployment rate will reach an average of 4.7% in 2004, as the labour force increases slightly and employment stabilises over the second half of 2004. A drop in net-migration, coupled with weaker employment growth, will keep the unemployment rate steady at 4.8% in 2005. Employment

The inflation rate in the Edmonton region is expected to be 1.2% in 2004, down from 5.3% in 2003. We expect it to increase to 2.5% in 2005 before moderating to an average of 2.1% between 2006-2008. The inflation rate in the Edmonton region, as measured by the Consumer Price Index (CPI), has decreased from its high levels in the beginning of 2003. Inflation was 7.6% in January, rising to 9.1% in March, before moderating to 1.3% in December, averaging 5.3% for the year as a whole. The variability and high rates witnessed at the beginning of 2003 were attributable to high utility prices, particularly for natural gas and electricity. Because the inflation rate has fallen dramatically since the middle of 2003, we expect that inflation for the Edmonton region will average 1.2% in 2004, well below our previous estimate of 2.7% in the Spring Outlook. Contributing to the lower inflation outlook for 2004 will be lower natural gas prices, particularly in comparison with those witnessed in the beginning of 2003, where prices for natural gas were as high as $13 per GJ. The elimination of the 2000 Energy Rate Rider and 2001 Shortfall Collection Rate Rider at the beginning of 2004 from consumer electricity bills has also contributed to lower prices. The inflation rate is expected to increase to 2.5% in 2005, due largely in part by rebounding utility prices. Higher interest rates will keep the inflation rate to an average of 2.1% for the remainder of the forecast period.

fiffiatiim Rate = All Items Ldmonton (ti'..:6ai-.0. e'i-Yeari':eiC'entage Change in ( 12:0

Edmonton Labour Mairket'forccits( , , . . New Jobs Created - FdthontOWI(C.M;A:) (Thousands) ci Neiv.)0i.:Crea teld . (660 Urteiryment R00%

2002 ' -â&#x2013; â&#x2013; â&#x2013; 11I

Prepared by: City Forecast Committee, October 2004

'31.11,11,

2003;. ,_an,lo

Page 14

Edmonton Socio-Economic Outlook, 2004 - 2009 Enionton Non-Rusidtil Construction Price

Edmonton Region Inflation Rate Forecast \Annual Average Percenage Change in Consumer 3565

0e.2.

2 .3

5t 5t 405

2.24. 2,0

3,5

fl d ee â&#x20AC;˘ easues byStatstichangs Canda, incontactos selin 2004

2005

2006

r Price index)

55 5,0

2.5

in Conu

han

ercenage Averae Pi

nic

Inda

2007

2008

2009

Non-Residential Construction Price Tsprice The non-residential construction price index, which is reported by Statistics Canada, measures changes in contractors selling prices for new non-residential building construction for commercial, industrial and institutional development. The index is generated by Statistics Canada through surveys of both general and specialized trade contractors, and excludes the cost

2,e

nonresientil prce idex 2004

2005

ownsligtlyC

2006

2007

19 o 4.%, ad avrag 2008

2009

As a result of this increase, it is expected that the non-residential index will average 5.5% in 2004, up from 2.7% in 2003. A slight softening in the construction market in 2005 will bring the non-residential price index down slightly to 4.6%, and average 2.2% for theremainderof the forecast period.

of land, design and real estate fees. The non-residential price index has increased from 2.3% in the third quarter of 2003 to 5.8% in the second quarter of 2004 on a year-over-year basis, the largest increase since the early 1990s. The major reason for this increase could be attributable to Edmonton's tight labour market and shortage of skilled labour, particularly in the trades sector, and higher cost of construction materials.

0 0

S 0

0 0 S 0 0

Prprdb:Ct oeatCmmteOtbr20 -Prepared

by: City ForecastCommittee, October2004

ae1 Page 15

Edmonton Socio-Economic Outlook, 2004 - 2009

ECONOMIC OUTLOOK RISKS Upside Risks to the Outlook Continued tensions in the Middle East, brought on by the aftermath of the war on Iraqby the United States and threats of continued terrorism, could disrupt oil supplies further and fuel volatility in world energy markets. This hasalready resulted in increased energy prices so far this year, which could persist well into the future, keeping energy investment and exports strong for Alberta and the Edmonton region.

There is no question that the oil sands sector has been playing a large role in Edmonton's recent economic boom. Even though there are a large number of proposed and/or announced oil sands projects expected to begin construction in Alberta in the forecast period, environmental issues could hinder oil sands expansion. The Edmonton region has been experiencing tremendous growth in its..construction sector, particularly in the housing market, which is evident by the level of housing starts in the last few years. However, if the recent housing boom was based on market speculation instead of economic fundamentals, then there is the risk that the housing market could crash in the event of a softening economy or reduced net-migration, Which would slow the demand for new homes.

Better than expected economic growth in the United States for the remainder of this year and into 2005 could also help boost the Edmonton economy, as more goods and services, particularly from the energy sector, are exported to the United States.

Downside Risks to the Outlook A sustained increase in energy prices may dampen growth in the United States and the rest of the world economy as increased inflation erodes the purchasing power of consumers, hampering Canadian and Alberta exports. On the flip-side, a strengthening world economy may lead to an increase in non-OPEC oil supplies to meet increased oil demand, putting a strain on OPEC market share, which would drive down the price of oil. In such a case, planned investment in the Alberta and Edmonton energy sectors could be jeopardised and provincial government revenues reduced. Recent U.S. national energy policies are proposing an increase in domestic energy supplies, including the continued

development of nuclear and coal-fired power generation. The adoption of this approach would reduce the emphasis on gasfired generating plants, slow the increase in U.S. natural gas demand and remove much of the upward pressure on recent gas prices. If aggressively adopted, this policy may lead to a slow down in the current pace of development of North American gas resources, and hamper natural gas development in Alberta. A concerted effort to meet the greenhouse gas objectives of the Kyoto protocol through a mandated increase in the reliance on natural gas would increase both its demand and price, and would require expanded drilling programs and pipeline facilities in the province. Whether such a change would increase overall economic activity in Alberta and Edmonton would depend on

the extent to which other industries might be damaged by these and other climate change provisions.

2004Forecast October by: City Prepared Prepared by: .City Forecast Committee, October 2004

Committee,

Page 160 Page 16

Socio-Economic Outlook, 2004 - 2009

*Edmonton

Table 1 Forecast for Selected Economic Indicators Indicator World Oil Price (US$/bbl) (1) Alberta Natural Gas Price ($/GJ) (2) Economic Growth Rate (% change)(3) United States Canada Alberta Prime Lending Rate (%) Exchange Rate(US$/Cdn$)

Actual/Estimate 2005 2003 2004 2001 2002 United States, Canada and Alberta 37.00 31.14 38.00 25.94 26.09 6.70 6.31 6.50 5.91 3.83 0.3 1.9 2.7 5.81 0.646

Forecast 2007 2006

2008

2009

34.00 6.80

31.80 6.80

30.80 6.60

31.70 6.70

3.2 2.4 1.7 3.3 1.5 2.2 4.70 4.21 0.637 0.714 Edmonton 12.5 9.5* 8.6 6.7* 985* 967 686 698* 3.5* 3.3*

4.0 3.0 3.0 4.00 0.760

3.2 2.9 3.3 4.50 0.760

3.0 2.8 3.4 5.00 0.730

3.0 2.8 3.0 5.00 0.720

3.0 3.0 2.6 4.80 0.700

'3.0 3.0 2.6 4.80 0.700

9.5 6.7 1,000 707 3.6

9.0 5.8 1,014 716 3.6

8.5 5.5 1,027 725 3.5

8.5 5.5 1,041 734 3.2

8.5 5.5 1,054 742 2.8

9.5 6.7 1,068 751 2.8

Net Migration - CMA(000) (4) - City(000) (4) Population - CMA(000) (5) -City(000) (5) Economic Growth Rate (CMA)(%)

7.9 4.3 954 678 1.9*

Employment (CMA)(000)

505

522

537

545

553

562

570

577

584

3.3 15.9 4.9 2.2

3.4 17.2 5.1 2.9

2.8 15.0 5.1 5.3

1.5 8.0 4.7 1.2

1.5 8.0 4.8 2.5

1.5 8.5 4.7 2.3

1.4 8.0 4.7 2.2

1.3 7.5 4.8 2.0

1.3 7.4 4.8 1.9

0.9 11.4

1.7 12.3

3.4 11.8

3.7 10.5

4.0 10.3

3.9 10.3

3.4 10.8

3.2 11.3

3.0 11.4

4,811 2,815 1,996 7,855 4,959 2,896 905 3.2

8,822 4,158 4,664 12,582 6,861 5,721 1,142 2.1

8,956 3,857 5,099 12,380 6,391 5,989 1,075 2.7

7,533 3,709 3,824 10,664 6,264 4,400 1,353 5.5

6,732 3,332 3,400 9,554 5,554 4,000 1,118 4.6

6,381 3,239 3,142 8,838 5,305 3,533 1,043 2.8

5,973 3,192 2,781 8,518 5,283 3,235 946 2.0

5,857 3,165 2,692 8,325 5,239 3,086 912 1.9

5,861 3,213 2,649 8,415 5,327 3,088 920 1.9

Employment Growth Rate (%) S New Jobs Created (CMA) (000) S Unemployment Rate(CMA)(%) S Inflation Rate CPI(CMA)(%) Vacancy Rate (%) Apartment (CMA, Oct) Downtown Office (the City, Dec) Housing Starts (Units) City -Total - Single Family - Multi-Family CMA -Total - Single Family - Multi-Family Building Permit Value - City ($million) Non-Res Construction Price (% change) * Estimates

Sources: Actual/Estimate: Statistics Canada, Bank of Canada, Canada Mortgage and Housing Corporation, CB Richard Ellis, Canadian Petroleum Association, Alberta Economic Development and The City of Edmonton Planning and Development Department Forecast: City Forecast Committee, October 2004 Notes: 1. World oil prices are for West Texas intermediate crude at Cushing, Oklahoma in U.S. dollars. 2. Natural gas prices are AECO 30-Day Spot Natural Gas Price (Can$/GJ) 3. The U.S., Canada and Alberta economic growth rates are for real GDP at market price. 4. Numbers are for July 1 of previous year to June 31 of current year.

5.The 2001 figures are post-censal estimates by Statistics Canada, which are different from the actual 2001 Canada Census. Prepared by: City Forecast Committee, October2004

Page 17

Edmonton Socio-Economic Outlook, 2004 - 2009

Table 2: City of Edmonton Population Forecast, 2002 - 2009* 2002

2003

2004

2005

2006

2007

2008

2009

0 -4

38,883

39,188

39,333

39,611

40,356

40,761

41,258

41,739

5-9

40,236

39,639

39,106

38,767

37,922

38,021

38,109

38,194

10 - 14

42,717

42,352

41,676

40,983

40,027

39,278

38,723

15 -19

46,172

46,203

46,336

46,393

46,498

46,544

46,423

46,033

20 -24

57,336

59,290

60,533

61,396

61,995

62,267

62,038

62,117

25 - 29

59,397

60,902

62,228

63,368

64,123

64,964

66,425

67,524

30 -34

53,342

54,201

54,687

55,359

56,482

57,992

59,001

60,135

35 - 39

54,955

53,406

52,327

51,999

52,221

52,264

52,761

53,135

40 - 44

58,252

58,657

58,403

57,582

56,066

54,655

52,912

51,798

45 - 49

53,734

55,628

56,901

57,782

58,507

58,746

58,975

58,687

50 - 54

42,417

43,731

45,786

47,856

49,973

51,913

53,584

54,762

55 - 59

32,341

34,585

36,494

38,534

40,243

41,016

42,171

44,117

60 - 64

25,733

26,876

28,080

29,268

30,709

33,275

35,500

37,454

65-69

23,100

23,512

23,893

24,411

25,073

25,917

27,002

28,178

70 - 74

21,088

21,460

21,664

21,796

21,917

22,115

22,458

22,803

75 - 79

18,015

18,352

18,887

19,440

20,022

20,389

20,748

20,997

80 -84

10,193

10,995

11,592

12,080

12,380

12,682

12,850

13,189

85+

7,948

8,316

8,669

9,129

9,727

10,323

10,974

11,474

685,859

697,657

707,271

716,450

725,197

733,869

742,467

751,059

Total

PLANNING AND.

PpfyiFeal

DEVELOPMENT

0 0

0 0 0

Prepared by: City of Edmonton Planning and Development Department, October 2004 *Population estimates as at July 1 of each year

Prepared by:- City Forecast Committee, October2004

Page 180

Edmonton Socio-Economic Outlook, 2004 - 2009 Table 3: Edmonton CMA Population Forecast, 2002 - 2009*

2002

2003

2004

2005

2006

2007

2008.

2009

0- 4

56,062

56,640

56,957

57,462

58,651

59,266

60,040

60,806

5- 9

61,138

60,340

59,626

59,207

58,019

58,272

58,605

58,839

10-14

66,783

66,912

66,461

65,521

64,543

63,149

62,079

61,294

15-19

69,736

69,896

70,215

70,444

70,757

70,945

70,848

70,342

20-24

73,224

75,867

77,573

78,806

79,701

80,156

79,993

80,241

25 -29

75,124

77,183

79,030

80,624

81,710

82,917

84,929

86,488

30- 34

72,460

73,766

74,557

75,597

77,234

79,441

80,977

82,685

35-39

78,677

76,589

75,151

74,784

75,224

75,426

76,273

76,944

40-44

84,985

85,728

85,511

84,458

82,385

80,452

78,021

76,502

45-49

78,055

80,958

82,961

84,398

85,613

86,114

86,600

86,321

50- 54

63,206

65,259

68,433

71,645

74,959

78,029

80,702

82,626

55-59

48,629

52,121

55,096

58,264

60,920

62,202

64,087

67,157

60-64

36,219

37,909

39,679

41,422

43,547

47,316

50,593

53,424

65-69

30,698

31,302

31,869

32,619

33,568

34,756

36,284

37,925

70-74

26,926

27,447

27,759

27,974

28,180

28,484

28,974

29,467

75-79

20,332

20,920

21,583

22,268

22,977

23,509

23,905

24,156

80-84

13,657

14,514

15,245

15,734

16,158

16,416

16,849

17,360

85+

10,992

11,516

12,062

12,855

13,664

14,549

15,288

15,977

STotal

966,903 984,866 999,769 1,014,082 1,027,812

1,041,399 1,055,047 1,068,554

Prepared by: City of Edmonton Planning and Development Department, October 2004 *Population estimates as at July 1 of each year

no @ 0

Prepared by: City Forecast Committee, October 2004

PLANNING AND

DEVELOPMENT

Page 19

0 Edmonton Socio-Economic Outlook, 2004 - 2009 placed fifth among CMAs, after Toronto (21.7), Calgary (17.7), Oshawa (16.9) and Vancouver (13.4). Financial incentives are probably strong forces behind this movement. Interprovincial migrants who came to Alberta had a median income of only 82% of the Alberta median income.

Part 2: SOCIAL OUTLOOK KEYSOCIALISSUES SociallImplicationsofDemographicChange An aging population increases demand for health care, exercise programs, seniors housing and home care. Low fertility rates and. a shortage of skilled workers in Canada could bring about a needfor more internationalimmigrants.

Young people (aged 15 to 29) represented more than half of Edmonton's gain from 1996 to 2001, due to the healthy economic situation here, and the fact thatAlberta's unemployment rate has often been as much as two percentage points below the national average over the period. Elsewhere in Canada, particularly in large metropolitan centres like Toronto, Montreal and Vancouver, seniors are leaving the cities for smaller cities or rural areas. This was not the case for Edmonton, however, where net increases were seen for all age groups.

Immigration It is estimated that over the forecast period in the Edmonton CMA, the 0-9 group will increase by 2.6% (3,000). The 10-14 age group will fall by 8% (5,100) and the 15-19age group will remain flat. This decline in the number of youths will begin to have implications for schools and other agencies providing services to this group. . At the other end of the population spectrum, the 75+ age group in Edmonton is expected to increase by about 18% (8,600). The increase will largely occur in the older, central areas of the city and a high proportion of this age group is women living alone. The demand for services such as health care, exercise programs, seniors housing, and home care will continue to increase.

Canada is now second only to Australia in terms of percentage of its population that was foreign-born. Migration from other countries continues to contribute to Edmonton's increasingly ethnically diverse population, although 73% of immigrants to Canada are drawn to either Toronto, Vancouver or Montreal. Seventy-one percent of the almost 45,000 international immigrants to the Edmonton CMA during the 1990s were members of a visible minority; 58% of thenewcomers came from Asia. The Edmonton CMA now has the fifth highest proportion (15%) of visible minorities among Canadian census metropolitan areas. The following lists the top sources of foreign immigration to Edmonton during the 1990s.

As of 2002, Canada's fertility rate remained near the all-time low set in 2000. It had risen slightly to 1.5 children for every woman, approaching the rate of 1.4 reported in many European countries. This compares with a rate of 2.0 children per woman in the United States. Alberta showed a slightly higher fertility rate, at 1.69, and has shownincreases in births in four of the last five.years. "

Country of Origin Philippines India People's Republic of China Hong Kong Vietnam Poland

The fertility rate of women who immigrated to Canada from 1996 to 2001 was 3.1. Interestingly, the longer immigrant women stay in Canada, the closer their fertility rate approaches the Canadian average, particularly if they arrived at a young age and received part of their schooling here. This pattern of decline is not as marked among women who immigrated from Asia and the Middle East. The decline in fertility among immigrant women is significant, because natural increase (births minus deaths) has been making a steadily smaller contribution to our population growth for Canada in recent years. Interprovincial migration across Canada rose by 8% in 2001/ 2002, over the year previous. Among the provinces, Alberta and Ontario had the highest rates of in-migration, at 13 per 1,000 population. Edmonton showed an increase over the in-migration of 2000/2001, from 8.4 to 13 per 1,000 population. Edmonton

Prepared by: City Forecast Committee, October 2004

0 0

% of Total 12.4 10.1" 10.0 6.1 5.10 4.0

United Kingdom

United States

3.8 .3.4

Bosnia and Herzegovina Lebanon All others

2.1 2.1 40.9

In 2002, close to a quarter of Canadian residents over the age of 15 (23%) reported they were born outside the country. This is the highest proportion of foreign-born residents the country has recorded since 1931. Significantly, 46% of these new Canadians are from a non-European background. This contrasts with third-generation Canadians, 63% of whom report their background as British, French or Canadian.

Page 20

Edmonton Socio-Economic Outlook, 2004 - 2009 The majority of foreign immigrants to Canada during the period 1996 to 2001 were of working age (25 to 64). A report recently issued by Statistics Canada examined. settlement, education and employment patterns among new immigrants. It found that there was little secondary relocation of these people, once they reached their primary destination in . Canada. Immigrants tend to have higher levels of education than people born inCanada, and adult immigrants are much more likely to seek additional education once they arrive. Notwithstanding their educational achievements, recent immigrants are more likely to work in low-paying or non-skilled jobs, and are more likely to be unemployed .than native-born Canadians. In Edmonton, recent immigrants had an employment rate of76.1%, compared to 84% for other Edmontonians. Their unemployment rate was also higher (5.9%, versus 4.1% for others). Immigrant families who have come to Canada in recent years have not been nearly as successful at accumulating wealth as their counterparts who immigrated prior to 1976. Families who arrived before 1976 have a greater median wealth than comparable Canadian-born families; more recent arrivals have a lower median wealth than Canadian-born families. This holds true for families

In 2001, 17.8% of Edmonton CMA's population consisted of immigrants. The figure for Calgary was 20.9%; the national figure was 18.6%. Families The number of marriages in Alberta declined by 3.5% in 2001. This trend is expected to continue. Paralleling a Canada-wide trend, the number of marriages in Alberta in 2001 declined by 3.5% from 2000 (Canada as a whole showed a 6.8% decline). This reflects a long-term trend - people choosirng common-law relationships over marriage, particularly following break-up of a previous marriage. People are also waiting longer to marry. The average age of brides in 1981 was 26.2 years; by 2001 it had risen to 31.9. The average age of marriage for males also increased. People are also getting divorced at a later age. The 2001 Census of Canada has provided some new insights into living arrangements among seniors. The following chart provides statistics for Alberta.

with children, as well as lone-parent families and unattached individuals.

rrangements of enos

(6+)

MbeLI. 2001

* .

Between 1980 and 2000, earnings of immigrant males working full-time, full-year dropped by 7%, in spite of significant increases in their educational levels. Earnings for Canadian males in the same situation rose by 7%. Young Canadian-born men aged 2529 also suffered a drop in earnings of 10%. Over the same period, earnings of Canadian-born women rose by 19%, as compared to only 13% for immigrant women, even though the educational attainments of the immigrant women showed greater improvement. These gaps are more pronounced among prime working age workers and may be linked to their foreign work experience.

700--

lo,

400 30.

10.0 0.0 Males

Females

SouceofPoulation GrNNt Sourcesof Population Growth

oi.raa

45o

-i

Aboriginal children are much more likely than non-Aboriginal :children -

0pr

35 0 30.n-

alive

to be living separate from one or both of their parents. Only about 50% ofAboriginal children living in Canada's CMAs live with both parents, versus almost 83% for non-Aboriginals. Just under 5% ofAboriginal children in large urban areas do not with even one of their parents, staying instead with a relative or non-relative.

S200

SS 10 0 Edmonton CMA

Calgary CMA

Source Statistics Canoda, 2003

Prepared by: City Forecast Committee, October 2004

Page 21

Edmonton Socio-Economic Outlook, 2004 - 2009 Employment and Incomes Improved employment and income conditions have reduced demandfor food banks in Edmonton over the lastfew years.

The number of food bank users in Edmonton has been declining for the last few years, although demand increased again in 2002 and 2003.

Household Spending Among the provinces, Alberta has shown the steadiest employment growth over the longest period. For ten consecutive years, employment has grown by more than 2% per year. Median household incomes are above the Canadian level ($60,025 in 2001). Edmonton recorded a median household income of $67,325, and Calgary was somewhat higher at $70,110. The two cities ranked fourth and third respectively among Canadian CMAs, after Toronto and Ottawa-Gatineau. There has been considerable discussion in recent years about the shift to "knowledge work", but in fact, this trend has been growing since the early 70s. In 1971, about 14% of Canadian workers were doing high-knowledge work; by 2001 the proportion had grown to 25%. This reflects a continued increase in the importance of skills, knowledge and human capital in a wide range of industries. While knowledge work positions pay higher wages, the comparative level of wages compared to other occupations has not increased significantly over the last thirty years. In 1996, a higher proportion of men (19%) than women ( 11%) worked in knowledge positions, although the proportion for females is growing faster than for males. Statistics Canada recently reported that the prevalence of longterm unemployment has fallen significantly since the early 90s (in 2003, 10%.of Canada's unemployed had not worked in at least a year, compared to a figure of 17% in 1994). The problem seems to be greatest among workers over 45 years of age.

At $67,730, the average Alberta household spends more than other Canadianhouseholds. Albertans have higher household spending. The average household spent $67,730 in 2002, as compared to the national average of $60,090. Canada-wide expenditures on housing and food remained largely unchanged, but there were increases in the areas of transportation (a 14% increase in spending on new vehicles, 11% on fuel and operating costs, 16% on vehicle insurance) and communications (mostly cellular communications, Internet and satellite TV services). In 2002, over 64% ofCanadian homes reported owning a computer. Only 55% of households had one in 2000.

Albertans reported the highest expenditures on health care, $1,990, versus the national average of$1,590.

Canadian households in the section with the lowest 20% of household income had to allocate over 51% of their expenditures towards food, shelter and clothing, whereas those in the top 20% put only 28% of household income into the necessities of life.

0 -

TheAging Population It appears that many Canadians near retirement age are not ready to do so in the nearfuture.

Since the late 1970s the average retirement age has been

decreasing from about 65 to 61 Average Monithl.N Edrnonton

Food

Bank tUIs

Percentwe of Population Over 65

30.0 -0 25.0

20.0 b

S-1993

1995

1-97

2001

2003

Source Edmiontoni Gleem Associatlon0

15.0

- -1999

0 Source Sastic Cc mda 2003

Preparedby.

City ForecastCommittee, October2004

Page 22

Socio-Economic Outlook, 2004 - 2009

*Edmonton

We have heard a lot in recent years about the large numbers of While younger Aboriginals living off-reserve are as likely to report they are in good or excellent health as all Canadians of baby boomers who will be retiring imminently, and the problems this will create in the labour market. Recent research from the the same age (69% compared, to 71%), the gap is greater for Statistics Canada General Social Survey, however, reveals that olderAboriginals. 41% ofAboriginal women aged 55-64 reported almost one-third (31%) of non-retired Canadians aged 45 to 59 being in only fair or poor health on the 2001 Aboriginal Peoples said they did not know when they would retire, or did not intend . Survey. The comparable figure for all Canadian women in the same.age group is only 19%. to retire. Canadians with incomes below $20,000 were much more likely to state that they had no plans to retire than persons with an income of $40,000 or greater. Retirement plans were also Chronic complaints such as arthritis and rheumatism are almost greatly influenced by whether or not the individual had a private twice. as common among non-reserve adult Aboriginals as in the general population. High blood pressure, asthma and pension plan. Recent immigrants (arriving since 1980) were much diabetes are alsomore common among non-reserve Aboriginals. more.likely (47%) to have no fixed retirement plans and were also more concerned (45%) about the adequacy of their financial The proportion of adult non-reserve North American Indians reporting diabetes also rose from 5.3% in 1991 to 8.3% in 2001. preparations for retirement. . *The problem is even greater among older Aboriginal women, We know our population is aging, although Alberta has the where as many as one in four report problems with diabetes (as compared to one in ten for all Canadian women of similar age). youngest population of all the provinces, 0.4% ofAlbertans are over 65; the average for Canada is 13%. Within the CMA, Edmonton has the oldest population, as shown by the previous Social Services chart. Increasedgovernment transfers and lower taxes have meant higher after-tax incomes for many families. Health After-tax incomes for most Canadian family types increased over

Disability rates increase with age and are higherforfemales

than males; also higherforaboriginalsthan other Canadians. the twenty years beginning in 1981, mainly as a result of increased government transfers and lower taxes.

Statistics Canada conducted a survey of Canadians who had indicated on the 2001 census that they had some form of disability. For Canada as a whole, 12.4% of the population2 reported having activity limitations. Alberta was very close to the national average, at 12.5%; other provinces ranged from 8.4% to 17.1%.

Disahiliot

tes 1),. A ge

Canadl 200V

Families with children found themselves with almost $10,000 more. Elderly individuals and families had about $3,000 more, while lone-parent families had almost $5,000 more after taxes. The latter improvement meant that the proportion of lone-parent families below the low income cut-off dropped to a record low of 28.6%.

disabilityrateincreases

for t

Average Monthly Child ielfare caseloads

than t

Region and Alerta

ceCapital 0- - - - -U-

Capital Region

librt

10 L

0 to 14

15 to 64

65 to 74

75 and

over Sr

nada 20-M . 0

As shown in the chart above, the disability rate increases significantly with age, and rises sharply for the elderly (over 75). Females are more likely to report being disabled (13.3%) than are males (11.5%), except in the under 15 age group. Aboriginal persons are also 1.5 times more likely to report chronic health conditions and to report recent problems with depression.

Prepared by: City Forecast Committee, October 2004

1999

2000

2001

Government transfers (including E.I., Old Age Security/Income Supplements, C.P.P., social assistance, etc.) contributed 10.8% of the total community income of Edmonton in 1998. This compares to a high of 15.3% in Sudbury and a low of 6.4% in

Page 23

Edmonton Socio-Economic Outlook, 2004 - 2009 Halton, Ontario. The average for Canada is 12.8%. Edmonton is more or less in the middle of the range for the 18 cities reporting.

Break and Enter offences also increased; residential break-ins accounted for the largest proportion of Break and Enter offences.

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

Violent Crime

Housing and Homelessness

Violent crime increased by less than 1% in 2003, however, it is still up 3.5% from a five-year low in 1999.

The number of homeless in Edmonton continues to increase. The total number of homeless persons counted in October 2002 (1,915) was up 65% from the previous count in September 2000; almost two-thirds of those counted were absolute homeless, meaning that they had no permanent place to reside. The number of homeless children under 15 more than doubled between 1999 (112) and 2002 (267). As indicated earlier, increased multi-family residential construction and higher apartment vacancy rates should help alleviate shortages of affordable housing.

Traffic Crime and Collisions Traffic crime decreased by 3% to a five-year low of in 2003. The reduction in traffic crime is due to a 7% decrease in Impaired Driving offences and a 6% decrease in offences of Driving with aBlood Alcohol Exceeding 80 Milligrams. Traffic collisions were down 7% in 2003. The decrease was driven by an 18% drop in non-fatal injury collisions and a 4% drop in property damage collisions. Fatal collisions increased from 20 in 2002 to 30 in 2003.

Crime Total criminal code ojjffences in Edmonton increased by 11% in 2003.

Family Disputes and Child Abuse

Crites Relating ild ablies Crime in Edmonton 1994-2003~~2 60,000

,5o,00 o-

30,000 -

10,000-

.- i-

-a -C -

Property

--- -

7,000

6;000

Crime

500

--000

-4,000

20,01994

1996

1998

2000

2002~>K000a

1,000

2000

While the number of family disputes increased by just over 5% in 2003, the incidence of child abuse decreased by 22%. Property Crime The main contributors to the 11% increase in property crime include:

Theft and theft from auto, which accounted for more than half of all thefts in 2003.

Motor VehicleTheft continued a 5-year increasing trend. Prepared by: City Forecast Committee, October2004

Page 24

Edmonton Socio-Economic Outlook, 2004 - 2009 Recreation and Leisure Edmontonians are aware of the value of a physically active lifestyle and they see our city as being a supportive environment for active recreation. Unfortunately, many Edmontonians are not as active as they should be, and many Shave no intention of changing their activity patterns. *

A baseline recreational activity survey done in Edmonton in November of 2003 for Active Edmonton found that most Edmontonians are aware of the value of being physically active. They realize that exercise is important to maintaining good health, and they often are aware of what they should be doing to obtain those health benefits. Unfortunately, as many as 36% of the population have no intention of changing their activity patterns soon; 52% said they planned some increase in their physical activity within the next six months.

Gaming Spending on gambling across Canada rose by over 400% during the ten-year period 1992-2002. Slightly over 5% of Canadians are problem gamblers or are at risk of becoming problem gamblers. Risks are higher for men, Aboriginals and those with less education. The risks also increase if people gamble frequently, or if they tend to play VLTs. Spending on games of chance rose by 418% between 1992 and 2002, and increased by almost 18% over 200.1, to an average of $310 per Canadian household.

Almost 60% of Edmontonians report they take part in no regular vigorous physical activity and 34% say they do not even get moderately, vigorous activity on a regular basis. A significant proportion of our population does not get enough exercise to maintain good health.

Our society could well be facing continued intensification in problems such as obesity, diabetes and hypertension. Coupled with the aging of our population, the costs in terms of health care, lost productivity and strain on families could become overwhelming.

Prprdb:Ct0oeatCmmteOtbr20

ae2

Edmonton Socio-Economic Outlook, 2004 - 2009 APPENDIX I Employment by Industry - Edmonton C.M.A. (thousand) 1990

Industry

1991

424

Total

1992

428

429

1993 422

1994 429

1995

1996

441

466

475

483

489

505

522

537

100

110

101

109

120

121

1997

1998

1999

2000

2002

2001

2003

. 84

Agriculture

Forestry, Fishing, Mining, Oil & Gas

Goods-ProducingSector

Construction

Manufacturing

347

350

370

375

373

388

396

402

416

Utilities

344

348

346

341

345

Trade

Transportation and Warehousing

Finance, Insurance, Real Estate and Leasing

Professional, Scientific and Technical Services

36.

.46

Services-Producing Sector

Management of Companies & Administrative & Other Support Services Educational Services Health Care and Social Assistance Information, Culture and Recreation Accommodation and Food Services

Other Services

Public Administration

54 .

Prepared by the City of Edmonton Planning and Development Department, September 2004 Source: Statistics Canada

Prepared by: City Forecast Committee, October 2004

Page 26

Edmonton Socio-Economic Outlook, 2004 - 2009 APPENDIX II

Real Gross Domestic Product at Basic Prices by Industry, Edmonton C.M.A. Millions of Chained (1997) Dollars (1) ($Millions) Industry Agriculture Forestry, Fishing, Mining, Oil.& Gas Manufacturing Construction Transportation and Warehousing Utilities Trade Finance, Insurance, Real Estate and Leasing Business Service (2) Public Administration Educational Services Health Care and Social Assistance Accommodation and Food Services Other Services (3) GDP at Basic Prices Indirect Taxes Less Subsidies GDP at Market Prices Edmonton Growth Rate (%) Alberta Growth Rate (%)

1990 86 1,496 2,491 1,926 1,217 794 2,555 4,542 1,305 2,010 1,274 1,621 795 939 23,052

1991

1992

78 1,776 2,593 1,808 1,345 736 2,468

61 1,795 2,688 1,573 1,449 951 2,439

1993 103 1,537 2,818 1,693 1,469 952 2,633

4,560 1,163 1,995 1,318 1,861 695 909

4,879 1,153 1,973 1,486 1,734 685 951

23,306

23,817

1994 91 2,114 3,391 1,633 1,491 928 2,926

1995 287 2,762 3,343 1,669 1,548 - 801 2,754

1996 172 2,839 3,177 1,886 1,628 992 2,795

1997 226 3,197 4,000 1,971. 1,855 894 3,330

1998 242 3,524 3,788 2,352 1,809 899 3,250

1999 249 2,689 4,370 2,374 1,692 949 3,129

2000 189 2,646 .3,816 2,290 2,051 1,215 3,716

4,826 1,332 1,888 1,381 1,627 732 1,020

5,160 1,508 1,985 1,239 1,834 672 970

5,111 1,507 1,744 1,353 1,646 757 1,050

4,822 1,609 1,744 1,257 1,688 764 994

5,658 1,945 1,827 1,365 1,494 807 1,146

6,721 2,057 1,736 1,327 1,637 800 1,088

6,136 2,071 1,926 1,484 1,661 820 1,044

6,826 2,252 1,930 1,497 1,555 972 1,117

24,009

25,942

26,334

26,367

29,716

31,230

30,594

2001

2002

94 2,431 3,968 2,830 2,023 925 3,937

90 2,437 4,186 3,124 1,835 810 4,089

7,165 2,274 2,148 1,729 1,675 1,047 1,017

7,546 2,660 2,126 1,686 1,727 1,027 1,013

32,073

33,263

34,355

2,845

2,639

2,613

3,220

3,210

3,321

3,019

3,125

3,683

3,491

3,579

3,078

3,239

25,897 (0.1) 0.7

25,945 0.2 0.7

26,430 1.9 1.3

27,229 3.0 7.4

29,152 7.1 6.2

29,654 1.7 4.1

29,387 (0.9) 1.3

32,841 11.8 7.2

34,913 6.3 3.4

34,085 (2.4) 0.7

35,651 4.6 6.9

36,341 1.9 1.2

37,595 3.5 3:2

Prepared by the City of Edmonton Planning and Development Department, January 2004 Source: Statistics Canada and Alberta Finance Notes: (1) Preliminary Estimates - Subject to Revision. Updated growth rates for Edmonton and Alberta were obtained from Alberta Finance 2002 Provincial Economic Accounts, which were released after the completion of the Edmonton Socio-Economic Outlook (October 2003). (2) This includes: Professional, Scientific and Technical Services & Management of Companies and Administrative and Other Support Services (3) This includes: Other Services & Information, Culture and Recreation

Prepared by: City Forecast Committee, October 2004

Page 27

Edmonton Socio-Economic Outlook, 2004 - 2009 2009

Jong Huang (Chairperson) Chief Economist Planning and Development Department

K.L. Siu Director of Infrastructure Planning Asset Management & Public Works Department

Paul Tsounis Senior Economist Planning and Development Department

Stan Dilworth City Assessor Planning and Development Department.

Dana Oikawa Manager, Economic and Load Forecasting EPCOR Corporate

Linda Chan Manager, Capital-Revenues and Rates EPCOR Water Services

Terry Dew Director of Knowledge Management Edmonton Economic Development Corporation

Rod Keith Strategic Planning Officer Community Services Department 0

Alan Brownlee Director, Evaluation & Monitoring Transportation and Streets Department

Angela Muhlenfeld Supervisor, Planning & Evaluation Services Edmonton Police Services

Robert Higgins .Fire Planner II Planning & Development Department

Don Pilling Protection Engineer Emergency Response Department

Nila Chowdhury

Christina Ionescu Economist

Budget Consultant Corporate Services Department

For more economic information, please contact: (780) 496-6068 Jong Huang Paul Tsounis

(780) 496-6070

Corporate Services Department

jong.huang@edmonton.ca

paul.tsounis@edmonton.ca

For more social information, please contact: Rod Keith

(780) 496-4782

Prepared by: City Forecast Committee, October2004

rod.keith@edmonton.ca

Page 28

Edmonton Socio-Economic Outlook, 2004 - 2009

- -. -

Appendix III Edmonton Census Metropolitan Area

-..

ILga

L e d w a te

-4--

City

Town Town S

Accordl 2 CO Bonnty

Secondary Highway Railway

Gi bon

County Boundary

Village

Urban Service Area Boundary

I Albert

Spruc

WASAMUSt LAKEPlainn

NO 07

IL.. A

panGrove

County Suk@re

tonh-

rathc21 Sr Saod tche2

ATO

P a rk la n d

E d m on

rkDevon Calmar

EdPpneb trnational

JCseph

Leduc

0 ..

ink, New

Sarepta.

County oWarburg O

Beaumont

bLeduc

''.

z C"

Airport

geon

Primary Highway

P drionton

Prepared by: City Forecast Committee, October 2004

10 kilometres