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Ottawa ran $1.8B deficit in July

Between April and July of this year, federal revenues were $2.3 billion lower compared with last year, while program expenses were $6.5 billion higher. (Adrian Wyld/Canadian Press)

By comparison, Ottawa had a $5.2-billion surplus during the same April-to-July stretch last year, according to the Finance Department’s monthly fiscal monitor.

This year in July alone, the report said the government books showed a deficit of $1.8 billion — down from a $200-million surplus a year earlier. The July data included a $1.4-billion increase in program expenses, an $800-million decline in revenues and a $200-million decrease in public-debt charges.

Between April and July, the numbers show federal revenues were $2.3 billion lower compared with last year, while program expenses were $6.5 billion higher. The government’s debt-servicing costs were $800 million lower over the time period, mostly because of the impacts of weaker inflation on bonds and a lower average interest rate.

Earlier this week, the federal budget watchdog said government spending under the Liberal government over the first three months of the fiscal year reached its highest mark in at least six years.

Higher program spending

On Friday, the fiscal monitor said the bulk of the added spending between April and July was due to a $3.9-billion increase in direct program expenses compared with a year ago — a spike of 11.9 per cent.

A closer look at the increase showed that transfer payments were up $2 billion, or 21 per cent. Finance said the bigger number was a reflection of year-over-year differences in the timing of the payments and an increase in disaster assistance.

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Our uncomfortable ride with central bankers who can’t take us home again: Neil Macdonald

September 24, 2016

Our uncomfortable ride with central bankers who can’t take us home again: Neil Macdonald

The great post-Great Recession money-printing bonanza was supposed to be temporary

Chair Janet Yellen decided this week to keep the U.S. Federal Reserve's interest rate where it is, saying the U.S. economy isn't yet ready to withstand a modest increase.

Chair Janet Yellen decided this week to keep the U.S. Federal Reserve’s interest rate where it is, saying the U.S. economy isn’t yet ready to withstand a modest increase. (Gary Cameron/Reuters)

We can all, more or less, put a dollar amount to what we’re worth.

The value of that money is another question.

Money is the ultimate confidence game; $10 is worth $10 because we all agree it is worth $10, and for no other reason.

Common sense would seem to dictate that creating unimaginable amounts of new money, the way central banks have been doing since the Great Recession, would erode the value of a dollar, or a euro, or a yen.

The U.S. Federal Reserve alone has printed about $3.8 trillion since 2009. That’s enough to buy 38 million million-dollar homes.

The U.S. Federal Reserve has printed about $3.8 trillion since 2009. (Reuters)

Put another way, the American central bank has printed more money than the entire Canadian economy generates in two years. Most of it was spent buying U.S. government treasury bonds — basically creating money with one hand of government and handing it to the other to spend.

Of course, the money printing distorted everything. As intended, it drove down interest rates to nearly zero, punishing old-fashioned, “virtuous” behaviour, robbing savers of return on their investments, while rewarding those who live beyond their means and bailing out scoundrels.

Risky behaviour

As intended, the creation of that money encouraged even more risky behaviour. Stock markets set new records, floating on all that cash. People bought homes they probably couldn’t afford (to a point that has scared the government of Canada; our central bank has pursued low interest rates, too).

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Toronto’s land transfer tax revenue is booming, but the cupboard’s still bare

September 17, 2016

Toronto’s land transfer tax revenue is booming, but the cupboard’s still bare

‘The message to Toronto is, ‘Don’t spend it all,’ economist says

Toronto's red-hot real estate market has sent municipal land transfer tax revenues soaring. But the city's spending all that money, not saving it.

Toronto’s red-hot real estate market has sent municipal land transfer tax revenues soaring. But the city’s spending all that money, not saving it. (Sean Kilpatrick/Canadian Press)

In times of plenty, it can be easy to forget there may be leaner years ahead.

But Toronto city council and its city managers need only look westward for a cautionary tale about relying on a volatile source of revenue; here, it’s the municipal land transfer tax — but in Alberta it was oil.

Plunging oil prices have taken their toll on provincial revenues — down to $1.4 billion this year, from a high of more than $10 billion. That’s a glimpse of what could happen in Toronto when the housing bubble eventually bursts, real estate economist Frank Clayton says.

Unless, however, we choose to follow Norway’s example.

City Manager Peter Wallace says that the municipal land transfer tax is a volatile source of revenue – and the city shouldn’t count on it indefinitely. (CBC)

The Norwegian path

The oil-rich Scandinavian country has invested its energy revenues in a sovereign wealth fund since 1996, which now tops more than $1.158 trillion. Typically, the government can draw up to four per cent from that fund each year, slightly more than its annual 3.7 per cent rate of return, according to Norges Bank Investment Management.

And when the economy dipped last year, the country weathered it easily, taking its first-ever capital transfer from what Clayton dubbed its “rainy day fund”.

“So now that oil prices have gone down, Norway’s got assets and it’s producing income,” the Ryerson University professor said. “So the message to Toronto is, ‘Don’t spend it all.'”

…click on the above link to read the rest of the article…

TransCanada formally seeks NAFTA damages in Keystone XL rejection

June 26, 2016

TransCanada formally seeks NAFTA damages in Keystone XL rejection

Keystone XL was designed to link existing pipeline networks in Canada and the U.S.

(Evelyne Asselin/CBC)

TransCanada submitted a notice for an arbitration claim in January and had then tried to negotiate with the U.S. government to “reach an amicable settlement,” the company said in files posted on the pipeline’s website.

“Unfortunately, the parties were unable to settle the dispute.”

TransCanada said it then filed its formal arbitration request under North American Free Trade Agreement provisions, seeking to recover what it says are costs and damages.

The Keystone XL was designed to link existing pipeline networks in Canada and the United States to bring crude from Alberta and North Dakota to refineries in Illinois and, eventually, the Gulf of Mexico coast.

Obama rejected the cross-border crude oil pipeline last November, seven years after it was first proposed, saying it would not make a meaningful long-term contribution to the U.S. economy.

TransCanada is suing the United States in federal court in a separate legal action, seeking to reverse the pipeline’s rejection.

NAFTA, whose arbitration provisions allow companies to challenge governments before international panels, has been a target of recent anti-free-trade sentiments in the United States.

The heads of NAFTA members, Canada, the United States and Mexico, are expected to meet in Ottawa for a North American leaders’ Summit on June 29.

Canada was supposed to host the meeting early last year but cancelled it amid tension between then Prime Minister Stephen Harper and Obama over the Keystone XL pipeline.

TransCanada and the U.S. Department of Energy did not immediately respond to requests for comment.

ANALYSIS: Brexit vote a sign U.K. ‘longing for a time and place that never was’

June 25, 2016

ANALYSIS: Brexit vote a sign U.K. ‘longing for a time and place that never was’

‘Free movement of people is a major point of European integration,’ says political scientist

European Union leaders said Friday that the U.K. should begin the process of leaving the EU as soon as possible. It's expected that some countries will take a tough approach in negotiations over new trade deals, which will take at least two years to complete.

European Union leaders said Friday that the U.K. should begin the process of leaving the EU as soon as possible. It’s expected that some countries will take a tough approach in negotiations over new trade deals, which will take at least two years to complete. (Neil Hall/Reuters)

If it’s difficult to understand why the United Kingdom would vote to leave the European Union, spawning deep uncertainty about what happens next on any number of fronts, look no further than immigration.

The Brexit result was, in large part, a reaction to growing anxieties over migration to the U.K., realistic or not.

Immigration was a top priority for voters in the Leave camp, according to pre-referendum polling, and Leave leaders like the U.K. Independence Party’s Nigel Farage and former London mayor and likely next prime minister Boris Johnson have been clear on their position that “taking back control” of the U.K.’s borders is critical to future economic health.

It was a deliberate strategy to target migrants and the nostalgic whims of Britons “longing for a time and place that never was,” said Geoff Smith, professor emeritus of history at Queen’s University in Kingston, Ont.

A pro-European Union protester holds a sign near the Palace of Westminster in London on Friday, protesting Britain's decision to leave the European Union.

A pro-European Union protester holds a sign near the Palace of Westminster in London on Friday, protesting Britain’s decision to leave the European Union. (Marc-André Cossette/CBC)

“There’s an unhappiness with the status quo and the tendency has been to blame it on migrants,” Smith said. “They became a scapegoat, and it worked.”

Part of that scapegoating has been to point the finger at migrants for the U.K.’s slow and disappointing recovery from the financial crisis of 2008, as well as for disappearing public services, especially in places outside of major urban centres.

…click on the above link to read the rest of the article…

Ottawa sets up working group to monitor housing market

June 23, 2016

Ottawa sets up working group to monitor housing market

Finance Minister Bill Morneau says he will work with cities and provinces to get more and better data

Policymakers are looking at all the tools at their disposal to take care of the housing market.

Policymakers are looking at all the tools at their disposal to take care of the housing market. (David Donnelly/CBC)

“The working group will review the broad range of policy levers that affect both supply and demand for housing, the issue of affordability, and the stability of the housing market,” Morneau said in a speech to the Economic Club in Toronto on Thursday.

Morneau said that while he worked with his provincial counterparts on Canada Pension Plan issues, the housing market was also a major topic of conversation in Vancouver at their meeting Monday evening.

“Housing prices have surged by 15 per cent in Toronto, and 17 per cent in Vancouver in the last year alone,” Morneau said. “People want to know what’s going on.”

Managing the housing market to ensure new buyers can still get in without harming existing owners is an “extremely complex problem,” Morneau said, made even more so by the fact that no level of government has complete control over the issue.

“We want to make sure housing stays affordable for Canadian families but we also want to make sure the market stays stable, that it’s not vulnerable to economic shocks,” he told the CBC’s Peter Armstrong in an interview set to air on The Exchange at 7 p.m. eastern time.

“It’s important to understand that while the federal government has some levers it can pull, we don’t have all of them,” Morneau said.

…click on the above link to read the rest of the article…

How Canada got into bed with tax havens

June 18, 2016

How Canada got into bed with tax havens

1980 treaty with tiny Barbados paved way for billions to legally flow offshore

Canadian companies have flocked to Barbados with their cash for decades in order to legally avoid paying Canadian taxes.

Canadian companies have flocked to Barbados with their cash for decades in order to legally avoid paying Canadian taxes. (The Associated Press)

On a cold December afternoon in 1980, with MPs’ voices echoing in the mostly empty chamber, the House of Commons debated a piece of legislation that has altered Canada’s economy profoundly.

Bill S-2 aimed to ratify a series of taxation treaties between Canada and countries like Spain, Korea, Austria and Italy. Also on the list: the tiny Caribbean island country of Barbados, population 250,000.

Before the final vote was called, a fresh-faced Bob Rae, at the time the NDP’s finance critic, rose to speak against it. Necktie askew, he warned that there had been precious little study of the consequences of signing a treaty that, like the one with Barbados, would drastically cut the tax rate for Canadian companies operating abroad.

Bob Rae in the House of Commons in 1980

A fresh-faced Bob Rae, the federal NDP’s finance critic at the time, rose in the House of Commons in December 1980 to warn about tax treaties Canada was signing. (CPAC)

“The government is entering into these tax treaties without being fully aware of the impact they will have on domestic taxation in Canada,” Rae said. “Money that is income and is not being taxed at the corporate level, on which the government receives no revenue, has the unfortunate effect of increasing the load of taxation on the average citizen.”

His protestations didn’t stop the bill. After another hour of tepid debate, with a quick murmur of assent from the Liberal and Conservative MPs, the House passed it and it was signed into law the next week.

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Summer gas prices forecast to remain stable

June 4, 2016

Summer gas prices forecast to remain stable

Western Canada facing gas shortages, oil supply cut from wildfires

Canadian motorists shouldn't expect increases at the pumps as summer gas prices are expected to remain stable.

Canadian motorists shouldn’t expect increases at the pumps as summer gas prices are expected to remain stable. (Canadian Press)

From gas shortages in Western Canada to a dramatic spike in costs of gasoline in Newfoundland and Labrador, Canadian motorists may be concerned that these are signs that price increases will surely hit the pumps this summer.

But some industry analysts are forecasting no major spikes for the balance of the summer driving season.

“My prognosis is we’ve probably seen as much of a price increase at this point that we will see in the summer,” said industry analyst Michael J. Ervin of Kent Group Ltd.

“There’s always those outlier things. If there was a substantial increase in crude prices, that could have an impact but we don’t think that we’re going to see any upward volatility of crude prices in the near future.”

Roger McKnight, a chief petroleum analyst with En-Pro International Inc., said that in 12 of the last 13 years, gas prices hit their peak around mid-April.

Petro-Canada kelowna

A sign at a Petro-Canada station on B.C.’s Highway 97 warns customers that they are out of fuel. (Brady Strachan/CBC)

In the run-up to the summer driving season, which starts with the Memorial Day weekend in the U.S., prices generally start to fall back because refineries are geared up and ready for the summer driving season.

And that pattern seems to be repeating itself this year as well, he said.

“Enjoy it while you can,” said McKnight. “The prices will remain stable if not fall noticeably between now and Labour Day.

…click on the above link to read the rest of the article…

NEB approves Trans Mountain pipeline with 157 conditions

May 19, 2016

NEB approves Trans Mountain pipeline with 157 conditions

Federal government has 7 months to make decision on controversial project

Coastal communities in B.C. have raised serious concerns about spill risk and the potential damage it could cause to the environment.

Coastal communities in B.C. have raised serious concerns about spill risk and the potential damage it could cause to the environment. (Kinder Morgan)

Is a Calgary-based journalist with CBC’s network business unit. You can contact him on Twitter at @kylebakx

The federal government now has seven months to make a decision on the controversial Kinder Morgan Trans Mountain pipeline, after the national regulator gave its support to the proposed project.

The National Energy Board is recommending the multi-billion dollar pipeline be constructed if 157 conditions are met, including 49 environmental requirements. The NEB described the requirements as achievable for the company.

Kinder Morgan must meet the conditions in order for the company to construct and operate the pipeline.

A map of the Kinder Morgan Trans Mountain pipeline is seen in the foreground as Dr. Robert Steedman, chief environment officer of the National Energy Board, releases their report on the Trans Mountain pipeline expansion project in Calgary. (Jeff McIntosh/Canadian Press)

The NEB concluded the Trans Mountain expansion will provide several economic advantages for Canada such as access to more export markets, thousands of construction jobs and increased government revenue.

At this point, the exact route of the pipeline is still not determined.

The federal government will take the NEB’s decision into account in addition to considerations about upstream greenhouse gases and views of First Nations and other communities along the route.

Alberta’s oilpatch welcomed the decision, although the excitement was measured.

“It’s beneficial in 2019 when there is actual oil flowing,” said Robert Cooper, with the institutional sales and trading team at Acumen Capital Partners in Calgary. “Right now the immediate concern in the energy business is keeping the business alive.”

…click on the above link to read the rest of the article…

Cops, spies and journalists: Top Mountie Bob Paulson speaks out

May 18, 2016

Cops, spies and journalists: Top Mountie Bob Paulson speaks out

Spying by officers was not approved, RCMP commissioner says – so officers kept asking

In a broad and candid statement to CBC News, RCMP Commissioner Bob Paulson explains why

In a broad and candid statement to CBC News, RCMP Commissioner Bob Paulson explains why (Sean Kilpatrick/Canadian Press)

The RCMP commissioner decided to handle this one himself — and with good reason. As Canada’s top cop, Bob Paulson knew it wasn’t going to look good, and that he, personally, had been in the thick of it.

So, instead of punting the question to a communications officer, the head of the RCMP sat down on Tuesday night and tapped out his own version of a tangled story about illicit spying by his officers.

Yes, he said, the Mounties put two journalists under surveillance. And no, they did not have his approval — which was required. Three times, he’d turned them down. But they’d already done it anyway.

Who’s the leaker?

The tale begins with disclosures made in June of 2007 by Joel-Denis Bellavance, a highly-regarded reporter for the Montreal newspaper, La Presse. These indicated that CSIS had intelligence — or claimed to have it — about a bomb plot involving Adil Charkaoui, a suspected Al Qaeda sleeper agent.

A briefing note prepared late last year reveals that RCMP officers conducted unauthorized physical surveillance of journalists Gilles Toupin, left, and Joel-Denis Bellavance in an attempt to discover the source of a leaked CSIS document. (Twitter photos)

One question bothered CSIS: how did Bellavance get that secret document?

…click on the above link to read the rest of the article…

Canadian housing market hits $508,097 average price in April as sales rise to record

May 16, 2016

Canadian housing market hits $508,097 average price in April as sales rise to record

Average Canadian house price up 13% in April, but wide regional variances remain

Canada's housing market hit new all-time records both for the average price and the number of homes sold in April.

Canada’s housing market hit new all-time records both for the average price and the number of homes sold in April. (Associated Press)

The Canadian Real Estate Association says the average house price increased by more than 13 per cent in the year ended in April.

CREA has said for several months in a row that the average price is skewed higher by the hot and large markets of Toronto and Vancouver. Stripping those two cities out, the national average drops to $369,222 and the year-over-year gain is reduced to 8.7 per cent, CREA said.

CREA says the average figure is misleading, so it calculates something it calls the Aggregate Composite MLS House Price Index, and contends it’s a fairer representation of the real market, by blending together all housing types.

Even on that more normalizing scale, the CREA index rose 10.3 per cent in April, its biggest gain in almost six years stretching back to May 2010.

Here are the eye-popping numbers for some areas in and around Toronto and Vancouver:

The Greater Vancouver Area’s index increased by 25.3 per cent
The nearby Fraser Valley increased by 25.6 per cent
Prices in the GTA were up by 12.6 per cent
Victoria was up 12 per cent
Vancouver Island prices were up by 8.2 per cent.

By way of contrast, prices declined by 3.5 per cent and 2.4 per cent in Calgary and Saskatoon, respectively, which are smaller declines than those posted by these markets in March.

…click on the above link to read the rest of the article…

House flipping tax could curb speculative foreign money, CIBC says

May 14, 2016

House flipping tax could curb speculative foreign money, CIBC says

Tax on home flippers may be helpful, but most foreign investors are likely legitimate, Benjamin Tal says

Canada lacks concrete data on the level of foreign investment in the country's housing market, experts say.

Canada lacks concrete data on the level of foreign investment in the country’s housing market, experts say. (Daniel Acker/Bloomberg)

In a report Friday, Tal delved into a topic that is currently a major focus of policymakers: the impact of foreign investment on Canadian home prices.

There is a perception in some quarters that a major cause of high house prices in Canadian cities such as Toronto and Vancouver is foreign investors. Specifically, it has been alleged that foreign money is flooding into real estate in those two places, and pushing prices out of reach for those who actually live there.

Unfortunately, hard data on foreign money is hard to come by, as Canada does not yet reliably track such information — although recent steps from B.C. to track residency info of buyers is a step in that direction.

Canada’s national housing agency, the CMHC, says it is trying to collect more information on the topic, and Statistics Canada was earmarked half a million dollars in the recent federal budget to beef up its data collection on the housing market.

In the report, Tal draws a distinct line between foreign money where the buyer has an actual foothold in Canada, and speculative investments where the buyer has no incentive other than a financial interest.

The first is the more common type of foreign investment, Tal said after speaking with a group of real estate brokers who deal exclusively with foreign buyers. And moreover — it’s nothing to worry about.

…click on the above link to read the rest of the article…

Ottawa scientists prepare for disruptive solar weather

May 8, 2016

Ottawa scientists prepare for disruptive solar weather

A tsunami of solar particles could wreak havoc on planet earth

Solar flares on the surface of the sun.

Solar flares on the surface of the sun. (Natural Resources Canada)

Large-scale eruptions on the surface of the sun can create solar-particle waves that damage satellites and disrupt power grids — not to mention the GPS in your car.

Canadian Space Weather Forecast Centre at Natural Resources Canada are testing for the potential of a solar flare hitting the earth. (Steve Fischer/CBC)

Scientists at the Canadian Space Weather Forecast Centre are now preparing for the next big event.

At their command centre near the Mer Bleue Conservation Area in Ottawa, scientists are using an array of highly specialized instruments to test for geomagnetic activity.

Heightened levels are an indicator of solar flares and their evil twin, Coronal Mass Ejections or CMEs.

CMEs cause extensive damage

CMEs are massive eruptions on the surface of the sun that send a tsunami of particles into the solar system — and can dramatically change the earth’s magnetic field once they arrive here.

Fortunately, a CME in 2012 missed earth but others have hit here with disastrous effects.

The biggest CME on record to strike our planet came in August 1859, creating an aurora so bright you could read a newspaper by it at night across much of North America.

Within minutes the event caused extensive damage to the telegraph system, the only large scale telecommunications network at the time.

Now our dependence on electricity and satellite-based navigation systems make the world, and Canada much more vulnerable to CMEs.

Canada especially vulnerable

…click on the above link to read the rest of the article…

More evacuation orders issued for Fort McMurray area

May 5, 2016

More evacuation orders issued for Fort McMurray area

Anzac, Gregoire Lake Estates and Fort McMurray First Nation forced to evacuate late Wednesday

Many evacuees forced from their Fort McMurray homes by wildfire Tuesday are on the move once again.

Three communities south of Fort McMurray, one including an evacuation centre, were ordered to leave as changing weather patterns turned the wildfire their way late Wednesday evening.

A red glow from the encroaching fire can be seen ominously framing the Anzac evacuation centre as people board buses. For Donna Guillamot, evacuated yesterday from Fort McMurray, the feeling is all too familiar.

“I thought it was safe here, so I guess we’ll go to Edmonton,” said Guillamot. “It’s very stressful, you don’t know what’s burned, what’s not burned, when you can go back.”

“Now you’re sitting here and all you see is red flames. It’s pretty scary.”

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Cameron MacIntosh ✔‎@CamMacIntoshCBC

VIDEO: more on #Anzacevacuation #YMMFire #ABFire #cbcedm @cbcnews

1:42 AM – 5 May 2016

RCMP went door to door in Anzac, Gregoire Lake Estates and Fort McMurray First Nation after a mandatory evacuation order was issued.

Buses took people to Edmonton and officials hope to have everyone out by midnight. Dale Bendfeld, the acting director of community services and policing for Wood Buffalo, says safety, as always, is paramount.

“As you can see looking up there this is a very large and very serious fire we’re working with,” said Benfeld.

“It’s already taken on a city, we’re going to ensure that people of Anzac and Gregoire are safe and get them down to Edmonton and out of here.”

Evac bus

Evacuees board a bus preparing to leave Anzac. (Cameron MacIntosh)

The regional emergency operations centre (REOC) which had just relocated to Anzac from the Fort McMurray airport will be moving south to Lac La Biche.

…click on the above link to read the rest of the article…

Venezuela at risk of unravelling as economic, energy turmoil deepens

May 2, 2016

Venezuela at risk of unravelling as economic, energy turmoil deepens

Violent protests follow decision to ration energy, cut work week for public employeesSo much is riding on the onset of the rainy season in Venezuela, where people across the drought-stricken country lined up on April 28, 2016, to buy food. So far, Caracas is being spared from energy-saving blackouts but its suburbs are increasingly being left in the dark. (Marco Bello/Reuters)

A devastating drought has brought Venezuela, already facing economic and energy crises amid simmering political unrest, to the brink and threatens the future of the oil-rich nation.

“Simply put, a natural disaster is making a man-made disaster much worse,” said Donald Kingsbury, a professor of political science and Latin American studies at the University of Toronto.

The “man-made disaster,” in this case, is a heavily petroleum-dependent, state-run economy gutted by the precipitous drop in crude oil prices.

Inflation will reach 720 per cent some time this year, the International Monetary Fund estimates, and the economy will contract another 10 per cent. Food staples and essential medicines are increasingly scarce. The costs of basic goods and services has skyrocketed. Incomes, for those lucky enough to still have one, are stagnant.

Further, crime rates have reached troubling levels. Venezuela now boasts the world’s second-highest per capita homicide rate after Honduras.

A man holds a picture of Venezuela’s late president Hugo Chavez, whose time in power still looms large over the country’s politics. (Ariana Cubillos/Reuters)

“People are fed up, from all over the political and social spectrum. At this point, it may not take much for things to erupt,” said Kingsbury.

The worst drought to hit Venezuela in almost half a century could be the catalyst, he said.

…click on the above link to read the rest of the article…

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