Canada’s national housing agency said Wednesday that the 47 per cent decline in the country’s insured mortgage market year-over-year in the third quarter is the “new normal level.”
The Canada Mortgage and Housing Corp. said in its latest financial report that it provided mortgage loan insurance to 67,915 units for the three-month period ended Sept. 30 compared to 127,991 units during the same period a year ago.
Steve Mennill, CMHC’s senior vice-president of insurance, said decreased volumes have been steady throughout the year as a result of the new mortgage rules announced by the federal government in the fourth quarter of 2016.
The rules require all home buyers with less than a 20 per cent down payment to undergo a stress test to ensure the borrower can still service their loan should interest rates rise, or their personal finances fall. This cut into the purchasing power of some first-time homebuyers.
“We think we’ve found the new kind of level following those changes that were made close to a year ago,” Mennill said during a conference call Wednesday, November 29, 2017.
“So we’re fairly confident that the level of volume that we’re seeing now is the new normal level.”
CMHC said the 47 per cent drop in total insured volumes in the third quarter was primarily due to decreases in transactional homeowner and portfolio volumes. The agency reported that transactional homeowner volumes decreased by 13,966 units, or 30 per cent, due to lower purchase and refinance volumes, while portfolio volumes decreased by 50,388 units, or 90 per cent, mainly due to the market adjusting to new pricing as a result of the increased capital requirements.
Partially offsetting those decreases was an increase in multi-unit residential volumes of 4,278 units, or 17 per cent, primarily due to an increase in multi-unit residential refinance transactions mainly resulting from a continued low interest rate environment.
In the first three quarters of 2017, total insured mortgage volumes were 211,891 compared to 345,716 in the third quarter last year.
As a result of the lower volumes, CMHC said its total insurance-in-force decreased to $484 billion as of Sept. 30 of this year, a decrease of $28 billion from the end of 2016.
Mennill said during the conference call that lower mortgage loan volumes have impacted staffing requirements within CMHC’s homeowner underwriting group but that increased volumes in multi-unit residential have offset these impacts.
Charlie MacArthur, CMHC’s senior vice-president of regional operations and assisted housing, added that the National Housing Strategy will also require homeowner underwriters at the agency to work in assisted housing.
“There will be similar skills required in the assisted housing side of the business as that business grows with the announcement of the National Housing Strategy,” he said.
Prime Minister Justin Trudeau unveiled the $40-billion plan on Nov. 22, which includes a promise to introduce legislation to make housing a fundamental right. He also promised a new, portable housing benefit for low-income households, and to prioritize funding for the most vulnerable populations like women fleeing domestic violence.
CMHC said that Budget 2017 proposes new federal investments in excess of $11.2 billion over 11 years, as well as preservation of funding for social housing and new low-cost loans to support affordable housing under the new plan. The agency said these figures will build on additional federal funding of $5 billion made available through Budget 2016, a portion of which is reflected in CMHC’s 2017 expenditures for housing programs. CMHC said it will deliver $9.1 billion of this incremental federal funding investment.
In its quarterly report the agency also said that it has seen an improvement in the quality of its mortgage loan insurance portfolio compared to a year ago.
The agency said its overall arrears rate was 0.30 per cent in the third quarter, which is down from 0.32 per cent a year ago.
Despite continued geopolitical risks to global trade seemingly at every turn, Canadian export performance has grown at a rate higher than expected – 8 per cent this year over the projected 6 per cent, according to Export Development Canada’s (EDC) latest semi-annual Global Export Forecast released today.
In particular, stronger demand from US companies and consumers for Canadian products and services is playing a big part in that increase, just as NAFTA negotiations reach a critical juncture.
The energy sector’s return to growth is the main reason that Canada’s exports are picking up, as the oil patch rebounds from devastating forest fires and an ongoing lower price environment. The major buyer of that energy? You guessed it: the US. As the US economy perks up and industry begins to churn, energy demands have followed suit.
At the same time, ores and metals will see a big jump as the US and global industrial sectors begin to slowly increase production. That resurgence in production is also driving up Canadian exports of Canadian machinery and equipment in the strengthening U.S. market.
“Canada’s export engine is revved up and firing on all cylinders,” says Peter Hall, EDC Vice President and Chief Economist. “Despite the political signals coming out of the U.S., Canadian and US companies are clear: they want to do more business together. We are seeing more Canadian companies making new business investments in the US and we’re already measuring its impact on boosting demand for Canadian exports, specifically machinery and equipment.”
Sectors posting double-digit growth include:
- Energy 31%
- Ores & Metals 14%
- Industrial Machinery & Equipment 11%
- Energy exports stand at $77 billion and are forecast to grow by an astounding 31 per cent in 2017. However, the intense growth will be short-lived as gains flat line in 2018.
- Services, a key driver in the Canadian export story, will post a positive gain of almost 6 per cent this year and maintain that level of momentum in the longer-term outlook.
- The forestry sector remains in positive territory with gains of 4 per cent, but growth will slow due to the ongoing softwood lumber dispute between Canada and the US.
Overall, Canadian export growth is expected to level out to 4 per cent in 2018 after its 8 per cent gain this year, pushing export growth above the pre-recession high water mark. “We might very well have finally put our feet on the bottom of this long export stagnancy period,” added Hall.
Globally, EDC is projecting world growth to rise from 3.6 per cent this year to 3.8 per cent in 2018, fuelled by robust growth in emerging markets, specifically China, India and Brazil. However, developed markets have turned a corner with major economies recording stronger performances this year.
Developed markets are also providing growth opportunities in the long-term, particularly in the EU as a result of the new Canada-EU Comprehensive Economic and Trade Agreement (CETA). The free trade agreement opens up a market of approximately 500 million people worth $20 trillion to Canadian exporters.
“It’s been a long time coming, but global growth is back,” Hall adds. “Canada’s exporters are poised to gain from this growth throughout 2017 and 2018.”
For the full report, visit EDC’s Global Export Forecast: Fall 2017
EDC helps Canadian companies go, grow, and succeed in their international business. As a financial Crown corporation, EDC provides financing, insurance, bonding, trade knowledge, and matchmaking connections to help Canadian companies sell and invest abroad. EDC can also provide financial solutions to foreign buyers to facilitate and grow purchases from Canadian companies.
For more information about how we can help your company, call us at 1-888-434-8508 or visit www.edc.ca.
SOURCE Export Development Canada
By Alexander Panetta
THE CANADIAN PRESS
WASHINGTON _ It’s a refrain frequently heard in Canada: That ending NAFTA wouldn’t change much in economic relations with the United States, because the countries could simply pull their older agreement off the shelf, dust it off, and persist in trade without tariffs.
It’s also wrong, some analysts say.
A few people interviewed this week disputed the idea that the original Canada-U.S. Free Trade Agreement of 1987 would automatically snap back into place if NAFTA disappears, an increasingly relevant topic as hostilities mount in the trilateral trade talks.
“That’s so naive,” said Sarah Goldfeder, a former U.S. diplomat in Mexico and Canada who is following the trade negotiations at Earnscliffe Strategy Group in Ottawa, on the idea of an automatic snap-back.
“You’d have to re-implement (the original agreement).”
That would raise new challenges, she said. First of all, she said the current American political climate would not make for an easy re-implementation. She said there would be demands for a renegotiation within the U.S., and the parties would soon be back at the table struggling with many of the same sticking points.
“There’s no way this (Trump) administration would do this (re-implementation) without negotiating a new agreement,” she said.
“So you’re still going to have to negotiate all the same irritants.”
The current talks have become bogged down amid huge gaps between the countries and not only in material things like dairy, automobiles, and public works’ Buy American rules, but in basic philosophical differences on the architecture of a trade deal.
The Trump administration’s proposals would make it easy to cancel the agreement within five years, and hard for countries to count on stable long-term access to each other’s markets.
The president says he’ll cancel NAFTA if he can’t get a deal.
Insiders now view termination as a real possibility, raising unprecedented procedural questions _ like what the rules are for cancelling a trade deal and, of particular importance to Canadians, what the rules are for reviving an old one.
The suspension of the old agreement was signalled in diplomatic notes exchanged between the countries. The 1993 notes were brief and vaguely worded. The countries complimented each other on their new deal with Mexico, and confirmed that each would make separate arrangements to suspend the old deal.
The American suspension is laid out in Section 107 of the law implementing NAFTA in that country in 1994. The earlier deal negotiated by Brian Mulroney and Ronald Reagan was to be suspended, and, according to the law, it would remain suspended until such time as that suspension might be “terminated.”
It doesn’t define how you “terminate” a suspension. But a trade consultant who two decades ago advised Canada’s parliamentary committee on NAFTA implementation said it obviously requires someone to do something.
“It’s been suspended. Somebody has to un-suspend it,” Peter Clark said.
That someone could be Congress. And even if Congress does successfully vote to re-introduce the old FTA, its vote would either require the approval of President Donald Trump, or an overwhelming, two-thirds majority vote in Congress to overcome a presidential veto.
A Washington trade expert says lawmakers could also try sneaking bits of trade legislation into larger bills it’s a common practice in American lawmaking to tack on unrelated items to a bill.
But Eric Miller says his own congressional sources have already told him: American lawmakers would expect a vote on any FTA re-implementation. He’s warning Canadians now _ over what he calls a dangerous complacency that there’s some insurance policy if NAFTA dies.
“I think it’s highly questionable that this insurance policy will pay out, and pay out in full, in the case of an accident,” he said.
“I’m highly doubtful the agreement would come back into place and everyone would be fine with it… If Congress believes they’re going to have to vote on it, then they’re going to have to vote on it.”
The U.S. Constitution, after all, gives Congress the power over international commercial agreements. Historically, Congress has merely lent that power to the president, and worked out a compromise set of rules known as fast-track legislation.
Now some analysts suggest the Congress could try wresting back its rightful power, block any Trump effort to cancel NAFTA, and avoid all this uncertainty over the 1993 deal, the 1987 deal, and trade in general.
But a former U.S. trade czar expresses some doubt this will happen.
Barack Obama’s trade representative Michael Froman points to the track record of this current Congress which has failed to pass a single piece of policy legislation of any significance.
“I think it would require a lot of action, a lot of consensus in Congress. And that may emerge,” Froman told the Council on Foreign Relations this week.
“But so far, there haven’t been a lot of profiles in courage.”
The end of free trade in North America would leave new tariffs averaging 3.5 per cent in the U.S., 4.2 in Canada, and 7.1 in Mexico. Some analysts say that would reduce Canada’s GDP by about 2.5 per cent on a long-term basis.
By David Hodges
THE CANADIAN PRESS
TORONTO _ A new report suggests the speed of technological advances has become so rapid that it’s outpacing the rate at which large Canadian businesses and government institutions can adapt, with the number of jobs threatened by automation ranging from 35 to 42 per cent.
The co-authored report, by Deloitte and the Human Resources Professionals Association, calls upon policy-makers and business leaders to prepare Canadian workers for the disruption that artificial intelligence, machine learning and other technologies are having on the economy.
“The changes we are seeing are nothing less than historic and governments and educators need to take a skills-first, not a job-first approach,” said Scott Allinson, vice-president of public affairs at the HRPA.
“Technology just seems to be outpacing the current business model,” added Allinson, pointing to last week’s announcement by Sears Canada that the retailer was shutting down its 130 remaining stores, leaving about 12,000 employees without a job.
“We’ve seen with the brick-and-mortar stores that they’re not keeping up with the change of what people are looking for, thanks to technology.”
Reforming education to ensure Canadians enter the workforce with the future-proofed skills they need to succeed in a digital world are among the key recommendations in the joint report.
It says this would require re-examining how schools are organized, with greater emphasis placed on interdisciplinary work, mental agility, critical thinking, teamwork, relationship management, and the capacity to learn itself “in other words, coaching the integrated capabilities needed for the future instead of teaching individual subjects.”
With workers today needing to upgrade their capabilities constantly, the report also calls upon businesses to take a leadership role in promoting “future-proofed capabilities” by replacing static learning and development programs with dynamic, continuous learning opportunities.
Among the ways this could be achieved would include making learning available on-demand, 24/7 to all employees on any digital platform: computer, tablet or smartphone. Employers that don’t offer these off-site, virtual learning opportunities will find it increasingly difficult to recruit and retain top talent, the report says.
Another key recommendation is modernizing provincial labour laws and the social safety net to reflect the realities of the “gig economy” _ which has turned the traditional one job/one employee/one employer model on its head, with pioneers like Uber and Airbnb doing away with large, hierarchical organizational structures altogether.
The report says that since 1997, Canada’s contingent workforce has grown from 4.8 million to 6.1 million and now accounts for about one-third of all jobs and is likely to keep growing.
While Ontario has been debating reforms to raise the minimum wage and improve the labour market, Allinson says that policy-makers across the country need to design solutions that reflect both the opportunities and the challenges facing gig-economy workers as well as free-agent employees in traditional companies. This includes significant reform to the way Canadian public policy approaches retirement planning, income taxes and unemployment insurance.
“We need to get down to the urgent work of assessing not just how work will change in Canada but how Canadian workers should prepare,” said Allinson.
Article by Claire E. Milton
On July 1, 2018, the possession of marijuana, referred to as cannabis in the legislation will become legal in Canada. Not a day goes by without a news story about how the provinces are scrambling to decide how to best implement a distribution system for the lawful sale and use of cannabis products.
Employers should fully understand laws applicable to both medical and recreational cannabis, and should more than likely be reviewing and modifying internal policies to address the changing landscape. If you do not already have an internal policy in place that addresses the use of both prescribed and recreational drugs in the workplace, then the legalization of recreational cannabis is an opportunity for you to put something in place.
There is much confusion about what is legal in Canada when it comes to cannabis. Canadians are saturated with news from the United States, most of which has no application to Canadians and their employers. So, let’s start with understanding what is legal today, and what will change on July 1, 2018.
Prescribed medical marijuana is already legal in Canada. Individuals who have a medical need and the authorization of their health-care practitioner can access cannabis in three ways: (i) registering to grow their own medical marijuana, (ii) designating a registered grower, or (iii) buying from a Health Canada-approved licensed producer. In each case, the production and distribution of medical cannabis are strictly regulated. This regime and ongoing access to medical cannabis will not change under the new legislation.
As of July 1, 2018, adults who are at least 18 years of age will be able to possess up to 30 grams of dry or fresh cannabis, share that amount with other adults, and buy dry cannabis or cannabis oil from a provincially regulated retailer. Adults will also be permitted to grow up to four plants per residence for personal use. This law encompasses strict rules around selling to minors and driving while impaired. Much like they do with the sale of alcoholic beverages, individual provinces, territories, and municipalities will be able to set higher minimum ages and individual laws regarding distribution and retail sales rules.
What does this mean for employers? If your workplace does not already have an internal policy on drug and alcohol use, it is time to put one in place. Recreational marijuana usage at work should be treated like any other controlled substance, such as alcohol. If you already have a policy, it should be clarified to ensure that employees understand that the legalization of recreational marijuana does not change anything when it comes to the workplace. Employers are responsible for the safety of employees, and they have a right to enforce a zero-tolerance policy against intoxication or impairment at work.
A good policy establishes:
- the priority of a safe workplace;
- the shared responsibility for acceptable conduct;
- the consequences of non-compliance;
- the communication protocol for employees needing information or answers to questions.
Employers can outline disciplinary actions and grounds for termination in cases where employees violate the policy.
The use of medical cannabis must be accommodated by employers if the employee demonstrates that he or she is compliant with the laws applicable to its use, and if the accommodation can be implemented without causing either undue hardship or untenable safety issues. Accommodation of an underlying disability for which cannabis has been prescribed must be managed just like any other medical need or disability. This could mean allowing employees to take breaks to vaporize their medicine or a change in their responsibilities to accommodate the medical condition.
Your policy should, therefore, include a specific section on medicinal cannabis, outlining what medical proof will be required and what conditions may be applicable to accommodation. Employers who have not accommodated medical cannabis have already found themselves before the law.
In the case of Wilson vs. Transparent Glazing Systems, glazier Gregory Wilson held a cannabis prescription for back pain and migraines but was fired after someone complained about him being impaired on the job. Wilson alleged discrimination based on disability and his use of medication. The company countered that he was incompetent and fired for poor performance.
The British Columbia Human Rights Tribunal agreed with the company’s assessment of his work but sided with Wilson. The Tribunal criticized Transparent Glazing for not dealing properly with Wilson’s poor performance and noted that the company only acted once they received a complaint about Wilson’s impairment. At no point did Transparent Glazing discuss Wilson’s performance issues or the effect his disability might have had on those issues with him, which made the termination discriminatory.
Although it is a U.S. case, in a July 2017 decision from the top court in Massachusetts, a woman who was fired for testing positive for marijuana obtained with a legal prescription was allowed to sue her former employer for disability discrimination.
Different industries, demographics of your workforce and your workplace culture will mean that there is no standard template for an effective policy. The different challenges and individual cultures need to be addressed in a policy that is crafted specifically for your workplace. However, this summary provides basic ideas that should be incorporated into any policy.
As Canadians become accustomed to a society that accepts recreational marijuana, employers will no longer be able to ignore the issue. As with many other circumstances, employers who deal with marijuana at work in an open and informed manner will be better prepared for the questions and situations that will inevitably arise.
Since writing this article, the following decision was issued by the Supreme Court of Canada.
Guidance from the highest court in the land for employers managing addiction issues in safety sensitive workplaces
On June 15, 2017, the Supreme Court of Canada issued an important judgment that will help employers balance their obligations under human rights law to not discriminate and under occupational health and safety law to keep everyone safe in the workplace.
Stewart v. Elk Valley Coal Corp., 2017 SCC 30 is a must read for employers. This case has been working its way to the top of our judicial system, beginning with a decision of the Alberta Human Rights Tribunal, which held that Stewart was terminated for breaching his employer’s policy that required him to disclose any drug dependence or addiction issues before any drug-related incident occurred. If an employee disclosed, they would be offered treatment assistance. If they failed to disclose and were involved in an incident and tested positive for drugs, they would be terminated – a policy dubbed the “no free accident” rule. Stewart was a cocaine user. He used only on days off but did not tell his employer that he was using drugs. His loader was involved in an accident; he tested positive for drugs and then Stewart disclosed that he was addicted to cocaine.
The employer fired him, and through his union representative, Stewart argued that he was terminated due to his addiction, which was discriminatory under the Alberta Human Rights, Citizenship and Multiculturalism Act. The Tribunal’s decision in favour of the employer was affirmed first by the Alberta Court of Queen’s Bench, then by the Alberta Court of Appeal, and now by the Supreme Court of Canada.
The workplace in this case was a mine, a dangerous work site. The policy requiring disclosure of drug dependence or addiction issues was based on the primary objective of maintaining a safe environment by encouraging employees with substance abuse problems to come forward and obtain treatment before their problems compromised safety. The Tribunal concluded that Stewart had the capacity to comply with the policy and that he would have been fired for non-disclosure, whether he was an addict with a disability or a “casual user”. The Supreme Court therefore agreed that there was no discrimination, and that the decision to terminate was not based on the addiction, but on the failure to disclose in accordance with the policy. This decision should give employers operating safety sensitive workplaces assurance that they can take a firm stand on zero-tolerance for substance abuse.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
By Mia Rabson
THE CANADIAN PRESS
OTTAWA _ Prime Minister Justin Trudeau says the government has no intention of stifling growth for small businesses and start-ups with its upcoming changes to the tax code.
Trudeau said Monday he has listened to the feedback and agrees with some of it, and that the government is now looking at balancing the need to make the tax code more fair without hurting investment.
“We need to make sure we are encouraging entrepreneurs, encouraging risk takers, encouraging success in the start-ups,” Trudeau told reporters at an event in Toronto.
The consultation period on the proposals ends next week and anxiety is high for business owners awaiting their fate and for politicians getting an earful from them.
That anxiety may continue at least until after Thanksgiving as it is expected to take the government at least a week to figure out its next step.
There are three main facets to the Liberal tax changes, some of which Trudeau campaigned on.
The first affects business owners, including professionals such as doctors and lawyers, who have incorporated, and have effectively reduced their income tax burden by “sprinkling” their income among adult family members who may not be doing any work for the business in return. The government’s proposal is to create a test to ensure any income paid to family members is fair compensation for work actually provided.
The second aspect affects how corporations make investments that may be intended to benefit the owner rather than business but using income that is taxed at lower business rates than individual rates.
The third is about imposing new limits on converting business income into capital gains where it is taxed at lower amounts.
The changes were circulated in a discussion paper by Finance Minister Bill Morneau in July, with the Liberals always saying they were meant just for discussion.
“If the Liberals were listening to Canadians, they would hear that raising taxes will keep local businesses from creating jobs, employing Canadians, and investing in their communities,” Conservative Leader Andrew Scheer said Monday as the Opposition continued its attack on the ideas.
Conservatives and other critics say business owners take risks others don’t and don’t always have access to benefits such as employment insurance.
The Conservatives also say these changes will affect middle-class business owners, who fall into the same category of middle-class Canadians the Trudeau government claims to be working to help the most.
The Liberals have countered saying their changes are intended to only go after the most wealthy using their incorporated status to pay less tax than Canadians who earn less money.
Two new reports released this week on the issue provide fodder for both sides.
The Canadian Taxpayers Federation notes people who make more than $100,000 account for just 8.4 per cent of taxpayers but pay 52 per cent of the total tax bill. This study also says the top one-per cent of tax filers pay more than one-fifth of all personal income taxes.
On the other hand, the Canadian Centre for Policy Alternatives says just 0.7 per cent of Canadian families are going to be impacted by the government proposal to not allow businesses to sprinkle income to other family members.
The CCPA also hit back against accusations the policies may affect women more than men. Their numbers say out of the 117,000 small business families who will receive any net benefit from income sprinkling, 98 per cent are headed by a man.