JWG via DTN 15 January 2023 JT and Rae have been reading the tar baby saga and are trying hard…
Canada economy 2016 -17
Canada – Economic forecast summary (June 2017)
(OECD) Economic growth is projected to increase in 2017, driven by expansionary fiscal policy, household wealth gains and a resumption in business investment, in particular in the resource sector following the rebound in commodity prices. In 2018, growth is likely to ease but remain robust, as government spending increases taper off. Consumer price inflation is expected to rise to above 2% in late 2018 as excess capacity is gradually eliminated and wage growth picks up.
The federal government’s mildly expansionary fiscal stance will hasten the economy’s return to full employment. Gradual removal of monetary stimulus from late 2017 is projected, in order to stabilise inflation at around the 2% mid-point of the official target range. Higher interest rates will take some of the wind out of booming housing markets and rapidly rising house prices. Nevertheless, macro-prudential measures, which were strengthened during 2016, should be tightened further to address economic and financial risks related to the housing market.
Recent increases in federal investment in physical infrastructure, social housing, education and innovation will improve Canada’s capacity to adjust to globalisation in an inclusive and efficient way. Adjustment pressures would be exacerbated in affected industries if the shift toward more protectionist trade policy in the United States continues. Adjustment capability would be enhanced by widening eligibility for active labour market measures and implementing systematic early needs assessment for all displaced workers. Initiatives to address the social problems of Canada’s Indigenous Peoples are also critical if growth is to be inclusive going forward.
Bill Morneau tries to soothe Liberal MPs’ fears over small business tax plan backlash
(Global News) Bill Morneau is scrambling to calm the fears of nervous Liberal backbenchers who’ve been inundated with complaints about the finance minister’s plan eliminate loopholes that give some wealthy small business owners an unfair tax advantage.
The conference call came as Liberal MPs prepared to air their concerns and push for changes to the proposals during a caucus retreat next week in Kelowna, B.C.
And it came as opposition to the proposals intensified.
Some 35 organizations across the country representing doctors, lawyers, farmers, financial planners, homebuilders, shop owners and other incorporated small businesses came together Thursday to create the Coalition for Small Business Tax Fairness – billed as “a unified voice to oppose” the proposed tax changes.
2017 an economic win for Canada, no matter what happens in second half: report
Canada’s GDP has grown at an annualized average of 2.5 per cent and 290,000 jobs have been created so far this year
(Financial Post) But looking ahead to 2018, things are less certain, according to a recent report from Toronto-Dominion Bank.
“Employment wise, we’ve seen a very strong few months in terms of numbers and a rise of full-time jobs,” said Brett House, deputy chief economist at Scotiabank.
“The Canadian economy is running very hot so, as the Bank of Canada moves monetary policy towards a more restrictive policy direction with higher rates, we expect it will have dampening effects on the economy. We also expect the economy to move back towards its potential growth rate. It normally doesn’t move above potential for sustained periods,” House said.
Beyond that, things are less certain.
Canadian Economic Growth Will Be Fastest Among G7 This Year, IMF Says
Canada’s expected to grow 2.5% this year, up from a 1.9% forecast in April.
(Canadian Press via HuffPost) The IMF says it revised its 2017 outlook for Canada following strong growth in the first quarter and indications of “resilient second-quarter activity.”
However, it trimmed its outlook for Canada for 2018 to 1.9 per cent compared with its earlier forecast for 2.0 per cent.
Will Bill Morneau’s crackdown on tax avoidance work?
The measures will likely make it harder for high-earning Canadians to avoid the taxman, but the government could have gone further
By Kevin Milligan
(Maclean’s) Finance Minister Bill Morneau delivered on a promise from Budget 2017 by releasing a consultation paper on the taxation of small business corporations. By shifting income through a corporation, individuals can lower their tax bill compared to someone else who just earns regular wage income. The new package of tax measures is aimed at shutting down these tax advantages some high earners have exploited until now. Below I explain the origin and aims of these new tax measures and assess how likely they are to succeed.
Former RBC CFO picked to chair Canada Infrastructure Bank board
(Globe & Mail) The Canada Infrastructure Bank is beginning to take shape, with the federal Liberals naming former Royal Bank chief financial officer Janice Fukakusa as the first chair of the board.
Just two weeks ago, Parliament approved the creation of the new $35-billion institution, which Ottawa wants up and running before the end of the year.
The competition has closed for board of director positions with the bank. However, Ottawa is accepting applications for president and for CEO until July 21.
Infrastructure Minister Amarjeet Sohi said his department has a list of projects it intends to forward to the bank for consideration once the institution is operational.
Mr. Sohi has invited his provincial and territorial counterparts to a two-day meeting in September in Ottawa and said he wants all bilateral agreements in place by March, 2018, at the latest. Provinces, territories and municipalities already have access to funding announced under the first phase, as well as previously existing programs and automatic transfers from the federal gas tax
Also on Thursday, the Senate national finance committee released a report that urged the government to be more transparent about where the billions in infrastructure spending are going.
According to the committee’s research, the government has approved 6,194 projects worth a combined $13-billion through new infrastructure programs. However, the committee report said gathering details continues to be a challenge given that more than 30 departments or organizations are involved.
Stephen Kinsman comments: I am glad others feel as I do about transparency and in spite of the University of Ottawa paper [see 4 May below], I believe the Infrastructure Bank is necessary and could be instrumental in helping establish a development / growth strategy important to Canada beyond the term of this government and the projects already apparently proposed..
This is on the understanding that it doesn’t become a political football, used to fund inappropriate projects on a “pork barrel” basis in lieu of, or in addition to those essential to the strategy suggested. We have seen federal governments do exactly that in the past and it is a concern I have. I am sure we all know of cases where government has demanded that Crown corps or agencies accept certain projects ultimately because they are regarded as important to inter-governmental relations and this, against advice or the mandate of the corporation or agency involved. I therefore wonder to what extent the board and management of the bank will be free to operate as a bank without government interference. In other words, if the federal government wishes to fund a project the Bank does not believe is in its interests as a lending institution, or outside its agreed mandate, the government should fund it separately from Bank involvement. Otherwise, the Bank simply becomes yet another government money-chute.
Ottawa unveils $2.1B in spending on transportation corridors and more
Money is meant to improve access to international markets
“Investments through the Trade and Transportation Corridors Initiative will make a big difference for Canadian businesses,” said Minister of Transport Marc Garneau in a press release.
“It will allow them to get better access to international markets by addressing critical bottlenecks and ensuring that Canada’s transportation networks remain cost competitive and efficient.”
Of the $2.1 billion, $2 billion will be spent as part of the National Trade Corridors Fund over 11 years.
Party’s over Canada — time to buckle down and invest for the next 150: Don Pittis
If the country plays to its advantages, it can become a global economic leader
(CBC) Oil, gas, potash, fish, forests and fields of waving wheat are historic symbols of the country’s wealth.
But … Canada must decide how to invest in its future good fortune.
Whether or not you are a fan of Canada 150, in economic terms, the country really does have something to celebrate.
Friday’s gross domestic product figures show the economy has grown at 3.3 per cent over the past year, “far and away the fastest growth rate among the major industrialized economies,” as BMO’s Doug Porter noted at the end of last week. …
As Canada considers how to invest its wealth for the next 150 years … there is a way for Canada to punch above its weight. That is to make sure every person is as stuffed with as much education and training as they can stand.
Spending money on education is not charity. Educating the uneducated is like digging a new mine or putting new farmland into production.
As Indigenous protestors have reminded us this past weekend, Canada is blessed with an untapped resource of people who need more and better education.
Morneau urges Senate to pass budget bill
Morneau’s appearance at committee [on 15 June] came just a couple of hours before the Speaker of the Senate, George Furey, disallowed a motion from independent Sen. Andre Pratte to carve out the $35-billion infrastructure bank portion of the budget bill into a separate bill that senators can study at greater length.
Threat from housing, high debts still growing, Poloz says
The dual threats of runaway regional housing markets and high household debt have grown over the past six months, the Bank of Canada said, but it believes Canada’s financial system “remains resilient,” thanks in part to a strengthening economic backdrop.
In its semi-annual Financial System Review, a key report outlining risks to the country’s financial stability, the central bank said that the booming housing markets in Toronto and Vancouver have added to already high debt burdens for Canadian consumers, as surging home prices, especially in Toronto and surrounding regions, have dramatically increased the size of new mortgages. It noted that Canada’s national ratio of household debt to disposable income, a key metric for consumers’ debt burdens, is approaching 170 per cent, a record high.
Canada’s job market surges, but wage growth lags
Employers topped expectations and created a net 55,000 new jobs in May, the biggest gain since last fall, as a surge in full-time positions offset part-time losses. Both the private and public sectors beefed up hiring, and more Canadians participated in the labour force, according to Statistics Canada’s monthly jobs report released on Friday.
However, wage increases remained bleak by historical standards, even though they rebounded slightly from a record low in April.
Liberals to face Senate as showdown looms over infrastructure bank plan
The Liberal government’s plan is to use public funds through the bank to leverage billions more from investors to pay for large projects, such as rail lines, bridges and transit systems that may be too expensive for governments, or too risky for private companies to handle alone.
‘Tide is turning’ for Calgary and Edmonton economies, thousands of new jobs expected: Conference Board
Calgary economy expected to grow for 1st time in 3 years while Edmonton growth forecast at 2.4%
The resumption of job growth in Calgary will push the unemployment rate down from last year’s 22-year high of 9.4 per cent to 8.0 per cent in 2018, the board predicts.
But the new round of hiring won’t do much in the short term to fill up Calgary’s emptied out downtown office buildings space, which reached a 25 per cent vacancy rate at the end of 2016.
By contrast, Edmonton’s construction industry is set to bounce back from two consecutive annual double-digit dips, with non-residential and infrastructure projects more than offsetting three years of drops in housing starts, the board predicts.
Case for Canada Infrastructure Bank ‘not compelling,’ researchers warn
The University of Ottawa’s Institute of Fiscal Studies and Democracy argues that the Liberal government has yet to make a compelling case for why it would be better to work with private investors seeking higher returns when Ottawa has the ability to finance projects itself at much lower rates.
Authors Azfar Ali Khan and Randall Bartlett argue that with yields on 30-year Government of Canada bonds currently sitting at 2.2 per cent, Ottawa can borrow at much lower rates than what is available in the private sector.
The authors challenge the argument that more government borrowing would raise concerns of rating agencies over a rise in public debt.
The on-demand economy is a bubble—and it’s about to burst
(Quartz) This is because of our lack of brand loyalty, episodic customer use, and the use of precarious business models. The services that survive will focus on locking in customer and suppliers, objective outcomes (such as getting from point A to point B), a high frequency of use (you need food every day, for example), and services where automation can eventually help play a role to bring down costs.
Bank of Canada unveils new $10 banknote for Canada 150 celebrations
Bill features 4 portraits of Canadian politicians, Inuit art and Canadian landscapes
(CBC) There will be 40 million notes printed — “just more than enough for every Canadian to keep one,” according to Poloz. The bank says they will enter circulation on June 1.
The front of the bill features portraits of Canada’s first prime minister, Sir John A. Macdonald, and fellow Father of Confederation Sir George-Étienne Cartier, Canada’s first female member of Parliament, Agnes MacPhail, and James Gladstone, Canada’s first Indigenous senator and a member of the Kainai (Blood) Tribe.
Poloz said the reverse of the bill was designed to include a variety of Canadian vistas, based on public feedback on what Canadians wanted to see on the bill.
The landscapes include the Lions and Capilano Lake from British Columbia, fields of Prairie wheat, the Canadian Shield as seen in Quebec, a view of the Atlantic Ocean from Cape Bonavista in Newfoundland and Labrador and the northern lights as they would be seen in Wood Buffalo National Park.
New internal-trade deal expected to add $25 billion a year to economy, give ‘home-field advantage’
If a recent study by the Bank of Canada is correct, removal of interprovincial trade barriers within Canada could add between 0.1 and 0.2 percentage points or between $2 billion and $4 billion to the country’s annual gross domestic product. Duguid was even more optimistic about the deal’s impact, saying it is expected to add $25 billion a year to the economy.
(Financial Post) After 150 years of squabbling over internal trade, Canadians finally have a comprehensive internal trade agreement — and they might have Europe to thank for it.
The federal government, 10 provinces and three territories on Friday in Toronto unveiled the Canadian Free Trade Agreement, a deal that commits them to remove all internal barriers on trade — except for 144 specific exemptions claimed by one of the 14 member governments. The deal replaces the 1995 Agreement on Internal Trade, which opened up business only in the 11 sectors covered in that pact.
Government procurement is a big part of the new deal. Suppliers and service providers can now bid on government business outside their home provinces.
Labour mobility is another big part of the agreement. Licensed professionals and trades people accredited in one province, such as engineers or carpenters, will be allowed to work in another province without having to re-qualify with the local regulator.
The agreement also opens the power generation sector and permits energy utilities to compete for business across provincial lines.
Andrew Coyne points out in No evidence that ‘Canada works’ in new internal free trade deal that “it only appears worthwhile within the bizarro world of federal-provincial relations, and the strange assumptions on which it operates:
• that we should rather be amazed that trade within the same country has been so far liberalized, rather than that it should have been so restricted in the first place;
• and most particularly, that the business of ensuring there is a single market within a single country should be left to negotiations between its constituent parts, rather than simply enforced by the federal government, as part of its normal duties.”
He has a point – or several.
Guillaume Lavoie: La révolution des Uber et Airbnb n’est pas juste «une mode»
(La Presse) La prolifération des plateformes d’échanges pairs à pairs telles que Airbnb et Uber exacerbe fréquemment la position des chantres du libre-échange et des tenants du statu quo. Or, la solution se trouverait plutôt entre les deux et il importe d’y adhérer rapidement, croit Guillaume Lavoie.
Guillaume Lavoie est plutôt bien placé pour en discuter. Alors que le débat sur Uber faisait rage dans la métropole, celui-ci est devenu en juin dernier l’auteur du premier règlement municipal au Canada pour encadrer et permettre le partage des espaces privés, soit les stationnements, l’entreposage privé et les espaces pour l’agriculture urbaine.
‘I feel duped’: Why bank employees with impressive but misleading titles could cost you big time
Most financial professionals in Canada are licensed as salespeople with no fiduciary duty to clients
(CBC) A recent report by the Small Investor Protection Association found there are 121,000 people registered as financial professionals in Canada, and the vast majority are registered as dealing representatives — salespeople licensed to sell financial investments.
Only about 4,000 of these registered financial professionals have a fiduciary duty, which is a legal obligation to act in the client’s best interest.
A common trick for misleading customers, according to Elford, is the banking industry’s use of the term “financial advisor” — spelled with an “o.”
He says “advisor” is an unregulated title that anyone can use, whereas the title “adviser” — spelled with an “e” — can only be used if the employee has a fiduciary responsibility to the client.
Bill Morneau’s budget speech for two Canadas
As populists and globalists face off around the world, the Liberals don’t want to pick a side
By Nick Taylor-Vaisey
(Maclean’s) … the Prime Minister constantly beats the drum of global cooperation that populists deeply resent. Finance Minister Bill Morneau’s second budget speech sharply reinforces that delicate rhetorical balancing act.
Budget 2017: Liberals spend on training and innovation while holding line on most taxes
Liberals’ 2nd budget offers more details on plan for middle class with deficit pegged at $28.5B
(CBC) The Liberal government has delivered a budget designed to brace Canadians for a fast-changing global economy and empower women in the workforce, while taking a wait-and-see approach to sweeping changes south of the border.
Budget 2017, titled Building a Strong Middle Class, offers targeted investments to tackle what it calls the “challenge of change.” It offers little new spending, but fleshes out details on where dollars earmarked in last fall’s economic update will be spent.
The budget delivers $1.18 billion this year on skills and innovation, nearly half of which has already been announced.
See Tony Deutsch Comment
Federal budget’s red ink leaves Liberals with little wiggle room
(Globe & Mail) Already facing significantly higher deficits than it pledged in the last election – or even that it was talking about a few months ago – a Liberal party approaching an election will find little room to manoeuvre in an election-year budget. It may have one more year, at the most, to pursue its greater aspirations for remaking economic policy before it is reined in by political realities.
Federal budget 2017: Highlights of Bill Morneau’s 2nd budget
(CBC) Finance Minister Bill Morneau has tabled his second federal budget, a document that fleshes out details on the government’s infrastructure spending and plans for innovation while avoiding major tax changes.
The budget revises the deficit for the year just ended up slightly to $23 billion and forecasts a deficit for the coming year of $28.5 billion, including a $3 billion “risk adjustment.”
Here are highlights from the 2017 federal budget:
- Deficit: $28.5 billion, up from $25.4 billion projected in the fall.
- Trend: Higher deficits for next 3 years before dipping to $18.8 billion in 2021-22.
- Housing: $11.2 billion over 11 years, already budgeted, will go to a National Housing Strategy.
- Child care: $7 billion over 10 years, already budgeted, for new spaces, starting 2018-19.
- Indigenous: $3.4 billion in new money over 5 years for infrastructure, health, education.
- Defence: $8.4 billion in capital spending for equipment pushed off to 2035.
- Care givers: New care-giving benefit up to 15 weeks, starting next year.
- Skills: New agency to research and measure skills development, starting 2018-19.
- Innovation: $950 million over 5 years to support business-led “superclusters.”
- Startups: $400 million over 3 years for a new Venture Capital Catalyst Initiative.
- Families: Option to extend parental leave up to 18 months.
- Uber tax: GST to be collected on ride-sharing services.
- Sin taxes: 1 cent more on a bottle of wine, 5 cents on 24-case of beer.
- Bye-bye: No more Canada Savings Bonds.
- Transit credit killed: 15% public transit tax credit phased out this year.
Bill Morneau’s budget caught between Trump and a hard place: Chris Hall
With little fiscal room to manoeuvre, the finance minister must also keep his eye on events in Washington
Consumer watchdog launches bank review in wake of CBC stories
Financial Consumer Agency of Canada urges concerned bank consumers to contact them
Canada’s top consumer watchdog says it is reviewing business practices at Canada’s federally-regulated charter banks starting next month, following a CBC investigation that has uncovered reports of troubling sales practices at Canada’s major financial institutions.
Lucie Tedesco, commissioner of the Financial Consumer Agency of Canada, said in a statement Wednesday that her office is concerned with reports that bank employees are pushing for and sometimes signing customers up for products without their expressed consent, in order to meet their own sales targets.
- Controversial sales tactics show need for consumer code, advocacy group says
- 4 money-saving reasons you should check your bank statements
- TD teller says customers paying the price for unrealistic sales targets
- TD employees admit to breaking the law
As such, the FCAC will be launching a review of business practices in the federally-regulated financial sector starting next month.
THE BIG STORIES TO WATCH IN 2016
Globe reporters look at the year ahead in six key areas
for Corporate Canada and the economy
Ten numbers that will tell Canada’s 2016 economic story
Forecasters in a Bloomberg survey are calling for a 1.8-per-cent expansion this year, after 1.2 per cent in 2015. That would mark only the third time the country has recorded back-to-back years of sub-2-per-cent growth since the end of the Second World War.
Here are nine more numbers that will illuminate Canada’s economic path in year ahead.
Newly elected Prime Minister Justin Trudeau has pledged to run small annual deficits to finance infrastructure and boost economic growth, which may take some of the pressure off the Bank of Canada. While the plan initially was to run $25-billion in cumulative deficits over three years, Mr. Trudeau and Finance Minister Bill Morneau are preparing to up the ante on deficit spending. How high can they go? According to Bloomberg calculations, the federal government can run $141-billion of cumulative deficits over the next five years if they chose to simply keep the debt-to-GDP ratio at current levels.
After falling 16 per cent last year and 26 per cent since the end of 2011, the Canadian currency may test record lows in 2016 if the commodity boom continues to deflate. That would be 61.76 U.S. cents, reached in January, 2002, about 14 per cent below current levels. That’s not the base case scenario for forecasters, who see 2016 marking the end of the decline. The consensus in a Bloomberg survey predicts the loonie will finish 2016 higher than it started. To be sure, at the end of 2014, forecasters were predicting little change for the Canadian dollar in 2015. (4 January 2016)
Mixed signals: Canadian economic data reveal uneven story
Friday’s two A-list Canadian economic releases capture the current state of the country’s economy in a hard-to-crack nutshell. Uneven. Inconsistent. Contradictory.
Despite the excitement generated by the bottom-line numbers for Statistics Canada’s October employment report (much, much better than expected) and the September merchandise trade report (much, much worse than expected), both reports failed to live up to the wow factor promised in the initial headlines. The details were encouraging in places, discouraging in others.
Statscan told us that Canada’s labour market added a very impressive 44,000 jobs last month, the second strong month in a row, much better than the small decline most economists had anticipated. But in the very next breath, it pointed out that it was all because of a 67,000-job surge in part-time work; higher-value full-time employment actually fell by 23,000 jobs. All quantity but no quality, the critics cried.
But hold the phone: It was all because of one massive shipment from South Korea – a nearly $3-billion piece of platform for the Hebron offshore oil project – which caused a freak spike in imports for the month. Outside of that, the trade deficit was actually quite mild by recent standards – but only because imports performed even worse than generally tepid exports.
Minister Garneau presents his strategy for the future of transportation in Canada: Transportation 2030
The Honourable Marc Garneau, Minister of Transport, is delivering on his commitment to create a safe, secure, green, innovative and integrated transportation system that supports trade and economic growth, a cleaner environment and the well-being of Canadians and their families.
Minister Garneau was at the Chamber of Commerce of Metropolitan Montréal today to present his strategy, Transportation 2030, to over 550 key transportation stakeholders from across the country. The plan is based on the five themes around which the Minister consulted with Canadians, stakeholders, provinces and territories, academics and Indigenous groups over the past six months.
Fiscal update boosts Liberal infrastructure plans but offers no path back to balance
Finance minister announces much-anticipated Canada Infrastructure Bank and greater powers for budget office
Justin Trudeau’s Liberal government is responding to the sluggish global economy with a fall economic update that puts an even greater focus on infrastructure spending than in its spring budget, while making it easier for private sector investors to add their money to the government’s already considerable funding pot.
The government will also make it easier for foreign investors to expand into Canada, in a further attempt to boost the tepid economy.
But Finance Minister Bill Morneau is still staring at a horizon awash in red ink, with no forecasted return to a balanced budget.
Highlights of Bill Morneau’s fall economic statement
Read the full 2016 Fall Economic Statement (pdf)
… And so beyond the economic forecast, the fall update is focused on how to make a “real and measurable impact,” Morneau said, taking the potentially controversial step of allowing private-sector pension funds and institutional investors to “get involved” in public infrastructure.
The finance minister said this would bring private-sector capital, expertise and fiscal discipline to the public policy goals of the current government.
Trudeau Liberals bet on infrastructure money with new bank as economy weakens
(Globe & Mail) Taking the advice of his advisory council on economic growth, Finance Minister Bill Morneau will make at least $35-billion available for a new infrastructure bank with the hope that it will attract four times that amount from global pension funds and other investors.
— Ottawa will proceed with a new federal infrastructure bank, capitalized with $15-billion from already promised infrastructure funds and a further $20-billion in equity or debt tied to specific projects built with public and private partners;
— Most of the new money for infrastructure is booked to occur after 2025, extending Ottawa’s 10-year infrastructure plan for another two years.
The proposed infrastructure bank would likely launch in 2017. It would operate at arm’s length from government and would compile a list of priority infrastructure projects from across the country. Bank staff would focus on large projects that could attract private investors and would then structure the funding plans, which could take many forms.
Why McKinsey & Co. is helping Ottawa out, pro bono
International consulting firm McKinsey is lending a big helping hand to Ottawa’s economic advisory council—for free. What’s in it for them?
(Maclean’s) Dominic Barton, global managing partner of the international consulting firm McKinsey & Co. … currently chairs Morneau’s advisory council on economic growth—a blue-chip group assembled to provide Justin Trudeau’s government with big ideas for creating wealth. … The Department of Finance confirmed to Maclean’s that McKinsey consultants are providing the council, which has no budget of its own, with “research, analysis and administration”—all for free.
In recent years, for instance, the firm has been urging huge infrastructure investments in many countries—estimating the world needs US$57 trillion in new infrastructure over the next 15 years. Not surprisingly, the first set of recommendations from Barton’s council, released on Oct. 20, featured a call for Ottawa to put $40 billion into a new national infrastructure bank, with the hope of luring four times that amount in private capital.
Barton said the Canadian government should focus on projects that offer a clear payback, like transportation systems, electricity grids and pipelines.
Celine Cooper: Millennials of the precariat are finding their voice
Highly educated and deeply in debt, millennials in Canada are now hitting a job market stripped of the jobs for which they have trained. They are experiencing first hand the growing gap between those with stable and well-paid jobs and those who must cobble together what they can — freelance work, multiple, temporary contracts, unpaid internships — to establish themselves and make ends meet. When they can find work, there is no guarantee of paid sick leave, vacation days, medical or dental benefits, parental leave or pension plans. Predictable work schedules and social office environments are not always a given. Especially in cities where housing markets have gone wild, many are still living at home with their parents.
As their generation finds its voice and common ground, political parties in Canada would be wise to reassess their middle class electoral strategies.
B.C. to target foreign real estate buyers with new tax
Foreigners who buy residential property in the Vancouver area will have to pay an extra 15-per-cent tax as part of a B.C. government plan to slow the foreign speculation that many blame for making the region’s homes the most unaffordable in Canada.
The change to the province’s property transfer tax announced on Monday means an extra $300,000 in taxes for people from abroad buying a home for $2-million. Detached houses in the area typically run around that or higher. The surprise move comes after the government tracked all residential real estate transactions across British Columbia over four weeks in June and July and found foreign citizens who were not permanent residents bought just more than a billion dollars worth of property.
The Bank of Canada’s Governor recently warned that foreign ownership is contributing to an unsustainable rise in housing prices. And Ottawa struck a working group last month where bureaucrats from the federal government, Vancouver, Toronto and both provincial governments are aiming to come up with some solutions to the housing affordability crisis by the end of the year.
Douglas Porter, the chief economist from Bank of Montreal, called British Columbia’s move a “very reasonable step” that Ontario should consider following.
Dunsworth: In review of Temporary Foreign Worker program, don’t forget the farmers
The federal government will begin a thorough review of the Temporary Foreign Worker (TFW) program in June. This is welcome news for migrant workers and their supporters, in particular the signalling by Employment Minister MaryAnn Mihychuk that a more accessible pathway to citizenship is among the changes being considered.
The minister, however, has not specifically mentioned farmworkers in her comments on the review, leaving open the worrying possibility that the eventual reforms will continue a long trend in Canadian history of excluding agricultural labourers from many of the rights and protections enjoyed by other workers and migrants. The Liberal government must avoid repeating this mistake, and should instead grant permanent residency status on arrival for all TFWs – including the men and women who plant, grow, harvest and package Canadians’ food.
Ottawa to match Red Cross donations for Fort McMurray wildfire, Trudeau says
Canada will get through the devastation in Alberta together, PM tells House of Commons
The long-term growth challenge: Many questions, few easy answers
(Globe & Mail) These are precisely the growth headwinds that led federal Finance Minister Bill Morneau to create his advisory council on economic growth (on which I sit). [It] will meet several times over the next year to develop a strategy for improving Canada’s growth rate. …there are lots of possibilities worth examining.
More capital investment would likely lead to higher growth, but can this best be encouraged through corporate tax cuts, more generous investment tax credits or policies to enhance household saving? Or perhaps we need to relax the current restrictions on foreign direct investment in order to take advantage of savings from the rest of the world.
Better infrastructure might be an important part of the solution, but which infrastructure matters most? Is it bridges and highways that facilitate greater cross-border trade, airports that encourage two-way flows for business and tourism, public transit in urban centres or electricity grids that allow for trade across provinces?
A more highly skilled labour force would likely increase our growth rate, but what is the best way to improve skills? Would better primary and secondary education do the trick, or would our scarce resources be better spent on universities and technical schools? Or maybe it’s not about spending more public dollars, but instead about redesigning our system to produce graduates with different kinds of skills.
Maybe financial markets lie at the heart of our growth challenges, with too few venture capitalists and commercial bankers too conservative in their risk assessments and lending practices. If so, what is the right policy response, especially since we already have Crown corporations making loans to the private sector? And should governments even be in the business of providing venture capital?
Matt Phillips argues that there is such a thing as responsible deficit spending, and right now you can find it in Canada, where Justin Trudeau’s Liberal government is conducting an economic policy experiment worth watching.
(Quartz) Canada—while affluent and successful—usually isn’t a major force in global macroeconomics. But Justin Trudeau’s Liberal government is turning Canada into a testing ground for a kind of economic policy that the world now desperately needs. … Fiscally conservative global policymakers have long called for a relentless check on government spending, but now they’re changing their tune. In February, the IMF urged governments, those that had the capacity to do it at least, to take bold, coordinated, fiscal action to give the economy a lift.
On Friday (April 15), finance ministers from the G-20 recommitted, in theory, to using their budgets to bolster growth, though they didn’t make any promises of action.
Neil Macdonald: Liberal budget still doesn’t add up, even with a few grains of salt
Fresh details from Ottawa only deepen the murkiness of Bill Morneau’s financial plan
It remains a bit of a shell game, and at the very least leaves the impression that the government may be holding back some uncomfortable fiscal realities.
Liberal budget makes it tougher to scrutinize fate of public purse: PBO
Budget watchdog takes issue with spending projections, decision to lower economic outlook by $6B
A new report Wednesday by the parliamentary budget office said last month’s federal budget failed to separate purely discretionary decisions by the Liberals — like new policy measures and changes in planning assumptions — from shifts in economic conditions, as past governments did.
“The government has made changes to the presentation of its fiscal plan that have made it more difficult for parliamentarians to scrutinize public finances,” said the analysis by budget officer Jean-Denis Frechette.
The report came weeks after the Liberals tabled a budget projecting five years of deficits totalling more than $110 billion. The analysis said the government could have provided more clarity for the public in several areas.
Among Frechette’s concerns is the Liberal decision to introduce a risk adjustment that lowered annual forecasts for nominal gross domestic product by $40 billion — a move that translated into knocking $6 billion a year off the projected budgetary balance.
Canada’s Fiscal Policy Shift
(Seeking Alpha) After nearly a decade of fiscal policy taking a back seat to monetary policy, the newly elected Liberal Government moved public spending into the driver’s seat with its first budget since the election last October. Canada will now use fiscal deficits to reinvigorate its limping economy. It has launched a policy of fiscal stimulus, led by large infrastructure investment for at least the next five years. While the political analysts argue as to which election promises were kept and which were broken, the principle issue in the budget concerns the role of deficits in generating economic well-being.
The budget has prompted many forecasters to reassess their earlier growth projections. TD Canada and BAML both bumped up their forecasts for 2016 and 2017 on the strength of the proposed budget. It is no secret that the Bank of Canada has had its hand stayed, awaiting Federal budget. This level of deficit spending will be welcomed by the Bank as a tool to augment its accommodating monetary policy. The central bank estimates growth of 1.4 percent in 2016 and 2.4 percent in 2017, in the absence of fiscal stimulus. At least, the Bank now finds it has a partner in promoting economic growth.
A final word. With the EU countries under austerity regimes and the US operating with a relatively non-expansionary Federal budget, Canada now embarks upon a program of deficit financing to counter its problems of slow growth. It will be of interest to many other nations to see if this strategy is what is needed to pull out of the current weak economic environment.
At Issue weighs in
Federal budget 2016: Liberals push deficit to spend big on families, cities
Justin Trudeau’s 1st budget moves on many Liberal spending promises, but blows away deficit pledge
The first budget from Justin Trudeau’s government finds the Liberals compromising some of their election promises to keep others, laying out a longer and larger string of deficits to begin the kind of long-term investments they say Canada needs.
While the big ticket items match the platform that helped the Liberals win a majority last October, other commitments aren’t ready to roll out.
Finance Minister Bill Morneau called the plan “reasonable and affordable,” despite the red ink washing across the otherwise sunny tone of his rookie budget.
The 2016 budget begins fulfilling the Liberal pledge to spend $120 billion on new and existing infrastructure over 10 years.
Phase one will focus immediately on public transit, water and wastewater systems, and affordable housing, something Trudeau himself admitted last week was “unsexy.”
Later investments will be “broader and more ambitious,” the budget promises, focusing on the government’s goal of shifting to a low-carbon economy and positioning Canadian cities to be more competitive internationally.
The budget allocates $8.4 billion over five years to help bring about “transformational change” in the socio-economic conditions of Canada’s Indigenous peoples and their communities.
Liberals’ 2016 Budget Opts For Big Spending Over Restraint
Alexandre Laurin, Director of Research C.D. Howe Institute
On the side of good news, new spending on infrastructure can provide a timely (but small) boost to the economy. The challenge will be to bring forward those large new capital investments in a timely manner. The level of coordination required with provinces and municipalities can slow things down.
The child benefit reform will be good news for low- to-mid income families with children, who will see their total payments increase. Money saved from the elimination of the Family Tax Cut and Universal Child Care Benefit will be reinvested in the new system, letting low- and modest-income families keep more of their benefits as their income rises, positively impacting their work decisions and the economy.
The decision to rescind the previously planned increase of the normal retirement age — bringing it back to 65 years old from the planned 67 — was made to protect a minority of retired low-income seniors from poverty while they would have had to wait an additional two years before being eligible for Old Age Security. The decision, however, fails to recognize longer life expectancy and the current trend towards later retirements.
The beneficial economic and fiscal impacts of working longer are clear. By reducing the stress of demography on the labour market and on the pension system, a higher retirement age could play a major role in our future ability to bear the fiscal and social cost of an aging population.
Quebec disappointed federal budget has few details on infrastructure spending
The federal budget is good for families but disappointing because of the sparse details on much-needed infrastructure spending, which appears to be well under Quebec’s real needs, Leitão says.
Canada’s ‘neglected’ waste water infrastructure needs billions to fix
(CBC) Canada’s crumbling infrastructure is expected to be at the forefront of Tuesday’s federal budget.
Topping the list of the Liberals’ campaign promises is $60 billion over 10 years for infrastructure projects — nearly double what the previous Harper government planned to spend.
Trudeau tracker: Can budget 2016 deliver on Liberals’ infrastructure promises?
“These investments have been put off for far too long,” said Justin Trudeau during a campaign stop last summer.
In his pre-election speeches, Trudeau spoke about roads and transit, but there’s infrastructure across Canada desperately in need of upgrades that the public rarely sees.
In Halifax, the city’s 2,000 kilometres of aging water and sewer pipes need $2.6 billion of work.
What are the top priorities for Canadians ahead of the federal budget?
“[Health care spending] is a perennial leader on the chart, but it’s also one of those things that people know that government money can make better,” said Ipsos CEO Darrell Bricker. “Whereas with some of these economic things there is a greater question as to whether or not the government can have an economic impact.”
Federal budget comes as Canadians fear for financial security
Many Canadians are worried about economic uncertainty and a majority fear for their own financial security, a new poll says.
Trudeau’s promise of economic help for the middle class — an issue his Liberals campaigned on — comes as sluggish growth and more recent economic turmoil sparked by the sharp drop in oil prices has shaken the confidence of Canadians, according to the poll by Forum Research.
It found that 33 per cent of those surveyed believe the economy will worsen while just 24 per cent expect the economy to improve this year. Just over one-third of respondents think the economy won’t change.
And those economic jitters have most Canadians now fretting about their own prospects, with 69 per cent saying they are concerned about their financial security.
The poll found that younger people, ages 18 to 34, are among those most pessimistic about the economy and their own financial security
Kevin Page’s primer for Budget 2016
Canada’s former budget officer Kevin Page helps make sense of what the Trudeau government’s first budget will attempt to achieve
Federal Budget 2016: If you’re 15 to 24, this is what to look out for
Much was promised to Canada’s youth during the election, will it all end up in the budget?
When Prime Minister Justin Trudeau took office he also assumed the role of minister for youth, but whether he will deliver on his campaign promises for that key demographic in the Liberal’s first budget remains an open question.
Aaron Wherry Analysis | Trudeau’s budget deficit inspires hope and dread
For all else that he has done, it is the promise of a deficit that might be Trudeau’s signature moment. Particularly if one accepts the theory that it essentially put him in office.
John Geddes: Federal budget 2016 – Building the case for cash
The Liberals justify deficits by stressing long-term aims, rather than short-term stimulus
(Macleans) Many Canadian political junkies think they know the moment most worth remembering from Canada 2020’s policy conference in Ottawa back in 2014. It was at the Liberal-linked think tank’s confab that fall that Justin Trudeau made news by dismissing Canada’s contribution of fighter jets to the combat mission in Iraq as a case of Conservatives “trying to whip out our CF-18s and show how big they are.” But only in the wonkiest of policy-wonk circles does anyone remember how, later that same day from the same stage, David Dodge made the case for governments fearlessly plunging into debt to pay for public infrastructure.
Yet it’s the former Bank of Canada governor’s dry remarks, not the future prime minister’s highly quotable crack, that echo now.
Trudeau government starting to live dangerously: Hébert
There is mounting evidence that Justin Trudeau’s Liberal government has reached the point where it is living dangerously.
Second only to that of the prime minister, the credibility of the finance minister is an asset that must be preserved at all costs. That is even truer in the case of a government led by a prime minister with limited economic credentials. This week in the House of Commons, the Bill Morneau-Trudeau tandem came across as less than the sum of its parts.
All week Morneau dodged questions about the size of the upcoming budget deficit. But in as much as Trudeau, in an editorial board meeting with La Presse last week, laid the groundwork for extending the timeline to return to budget balance beyond a first mandate, the Conservative official Opposition would have been remiss not to pursue the issue. … the fact is that every minute he spends twisting in the wind during question period takes a toll on the political capital he will need when he finally unveils what is lining up to be a challenging first budget.
At a time when the opposition parties are testing the government’s front bench for weaker links, Liberal strategists should worry that Morneau is emerging as a potential one.
Liberals post details of 2012 budget cuts withheld by Conservatives
Treasury Board publishes numbers showing results of cuts through 2018-19 and beyond
(CBC) [Parliamentary Budget Officer Jean-Denis] Fréchette could not say when his office would be in a position to release an analysis of the impact the 2012 budget cuts had on government services and programs.
The information made public today lists details of the cuts by department, along with the expected savings each year, beginning in 2012-13 through 2018-19 and ongoing thereafter.
Bombardier: A ‘no brainer’ investment or a ‘house built on quicksand’?
Plane maker cutting jobs even as Air Canada to purchase 45 of the new CSeries jets
With the announcement that Bombardier will be cutting 7,000 jobs over the next two years as it faces declining revenues and a net loss, the spotlight is now firmly on the federal government and whether it will heed the aerospace company’s plea for more money.
But where some analysts see the Montreal-based firm, with its 64,000 global workforce, as a prudent investment in an important Canadian industry, others believe it may be time for Ottawa to turn off the government money tap. At Issue | Bombardier Bailout
Bombardier laid off 7000 workers, got a new multi-billion dollar contract from Air Canada and wants millions more in handouts from Ottawa. Does this make sense? The At Issue panel weighs in.
Canada government may fund clean-up of spent oil wells: minister
(Planet Ark) A crash in crude oil prices has led oil companies to abandon more wells, particularly in the western Canadian provinces of Alberta and Saskatchewan.
Saskatchewan Premier Brad Wall on Monday asked Prime Minister Justin Trudeau to pay C$156 million to accelerate clean-up of oil wells in his province that can no longer produce. Such a plan could create 1,200 jobs, Wall said.
Restoring the habitat around old oil wells is a corporate responsibility, but the Canadian government is also aware of the need for jobs in regions hurt by crude oil’s slump, Carr said.
The guaranteed annual income: A little idea that might just solve some very big problems
The idea – guaranteed annual income – is not new; it’s been argued over by academics since at least the 1940s … What’s different this time is proponents now find themselves in positions of power in municipal governments, provincial legislatures and on Parliament Hill.
(Globe & Mail editorial) Changes in Canadian public policy tend to be incremental, but a groundswell seems to be building for a plan that could radically remake our social benefits structure.
The concept is simple. Replace the raft of income-support provisions currently administered, means-tested, audited and doled out by various levels of government – welfare, community housing allowances, employment insurance – with a single benefit. It could be run through the tax system. If your income is below a certain level, you get a cheque.
Many conservatives have long liked the idea, which triggers the same intellectual-pleasure regions as a flat tax and could make government small and more efficient. The suggestion in Quebec is the province could shutter at least one department entirely. That appeals to the austerity-minded wing of Mr. Couillard’s cabinet.
Fans on the left like the universality and the idea it could reduce income and social inequality.
The arguments against guaranteed income are also well-established, the main one being that it could act as a disincentive to work. Another is that governments can safely be relied upon to screw things up, as they arguably did in Dauphin, Man.
To transform Canada’s economy, Trudeau needs to be a ‘bold builder’
Canada’s wake-up call has arrived with all the bad economic news – the falling loonie (which raises the cost of living), collapsing oil and commodity prices, a serious bear stock market, reduced government revenues, and weakening employment performance.
But bad news can include good news – and the upside is that the new government and the watching public cannot fail but see what they face. The harsh forces now at work can no longer go unnoticed. The government, four months into its mandate, is getting a clear idea of the challenges ahead – and that will help it explain to Canadians what has to be done.
The last five years were largely lost ones for the Canadian economy, which has suffered from three major vulnerabilities:
Our growing household-sector debt and (because we have failed to live within our means) foreign borrowing.
China’s impact on oil and commodity prices, which stems from the fact that a once-explosive economy is growing more slowly and reducing its investment in physical capital.
Finally, the looming – and unavoidable – end to the current U.S. expansion.
The Big Shortfall: Preparing the budget promises to be a mammoth financial headache for Liberals
By Jason Fekete
(National Post) Preparing for the federal budget has produced its share of challenges, large and small, for the new Liberal government. And the economic and fiscal signs point to more ahead.
Cratering commodity prices, a dipping Canadian dollar, sluggish economic growth and costly campaign promises are proving a mammoth financial headache for the government, and, with Parliament set to resume Monday, could soon be a political one as well.
So while Canadians in the coming days will hear about a variety of Liberal agenda items, from democratic reform, to missing and murdered indigenous women, to Senate appointments, preparing the annual budget, expected in March, is THE top priority.
The cabinet is considering whether to expedite some of its promised infrastructure spending to spur a rapidly deteriorating economy, raising the question of whether a full-blown stimulus program is needed of the sort announced amid the economic crisis of 2009.
Nenshi reacts to Trudeau’s ‘resourcefulness’ comments at World Economic Forum
Calgary mayor with the prime minister in Davos, Switzerland
Trudeau attempted to differentiate himself from Stephen Harper, who addressed Davos as prime minister in 2012.
“My predecessor wanted you to know Canada for its resources,” he said. “I want you to know Canadians for our resourcefulness.”
Nenshi says he would not have used that language.
“We are still a resource-based economy. Our biggest export is still energy. And I do not see a path where that does not continue to be the case, so clearly we need to do what we can on market access,” said Nenshi.
Liberal cabinet holding retreat to plan 2016 budget
Is Canada’s economic future free of fossil fuels?
Climate and energy policies are now one and the same. To take the Paris Agreement seriously, Canada must accept that the oil sands can no longer be key to its economy.
(Open Canada) The crucial point about the Paris agreement is that states will now have to change their policy priorities and focus on building post-fossil fuel economies. Failure to do so may present states with further and rather different security challenges if they are seriously out of line with international efforts. These security issues must also be anticipated in planning for a fossil-fuel-free future.
So what are the likely impacts of climate change on Canada? What about Canadian security and defence in these changing times? The right answer to these questions is: “Well, it all depends!” What it depends on is whether Canada quickly moves to do sensible things both at home and abroad or, failing to seize the moment, misses the opportunity to grapple effectively with climate change. …
The third point, and one that has become increasingly clear in the last few years is that policies for dealing with climate change may, if they are not carefully considered, cause many of the problems to which they are supposedly a response. …
Fourth and perhaps most important in terms of thinking about climate and security is to focus on long-term strategy. … And strategy usually fails when the context of conflict is misread or an antagonist’s intentions are misconstrued. Ethnocentric blind spots and the failure to consider the consequences of one’s own actions compound difficulties.
Bill Morneau kicks off pre-budget consultations with Halifax speech
‘The challenge is greater than we expected’ when elected, federal finance minister says
(CBC) In a speech to the Halifax Chamber of Commerce, Morneau said Canada isn’t facing the problems alone.
“The global economy is weak, and we are facing an uphill battle,” he said Monday. “But we are facing these challenges from a position of strength.”
Morneau pointed out Canada’s low debt to gross domestic product ratio and highly educated workforce are positives for long-term economic growth.
“Longer term growth is the hallmark of this government,” the Liberal minister said.
He also said challenges to long-term growth include Canada’s aging population and the shrinking labour force.
Morneau said labour force participation could be much improved with assistance to get more people with disabilities, as well as aboriginals and immigrants employed.
The minister is on a six-day cross-country consultation trip to ask Canadians for input into what should be in the coming federal budget.
The meetings will be a mix of traditional closed-door sessions with stakeholder groups, ranging from manufacturing to cultural organizations, plus a couple of public events in each location where people will get a chance to offer their opinions directly to the federal minister.
Weaker spending, hiring expected this year as commodities rout deepens: BoC
In-House Panel: “Seismic shifts” in economy problematic for rookie finance minister
The outlook for the Canadian economy is anything but rosy — a sizable export deficit, commodity prices are in the doldrums and employment growth has been anaemic.
Not to mention the loonie has sunk to its lowest levels in more than a decade. As a consequence, Bill Morneau, the government’s rookie finance minister, is facing trying times.
The Liberals have promised to run deficits, and ramp up government spending, to jump start the slumping economy. But the governor of the Bank of Canada says Canadians shouldn’t expect a dramatic turnaround in the near term even with more money flowing out of the federal treasury.
Stephen Poloz, the governor of the Bank of Canada, warned this week that the economy is in for a difficult adjustment period after a “seismic shift” in global commodity prices.
Canada forgot to plan for its future by leaning on oil and the loonie
We underinvested in cities and technology, now housing is all that’s keeping us afloat
By Saeid Fard
(Globe & Mail) When the United States and much of world entered into a recession following the global financial collapse of 2008, Canadians escaped relatively unscathed, thanks in part to a well-regulated banking system that had greater reserve requirements and was less entangled in the global financial web than its U.S. and European counterparts. But an unfortunate consequence of our insulation from global ills was that we did not subject ourselves to the kind of economic self-examination forced on other countries. Instead, consumer debt continued to rise, real estate prices continued to escalate and our economy grew worryingly reliant on just two industries: petroleum and housing.
Off the backs of those industries, Canada’s gross domestic product (GDP) grew by 19 per cent between 2010 and 2014. But most of that growth was driven by factors outside Canada’s control. China’s economy was booming and, with it, its insatiable need for resources. Oil prices were fixed artificially high by OPEC, Iranian petroleum supply was cut owing to sanctions, millionaires from precarious economies, including China’s, increasingly sheltered their wealth in havens such as Canadian housing, and “fracking” technology unlocked new petroleum resources in Western Canada.
Justin Trudeau can’t afford to ignore Canada’s economic challenges
By William A. Macdonald*
(Globe & Mail) The challenge is not the deficit: Canada has the best ratio of government debt to gross domestic product in the G8. But one good number is not enough when two other key indicators are so bad that they have the economy well off course.
The first tough number is the current account deficit – that is, the gap between the value of the goods and services we import and those we export. That deficit will likely hit $67-billion this year, the result of consumer spending, not productive investment.
Another pair of dangerous numbers involves the level of household-sector debt (higher than both the comparable U.S. figures during the 2008 crisis and that of any other G8 country today) and high prices for houses, particularly in Vancouver and Toronto.
Canada now needs more balance: between natural and human resources, between indebted sectors, and between social and economic advance. Those who want a strong economy must understand the need for societal strength – and vice versa. Pierre Trudeau overreached on the economy; Stephen Harper underreached. Justin Trudeau cannot get it right if he is governed by a fiscal straitjacket.
No one, including the Prime Minister and his economic advisers, is ready yet for what is needed. A big, bold, prudent, and patient approach is the way forward.
In a recent column, The Globe’s Jeffrey Simpson said that the Liberals don’t really have their heart in fighting the deficit. Nor should they. But if the government doesn’t meet the economic challenge it faces, the social policy that is close to its heart will be undermined.
*William A. Macdonald is president of W.A. Macdonald Associates Inc., and has an extensive record of public service. To spark discussion of the nation’s future, he and associate William R.K. Innes have created The Canadian Narrative Project along with Trent University. For more, visit http://www.canadiandifference.ca