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Minggu, 31 Maret 2024

Quebec Tim Hortons franchisees sue brand owner for almost $19M - Global News

Several Quebec Tim Hortons franchisees are taking the brand’s owner to court, blaming what they describe as unreasonable constraints in the company’s licensing agreements for lower-than-expected profits.

In a lawsuit filed in Quebec Superior Court on Thursday, 16 companies with Tim Hortons franchise licences allege the TDL Group Corp.’s contracts “place it in a position of absolute dominance” over their combined 44 restaurants.

“Through these Tim Hortons licence agreements … TDL controls every essential lever involved in the running of a restaurant,” from deals with suppliers to equipment,” the plaintiffs allege in their application.

TDL also sets prices for both menu items and the ingredients restaurants need to make them, the lawsuit contends.

Yet TDL’s policy of fixing prices didn’t adapt to the market, the franchisees assert. They argue the franchisor’s rules leave them “no room for maneuver” and impose costs they are unable to match in sales. A resulting blow to their profits has reduced the value of their restaurants and made it difficult for them to bear the cost of renovations and other investments that TDL expects, they say.

Before 2019, the franchisees’ profitability mostly aligned with the forecast TDL provided them, the lawsuit states. But profits began to fall after that. And between 2021 and 2023, the 16 franchisee companies say they lost out on a combined $18.9 million.

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Meanwhile appeals for reform, such as flexibility to set prices for some products within an agreed upon range, were unsuccessful, the statement of claim says.

The lawsuit argues TDL has therefore violated its contractual obligation to help and partner with the franchisees.

“As a result of TDL’s breaches, the plaintiffs are unable to generate the adequate profitability to which they are entitled to expect,” court documents read. “TDL has failed to help the plaintiffs and to act in a reasonable and diligent manner to work in concert with the franchisee to attain their common objectives.”

Click to play video: 'Open drug use in Maple Ridge Tim Hortons'

2:07 Open drug use in Maple Ridge Tim Hortons

The franchisees are seeking compensation from TDL to cover the 2021-2023 losses.

Tim Hortons has rejected the claims in the lawsuit, which have not been proven in court.

“Tim Hortons franchisees operate one of the most profitable and loved restaurant concepts in Canada and in Quebec,” the company said in an emailed statement. “Just in the last three years, we have seen 24 Tim Hortons franchisees buy 77 restaurants in Quebec – because it is well known that franchisees have the opportunity to earn substantial profits when they operate the restaurants well and according to our brand standards.”

Lawyers for the plaintiffs did not respond to a request for comment on Saturday.

B.C. carbon tax increase will start being felt at the pumps on April 1 - CHEK News

Get ready to pay more for gas starting Monday. B.C. Is going ahead with its provincial carbon tax hike on April 1, 2024.

The 23 per cent hike will see the provincial carbon tax rise by $65 to $80 per tonne.

For drivers, that increase means you will see an extra 3.3 cents per litre each time you fill up.

B.C. Environment Minister George Heyman claims the tax — which was the first of its kind in Canada — has been effective in reducing emissions.

But BC United is calling for it to be scrapped altogether as soaring inflation leads to a cost crunch for many British Columbians.

Last week, Federal Conservative leader Pierre Poilievre told CHEK News that he thinks the tax is harming British Columbians when affordability and housing costs are at a crisis point.

“My message to the NDP premier and to Justin Trudeau and Jagmeet Singh is get your hands out of the pockets of British Columbians,” he said in an interview on March 17.

“Let them afford food, gas and heat once again.”

B.C. Premier David Eby responded to recent attack ads from the Federal Conservative party saying that the tax increase is also required for British Columbians to receive rebate cheques this year.

“The fact we face is that if we followed Mr. Poilievre’s suggestion there would be less money returned to British Columbians after April 1 than there would be if the federal government administered this increase directly,” said Eby on March 15.

B.C. was the first province in Canada to create a carbon tax in 2008 and continues to control the tax, though it has agreed to follow a schedule of increases set by Ottawa.

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2024-03-30 18:16:33Z
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Sabtu, 30 Maret 2024

Forexlive Americas FX news wrap: Powell says PCE report 'pretty much in line' - ForexLive

Markets:

Markets closed for Good Friday
FX essentially unchanged

A holiday throughout global markets usually makes for a quiet news day but that wasn't the case today with US PCE, Powell and some other odds-and-ends.

The PCE report had something for everyone but there was some US dollar selling in the aftermath. I suspect some of that was a sigh of relief that it wasn't hot and some was due to the m/m core unrounded at +0.261% compared to +0.3% expected. Now some of that might have been because of an upward revision to January to +0.5% from +0.4% but the market will take the help where it can get it.

Powell himself struck me as incrementally more hawkish, though he did say that today's PCE report was "pretty much in line with our expectations" and "good to see". At the same time, he said the Fed wants to see more inflation reports like last year, which indicates it's not enough.

What struck me was that he didn't highlight the opportunity to cut rates this year, though he wasn't really asked about it. In the longer term, he said that if inflation stays sticky for longer, they will hold for longer (importantly, he didn't say they would hike).

In any case, the early US dollar selling was slowly faded and we're winding down the day exactly where it began. Monday is also a holiday in parts of the world (Europe in particular) so we might not be back to full throttle in markets. Watch Asia though with the BOJ's Tankan and China's manufacturing PMI.

Have a happy Easter.

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2024-03-29 18:39:00Z
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Chocolate prices to keep rising as West Africa’s cocoa crisis deepens - Al Jazeera English

Long the world’s undisputed cocoa powerhouses, accounting for more than 60 percent of global supply, Ghana and its West African neighbour Ivory Coast are both facing catastrophic harvests this season.

Expectations of shortages of cocoa beans – the raw material for chocolate – have seen New York cocoa futures more than double this year alone. They have hit new record highs almost daily in an unprecedented trend that shows little sign of abating.

More than 20 farmers, experts and industry insiders told the Reuters news agency that a perfect storm of rampant illegal gold mining, climate change, sector mismanagement and rapidly spreading disease is to blame.

In its most sobering assessment to date, according to data compiled since 2018 and obtained by Reuters, Ghana’s cocoa marketing board Cocobod estimates that 590,000 hectares (1.45 million acres) of plantations have been infected with swollen shoot, a virus that will ultimately kill them.

Ghana today has some 1.38 million hectares (3.41 million acres) of land under cocoa cultivation, a figure Cocobod said includes infected trees that are still producing cocoa.

“Production is in long-term decline,” said Steve Wateridge, a cocoa expert with Tropical Research Services. “We wouldn’t get the lowest crop for 20 years in Ghana and lowest for eight years in Ivory Coast, if we hadn’t reached a tipping point.”

It is an imbroglio with no easy fixes that has shocked markets and could spell the beginning of the end of West Africa’s cocoa supremacy, the experts told Reuters. That may open the door for ascendant producers, particularly in Latin America.

And while millions of cocoa farmers in West Africa are facing a painful watershed moment, it is a shift that will also be felt in wealthy consumer markets, possibly for years to come.

Shoppers buying Easter confections in the United States are discovering that chocolate on store shelves is more than 10 percent more expensive than a year ago, according to data from research firm NielsenIQ.

Since chocolate-makers tend to hedge cocoa purchases months in advance, analysts have said the disastrous crops in West Africa will only really hit consumers later this year.

“The kind of chocolate bar that we’re used to eating, that’s going to become a luxury,” said Tedd George, an Africa-focused commodities expert with Kleos Advisory. “It will be available, but it’s going to be twice as expensive.”

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Jumat, 29 Maret 2024

HSBC completes sale of Canadian unit to RBC - The Globe and Mail

HSBC Holdings said it completed the $13.5-billion sale of its Canadian unit, HSBC Bank Canada, to Royal Bank of Canada (RBC) on Thursday.

The transaction will result in the recognition of an estimated gain of $4.9-billion in the first quarter of 2024, HSBC said in a statement on Friday.

RBC previously said the acquisition, which merges Canada’s biggest and seventh-biggest lenders, will boost its domestic business as well as its position on the global stage.

HSBC Canada’s branches and offices will open for business on Monday, April 1 as RBC locations, RBC said in a separate statement.

The merger, RBC’s biggest, overcame opposition from environment and anti-monopoly groups as well as conservatives, who lamented the increasing concentration of the industry and the possibility of higher fees for consumers.

Deals of this size in the banking sector have not been attempted in Canada since the early 1990s when RBC’s bid for Bank of Montreal was blocked by regulators.

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2024-03-29 11:56:43Z
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B.C.’s carbon tax hike kicks in on Monday, April 1 so prepare to pay more at the pump - Global News

It’s not an April Fools joke.

In an effort to tackle climate change, the price of gas in B.C. will increase another three cents on Monday.

The B.C. government says to offset that, about 65 per cent of British Columbians will qualify for a tax credit, but that means roughly 35 per cent will not.

The amount received will depend on your household’s net income and the size of your family.

A single person taking home less than $39,000 will get the maximum credit of $447 a year.

Payments are reduced for a single person until around $61,000 when the credit becomes zero.

For couples and parents, the household net income threshold is roughly $50,000 for a full tax credit per family member.

Payments reduce and then stop anywhere between $83,000 and $100,000, depending on the number of children.

Click to play video: 'Carbon tax continues to be hot button issue for voters'

2:15 Carbon tax continues to be hot button issue for voters

The B.C. government has provided a website where residents can check their eligibility.

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B.C.’s Minister of Environment and Climate Change Strategy said “100 per cent of the carbon tax increase on April 1st is going back to the Climate Action Tax Credits to supporting low and middle-income British Columbians.”

However, the opposition said the increase will have a cascading effect.

“Every time they increase the carbon tax, they’re increasing the cost of transportation, which is how we get all our goods that show up at our grocery stores that increases the pressure on grocery prices, which are already the highest in the country,” opposition leader Kevin Falcon said.

Click to play video: 'B.C. Conservatives unveil climate policy'

2:08 B.C. Conservatives unveil climate policy

In a statement, Minister of Finance, Katrine Conroy, said the government is trying to fight pollution and help with costs.

“Government is helping reduce everyday costs by delivering middle-class housing, cutting child care costs, reducing ICBC rates, boosting family benefits and keeping hydro costs low,” she said.

“A family with two kids, earning $100,000 pays nearly $3,000 less net provincial taxes today than in 2016. Individuals earning up to $150,000 pay the lowest personal income tax rate among provinces.”

'Bare trust' reporting paused for 2023: CRA - CTV News

The Canada Revenue Agency (CRA) announced Thursday it will not require "bare trust" reporting from Canadians that it introduced for the 2024 tax season, just four days before the April 2 deadline.

The new reporting required applicable trusts to file a T3 return, naming beneficiaries and trustees on the file.

"In recognition that the new reporting requirements for bare trusts have had an unintended impact on Canadians, the CRA will not require bare trusts to file a T3 Income Tax and Information Return (T3 return) … for the 2023 tax year, unless the CRA makes a direct request for these filings," the CRA said in a statement.

Caitlin Butler, a Vancouver-based tax specialist and director of tax education and publications at Video Tax News, told CTV News in January the expansion of trust reporting rules is a big change that will affect many taxpayers.

"These changes will impact many individuals and businesses, many of whom may not even realize they should file a trust return," Butler said in an email to CTVNews.ca.

She said required reporting has been expanded to include situations where a trust acts as an agent for its beneficiaries, often referred to as a bare trust.

"In plain English, this occurs when the person on title or holding the asset is not the true beneficial owner but rather holds the asset for the benefit of another party," she said.

Examples include if a parent is on title of a child's home – without the parent having beneficial ownership – to help the child obtain a mortgage, or a corporate bank account is opened by the shareholders with the corporation being the beneficial owner of the funds.

The CRA said over the coming months, it will work with the Department of Finance to "further clarify its guidance on this filing requirement."

The CRA also said it will communicate with Canadians as further information becomes available.

With files from CTV News' Christl Dabu

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Kamis, 28 Maret 2024

Economy grows more than expected, keeping the Bank of Canada 'on its toes' - Financial Post

January GDP strongest monthly growth in a year

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Published Mar 28, 2024 • Last updated 3 hours ago • 3 minute read

GDP data released Thursday showed "broad-based growth" in 18 out of the 20 sectors measured by Statistics Canada. Photo by Peter J Thompson/National Post

The Canadian economy surprised to the upside in January, posting its strongest monthly growth in a year, which could keep the Bank of Canada “on its toes,” say economists.

Real gross domestic product (GDP), which measures the value of goods and services produced during a specific time frame, edged up by 0.6 per cent in January, according to Statistics Canada, beating analysts’ expectations of 0.4 per cent. The agency also expects a 0.4 per cent rise in GDP during February.

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“To put that two-month flurry of growth into perspective, the combined one per cent gain is as much as the economy grew in the entire 12 months of 2023,” Bank of Montreal chief economist Douglas Porter said in a note. “After a prolonged lull through much of last year … the economy looks to have caught some strong tailwinds early this year.”

The rise in GDP was due to broad-based growth in 18 of the 20 sectors measured by Statistics Canada.

The public sector, which includes education, health care and social assistance and public administration, increased 1.9 per cent in January, following two consecutive monthly declines. Education, which grew by six per cent, was the largest contributor to the country’s growth as activity rebounded from strikes by public sector workers in Quebec late last year.

Manufacturing fully recouped December’s decline in growth with a 0.9 per cent rise in January. A sudden drop in temperature in mid-January in parts of Canada contributed to increased activity in the utilities sector, which rose by 3.2 per cent, its highest growth rate since January 2022.

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The real estate and rental sector grew for a third consecutive month — by 0.4 per cent — on higher resale activity. The Greater Toronto Area, Hamilton-Burlington and most markets in Ontario’s Greater Golden Horseshoe contributed to the growth.

The information and cultural services sector, which includes the motion picture and sound recording industry, also grew for the third consecutive month, as activity continued to ramp up following the end of a strike by the Screen Actors Guild – American Federation of Television and Radio Artists in November.

These “robust” figures could pose a difficult challenge for the Bank of Canada, Toronto-Dominion Bank economist Marc Ercolao said in a note.

While the central bank has received “solid evidence” in the past two months that inflation is cooperating, “strong GDP data prints” such as today’s will “keep them on their toes,” said Ercolao, who expects the first interest rate cut to take place in July.

On the labour front, Statistics Canada said there were 632,100 job vacancies in January, down 34,800, or 5.2 per cent, from November. Vacancies in the manufacturing sector declined by 10.2 per cent to 37,500, the lowest level since September 2017.

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Monthly payroll increases were recorded in 13 of 20 sectors, led by retail trade, manufacturing and finance. But these gains were offset by a 0.3 per cent decline in construction.

The number of employees receiving pay and benefits from their employers, as measured by payroll employment, rose for the first time in the retail trade after four consecutive monthly declines.

Despite the strong start to the year, some economists expressed caution, especially regarding February’s GDP estimate.

Claire Fan, an economist at the Royal Bank of Canada, said the “substantially stronger-than-expected” numbers are partially driven by one-off factors such as the ending of the Quebec teachers’ strike, so growth isn’t likely to be sustained in the coming months.

“We’ve learned to take the advance estimates (February) with a grain of salt as they have been highly revision prone,” she said, while retaining RBC’s assessment of a weak economic backdrop.

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BMO’s Porter said Canada experienced something similar last year when GDP stalled after a strong start to the year.

“There could be a serious issue with seasonality here, especially in light of much milder winters recently,” he said.

Despite the increase in GDP, most economists have stuck to their previous predictions that June will be when the Bank of Canada issues its initial interest rate cut.

• Email: nkarim@postmedia.com

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2024-03-28 15:22:30Z
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Calgary breaks all-time record in housing starts but increasing demand keeps inventory low - CBC.ca

Soaring housing demands in Calgary led to an all-time record for new residential builds last year, but inventory levels of completed and unsold units remained low due to demand outpacing supply.

According to the latest report from Canada Mortgage and Housing Corporation (CMHC), total housing starts increased by 13 per cent in Calgary, reaching a total of 19,579 units with growth across all dwelling types in the city.

That compares to a decline of 0.5 per cent overall for housing starts in the six major Canadian cities surveyed by CMHC.

Calgary also had the highest housing starts by population.

"Part of the reason why we think that might have happened is that developers are responding to low vacancies in the rental market," said Adebola Omosola, a housing economics specialist with CMHC.

"The population of Calgary is still growing, a record number of people moved here last year, and we still expect that to remain at least in the short term."

Earlier this year, the Calgary Real Estate Board also predicted that demand, especially for rental apartments, wouldn't let up any time soon.

Industry can cope with demand, expert says

According to numbers from the report, average construction times were higher in 2023 for all dwelling types except for apartments.

The agency's report suggests the increase in the number of under-construction residential projects might mean builders are operating at or near full capacity.

However, there's optimism the construction industry can match the increasing need.

Brian Hahn, CEO of BILD Calgary Region, said despite concerns around about construction costs, project timelines and labour shortages, the industry has kept up with the demand for new builds.

Demand is expected to remain robust, but the construction industry can keep up, according to BILD Calgary region CEO Brian Hahn. — Demand is expected to remain robust, but the construction industry can keep up, according to BILD Calgary Region chief executive officer Brian Hahn. (Shaun Best/Reuters)

"I've heard that kind of conversation at the end of 2022 and I heard it in 2023," Hahn said.

"Yet here we are early in 2024, and January and February were record numbers again."

Hahn added he believes the current pace of construction will continue for at least the next six months and that the industry is looking at initiatives to attract more people to the trades.

Increase in row house and apartment construction

Construction growth was largely driven by new apartment projects, making up almost half of the housing starts in Calgary in 2023.

The federal housing agency says 9,034 apartment units were started that year, an increase of 17 per cent from the previous year. Of those, about 54 per cent were purpose-built rentals.

Apartments made up around two-thirds of all units under construction, CMHC said, with the total number of units under construction reaching 23,473.

Growth, however, was seen across all dwelling types. Row homes increased by 34 per cent from the previous year while groundbreaking on single-detached homes grew by two per cent.

"Notwithstanding challenges, our members and the industry counterparts that support them managed to produce a record amount of starts and completions," Hahn said.

"I have little doubt that the industry will do their very best to keep pace at those levels."

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Rabu, 27 Maret 2024

Apartment construction surged last year but demand still outpacing supply, says CMHC - CBC News

A surge in new apartment construction drove housing start increases in some major Canadian cities last year, but demand continues to outweigh supply, according to a report released Wednesday by the federal housing agency.

The report from Canada Mortgage and Housing Corporation focuses on six major cities: Toronto, Montreal, Vancouver, Calgary, Edmonton and Ottawa. Their combined housing starts dipped 0.5 per cent compared with 2022, totalling 137,915 units, as apartment starts grew seven per cent, to reach a record 98,774 units.

That number was offset by declines in the number of new single-detached homes, which fell 20 per cent year over year, due to weaker demand for higher-priced homes in an elevated mortgage rate environment.

"We ended up being positively surprised by 2023. We were really quite concerned that higher interest rates were going to really have an impact," said CMHC deputy chief economist Aled ab Iorweth.

"They did have an impact, but it seems to have been on smaller structures, single-detached [homes] and so forth."

Toronto, Vancouver, Calgary break records

Toronto, Vancouver and Calgary all saw an increase in total housing starts boosted by record-high levels of apartment construction.

Montreal, meanwhile, saw a 35 per cent decline in apartment starts due to higher financing and construction costs — its lowest level in eight years, according to CMHC. It was the only market with a significant decrease in new homes being built across all housing types.

Ottawa and Edmonton saw drops in total starts, with the former logging a 20 per cent decline and the latter a 10 per cent decline. Yet apartment starts in Ottawa reached their highest level since the 1970s, according to the report.

WATCH | Is 'war-time' housing a solution to Canada's crisis?:

Is 'war-time' housing a solution to Canada's crisis?

3 months ago

Duration 9:33

The federal government is reviving a war-time plan for pre-approved home designs to accelerate building across the country. Andrew Chang breaks down why it takes so long to build housing in Canada, and whether a new version of the plan could help.Purpose-built rental construction accounted for 42 per cent of all apartment construction in 2023 — reaching a record 41,460 units — which contributed heavily to the total starts.

But low vacancy rates and a rapid increase in the cost of rent have indicated that demand is outpacing supply for these types of properties.

The agency continued to warn about the need to ramp up housing construction to address affordability gaps and significant population growth in Canada.

'We're still not building enough'

It said housing starts are projected to decrease in 2024, despite the CMHC's forecast that Canada will require an additional 3.5 million units by 2030, on top of what is currently projected to be built, to restore affordability to levels seen around 2004.

Its report cited rising costs, larger project sizes and labour shortages last year that led to longer construction timelines, prompting various levels of government in Canada to announce new programs aimed at stimulating new rental housing supply.

WATCH | Ontario housing starts expected to be lower this year, budget shows:

Ontario housing starts expected to be lower this year, budget shows

21 hours ago

Duration 2:23

Ontario’s finance minister said new home construction is still a priority for the government, even though the 2024 budget forecasts less building than in previous years. CBC’s Lorenda Reddekopp has more on what the province is promising."We're still not building enough, particularly on the rental side," said ab Iorwerth.

"The demand is enormous. I don't think we're keeping up with demand. So we need a lot more investment."

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2024-03-27 17:31:02Z
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Donald Trump’s social media company soars in Wall Street debut - Al Jazeera English

Trump Media & Technology Group closes 16 percent higher, giving the company a market capitalisation of nearly $8bn.

Shares of former Donald Trump’s social media company soared by as much as 59 percent on the first day of trading on Wall Street, boosting the former United States president’s expected windfall as he faces a growing list of legal bills.

The Trump Media & Technology Group reached $79.38 per share at its peak on Tuesday, before closing 16 percent higher at $57.99, giving the company a market capitalisation of nearly $8bn.

Trump Media’s rip-roaring market debut, despite operating losses of $10.6m for the first nine months of 2023, came a day after the completed its merger with shell company Digital World Acquisition.

Trump launched the social media platform Truth Social after he was kicked off mainstream platforms, including Facebook and Twitter, following the January 6 insurrection at the US Capitol.

The Republican contender for the 2024 US presidential election has since been reinstated to both but has stuck with Truth Social.

Trump holds a nearly 60 percent ownership stake in the company, now worth about $4.6bn.

“I LOVE TRUTH SOCIAL, I LOVE THE TRUTH!,” Trump posted on the social media network on Tuesday.

Trump, who is facing four criminal trials as he seeks re-election in a November face-off with US President Joe Biden, has been struggling to raise money for his campaign and mounting legal expenses.

Trump is currently facing a huge bond payment after a New York court ruled that he, his sons and their family business lied for years about the value of his assets.

A New York appeals court on Monday cut the $454m bond payment that had been due that day to $175m and gave him 10 extra days to pay, which Trump has said he will do.

The original sum had raised the possibility that New York authorities would move to seize Trump’s assets.

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2024-03-27 03:08:35Z
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Selasa, 26 Maret 2024

Canada's lagging productivity has reached crisis levels, BoC official says - National Post

A senior Bank of Canada official says the need to improve productivity has reached an emergency level as the economy faces a future where inflation may be more of a threat than in the past few decades.

“You know those signs that say ‘In an emergency, break the glass?’ Well, it’s time to break the glass,” Bank of Canada senior deputy governor Carolyn Rogers said in a speech Tuesday.

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Rogers said Canadian labour productivity eked out a small gain at the end of last year, but that came after six straight quarters where productivity fell.

She noted the U.S. has seen productivity gains coming out of the pandemic as firms found their footing, but Canada has not seen the same.

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“In fact, the level of productivity in Canada’s business sector is more or less unchanged from where it was seven years ago,” Rogers said.

The need to improve productivity comes as Rogers said many of the forces that helped create a benign environment for inflation in the past are going to fade away, or even reverse.

“We know that changing demographics and the economic impacts of climate change will tend to put upward pressure on prices. Persistent global trade tensions also raise the risk of future inflation,” she said.

The Bank of Canada’s next interest rate decision and monetary policy report is set for April 10.

Inflation has been cooling in recent months, coming in at an annual rate of 2.8 per cent in February. Economists will be watching to see what the central bank, which is targeting an annual inflation rate of two per cent, will have to say about cuts to its key interest rate target.

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Rogers said Tuesday that productivity is a way to inoculate an economy against inflation.

“An economy with low productivity can grow only so quickly before inflation sets in. But an economy with strong productivity can have faster growth, more jobs and higher wages with less risk of inflation,” she said.

Canada’s lagging productivity has been a chronic problem.

Rogers said when you compare Canada’s recent productivity record with that of other countries, what sticks out is how much the country lags on investment in machinery, equipment and intellectual property.

She also said Canada needs to focus on making sure the training and education we provide teach the skills we need, while a more competitive business environment would help drive greater innovation and efficiency.

Our website is the place for the latest breaking news, exclusive scoops, longreads and provocative commentary. Please bookmark nationalpost.com and sign up for our daily newsletter, Posted, here.

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2024-03-26 22:23:42Z
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Bank of Canada warns of low productivity 'emergency,' making it harder to control inflation - The Globe and Mail

Carolyn Rogers, Senior Deputy Governor of the Bank of Canada, at a press conference in Ottawa on March 6, 2024.Sean Kilpatrick/The Canadian Press

The Bank of Canada is warning that weak productivity and low business investment has become a national “emergency,” making it harder to control inflation and risking the erosion of living standards.

In a speech in Halifax, Senior Deputy Governor Carolyn Rogers said that Canada is slipping further behind the United States and other peer countries when it comes to economic output per worker.

She pointed to weak business investment, meager competition and a failure to properly integrate skilled immigrants into the Canadian workforce.

“I’m saying that it’s an emergency - it’s time to break the glass,” the central bank’s second-in-command told the business audience on Tuesday morning.

Canada has long lagged the United States when it comes to how much the economy produces per hour of work. But the situation has gotten worse over the past decade, especially coming out of the pandemic. Before the final quarter of last year, productivity had declined for six straight quarters.

“Back in 1984, the Canadian economy was producing 88 per cent of the value generated by the US economy per hour,” Ms. Rogers said.

“That’s not great. But by 2022, Canadian productivity had fallen to just 71 per cent of that of the United States. Over this same period of time, Canada also fell behind our G7 peers, with only Italy seeing a larger decline in productivity relative to the United States.”

There are numerous theories about why Canadian productivity is so poor, despite having a well-educated workforce, a strong research culture and access to foreign markets through trade agreements.

Ms. Rogers focused on the lack of business investment in machinery, equipment and intellectual property. Here she pointed to weak competition in Canada and regulatory uncertainty as potential culprits.

“Canada’s economy features many sectors where companies face limited levels of competition, whether from firms in other provinces, foreign rivals or new entrants,” she said. “Of course, every country has certain sectors that it champions, and there can be valid reasons to protect local businesses. However, too much protection can lead to problems.”

She also said the country needs to do a better job integrating new workers into the economy. Boosting productivity entails both giving workers better equipment, and making sure their education and skills match the work they are doing.

“Too often, new Canadians are working in jobs that don’t take advantage of the skills they already possess. And too often these people wind up stuck in low-wage, low-productivity jobs. Doing better at matching jobs and workers is crucial to the future of Canada’s economy,” Ms. Rogers said.

Weak productivity is not only undercutting overall growth, it’s making the central bank’s job of controlling inflation more difficult, she said. If companies are becoming more productive, they can earn higher profits and pay better wages without passing cost increases along to customers. But if productivity lags, rising labour costs tend to show up in higher prices.

“Increasing productivity is a way to protect our economy from future bouts of inflation without having to rely so much on the cure of higher interest rates,” Ms. Rogers said.

The speech mostly avoided talking about near-term monetary policy decisions, although Ms. Rogers noted that inflation remains above the bank’s target and said that “we need to finish the job.”

The bank’s next interest rate decision is on April 10.

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2024-03-26 13:29:12Z
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Minggu, 31 Maret 2024

Sabtu, 30 Maret 2024

Jumat, 29 Maret 2024

Kamis, 28 Maret 2024

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