Monday, September 11, 2017

Vanocouver tech firms offer benefits to attract tech workers

As Vancouver tries to be a base for new tech start-ups it has found that it needs to offer bonuses of various types to attract workers to the city where living costs are high. While Vancouver has already established itself as the cheapest place among fifty markets in North America to establish a new tech start-up, companies in Vancouver realize that to be successful they must attract top tech talent.

The growth of the tech sector in Vancouver is being helped by the fact that large multinationals such as Amazon and Microsoft have recently opened offices in Vancouver. At the same time, Canadian startups such as Hootsuite have begun to obtain international status. Vancouver's high cost of living and the low value of the Canadian loonie relative to the US dollar are two drawbacks that Vancouver has to counter. However, the situation is even worse in some prime high-tech areas such as Silicon Valley in the United States which is notorious for the high cost of living in the Bay area. An employee in the area notes: “I didn’t become a software engineer to be trying to make ends meet,” said a Twitter employee in his early 40s who earns a base salary of $160,000. It is, he added, a “pretty bad” income for raising a family in the Bay Area." Bill Tam CEO of the BC Tech Association said that the growth of the industry has left companies to fiercely compete to hire workers. The Association issued a report estimating that by 2021 there will be an estimated 35,000 jobs needing to be filled in BC in the tech industry. The competition has led companies to offer enticements such as vacation cash and luxury cars to hire prospective employees. Tam said that demand for workers was by far exceeding supply. Tam said that he has heard of companies offering flexible work hours, unlimited vacation, and even one company that offered a downpayment on a new Tesla car. Tam said: "Tech companies by design are trying to be innovative in all aspects of what they're doing. So the way in which they structure their businesses and the culture they try to adopt is very much consistent with that philosophy."

One company, RingPartner, has cut hours per day worked to just five hours in an attempt to lure employees. The thirty employees of RingPartner report to the office between 10 a.m. and 3 p.m. Monday to Friday. Where they do the rest of their work is up to them. They can spend the afternoon at the beach and log on to their computers in the evening. Many parents appreciate the arrangement as they can spend more time with their family. However, some people prefer the traditional eight-hour day at the office and do exactly that. RingPartner notes that since they introduced their new policies sick days have actually decreased by a significant ten percent. Their revenue and profitability has also increased.

Leslie Collin, director of people and culture at Unbounce said that benefits not only are a recruiting tool but reflect a company's culture. The Vancouver-based company gives each of 190 employees four weeks of paid vacation, plus $1,000 for taking time off. Collin said that the vacation bonus allows workers "to go on a new adventure and support their life goals as well as their career goals." She said that rest helped employees to be able to come up with fresh ideas and more creativity and that this helped the company be successful.

Saturday, September 9, 2017

Study shows that tech students may be going to US rather than staying in Canada

A study by two students at the University of Waterloo shows that in the fast growing tech market many tech graduates are deciding to go to the US rather than stay in Canada.

Atef Chaudary and Joey Loi are graduates of the Systems Design Engineering(SYDE) program at the University of Waterloo in Ontario. The small study of 82 graduating students to which 77 replied showed that many in the program went straight to the US rather than stay in Canada. This appears to show a brain drain from Canada at least in the tech area. However, the two who did the study warned against its being extrapolated. Yet the study does give at least some evidence for a potential brain drain in the restricted area of technology graduates.
The tech area is the fastest growing market in North America and so there is fierce competition for graduates. Each student in the SYDE program had to take six co-ops in which they were required to work for companies to obtain experience. These co-op experiences are what drove many graduates to decide to work in the US. By the end of the term fully 40 percent of the students did co-op work in the US. Students working in the Waterloo area started out at 30 percent but declined ever since. Toronto jobs also fell precipitously from 70 percent to 30 percent. As their skills increased, it would seem that students found better co-op positions outside the country..
The reason for the migration south is that the US jobs pay better among other pluses. In advising Canadian companies how to compete Loi said: “Co-op replicates a realistic job search process. Make the internships in Toronto or other areas more enticing. One of the ways to do so is matching pay. We need it for tuition and also almost as a status symbol.” Average hourly pay for a US co-op job was $49.40 an hour. In contrast, the average pay on co-op jobs in Canada was only $25.40 per hour. Obviously, US pay is much superior. Fully six out of ten students who had a full time job at the time of graduation were working for a company that they had done a co-op with. Many students want to migrate to places such as San Francisco and Seattle where there are large innovative companies such as Tesla, Apple and others who are innovative and are attractive to new grads.
Loi said: “There’s a mentorship aspect. The perception exists that if you go to these bigger companies you’re going to get exposure to better people to network and get more opportunities for you, which is not the same for Canadian companies. If there were more high profile hires in Canada, engineers or others coming from the valley that would an attracting point.”
Obviously, if the Canadian tech companies are going to hire top people from Silicon valley in the US it would need both to up salaries and provide special incentives to lure them away. Neither may be practical. The least Canadian companies could do is to compete on the salary level. No doubt many would prefer to stay in Canada if the salaries came close to matching those provided in the United States. It may be that Canada is able to attract more from overseas as the political situation in the US appears threatening to some tech students from some countries. This may help Canada attract some foreign tech workers and students who would have otherwise gone to the United States.
At a global level, it would appear that China is also on the cutting edge of advancing technology and wants to become a global leader in artificial intelligence development as discussed in a recent Digital Journal article China is offering more to entice top researchers compared to competitors in US or Europe.
Chaudhary also notes that Canadian tech companies are not doing the right things to keep Canadian graduates here particularly on the salary level. Of 50 markets for tech start-ops Vancouver was the cheapest with Toronto and Montreal also faring well as competitors, but unless Canadian technology companies start to to compete with salary levels in the US they will fail to keep and attract the top talent they need.
Heather Galt, of Communitech said that many hope that students will study abroad and then return to start companies or contribute to developments in Canada: “I encourage my students to go and have that opportunity for international experience. It benefits the individual and Canada.I actually believe that going and having those expat opportunities is a fantastic part of how we as a country will build opportunities internally within our own country. The Canadians that I talk to in the Valley and Seattle, they have an incredible sense of pride. They miss home and love Canada. We need to encourage our companies, our schools and our students to share stories with one another to get excited. It shouldn’t be out of a sense of duty—in my mind it should be that you really believe and really want to be a part of what’s coming.” The small study is not in any way a definitive study showing that there is a brain drain. Indeed there are studies that show the opposite which is not surprising given the political uncertainty in the US at present. However, the study does show the need for Canadian tech companies to offer salaries that are competitive to those in the US. The Canadian government and investors have been promoting tech industry in Canada as discussed in a recent Digital Journal article. This investment will be in vain if top tech talent in the country decides to move south.


Friday, August 11, 2017

Vancouver a great city to set up a tech company

A report by Commercial Real Estate Research(CBRE) found that of 50 US and Canadian markets, Vancouver was the cheapest city to start up a new tech company.

CBRE has a full time staff of about 30 researchers spread across Canada. A typical tech company setting up in Vancouver would cost about $24 million a year US to cover both employee salaries and rent in Vancouver. In contrast the same company in the San Francisco Bay area, the most expensive area, would cost $67 million more than twice as much.
CBRE, Research Director, Colin Yasukochi said that the lower start up costs in Vancouver are due in part to the lower-priced Canadian dollar, but also more favourable immigration policies, and lower rental rates than many major US tech centers play a significant role. Yasukochi said: "I think there's a better supply demand balance in Canada with regard to the account workforce and the demand for it."
The average salary of a tech worker in Vancouver is $79,402 a year which is $34,000 to $44,000 less than they would receive for similar work in Seattle or San Francisco. However, some BC tech firms are aiming to lure workers to the province due to fears among workers in some foreign countries that Trump will impose strict visa restrictions on them. Allison Rutherford, Executive Director of HR Tech Group, that conducts a yearly salary survey of the BC tech industry said: "Yes our salaries are lower, so that's attracting big anchor companies to come here, because A we've got quality talent, and B, it's a reasonable place to set up shop."
However, Nils Anderson, a game designer in Vancouver said the lower Canadian wages might attract companies but they also drove senior workers to US sites where the pay was better creating a brain drain. Anderson said: "It's how markets work. The market pays what the market pays, and if nobody else in town is going to increase the wages ... then that's the offer you get here. As soon as you want to start a family here in Vancouver, it's like okay, can you do that on $30,000 to $40,000 a year less. When the cost of living here is basically the same as San Francisco, that's not really an option." Anderson also pointed out that Vancouver had not yet attracted big anchor tech companies such as Microsoft, or Ubisoft. He said if they set up shop in Vancouver wages would improve.
However, both Yasukochi and Rutherford said they expect the low wages in Vancouver not to last and that as Vancouver's tech sector grew, salaries would also. Yasukochi said: "I believe that as more and more companies discover the high quality of tech talent in Vancouver, then the relative value of the wages will start to go up."
The US is moving to tighten policies for H1-B visas for skilled foreign workers. However, Canada is waiting for a new streamlined process for worker permits to come into effect. As a result some BC tech companies are taking advantage of the fear created by US policies to recruit workers to come to the province. Igor Fatelski, CEO of Mobify a tech company producing apps for retailers says: "This uncertainty is really dialing down enthusiasm, especially for travel to the U.S. for long-term career moves. We're seeing that change slowly happen. We're seeing more and more interest from around the world from potential employees that want to work in Canada because they're not certain what's going to happen in the U.S." US President Donald Trump has recently announced that his government plans to suspend expedited applications for the H1-B visas. Fatelski said that more interest was being shown in coming to BC. Fatelski himself is an immigrant from Russia coming when he was 15. He now employs more than 100 people and will need more.
Navdeep Bains, Canada's Minister of Innovation said the government would act quickly to fast track work permits in order to attract highly skilled workers from other countries."We're taking the processing time, which takes months, and reducing it to two weeks for immigration processing for individuals [who] need to come here to help companies grow and scale up. So this is a big deal. It's a game changer." The change is to come through the Global Talent Stream a new program.

Canadian company Bombardier considering options for its train business

The Quebec-based Canadian company Bombardier says that it is considering `multiple options` for its train business as the unit continues to provide strong profits and sales, enabling the company to break even in its latest quarterly results.

Overall, the Montreal-based company that makes mainly planes and trains used up $570 million US in the quarter that ended June 30. While the company lost $296 million or 13 cents per share this was an improvement over the same period last year when they lost $24 million or 24 cents a share. However, revenue fell 5 percent to $4.09 billion. However if special charges such as employee severance, and also benefits from a tax adjustment are considered, analysts had expected the company to post a one cent loss per share. Instead the company broke even.
Investors were actually buoyed by the results with shares up 5.4 percent on Friday AM to $2.54. This is a rise of 63 percent from its low of $1.56 last September. Alain Bellemare the CEO said of the train business:“We have multiple options that we are pursuing. We will do what is right to keep on growing the great franchise.” Bellemare is two years into a five-year turnaround plan that has seen many critics of government support and increases in executive pay as show on the appended video. Bellemare became CEO in a shakeup in 2015.
Bombardier is in the final stages of combining rail operations with Germany`s Siemens. Bellemare refused to talk of future partners or time-lines. The pension fund manager Caisse de depot et placement du Quebec owns 30 percent of the firm and the Quebec government has a 49.5 percent share in the C Series airliner program. The US Boeing Corp. wants the US government to subject the C Series planes to hefty tariffs. No doubt Trump will favor such a move.
Bombardier used to be a key Canadian defence contractor but as part of its restructuring it sold off its military-related work. As part of its restructuring program Bombardier announced in October of 2016 ``.. that, by the end of 2018, they will slash up to 7,500 jobs or more than 10 percent of 70,900 employees from 2015. About a half of job cuts will be done in railway technology unit.`` However, executives have seen their pay rates soar: "Bombardier's senior executives saw their compensation rise by nearly 50 per cent last year at a time when it laid off thousands of workers, ... Total compensation for the Montreal-based company's top five executives and board chairman Pierre Beaudoin was US$32.6 million in 2016, up from US$21.9 million the year before, according to a proxy circular ahead of its May 11 annual meeting." Top executives in power when disaster struck the company are financially rewarded while workers are laid off. The government approves the executive moves by providing more support for the company.

Saturday, July 1, 2017

Two Canadian airports ban ads from Quebec company Flight Claim

The Quebec Company Flight Claim, based in Montreal, in April signed a contract for $73,000 that would allow them to run ads on baggage screens at Montreal's Pierre Elliot Trudeau airport.

The campaign started just last week and lasted only four days before it was abruptly stopped. The promotional ad claimed that passengers could receive up to $1,800 in compensation and to contact the company if they wanted help to fight their case. The ads can be seen here.
The general manager of Flight Claim, Jacob Charbonneau said: "We're just there to protect and help the rights of the passengers, so we feel it's kind of sad that we're not able to publicize in a free market" The company will take on passengers' claims in return for 25 percent of the compensation received. Charbonneau claimed that many passengers are unaware of their rights for delays, cancellations, and overbooked flights. The company website is here.
An email sent to Flight Claim by the airport's advertising agency said the ad was pulled after pressure from airlines. Stephanie Lepage, spokesperson the the airport said that the email was incorrect that the airlines had not requested the ad be removed. She said that the airport made the decision on its own in order not to create trouble for the airlines. She said: "Passengers, but also airlines, are our customers. We did not want to have a conflict between airlines and passengers." But obviously the decision favors the airlines not the passengers. While Flight Claim is out to make a profit it also would be informing passengers of their rights and helping them be enforced. Lepage said that the airport made a mistake in publishing the ads in the first place. Surely, that is because the airlines were complaining to the airport management just as the email to Flight Claim had said. The airport was obviously quite happy before the ads made it clear to passengers that they had certain rights against the airlines. The airport is trying to protect the airlines and not promote the rights of passengers.
Toronto's Pearson Airport is also refusing to display the ads. Charbonneau met in person with the Greater Toronto Airports Authority(GTAA) last week to argue for his case. The GTAA claimed the ads would confuse passengers about their rights because the federal government is in the process of creating new compensation guidelines and an upcoming passenger bill of rights. Spokesperson for the GTAA, Natalie Moncur said to CBC: "Before enabling businesses to profit by advertising to travelers, the GTAA has a responsibility to ensure that there is clarity for its passengers about what these new rules mean." This all sounds sensible until one finds out that the new rules won't come into force until some time in 2018. The whole argument is just a red herring meant to avoid talking about what is probably the reall reason for rejecting the ads, actual or potential opposition from the airlines.
Charbonneau argued that it was not fair to passengers passing through the GTAA property not to know their rights to compensation and it was a disservice to customers not to inform them of these rights. Charbonneau says he will be writing to both Transport Minister Marc Garneau and the Canadian Transportation Agency to lobby for the right to run his ads in both airports.
Flight Claim was founded in July of last year. They had begun the bid to put ads in Toronto on March 23rd when Charbonneau approached Astral Media the manager of ad space at Pearson. Charbonneau was asked for details about his business and whether or not they planned to sue airlines. Charbonneau said it was possible because they were in the business of defending passenger rights. Shortly after that, Flight Claim was denied its bid to advertise. As mentioned earlier, Charbonneau's meeting with the GTAA did not change the situation. Perhaps there is one bright note in all of this for Flight Claim. They have received a lot of free advertising by being turned down.

Wednesday, June 28, 2017

Canada increases defence spending by 70 percent over next decade

Canadian Defence Minister Harjit Sajjan reveals that the Canadian government will increase defence spending by 70 percent over the next decade.

Canada's defense spending will increase from $18.9 billion now to $32.7 billion. When asked where the money would come from Sajjan would not say but promised it would be there when required. Money spent on defense is money not available for other programs such as medical care, infrastructure improvements, and other expenditures that arguably would be of much greater value to Canadians.
Sajjan said that Canada will add hundreds of new elite special forces commandos, wage offensive cyber warfare, and also deploy armed drones to international battlefields as part of its military response to global security threats. No doubt these efforts will relieve some of the burden on the US of being a global policeman. As a recent article notes the secrecy that surrounds all the work of the Canadian special forces, and expansion of cyberattacks "raise questions about transparency and civil liberties". The special forces will increase by 605 people and they are to receive new airborne intelligence, surveillance, and intelligence tools. The announcement of the increase comes just two weeks after Trudeau met with NATO countries in Brussels.
The New Democratic Party (NDP) supposedly to the left of the liberals is no critic of military spending except to claim it was too low under the Harper Conservatives. UBC Professor Michael Byers, a former NDP candidate, argued that new Canadian defence spending should come quickly. Byer's was also an adviser to NDP leader Tom Mulcair. Mulciar criticized the Liberals for not spending enough on the military in the March budget: "Canadians have every right to be concerned. We are in desperate need of new ships for our Navy, we're in desperate need of new fighter aircraft for our Air Force, and there's no way that with the type of budget we've seen here that they're going to be getting them."
For a considerable time the NDP policy was to pull out of NATO. However the NDP has for some time abandoned its earlier policies many of them socialist: "With the arrival of Jack Layton as party leader in 2003 came an overhaul that included not only more robust fund raising tactics but also a policy review committee to weed out outdated resolutions from the policy manual. The post-Halifax policy book still contains so-called leftist staples such as the decriminalization of marijuana and “an end to Israeli occupation of Palestinian land,” but gone are the calls for Canada to leave NATO or nationalize banks." Of course long before that the party abandoned the aim of its predecessor the Cooperative Commonwealth Federation(CCF) to replace capitalism. As the CCF Regina Manifesto put it in its first sentence: "The CCF is a federation of organizations whose purpose is the establishment in Canada of a Co-operative Commonwealth in which the principle regulating production, distribution and exchange will be the supplying of human needs and not the making of profits." While the Canadian left may criticize the Liberals for not spending enough on defense, US President Donald Trump is happy that the Trudeau government is doing exactly what he has long recommended spend more on the military and pay a fairer share of NATO expenses.
The White House reported that Trump had praised Trudeau's increased military spending during a phone call after the announcement. Trump had earlier been lashing out at NATO allies by not paying their fair share of two percent of GDP towards military spending. Ironically the Canadian Foreign Affairs Minister, Chrystia Freeland said: "The fact that our friend and ally has come to question the very worth of its mantle of global leadership puts into sharper focus the need for the rest of us to set our own clear and sovereign course." There is almost zero likelihood that Canada will steer an independent course from the US. Its ties with the US military-industrial complex are too strong. What nonsensical rhetoric "mantle of global leadership", "clear and sovereign course". Variations on this nonsense can be found in a recent New York Times article.
Canada is a country that supposedly showed its independence from the US by not participating in the Iraq war while undertaking a larger role in Afghanistan. Yet, Canada awarded a medal to Walter Natynczyk a medal for service during the Iraq war, a war we were not supposed to be involved in. He later became chief of staff of the Canadian army for a number of years. In February of 2012 Natynczyk was awarded the Legion of Merit (Degree of Commander) by US General Martin Dempsey. There are obviously close ties between US and Canadian military.

Tuesday, June 27, 2017

President Trump appoints woman as Canadian ambassador

U.S. President Donald Trump is poised to nominate Kelly Knight Craft as the next American ambassador to Canada. The post has been vacant since the former ambassador Bruce Heyman appointed by former president Barack Obama resigned on January 20.
 1 of 2 
The White House announced in a statement late Wednesday that Craft had been picked for the post. Maryscott Greenwood who heads the Canadian-American Business Council praised the choice saying: "I think it's an inspired choice on the part of the president. It's a complement to Canada that the White House would choose a person of Kelly's calibre, intellect and talent, so I am excited about the prospect."
Her nomination will need to be approved by the Senate. The Trump administration hopes to get her nomination approved quickly so she can be ambassador before the NAFTA trade negotiations begin in August. Craft is married to billionaire Joe Craft, president and CEO of Alliance Resource Partners LP, one of the largest coal producers in the eastern United States. In 2012 a profile of him in McClatchy newspapers said he was Kentucky's most powerful non-elected person. He was critical of the Obama administration's environmental policies. His licence plate has the slogan "Friends of Coal."
Nevertheless, Greenwood did not think her husbands business would hurt relations. Both Knight Craft and her husband have donated to her alma mater the University of Kentucky. Knight Craft serves as a trustee on the board of the university. Her husband's business have given $2 million to the Super PAC of Karl Rove American Crossroads and to other Super PACs. Knight Craft is said to close to the Republican Majority Senate Leader Mitch McConnell. She has donated to and co-chaired fund-raising campaigns for him over the years. She is also involved in charitable work with the Salvation Army in Lexington, Kentucky. Knight Craft said of Trump's nominating her for the job: "I deeply appreciate the President's confidence in me, and am looking forward to the Senate confirmation process." The State Department has already vetted her. Knight Craft was appointed to a UN delegation back in 2007 by George W. Bush.
Mac Brown, co-chair of the Republican Party of Kentucky also sang the praises of Knight Craft saying: "She's an unbelievable, very nice woman who is extraordinarily hard-working," The US Senate over which McConnell presides is expected to deal with a number of major issues affecting Canada in the future, including tax reform, trade disputes, and the renegotiation of NAFTA.

Rail service to northern Manitoba port of Churchill suspended

The northern Manitoba town of Churchill has lost its only rail service into the town as OmniTrax the Denver-based company that owns the rail line into the community from the south announced that the rail bed was washed away in 19 locations.

Five workers in Churchill were let go as a result of the service suspension. Business owners in the town say that there could be more layoffs. The owner of the 31 room Tundra Inn and hostel, Belinda Fitzpatrick said that it was upsetting and heartbreaking to layoff the 5 workers. She had intended to open a seasonal restaurant next week but the suspension of rail service caused her to drop her plans. She describes the rail line as the lifeline to the community. There is no road into the community from the south. The road ends at Gillam near where there is a large hydro development. The rail service ends there now as well. Churchill is a further 300 km from Gillam.
Omnitrax describes the damage as catastrophic and said that the damage would be not fixed until the earliest next winter and perhaps even next spring. Another Churchill business owner Dale de Meulles who with his wife have run Churchill's hardware and lumber store for 14 years has said the situation is nerve-wracking. He may soon have to close his store. He said he did not know if the business would survive. The store depends upon supplies being brought in by rail. He has already warned staff about layoffs. He said about 10 of his staff will lose their jobs. There were already layoffs last year when Omnitrax suddenly just decided to close the port.
Port employees made up about ten percent of the population and was by far the largest employer. The company was not making the profits it expected. Residents hoped that the federal and provincial governments would act to keep the port open but to no avail. Governments provincial or federal of whatever stripe follow basically neo-liberal policies that support private enterprise but on the whole try to avoid having to provide subsidies to corporations who cannot make profits without considerable subsidization. De Meulles still had hope:"As a Churchillian, we will never give up. We've [had] so many hurdles in front of us and we keep jumping over them, but we need help this time."
Rhoda, de Meulles wife, wants the Liberal Federal Government to send in the military to help clean up and reopen the railway. There is a massive amount of damage from spring weather including at least five damaged bridges, and 600 culverts to be inspected at 19 different locations. Meanwhile, Fitzpatrick is contacting guests who have booked at the Tundra hotel for the summer to see if they can come in by air. This would be more expensive than the train. However, she has already had some cancellations and expects up to 90 percent of guests who had planned to come to cancel.
The main hope for Churchill is the Missinippi Rail Consortium a group of northern Manitoba First Nations who are in the process of purchasing the port of Churchill and the rail line from the Pas Manitoba to Churchil from Omnitrax. The residents of Churchill plus the first nations, many of whom are dependent on the rail line, along with some western wheat farmers who see the port as an alternate northern route for shipping grain may have enough political clout to persuade the federal and provincial Canadian governments to invest sufficient funds to upgrade the railroad and reopen the port.
The rail line to Churchill from The Pas was started in 1927 by the federal government but problems with finance and engineering difficulties because of the terrain led to its being completed in March of 1929 with traffic started on in September of the same year. It became part of the Canadian National Railway System. There was an extension of the line to Flin Flon in 1928 and this was extended to the mining town of Lynnn Lake in November of 1953. CN was government-owned, having been a Canadian Crown corporation until it was privatized in 1995. The Lynn |Lake extension was bought by a group of aboriginal nations some time ago to form the Keewatin Railway. Ownership of the port of Churchill and the railway to Churchill by aboriginal groups with the support of Churchill residents and some prairie wheat farmers makes sense. The railway can then serve those who have a stake in the railway rather than shareholders in a giant foreign corporation such as Omnitrax whose main interest is providing a good return on investment. The problem will be to see whether the federal Canadian and Manitoba provincial government have the slightest interest in serving these stakeholders. The reaction of the Conservative Manitoba Government is not very helpful.
Mike Gagne, director of operations of the Manitoba Emergency Measures Organization (EMO) said:"Right now we have no immediate action to take.Unless you gather information, do a fulsome assessment, it's really difficult to know what immediate action you could take, because these are complex issues and looking at the amount of goods and materials and services that you need to sustain, there isn't something that you can figure out over a weekend." Surely immediate action could be taken to assess the damage. There have been arrangements made with Calm Air to have additional flights from the northern city of Thompson to Churchill.
Barry Prentice, who is a transportation economist at the University of Manitoba. He noted that the section of the track from Gillam to Churchill had always been a problem since it is built over permafrost that makes the ground unstable every spring. He said that there had to be a decision to reroute the railroad or build a road. Prentice said: "Is this fix going to be the fix, or is it just going to be another in a series of endless fixes for a route that was never actually likely to be a sustainable route? I think it's time to step back from this immediate problem and ask the ... serious question: do we really need a rail line to Churchill ... and if so, should we not maybe look at a different route to get there and solve the problem once and for all?" Prentice said that climate change could make things even worse during the coming years. Whatever is planned in the future the two two main levels of government need to support those who are the main stakeholders, those served by the railway now.

Tuesday, June 20, 2017

More and more Canadians borrowing against their home equity

According to some Many Canadians may now be turning to their home equity as a way to raise money to fund a lifestyle that could be unaffordable for some.

A recent article in BNN points out that more and more Canadians are using their homes as if it were an ATM from which they could withdraw. Since 2011 the number of Canadians who have taken out a home equity line of credit (HELOC) has risen by 40 percent. As many householders are still paying on mortgages and other debts such as car loans, the added debt can sometimes not be managed. Many are not able to even make regular payments on time.
The Financial Consumer Agency of Canada's(FCAC) commissioner Lucie Tedesco said: "At a time when consumers are carrying record amounts of debt, the persistence of HELOC debt may add stress to the financial well-being of Canadian households." The Agency's report says there are about three million HELOC accounts in Canada, and the average outstanding balance is $70,000. Canada's debt to income ratio has now risen to record levels even higher than that in the US before its 2008-9 housing crash. Should there be an unexpected economic shock many households could be vulnerable and end up losing their homes.
The agency report actually shows that about 40 percent of consumers are unable to make regular payments towards the HELOC principal. Most consumers are unable to repay their HELOC until they sell their homes. The report note that banks were combining term mortgages with HELOCs and other products to customers, creating complex products that customers often did not understand too well. The FCAC report said: "Banks reported to FCAC that a readvanceable mortgage is now the default option offered to credit-worthy mortgage customers with down payments of at least 20 per cent,."
Some analysts fear a housing bubble, especially in areas such as Toronto and Vancouver, but unlike the US, Canada does not have much of a sub-prime mortgage market where loans are made that are quite risky nor does it have the complex credit products that fooled borrowers and investors in the US housing crash. However, the report shows clear signs that there are dangerous trends in Canadian's borrowing based on their home equity. The appended video shows prices in the Toronto housing market have declined recently due to government policy.
There are several other ways that you can borrow against the equity in your home as well as a HELOC. Many people choose to take out a second mortgage or a reverse mortgage. The options are outlined here.
The Mortgage Professionals Canada put out a report in which their chief economist William Dunning shows that 1.91 million Canadians now have a HELOC a lower figure than FCAC it would seem. Perhaps many who hold the accounts are not Canadian. The report estimates that 21 percent of Canadians who purchased their first home before 1990 still have not paid off their entire mortgage. One percent of those who bought homes between 2014-216 actually have negative equity in their homes. 4.3 million Canadian homes have a mortgage but 3.57 million homes have neither a mortgage or a HELOC. There are fully 1.48 million Canadian homes with both a HELOC and a mortgage. Canadians take out a HELOC not just because they need cash. A full 28 percent just used the HELOC for debt consolidation a smart move with low borrowing rates. Another 31 percent used the money to actually invest in the house for renovation and repair. Only 9 per used the credit for general purchases and finally 9 percent claimed to use it for other reasons. It would seem that many use the HELOC in quite sensible ways and only a small minority to finance what may be an unaffordable lifestyle.

Friday, June 16, 2017

Manitoba Conservative government may privatize home care services

The Manitoba Progressive Conservative (PC) government of premier Brian Pallister is looking to save money on provincial home care service programs and may even privatize the service.

However, Pallister won't say yet whether he plans to privatize the service saying: "I'll continue to say that we are looking for results and improving results. We shouldn't be close-minded about it. All across the country other provinces have faced up to these challenges — some private improvements, lots of changes within the public sector delivery model. We are pursuing these things. We are looking for options." A private company will operate the service only if it makes a profit so unlike a public service it needs to aim for more than just covering its costs. It would not want to incur a deficit to handle expanding needs. either.
In spite of Pallister's remarks, the Manitoba Government and General Employees'' Union (MGEU) revealed that the Winnipeg Regional Health Authority(WRHA) intends to contract out services provided by home care nurses for a newly announced "enhanced home care service". The government is great at rhetorical puffery when they want to promote what will probably be reduced services. MGEU president Michelle Gawronsky believes that the contracting out is a first step towards privatizing Manitoba's home care services resulting in public sector job losses. Gawronsky said: "[Home care workers] are very, very concerned. They're angry, they're upset. We are looking for major change to happen within our system and we are being attacked for trying to improve a system that is the worst in Canada."
The WRHA announced the plans for contracting out in April after the province cancelled the Hospital Home Team a unit of about 10 nurses who were in charge of caring for about 550 chronically ill patients in Winnipeg in their homes. The province had previously given $1.7 million to pay for the program but ended funding on March 31st this year. The appended video appears to be made by nurses in the program. On May 8 in a meeting with WRHA president Milton Sussman , Gawronsky learned about the contracting out scheme. Union members were shocked at the news.
The province has already cut health services in Winnipeg closing half of the emergency facilities, forcing many to make longer trips to emergency rooms. Present legislation in Manitoba requires all regional health authorities to provide home care services free to all who meet the program's requirements. The program is actually quite cost efficient in that it delays sending patients to a long-term care facility where costs are much higher. Under the current contract, 80 percent of the workers in the program must belong to the MGEU. However, contracting out could possibly lead to a breach in the contract according to Gawronsky who wrote to health minister Kevin Goertzen outlining her concern.
As the population of the province ages, a recent report claims that the program that costs now over $300 million annually could end up costing $874 annually by 2037. That is close to three times the present cost but that is over twenty years, a long period. Doing away with the program would cost even more. However much of that cost could be placed on the people now being served by the program rather than the government. In 1996 the then Progressive Conservative premier Gary Filmon also tried to move towards for-profit home care but had such negative reactions that he dropped his plans after a short pilot project.
The WRHA is being forced to find $83 million in savings for the coming year. Miton Sussman chair of the WRHA said that all options were on the table including privatization. He also said that he could not guarantee that jobs would not be lost. Not only will jobs be lost but they will be relatively well paying union jobs to be replaced by non-union jobs with lower pay in order to make room for private operators to make a profit should services be privatized. Sussman said that their had to be changes to achieve the savings required by the government. All five Manitoba health regions have been told by the government to balance their books and find savings for 2017-18. The budget for 2016-17 was $2.6 billion and was projected to wind up $30 million in the red. This is not that large a percentage in terms of the total budget.
Other services considered for privatization are MRI scans and cataract surgeries. However Sussman claimed that the WRHA was had made no decisions yet and was still considering options.,saying:"I don't want to speculate that it is something that is going to happen. What I am saying is we are looking at a whole range of options and if someone can provide a high quality at a lower cost, we have to consider those kinds of things.Where is makes sense, it might be something we look at." From the provincial government point of view it makes sense. It can provide new areas of investment for businesses many of whom support the Conservative government. It can also result in more donations as a token of appreciation.
The Pallister government has hired the consultant group KPMG to find savings and efficiencies in Manitoba health care systems KPMG is one of the big four global auditors with offices in many countries but main headquarters in the Netherlands. It employs about 189,000 people globally. It offers three basic lines of service, financial audits, tax, and advisory services. While the company has won many awards it has had clashes with the Canadian Revenue AgencyCRA) but for some reason the KPMG clients were given an amnesty :In 2015, KPMG was accused by the Canada Revenue Agency of Tax evasion schemes: "The CRA alleges that the KPMG tax structure was in reality a "sham" that intended to deceive the taxman.".[56] In 2016, the Canada Revenue Agency was found to have offered an amnesty to KPMG clients caught using an offshore tax-avoidance scheme on the Isle of Man.[57]
The KPMG report is completed but will not be released since much of the information is said to be proprietary. The Pallister government actually received an extensive report recommending reforms ordered by the previous New Democratic Party and co-authored by Dr. David Peachey of consulting firm of Health Intelligence Inc. in Nova Scotia. The report was received in February this year. However, the Pallister government decided to contract with KPMG for its own report.
These consulting firms that tell you how to save money actually cost a lot of money but they can provide expert opinion that you can use to support your favorite policies usually. This is worth a lot and avoids criticism which can be dismissed as political or ideological. Ontario spent nearly $7 million on consultants who helped a government-appointed panel recommend that the province sell a majority stake in Hydro One and liberalize the sale of beer. KPMG was one of several consultants involved.
The Manitoba PC government paid KPMG $740,000 for their report. Pallister earlier promised that 97 percent of the results would be released to the public with only the names of civil servants who had been asked for their opinions removed. Pallister explained: "My understanding wasn't that a lot of this information would be proprietary at the outset. And now I understand that it is legally my responsibility to protect the integrity of the process that was used... It's owned by the company that helped guide us." This contradicts the governments' own RFP (Request for Proposals) that it issued in December of 2016. which stated that all information, data, research, reports and other material produced by the consultant "shall be the exclusive property of Manitoba." Yet Pallister said: "Out of respect for the company and for future tendering processes I think it's important they have a manner of going about their business they've developed over many years and spent a great amount to develop that they want to protect, so that's part of the problem in releasing that information.:" No doubt Manitoba is quite happy for the public not being able to see the whole report. There could be reforms recommended that the government did not approve and reforms rejected that the government approves.
We should know soon exactly what changes are to made in home care services. We will probably never know if KPMG recommended changes that the government is not making or if it recommended against changes that the government is making. The KPMG report may have been produced with taxpayer money but it remains to be seen if the taxpayer will ever be able to see it all.

Saturday, June 10, 2017

Ontario economy grew at twice the Canadian average last year

For years while the price of oil was high, Ontario's growth lagged behind that of Alberta and Saskatchewan the main oil producing provinces. However, now its growth is surging while the oil producers are hard hit.

Canada's large banks predict that this year Ontario's growth will be near the top of all provinces. The jobless rate, 5.8 percent, is the lowest since 2001. The national average unemployment rate is 6.5 percent itself the lowest since 2008. In 2016, Ontario added 96, 800 full-time jobs and surprisingly part-time jobs actually decreased by 10,200 a plus for many workers. Manitoba has the lowest rates at 5.4 percent and British Columbia 5.5 percent. However there are still 437,000 Canadians looking for work according to Statistics Canada. In 2016 the province grew at twice the national average. The growth is not related to just one sector but includes manufacturing, real estate finance and technology. Tax revenue from corporations grew 16,.8 percent last year and 19.6 percent this year as corporate profits grew. The future looks promising as a survey of Ontario businesses by the Bank of Canada showed that sales are up and that companies are intending to invest in new equipment and hire on more staff.
The center of recent growth is in the Greater Toronto Area. The Conference Board of Canada predicts that this will be the leading metropolitan growth area in 2016 leading to a 2.6 increase in GDP for Ontario. Windsor, the Ottawa region, and the Kitchener-Cambridge-Guelph triangle are also prospering. The Conference Board claims: "Through 2019, Ontario households will reap the benefits of a robust business sector. With the labour market looking good, healthy consumer spending across all spending categories is expected over the near term." Robert Hogue, the senior economist at the Royal Bank of Canada(RBC) described the Ontario economy as vibrant and said: "The Ontario economy has been, I think, quite impressive at adapting, at adjusting, and at continuing to generate jobs." Ontario premier Kathleen Wynne will no doubt point to Ontario's growth if she announces a plan to hike the minimum wage to 15 dollars an hour.
In spite of the low unemployment level, the growth in the economy has not been matched by a parallel growth in wages. The average worker has not shared in the boom. Statistics Canada data show the average worker's wages grew just 1.1 percent last year. This is below inflation meaning that last year the average worker took a pay cut. This may have an effect on consumer confidence and sales in the future. As Nik Nanos, of Nanos research put it: "There's a collision between the psychology of consumer confidence and the reality of the economic numbers. When people don't feel that real wages are significantly increasing, when they're unsure about their level of job security, it creates a psychological chill on consumer confidence." However, borrowing iterest rates are low and that may encourage spending. The Bloomberg Nanos Canadian Confidence Index suggests that consumers in the province are feeling upbeat. The swing up began as the price of oil dropped. No doubt it reflects more money being available as less is spent on fuel.
There is some worry about growing protectionist rhetoric by Trump in the US and uncertainty caused by renegotiation of the North American Free Trade Act (NAFTA). Exports could also be hurt if the Canadian dollar, the loonie, were to increase significantly in value. However there are positive signs too from the US. Aided by tax refunds and rising incomes Americans increased spending in April at the fastest rate since 2016 in a sign the U.S. economy is growing faster. This could result in an increase in Canadian exports to the U.S. especially as the value of the Canadian dollar is quite low. Another worrying factor for Ontario is the boom in the housing market in Toronto that may turn out to be a bubble.
While some complain of Ontario hydro rates, the province has a low tax rate of just 11.5 percent. Only British Columbia has a lower rate. Ontario is fortunate as well in that its economy does not depend on one main commodity. It is less subject to severe stress as has happened in Alberta where oil is its main source of revenue. However, the entire manufacturing sector in Ontario was badly hit during the 2008-9 recession and the recovery has been relatively slow with some negative effects such as there being more part-time and contract work with less benefits for workers.
British Columbia led all provinces in the growth of its GDP last year growing by 3.7 percent. This was up from 3.1 percent in 2015. Ontario came second with a growth rate of 2.6 percent the same as in 2015. Manitoba was third with 2.4 percent an increase from 2.1 percent in 2015.

Quebec unions shut down construction sites

(May 28)Unions representing 175,00 construction workers in Quebec launched a general strike shutting down major construction projects in Quebec after months of failed labour negotiations.

 1 of 2 
Labour federations and construction companies had negotiated late into the night last Tuesday but could not reach a deal before a midnight strike deadline. Workers in the industrial sector want more stable work schedules, but salaries are believed to be the main issue in the residential construction area. Michel Trepanier a spokesperson for the alliance of construction unions said; "Employers are asking us to sacrifice time with our families to be available for work... There are limits and they've been reached." Collective agreements had expired on April 30.
Some large projects in the city of Montreal were halted by the strike, including work on the new Champlain Bridge and the CHUM hospital. Hundreds of workers picketed at the two sites. Montreal is replete with orange construction cranes all of them idle now. Work was also disrupted on the new Turcor highway exchange a key highway stretch in the west end of the city.
Plumber Martin Gauthier supports the strike but hoped a deal could be reached quickly noting that the strike was costly: "I'm not making money today,. Nobody is winning — that's the bottom line." As well as construction workers about 1,400 Quebec government engineers walked of their job at the midnight deadline. The engineers have been in a strike position for almost a year. Union president Mar-Andre Martin said that a week of negotiations had not resulted in any notable progress.
The Quebec government could in time pass back-to-work legislation but will not do so for now. The provincial Labour Minister Dominique Vien said she is hopeful that the construction workers and employers can reach agreement soon saying: "The message I want to send is that it would be better to have a negotiated deal than a special law. I think that everyone here very much agrees with that." She estimated that the strike was costing Quebec economy $45 million a day. She said that the provincial government could not allow the strike to continue long as it would cost Quebec too much. She said the government was prepared to table back-to-work legislation.
Montreal Mayor Denis Coderre urged the province not to be "too patient" before legislating workers back to work. Coderre said: "We're not going to be patient for a long time." The federation of Quebec chambers of commerce also urged a quick end to the dispute. Stephane Forget head of the federation said: "The adage that says 'when the construction industry is doing well, everything is doing well' is also inversely true — a labour conflict has a major and direct impact on all economic sectors." Forget noted that a 10 day work stoppage back in 2013 caused a drop of 1.1 percent in the province's GDP for that year.
Construction job sites that did not join the strike were targeted by flash mobs of pickets that led many workers to lay down their tools. A mobile strike picket unit of up to 40 members moved from one location to another to convince those still working to join the strike. Some had not heard the news but others were reluctant to strike. Quebec has an anti-scab law that would normally prevent employers from still operating but some employer groups claim the law does not apply to the construction industry; if workers agree, some sites could remain open. However many job supervisors decided to comply with the strike as soon as pickets appeared.
Montreal was particularly hard hit as about 60 projects were halted. At the new Champlain Bridge more than 600 employees were off the job. The bridge costing $4.3 billion is slated to be finished by the end of 2018. It is replacing the most-used bridge in Canada. The Turcot exchange is a key cog in Montreal's highway network and is being replaced. Approximately 300,000 used the exchange daily in 2017. The project is just 40 percent complete and is slated to be finished by autumn 2020. Many street projects plus a new hospital project also are shut down for now.

Saturday, May 27, 2017

Trudeau needs to change NAFTA to protect Canadian water

Maude Barlow, National Chair of the Council of Canadians, criticizes Canadian Prime Minister Justin Trudeau for avoiding any confrontation with US President Trump on the issue of water and NAFTA.

Barlow has just issued a report called: Water For Sale: How Free Trade And Investment Agreements Threaten Environmental Protection Of Water And Promote The Commodification Of The World’s Water. The report looks at the trade threats posed to global water supplies by different trade agreements including NAFTA. Barlow notes:
“NAFTA rules that already trump domestic water protections could be made far worse with the upcoming renegotiation of the deal. Trump is attacking water protections in the U.S., locking in deregulation in ways that would make it very hard for future presidents to undo. Trudeau is doing the same here by not restoring the Navigable Waters Protection Act, despite his promise to do so. These realities, combined with Trump and Trudeau’s refusal to remove Chapter 11 from NAFTA, put water protection in the crosshairs.”
The World Health Organization(WHO) recently issued a dire warning that almost 2 billion people are drinking water contaminated with faeces. The contamination puts people at risk of contracting cholera, dysentery, typhoid and polio according to Maria Neira who heads WHO`s public health department. She added: "Contaminated drinking-water is estimated to cause more than 500,000 diarrhoeal deaths each year and is a major factor in several neglected tropical diseases, including intestinal worms, schistosomiasis and trachoma," While on average countries had increased funding for improving access to safe water and sanitation, still 80 percent said that they still did not have enough financing to reach nationally-set targets.
Modern trade free trade and investment agreements contain sections that undermine laws and regulations that protect water. Water must be removed ├ás a commodity to be traded in all such agreements to protect it, Barlow argues that that the investor-state dispute settlement (ISDS) must be removed from NAFTA and other trade agreements. ``People and their governments must be given the right to restrict trade from places or in conditions where water and local communities have been harmed. Foreign investors must return to using the domestic courts of the countries in which they are operating and with whom they have a dispute. The political moment to have this debate has arrived.” However, Trudeau does not even seem to be bringing the matter up. The mainstream media is unlikely to discuss the matter either,
In trade deals, corporations would like to see water considered to be a commodity to be traded. It can also be treated as a service allowing for privatization of services that provide water. It is also treated as an investment. All of these descriptions allow water to be subject to clauses in an agreement that challenge water protection laws. Barlow argues that water should specifically be excluded from such provisions.
Wikipedia describes the ISDS provisions as follows:Investor-state dispute settlement (ISDS) or investment court system (ICS) is a system through which individual companies can sue countries for alleged discriminatory practices. The practice was made widely known through the Philip Morris v. Uruguay case, where the tobacco company Philip Morris sued Uruguay after having enacted strict laws aimed at promoting public health.
ISDS has been criticized because the United States has never lost any of its ISDS cases, and that the system is biased to favor American companies and American trade over other Western countries, and Western countries over the rest of the world. Chapter 11 of NAFTA contains ISDS provisions,
The provisions allow one NAFTA party in Canada, US, or Mexico) to bring charges directly against the government of another NAFTA party before an international tribunal avoiding local courts. There is no other situation in international law where private parties are able to sue a state without showing the domestic courts are not independent or reliable, A sample of a case brought against Canada is S.D.. Myers versus Canada that the company won:S.D. Myers v. Canada Between 1995 and 1997 the Canadian government banned the export of toxic PCB waste, in order to comply with its obligations under the Basel Convention, of which the United States is not a party. Waste treatment company S.D. Myers then sued the Canadian government under NAFTA Chapter 11 for $20 million in damages. The claim was upheld by a NAFTA Tribunal in 2000.
The renegotiation should take place through a transparent process with all stakeholders involved not just corporations and politicians. Consultation with the public on the issues is also important. Another important part of the NAFTA agreement that needs to be deleted is the proportionality clause as discussed in a recent Digital Journal article.