#1https://i.cbc.ca/1.6344867.1644419129!/filelmage/httplmage/image.jpg_gen/derivatives/1 6x9_780/rogers-place-has-been boto-downtown-restaurants.jpg Alberta...Canada's Solution to Our ICE ALK Population Trap E CEA's Transportation Connects Alberta Conference NATIONAL BANK FINANCIAL WEALTH MANAGEMENT ANGUS WATT Presented by: Angus Watt Advisory Group March 11, 2024 ADVISORY GROUP+ Research provided by: Stéfane Marion, Chief Economist & Strategist, National Bank#2Disclaimer National Bank Financial - Wealth Management (NBFWM) is a division of National Bank Financial Inc. (NBF Inc.), as well as a trademark owned by National Bank of Canada (NBC) that is used under license by NBF Inc. NBF Inc. is a member of the Canadian Investment Regulatory Organization (CIRO), the Canadian Investor Protection Fund (CIPF), and a subsidiary of NBC, a public company listed on the Toronto Stock Exchange (TSX:NA). NBF is not a tax advisor and clients should seek professional advice on tax-related matters, including their personal situation. Please note that comments included in this letter are for information purposes only and are not intended to provide legal, tax or accounting advice. The comments reflect the opinion of their author only and may not reflect the views of NBF. ** The securities or sectors mentioned herein are not suitable for all types of investors. Please consult your investment advisor to verify whether the securities or sectors suit your investor's profile as well as to obtain complete information, including the main risk factors, regarding those securities or sectors. *** The information contained herein has been prepared by Angus Watt, a Senior Wealth Advisor with National Bank Financial; the opinions expressed do not necessarily reflect those of National Bank Financial. **** While opinions expressed are based on analysis and interpretation of historical data believed to be accurate the underlying data is not necessarily guaranteed as to accuracy. *****The information contained herein was obtained from sources which we believe to be reliable. However, this information is not guaranteed by National Bank Financial Inc. and may be incomplete. NATIONAL BANK ANGUS WATT FINANCIAL ADVISORY GROUP+ WEALTH MANAGEMENT CIPF Canadian Investor Protection Fund MEMBER#3Why is Inflation Bad? TA X NATIONAL BANK FINANCIAL ANGUS WATT ADVISORY GROUP+ WEALTH MANAGEMENT#4How? Tax on individuals Reduced purchasing power Spending more to receive less Tax on industry Increased cost of goods and services Profits shrink unless they can increase productivity Cost of inflation is passed on to the consumer $ Tax on governments All levels of government have some sort of debt Cost of debt servicing increases, leads to: • Decreased spending • Cut programs • Increased taxes NATIONAL BANK FINANCIAL WEALTH MANAGEMENT ANGUS WATT ADVISORY GROUP+#5Canada's Debt Burden, 2023/24 Combined Federal 100% 96.8% 92.0% 93.1% and Provincial Debt as a share of the 90% 86.6% 87.8% 86.9% 86.2% Federal Provincial 80% economy • 70% 63.4% Combined federal 60% and provincial 49.6% debt interest this 50% 42.9% year ($82bill) is 40% equivalent to total spent on K-12 80% education in Canada during 20% 2020-21. 10% 0% BC AB SK MB ON QC NB NS PE NL Source: https://www.fraserinstitute.org/file/growing-debt- burden-for-canadians-2024-infographic-1-optjpg NATIONAL BANK ANGUS WATT FINANCIAL ADVISORY GROUP+ WEALTH MANAGEMENT#6Participation Rates in Student Testing Falling in BC 100.0% Participation 100.0% Participation Fewer that 1/2 of BC grade 10 students are now proficient in numeracy 100% 90% 80% 80.5% 70% Met Standard 60% 50% 40% 30% 82.9% Participation 76.4% Met Standard 62.4% Met Standard 20% 10% Gr. 10 English 2015/16 Gr. 10 Literacy 2021/22 Gr. 10 Math 2015/16 0 NATIONAL BANK ANGUS WATT FINANCIAL WEALTH MANAGEMENT ADVISORY GROUP+ 77.7% Participation 48.2% Met Standard Gr. 10 Numeracy 2021/22 Source: https://www.fraserinstitute.org/file/collapse-of- student-testing-in-bc-high-schools-infographic-optjpg#7US Inflation and CPI Composition U.S. inflation: Consumer price index (CPI) 10% 10% U.S. CPI basket weights (eight major groups) Other goods & services 2.7% Education & communication 8% 8% Total CPI (y/y) 6% Core CPI (y/y) 4% Recreation 5.8% Food & beverages 14.4% 5.4% 6% Medical care 8.1% 4.3% 4% 3.7% 2% 0% 2% 16.7% Transportation 44.4% 0% Housing 2.5% -2% -2% Apparel 1990 1995 2000 2005 2010 2015 2020 2025 NATIONAL BANK ANGUS WATT FINANCIAL WEALTH MANAGEMENT ADVISORY GROUP+ Source: National Bank CIO Office (Dada via Refinitiv)#8Canada Inflation and CPI Composition Canada inflation: Consumer price index (CPI) 10% 10% Canada CPI basket weights (eight major groups) Alcohol & tobacco Recreation, education & reading 8% 8% 9.9% Total CPI (y/y) Health & personal care 6% 6% 5.0% Core CPI (y/y) 4% 4.0% 4% 3.6% Transportation 16.4% 2% 2% M 0% 4.5% 0% 4.7% Clothing & footwear 14.4% -2% -2% 1990 1995 2000 2005 2010 2015 2020 2025 Household operations, furnishings & equipment NATIONAL BANK ANGUS WATT FINANCIAL WEALTH MANAGEMENT ADVISORY GROUP+ Food 16.7% 28.3% Shelter Source: National Bank CIO Office (Dada via Refinitiv)#9Mortgages by Interest Rate - US • ● According to US Census data nearly 38% of households are mortgage free As of October 18, 2023, US 30- year mortgages are at 8.0% • The average mortgage rate in the US is 3.4% 5.01% TO 6.00% MORTGAGE RATE (5.3%) 4.01% TO 5.00% MORTGAGE RATE (20.3%) GREATER THAN 6% MORTGAGE RATE (3.7%) LESS THAN 3.00% MORTGAGE RATE (26.0%) NATIONAL BANK ANGUS WATT FINANCIAL ADVISORY GROUP+ WEALTH MANAGEMENT 3.01% TO 4.00% MORTGAGE RATE (44.7%) Chart: Lance Lambert. Source: Federal Housing Finance Agency, Morningstar#10Mortgages - Canada NATIONAL BANK FINANCIAL WEALTH MANAGEMENT • 66% of Canadians are homeowners • 50% have a mortgage • 70% have a fixed-rate mortgage that is not immediately affected by higher interest rates. ANGUS WATT ADVISORY GROUP+ Bank of Canada: Financial System Review 2022#11Canadian residential mortgages up for renewal Billions of dollars, by renewal year 400 300 200 100 2024 2025 2026 2027 2028 NATIONAL BANK FINANCIAL WEALTH MANAGEMENT ANGUS WATT ADVISORY GROUP+ Source: RBC Capital Markets#12The Pandemic Hangover MENTAL HEALTH AFTER COVID-19 Workplace stress Physical health Social fear Delay of relationships & marriages Higher cost of living Higher cost of family home Delay of starting families: average age of first-time mothers: 31.6 (2022) versus 26.7 (1976) Workplace shortages: need 100,000 agriculture workers in Canada by 2030 NATIONAL BANK FINANCIAL ANGUS WATT ADVISORY GROUP+ WEALTH MANAGEMENT#13Canada: A growing share of the population is immigrants 18 Million people 16 Between 2016 and 2021, immigrants accounted By census year for 80% of labour force growth 14 12 10 Share of immigrant population (R) 35.0 % Projections 32.5 30.0 27.5 25.0 22.5 20.0 - 17.5 - 15.0 12.5 - 10.0 4 Number of immigrants (L) 7.5 - 5.0 2 2.5 0.0 0 T T T T T T T L 1871 1881 1891 1901 1911 1921 1931 1941 1951 1961 1971 1981 1986 1991 1996 2001 2006 2011 2016 2021 2026 2031 2036 2041 NATIONAL BANK ANGUS WATT FINANCIAL WEALTH MANAGEMENT ADVISORY GROUP+ NBF Economics and Strategy (data via Statistics Canada https://www150.statcan.gc.ca/n1/daily-quotidien/221026/g-a001-eng.htm#14Canada: Labour force participation near a record high 89 88 Labour force participation 87 86- rate for 85 population 84 aged 25-54 83- 82 81 80 79- 78- 77 765 74 72 73 ייייייייייייייין 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 NBF Economics and Strategy (data from Statistics Canada, U.S. Bureau of Labor Statistics) NATIONAL BANK ANGUS WATT FINANCIAL ADVISORY GROUP+ WEALTH MANAGEMENT#15Canada's Immigration Targets 2022: 431,645 2023: 465,000 Challenges are many: ⚫ schools ⚫ healthcare 2024: 485,000 ● housing 2025: 500,000 We will need an additional 3.5 million homes above the current home-building projections by 2030 - CHMC. Do we have the labour capacity to build, fill and run these new schools, hospitals and homes? NATIONAL BANK ANGUS WATT FINANCIAL ADVISORY GROUP+ WEALTH MANAGEMENT Statistics Canada#16Canada: Homebuilders aren't keeping up with Population Growth 220 Thousands (quarterly data) 200 180 The ratio of home starts to population growth... Quarterly change in 160 population aged 15+ vs. quarterly residential home sales 140 NATIONAL BANK FINANCIAL WEALTH MANAGEMENT 120 100- 80 60 ри 40 ifin .fell to a record low of 0.27 in Q1 2023 Population growth Home starts 20 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 ANGUS WATT ADVISORY GROUP+ NBF Econmics and Strategy (data via Statcan and FRED)#17Canada: Shelter costs keep inflation above 3% CPI inflation: Total, housing and ex-housing 9 8 Variation y/y 7 " 00 6 5 4 3 2 1 0 Shelter Total Ex. Shelter =1 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 NATIONAL BANK ANGUS WATT FINANCIAL ADVISORY GROUP+ WEALTH MANAGEMENT Source: NBF Economics and Strategy (data via Statistics Canada)#18Canada: Standard of living at a standstill Real GDP per capita 114 Index (2016Q1=100) 112 110 108 106 104 102 100 98 96 94 92 90 88 86 84 2016 2017 2018 2019 2020 NATIONAL BANK ANGUS WATT FINANCIAL ADVISORY GROUP+ WEALTH MANAGEMENT 2021 2022 2023 Source:NBF Economics and Strategy (data via Statistics Canada and BEA)#19Consumer Confidence is Falling 160 150 Last observation Canada: September, United States: August Index level (2014 = 100) 140- 130 120 110 100 90 80 70 60 50- 40- Shaded area: U.S. recessions 30 20 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 NATIONAL BANK ANGUS WATT FINANCIAL WEALTH MANAGEMENT ADVISORY GROUP+ NBF Economics and Strategy (data from Conference Board of Canada)#20Canada: Caught in a population trap Net real capital stock at year-end per person, all sectors (NBF estimation for 2023) y/y variation (%) 5.0 4.5- 4.0 3.5 3.0- 2.5- 2.0- 5-year MA 1.5 1.0 0.5- 0.0 -0.5- -1.0- -1.5 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 NATIONAL BANK ANGUS WATT FINANCIAL ADVISORY GROUP+ WEALTH MANAGEMENT Source: NBF Economics and Strategy (data via Statistics Canada 34-10- 0163-01, 36-10-0096-01, 17-10-0009-01)#21Canada: Unprecedented Surge Annual growth in total population 1,300,000. Individuals 1,200,000- 1,100,000- 1,000,000 900,000 * 1972 is a statistical correction from a re- benchmarking by Statistics Canada 800,000 700,000 Newfoundland joins Canada Statistical correction by Statcan 600,000 Baby boom 500,000 400,000 300,000 200,000 100,000 1950 1960 1970 1980 1990 2000 2010 2020 NATIONAL BANK ANGUS WATT FINANCIAL ADVISORY GROUP+ WEALTH MANAGEMENT Source: NBF Economics and Strategy (data via Statistics Canada)#22Canada: Population growth decomposition 1,300 Total 1,200 Natural Inter provinci al net migration International net migration Population 1,100 growth, 1,000 2023 Q3 900 800 700 600- 500 400 300 200 100 0 T 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 NBF Economics and Strategy (data via Statistics Canada) NATIONAL BANK ANGUS WATT FINANCIAL WEALTH MANAGEMENT ADVISORY GROUP+#23Ontario: Population growth decomposition 600 550 Population 500 growth, 450 calendar 400 year 350 300 250 200 150 100 50 Total Natural Interprovincial net migration Intemational net migration -50 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 NBF Economics and Strategy (data via Statistics Canada) NATIONAL BANK FINANCIAL WEALTH MANAGEMENT ANGUS WATT ADVISORY GROUP+#24British Columbia: Population growth decomposition 200 Thousands of individuals Total Natural Interprovincial net migration Intemational net migration 180 Population 160 growth, calendar 140- year 120 100 80 60 40 40 20 0 - -20 יי 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 NBF Economics and Strategy (data via Statistics Canada) NATIONAL BANK FINANCIAL WEALTH MANAGEMENT ANGUS WATT ADVISORY GROUP+#25Alberta: Population growth decomposition 200 Thousands of individuals Total Natural Interprovincial net migration Intemational net migration 180 Population 160- growth, calendar 140 year 120 100 80 60- 40 40 20- -20 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 NBF Economics and Strategy (data via Statistics Canada) NATIONAL BANK FINANCIAL WEALTH MANAGEMENT ANGUS WATT ADVISORY GROUP+#26Canada: Q3 2023 Perspective on Housing Affordability 110 % of median income Monthly mortgage payment on median home price, all types of dwellings (25-year amortization, 5-year term) NATIONAL BANK FINANCIAL WEALTH MANAGEMENT 100 90 80- 70- 60 50 40 30 Vancouver Toronto Canada Montreal Calgary 20 1980 1985 1990 1995 2000 2005 2010 2015 2020 ANGUS WATT ADVISORY GROUP+ NBF Economics and Strategy (data via Statistics Canada, Teranet-National Bank, CREA)#27Canada: Q3 2023 Housing Affordability (non-condo) City Average price of home in metropolitan Household Months of saving annual income needed for downpayment (10% savings rate) Mortgage payment as % of income (MPPI) market Toronto $1,219,008 $254,216 311 89.1% Vancouver $1,673,264 $348,949 464 133.3% Calgary $630,562 $154,454 50 47.2% Edmonton $456,068 $112,943 30 34.1% NATIONAL BANK ANGUS WATT FINANCIAL ADVISORY GROUP+ WEALTH MANAGEMENT NBF Economics and Strategy (data via Statistics Canada, Teranet-National Bank)#28Albertan 2 "Build the highway...and they will come." Fasten your seatbelts, Highway 2 is about to explode as our Province takes off. NATIONAL BANK FINANCIAL WEALTH MANAGEMENT ANGUS WATT ADVISORY GROUP+#29Canada: All provinces grow at least twice as fast as OECD Population change (2023Q3 vs 2022Q3) 4.5 4.0 % 3.5 3.4 3.3 3.2 3.1 2.9 3.0 3.0 2.6 2.5 2.5 2.0 1.5 1.3 1.0 0.6 0.5 4.3 4.0 0.0 OECD NL QC SK MB NS NB CAN BC ON PE AB NATIONAL BANK ANGUS WATT FINANCIAL ADVISORY GROUP+ WEALTH MANAGEMENT Source: NBF Economics and Strategy (data via Statistics Canada, OECD)#30Alberta: Population Growth is the Fastest in the World Population growth in 2022, top 20 countries + Alberta and G7 economies (2023 data for CA and AB) G7 Top 20 Alberta (1) Niger (2) Syria (3) 4.1 33 3.7 3.7 Singapore (4) Congo (5) Kazakhstan (5) Somalia (7) Mali (7) Angola (7) Chad (7) Tanzania (11) Uganda (11) Canada (11) 3.3 Zambia (14) Burundi (15) Benin (15) Mozambique (15) Senegal (18) Mauritania (18) Cameroon (18) Sudan (18) Germany (85) United States (149) France (161) 3.2 3.2 3.0 3.0 3.0 3333000 3.1 3.1 3.1 3.1 2.8 2.7 2.7 2.7 2.6 2.6 2.6 2.6 11 1.1 0.4 0.3 United Kingdom (182) -0.1 Italy (192) -0.4 Japan (192) -0.4 -1.0 -0.5 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 NATIONAL BANK ANGUS WATT FINANCIAL ADVISORY GROUP+ WEALTH MANAGEMENT NBF Economics and Strategy (data via World Bank, Statistics Canada)#31Alberta - Connecting the dots: the Next 5 Years Strong interprovincial and international migration. Increased demand in housing, schools, healthcare and infrastructure. Shortage of skilled workforce. New residents to Alberta are looking for: • A home, a backyard, and a school nearby • A place to develop a career A place to raise a family Need a tax regime that supports corporations and the people of Alberta. Need provincial research incentives. "We are a province of problem solvers" Joe Lukacs NATIONAL BANK FINANCIAL WEALTH MANAGEMENT ANGUS WATT ADVISORY GROUP+#32Joe Lukacs • I'm a serial problem solver. I have had a couple dozen successful innovations, but the ideas came from solving problems. NATIONAL BANK FINANCIAL WEALTH MANAGEMENT ANGUS WATT ADVISORY GROUP+#33Stantec Don Stanley • A Harvard graduate in environmental engineering searching for work, Dr. Stanley sent out 600 letters and drove 27,000 kilometers (17,000 miles) in 4 months, visiting small communities in western Canada. • • An innovator in developing techniques for the construction and operation of environmental installations Grew from one man operation into an international, multi-disciplinary organization with 28,000 employees in over 400 locations across 6 continents NATIONAL BANK FINANCIAL WEALTH MANAGEMENT ANGUS WATT ADVISORY GROUP+#34Questions 780.412.6644 [email protected] anguswatt.com NATIONAL BANK FINANCIAL ANGUS WATT ADVISORY GROUP+ WEALTH MANAGEMENT