Canada: economy & finance
A rough guide to Bill C-38
by Aaron Wherry (Maclean’s)
Complete text of Bill C-38
Stephen Colbert Uncovers a Canadian Currency Conspiracy
On tonight’s Colbert Report, Stephen Colbert uncovered a grave threat to the supremacy of the US dollar: Iceland is considering adopting Canada’s currency as its own. Like all red blooded Americans, Colbert despises Canada – what with their fiscal sensibility and free healthcare – and vows not to let this stand. (25/04/2012)
The World Economy Has Changed And so has our place in it
(OpenCanada.org) The common wisdom that Canada cannot reduce its dependence on the U.S. market, and that Canada will trade little with fast-growing markets elsewhere, is starting to change. An important shift is already underway.
Canada’s traditional areas of trade growth have plateaued. While global trade exploded over the past decade, Canada’s export volumes to the U.S. stagnated … By contrast, Canada’s trade with fast-growth markets elsewhere has taken off. Trade and investment flows show that Canadian companies have been venturing into these markets, investing in them, or importing from them. … the world economy – and Canada’s role within it – is changing at a dramatic pace. Our research shows clearly that Canada’s traditional trade relationships have already changed – and these changes are poised to accelerate in the coming years. Competition has intensified and opportunities are exploding.
Tasha Kheiriddin writes for iPolitics: the Conservatives released their Economic Update on November 13. Deficits are now forecast to extend into fiscal 2016 — and listen to what Finance Minister Jim Flaherty had to say about it:
“As I have said on many occasions, balanced budgets are not an end in themselves. They are a means to an end, and that end is a better, more prosperous future for all Canadians.”
As columnist Michael Den Tandt noted in the National Post this week, that stance torches whatever was left of the Reform Party’s fiscal legacy. It’s not just the ink that’s red: increasingly, it appears the Tories might be too. …
For the Conservatives, the reason is likely an economic reality check. The Tories are trying to put the best spin on bad economic news: their forecasts are off, their revenues are lower than projected and they are staring down both a fiscal cliff in the United States and a fiscal crisis in Europe. The new reality demands a rethink — either cut spending more, raise taxes, or balance the books later.
The Tories probably figure they can get the least grief by choosing door number three. If they’re lucky, the Americans will pull back from the brink, the EU will get its act together, demand for natural resources will grow, and the government will actually meet its previous projections and bring the deficit to heel before the next election in 2015. They are playing a variation of Paul Martin’s game when he was finance minister: instead of predicting balanced budgets and getting a surplus, the Conservatives are predicting deficits in the hopes of achieving a balanced budget.
Two cheers for Canada, not three
By Derek Burney and Fen Hampson
(iPolitics via National Newswatch.com) The first came from German Chancellor Angela Merkel in her ringing endorsement of Canada’s responsible approach to fiscal policy and her praise for our sound banking system during her visit to Ottawa. There was also good news for Prime Minister Stephen Harper in Merkel’s pledge to work for a “speedy conclusion” to a trade deal between Canada and the European Union. Merkel and Harper are beacons of sanity in a western world of unaffordable entitlements.
The second cheer came from Moody’s Investor Service which gave Canada its top triple A rating in its annual report on the state of the Canadian economy and 0ttawa’s finances. …
Notwithstanding the good news we got last week, as a trading nation that depends for its survival on what it can produce and sell to the world, Canada is struggling. We are uncompetitive in relation to our major trading partners and sorely lacking in innovation and productivity. Canadian companies are also failing to adapt to a fast changing world.
In a globalized world that has become even more competitive with the rise of emerging markets, which are the new drivers of growth, we will lose big time if our political house becomes fragile and our provinces engage in puerile, internecine warfare with the federal government or among themselves.
Our provinces, the federal government, and the business community are going to have to work much more closely together to help Canadians exploit new markets and make Canada globally competitive at a time when the opportunities for trade expansion and growth in our traditional markets, like the United States and Europe (even if we get a CETA agreement), have dimmed because of weak demand, chronic fiscal problems, and continuing financial instability.
Job quality improving, CIBC says
(CBC) A new look at Canada’s labour market reveals the first six months of 2012 has seen a big improvement in the quality of jobs that have been created — a surprise that was welcomed Thursday even though the trend likely won’t last.
It is already known that Canada’s economy churned out 155,000 new jobs in the first half of this year, more than economists had expected, the CIBC says in its latest report on employment quality.
Canada’s young people struggle to find jobs
(RCI) The latest Statistics Canada figures show that the number of jobs for youth between the ages of 15-24 is down while the number of people looking for them is going up.
Canada lost more than 430,000 jobs during the 2008-09 financial slump, half of these were in the youth job market, and almost none of them have been recovered.
CAW study finds laid-off workers can’t find ‘decent jobs’
Report tracked 260 laid-off manufacturing workers from three plants
OECD sees signs Canada’s economy is suffering from ‘Dutch Disease’
(Edmonton Journal) Runup in commodity prices leads to uneven economy, warns Organization for Economic Co-operation and Development
The OECD is weighing in on the controversy surrounding whether Canada is suffering from an economic condition known as Dutch Disease, and it’s qualified answer is yes.
The Organization for Economic Co-operation and Development warns in a report released Wednesday that the run-up in commodity prices is leading to an uneven economy in Canada.
And it says the country needs to do more to develop non-resource aspects of the economy in order to maintain high levels of employment and an equitable distribution of wealth across regions.
Budget bill debate set for shutdown as marathon vote looms
Hundreds of opposition amendments grouped for dozens of votes starting as early as tomorrow night
(CBC) The Harper government’s habit of using time allocation motions to cut off debate in the House of Commons took centre stage Tuesday, as Government House Leader Peter Van Loan moved the controversial measure to hustle MPs towards a highly-anticipated marathon of budget amendment votes.
The choice is not between austerity and prosperity – Harper
(RCI) Prime Minister Stephen Harper told an Montreal audience that economic prosperity can co-exist with fiscal discipline. Speaking at an international economic forum, the Conservative Party leader said what the world needs is a practical approach that combines budgetary discipline and other growth measures. It’s a message the prime minister says he intends to take as Canada’s position at the upcoming G20 summit in Mexico.
Parliamentary protest over Tory budget bill sets stage for marathon 24-hour vote
Speaker Andrew Scheer agreed to allow voting on most of more than 800 proposed amendments to Bill C-38, the government’s so-called omnibus bill, setting the stage for a marathon voting session of 24 hours or more that could begin as early as Tuesday. …
By grouping the motions together, Scheer did save MPs some measure of time by restricting the number of votes on the amendments to the bill, which weighs in at more than 400 pages and changes some 70 laws, including environmental regulation, social programs and tax laws.
Tim Harper: PM is spending political capital on omnibus budget bill
… as the House of Commons prepares to hit the home stretch with the budget bill front and centre beginning Monday, the question will be how much political capital the Conservatives will have spent by the summer recess in order to pass this mountain of regulations the way they were determined to do it.
Prime Minister Stephen Harper may have his majority, but like other prime ministers before him who crafted such victories, he did not win a majority of votes.
The opposition will fight the omnibus bills with omnibus amendments. There will be much sound and light; it will be dismissed by many as mere process or theatre, and derided by the government as game-playing.
But the Conservatives best keep an eye on those they once thought were friends, not their enemies, as the bill receives its final debate.
MPs facing hundreds of amendments to budget bill
Opposition parties propose changes to budget in last-ditch protest against C-38
MPs could be facing votes on more than 600 proposed changes to the federal budget next week
Job market tough for young Canadians
(RCI) Unemployed Canadians continued to struggle with a tough job market last month as the slow-moving economy laid an egg in February, unexpectedly shedding 2,800 jobs. The national unemployment rate dropped to 7.4 per cent, but that was because close to a net 38,000 frustrated job seekers simply gave up the search. The news was particularly grim for young Canadians. Employment among the 15-24 age cohort fell another 26,800 in February and now is down almost 300,000 jobs since the beginning of the recession in 2008. Prime Minister Stephen Harper called the Statistics Canada report “disappointing,” but stressed some positives, including increased full-time employment, continuing a trend, and a brightening outlook in the United States. Liberal critic Scott Brison berated the government’s record, particularly on youth employment, saying “an entire generation of Canadians is losing hope.”
Michel Kelly-Gagnon: Harper’s legacy could be that of big spender
(Toronto Sun via MEI) … what’s the record of the Harper government? During the last year of the Liberal reign in 2005-2006, program spending was $175 billion. During the fiscal year ending in a couple of days, it will have been about $243 billion. That’s an increase of almost 40% in only six years. …
Whatever the reason, unless Harper’s government changes course quickly, he unfortunately may not have much of a conservative economic legacy to call his own when he leaves office.
Across Canada, economic woes put public-service pension plans in the spotlight
Governments at all levels are grappling with massive deficits in their public pension plans thanks to a combination of factors, including low interest rates, sluggish investment returns and an aging work force that is retiring in record numbers.
Canada Budget 2012: Moody’s, Fitch Ratings Question Need For Ottawa’s Austerity Agenda
(HuffPost) The federal government doesn’t need to ramp up spending cuts, and implementing them could harm Canada’s economy as it struggles with weak global demand, two major ratings agencies have said.
Steven Hess, the lead Canada analyst for Moody’s, told the Wall Street Journal that there is a “risk to growth” if the government moves too quickly with austerity measures designed to return the country to balanced budgets.
With a budget deficit that amounts to about two per cent of GDP, there is “no rush” for Canada to address the problem, Hess said.
Though Ottawa has been systematically finding efficiencies in government departments since 2007, lower tax rates and the global economic crisis have forced the government into deficit spending in recent years.
Ahead of this year’s budget, expected to be tabled before the end of March, the Prime Minister’s Office has asked government departments to find 10 per cent in spending reductions.
The government has also floated the notion of reforming the Canada Pension Plan and Old Age Security, ideas that were met with political resistance before the Finance Minister Jim Flaherty softened his stance somewhat.
China trade mission alters economic future: expert
Canada is not turning its back on the United States in favour of trade with China, but rather being prudent by diversifying its economy, a trade expert says.
“One thing that is absolutely certain is that at least for my lifetime and that of my son, the United States will be the number one economy for Canada,” Peter Harder told CTV’s Question Period Sunday.
“But the other new reality is that China will be number two,” the president of the Canada-China Business Council said. “The question is, ‘How big will number two be?’.”
LAWRENCE MARTIN: The myth of Tory economic performance
(Globe & Mail) From 2007 to 2011, Canada’s economic performance put us in the middle of the pack in GDP growth among 34 industrialized countries. Our unemployment rate is currently rising and nearing the U.S. level. It’s true that, comparatively speaking, we’re doing well on a number of other economic indices. But given the advantages the Conservatives enjoyed when they took office – the big surplus, the well-regulated financial sector, the natural-resource-laden riches – how much of an accomplishment is it? When you start a race a lap ahead of the field, how hard is it to be among the leaders?
To talk of the Tory economic record, we might first address the reddened state of our treasury that’s occasioning the cuts in the coming budget. A pertinent question is whether our deficit is the result of natural economic factors or whether it owes itself to vote-getting political expediency.
Canada’s Economic Growth No Longer Leads G7
(Canadian Press via HuffPost) “We are going into a period of catch-up where it looks like the U.S. is doing better because they will be growing faster, on the jobs front perhaps most starkly,” says Douglas Porter, deputy chief economist with the Bank of Montreal.
On many fronts, the switch has already begun.
Last week’s employment reports from both capitals is the most graphic example. The score was 2,300 jobs added in Canada in January versus 243,000 in the U.S. Even after allowing for the fact that Canada is one tenth the size of the U.S., that’s more than 10 times more jobs created in relative terms.
Economy unexpectedly shrank in November
(CBC) “The downside surprise was almost entirely due to one sector — oil and gas extraction fell 2.5 per cent,” BMO chief economist Doug Porter said.
Crude oil production fell because of maintenance shutdowns, which presumably will soon be reversed, Porter noted. But lower natural gas output also hurt “and there’s not much hope for a quick turn there,” he said.
A glut of natural gas from shale deposits has depressed prices for much of the last year, and that’s eating into the output of one of Canada’s key industries.
Globalization And Canada: ‘Resistance Is Futile,’ EDC Tells Business Leaders
(HuffPost) With the loonie near parity, transportation costs climbing and protectionist trade provisions on the table in Washington, Canadian businesses can be forgiven for questioning the logic of global expansion.
But according to Stephen Poloz, president and CEO of Export Development Canada (EDC), such thinking is ill-advised. Irrespective of the current global economic turmoil, he says, globalization is here to stay.
Speaking at the Toronto Board of Trade on Wednesday, Poloz made the case for expansion in the face of uncertainty, highlighting the increasing importance of emerging markets to the survival of Canadian businesses.