Author Archives: CICS Immigration Team

Canadians Now Wealthier Than Americans, Mostly Due to Housing Prices

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Condo construction in Canada. The crash in the US housing market was the main cause of the average net worth of households in Canada surpassing the net worth of households in the US (Raysonho)

A report that first surfaced on Canada Day stating that Canada now has higher average household net worth than the US set the news media on both sides of the border buzzing. Advocates of robust government intervention in the economy pointed to this development as vindication of their faith in their economic ideology, while Republicans blamed the news on Obama’s term in office.

The real cause of the switch in household net worth standings is much more mundane: a drop in housing prices in the US. As the National Post’s Andrew Coyne notes, home prices declined by nearly one-third in the US from 2006, when the US was ahead in household net worth, to 2011, when the wealth comparison used in the report was done, while they remained steady in Canada, and this accounts for almost all of the drop in the average household net worth in the US relative to that in Canada. A commodity boom driving up the value of the Canadian dollar also helped Canada’s relative position.

The key policy decision in the US that caused the divergence in the wealth of American and Canadian households was the goal the American political establishment set in the early 2000s to purposefully encourage a boom in the housing market using the government sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, and low interest rates from the Federal Reserve as the tools.

As far back as 2001, popular American pundit Paul Krugman, in classic Keynesian economic fashion, trumpeted the benefits a housing bubble could provide for the US economy and proposed the means of creating it:

To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.

The Federal Reserve obliged and sharply lowered interest rates and kept them there for the next three years.

The GSEs did their part and expanded their volume of purchases of privately issued mortgage backed securities from $20 billion in 2000 to over $150 billion at the height of the housing bubble, in 2006.

In contrast, the Canada Mortgage and Housing Corporation (CMHC), a crown corporation which has a role somewhat similar to that of the GSEs in the US, remained conservative in the type of mortgages it insured, while the Bank of Canada kept its overnight lending rate a full two percentage points higher than the Fed’s, and consequently, no bubble formed in Canada’s housing market.

Whether the US economy would have been spared a housing bubble in the absence of the expansion of GSE subsidies and lowering of the Fed’s lending rate is a matter of much scholarly debate. At the very least, the decision by the American political establishment and Federal Reserve authorities to expand government mortgage subsidies and keep interest rates low for three years, respectively, did nothing to prevent a bubble from forming, and made the one that did form worse than it otherwise would have been.

The real story that emerges in Canada overtaking the US in average household net worth is the superiority of a more prudent approach to economic intervention that emphasizes sustainable economic development over one that focuses on boosting GDP in the short term at any price.

Financial Post Addresses Growing Income Disparity Between Recent Immigrants and Other Canadians

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1880 poster inviting people to immigrate to Canada. The income gap between recent immigrants and native born Canadians has grown from 20 percent in 1970 to 39 percent today.

The growing income gap between recent immigrants and longer-established Canadians received special news coverage today with a report in the Financial Post by the deputy chief economist of CIBC, Benjamin Tal.

The article describes the deteriorating position of newly arrived immigrants relative to native-born Canadians by comparing what it was in the 1970s to what it is today:

A male immigrant who arrived in Canada in the 1970s made about 80¢ on the dollar relative to a Canadian-born worker, and he was able to narrow the gap at a rate of roughly 1¢ per year. Today, despite the fact two-thirds of newcomers have post-secondary education, their earnings have dropped to close to 60¢ on the dollar and the gap is narrowing at a much slower pace. Nearly half of the individuals who immigrated to Canada between 2001 and 2006 are overqualified for the jobs they occupy.

Tal places a large economic price on the growing income gap, estimating it deprives Canada of $20 billion in earnings a year, and argues that the Canadian economy will need to do better at harnessing the economic potential of its immigrants if it is to make up for the decreasing ratio of Canadian workers to retirees as Canada’s population ages.

The editorial counsels against expanding immigration programs designed to meet Canada’s short term labour market needs by allowing lower skilled workers to become permanent residents, arguing that lower-skilled workers are less able to adapt to changing labour market conditions. It points out that even in the comparatively long-term-focused Federal Skilled Worker Program, one third of the preferred occupations are construction-industry related, and that a slowdown in the housing market could leave immigrants in these vocations lacking the qualifications to work in Canada.

Tal recommends that to address the income gap, the Canadian government should borrow from Australian immigration policy, which manages to keep income disparity between its immigrant and native-born workers at 50 percent the level seen in Canada, and raise language proficiency requirements for immigration.

This is not the first time an economist for a large Canadian bank has recommended increasing the language bar for immigrants. A report by TD chief economist Craig Alexander in February proposed increasing official language proficiency requirements for immigration applicants along with expanding the role of provincial nominee programs in selecting immigrants in order to reduce the income and employment gap between immigrants and native-born Canadians.

Immigration’s Crime-Reducing Effect Gets Media Attention

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Chinatown in Toronto. A growing visible minority proportion has coincided with a decline in the crime rate in Toronto. (chensiyuan)

Study findings suggesting that immigration reduces crime have been picked up today by the online version of MacLean’s magazine, one of Canada’s largest weekly news magazines, in an article, Does immigration reduce crime?

One study referenced, conducted by researchers Ronit Dinovitzer and Ron Levi at the University of Toronto, compared the rate of youth delinquency in a group of 900 teenagers, 66 percent of whom were non-European immigrants, in a Toronto community in 1999, to the rate found in a group of 835 teenagers in the same community, but twenty three years earlier, when only 10 percent of respondents came from an immigrant background.

The findings show a significantly lower rate of youth delinquency, which includes activities like smoking marijuana, getting into fights and stealing cars, in the newer cohort of teenagers over the older, less ethnically diverse cohort.

Another finding by Statistics Canada shows a strong negative correlation between the rate of violent crime in Montréal neighbourhoods, and the proportion of the neighborhood’s population that is made up of recent immigrants.

The more general correlation that advocates of the ‘immigration reducing crime’ theory point to is the nation-wide decline in the crime rate since the 1970s, when immigration levels were significantly increased by the Trudeau government and maintained by governments since. Major Canadian cities like Toronto have seen their crime rates decline by up to 50 percent since 1991, as their proportion of foreign born residents, now at 50 percent in Toronto, has increased.

Alberta Temporary Worker Program to Expand List of Eligible Occupations

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The temporary foreign worker pilot is intended to alleviate the acute labour shortages that natural resource industry hubs like the city of Fort McMurray face (Regional Municipality of Wood Buffalo)

Citizenship and Immigration Canada (CIC) and the provincial government of Alberta jointly announced this week that the Alberta temporary worker pilot program will be expanded to include more occupations.

The pilot project began in June 2011 and issues special work permits to foreign nationals who meet the program’s requirements, including being qualified in an eligible occupation, which allows them to work temporarily in Alberta in a single occupation without the constraints that typically come with work permits for temporary foreign workers, like requiring a Labour Market Opinion (LMO) from Services Canada to change employers.

The expansion of the program will add the following occupations to the list of approved occupations:

  • Welder
  • Heavy duty equipment mechanic
  • Ironworker
  • Millwright and industrial mechanic
  • Carpenter
  • Estimator

The pilot previously accepted only a single occupation, pipe/steam-fitter.

Alberta faces some of the most severe labour shortages for skilled trades workers in Canada, as companies are unable to find a sufficient number of Canadian residents that are able and willing to work in often remote resource extraction sites like the oil sands in the province’s north.

TD Bank Says it is Looking to Reverse Closure of Some Iranian-Canadians’ Accounts

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TD Bank is looking to smooth over relations with the Iranian-Canadian community after it closed dozens of Iranian-Canadians' bank accounts. (Matthew G. Bisanz)

After a maelstrom of criticism for closing the bank accounts of dozens of Canadians of Iranian descent, in some cases with little to no explanation, TD Bank announced this week that it is looking to address the complaints and handle its enforcement of financial sanctions against Iran more delicately.

In an interview on Monday, a spokesman for TD Bank, Mohammed Nakhooda, said the bank realizes that the closure of the accounts had been “distressing and disruptive” and that it was looking to improve the way it communicates with its customers about the issue.

The Canadian financial institution said it would try to reach out to those affected and explain the cause of their account closure, and put in place a process whereby it would obtain more information from some affected clients to clarify their personal status and activities, and depending on the information obtained, re-open their accounts.

Letters sent up until recently, seen by media, from TD to customers to inform them of their account closing contained only a statement that the sanctions prohibit the bank from “providing any financial services to, or for the benefit of Iran, or any one in Iran” in the way of an explanation.

Half a Million Visitor Visas Issued so far in 2012

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10 percent more visitor visas have been issued so far this year than this time last year. The "Honeymoon Capital of the World", Niagara Falls, is Canada's top tourist spot (Ujjwal Kumar)

Citizenship and Immigration Canada (CIC) announced last week that it has issued 500,000 temporary visitor visas in 2012, a 10 percent increase from the number issued this time last year.

The total number of people who visit Canada far exceeds the number of temporary visas issued, as ninety percent of international visitors to Canada are from one of the over 50 countries whose citizens do not need a visa to visit Canada, including the US which is the source of 76 percent of foreign visits to Canada.

Not surprisingly, the Canadian province that attracts the most foreign visitors every year is the country’s largest and most populous, Ontario. British Columbia and Quebec are the second and third most visited provinces, respectively.

Niagara Falls, Ontario remains far and away the most popular tourist destination in Canada, with an estimated 12 million people visiting it each year.

Iranian-Canadians Outraged as at least 100 Accounts Closed by TD Bank

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View of Tehran, Iran at night. Being a party to a financial transaction to or from family in Iran was enough to get the accounts of some TD Bank customers closed. (Babak Farrokh)

After a report last week by the Ottawa Citizen detailing the case of several Iranian-Canadians who had their bank accounts closed by TD Bank with little to no explanation, it has emerged that the scale of the closures is much larger than the initial report indicated.

At least one hundred Canadians of Iranian descent have come forward in the last week reporting that they have had their accounts closed by TD, in an attempt by the financial institution to enforce economic sanctions against Iran put in place by the Harper government last year.

The Canadian government has had targeted sanctions on individuals tied the Iranian government since 2007, but new broad-based sanctions, enacted in November 2011 under the Special Economic Sanctions Act (SEPA), created a prohibition against any financial transaction by a Canadian resident or institution with any account at a financial institution in Iran, subject to a few exceptions, including personal remittances of values less than forty thousand dollars.

It has been left to each Canadian financial institution to interpret and decide how to comply with the new sanctions, and TD Bank has stated in letters to customers whose accounts it has closed that it believes the sanctions prohibit it from “providing any financial services to, or for the benefit of Iran, or any one in Iran”.

Many in the Iranian-Canadian community are furious about the closures. One affected TD customer, Pooya Sadeghi, created a Facebook page, Condemn TD Bank in their Treatment of clients with Iranian Background, after TD closed an account he shared with his wife and her parents.

On the Facebook page, a commenter, Nilofar Shidmehr, expressed her fear that Canadians of Iranian descent could be targeted by ethnic laws like those that affected Japanese-Canadians during World War 2:

We should do everything to stop this asap. Imagine what happens if there will be a war and the Canadian government sends us to an internment, like they sent Japanese-Canadians to. Is anyone knows some human rights organization which can help? I think this case can be considered as human rights abuse.

There was also blame put on the Harper government for the sanctions. “TD Bank is small potatoes. The real problem is Harper and his thugs in government who are behind all this,” commented Poyan Nahrvar.

In an interview with CICS News, Kaveh Shahrooz, a lawyer and vice-president of the Iranian Canadian Congress, and a harsh critic of the Iranian government, denounced the sanctions’ indiscriminate effect. “The Iranian government is a brutal regime that has killed many people in Iran, and to the extent that sanctions can prevent their agents from operating, we have no problem with that, but they need to differentiate between ordinary Iranians and regime agents.”

In regards to TD’s closure of customer accounts, Mr. Shahrooz said: “we believe [the sanctions] are being over-zealously applied.” The ICC is set to meet TD executives in about 10 days, at which point Mr. Shahrooz says they hope that TD will agree to put in place a process whereby the people affected can be told why their accounts were closed.

Study: Vancouver is North America’s Second Most Congested City

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TomTom, a provider of automotive navigation products and services, has released its first quarterly congestion index, and it puts Vancouver in second place behind Los Angeles in a ranking of North American cities by their level of traffic congestion.

The next most congested Canadian cities, Toronto and Ottawa, place ninth and tenth, with vehicle commutes taking 47 percent and 55 percent longer during the morning peak period than non-congested, or free-flow, periods, respectively. Commutes in both cities take an average of 22 percent longer due to congestion during all hours than during free-flow periods.

In contrast, vehicle commutes in Vancouver and Los Angeles take 30 and 33 percent longer at all hours due to congestion, respectively.

Commuting times in Vancouver are on average 30 percent longer due to traffic according to TomTom's congestion index report (MagnusL3D)

As the final destination for nearly 14 percent of Canadian immigrants, Vancouver has seen rapid population growth in recent years, which has increased congestion on its roads and highways. Many natural choke points, due to geography inundated by coast line, has also contributed to long traffic delays.

 

Fewer Test-Takers Passing Canadian Citizenship Exam

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Citizens take the oath (Government of Canada)

Since the federal government increased the passing grade on the Canadian citizenship exam from 12/20 to 15/20 in 2010 and increased the number of topics that the test covers, failure rates have nearly quadrupled, from approximately 4 percent in 2009, to 15 percent in 2011, according to a report by Cary Mills of the Globe and Mail.

Mills notes that the increase in exam difficulty is affecting certain communities more than others, for example pushing failure rates for Afghan-born immigrants from 21 percent in the year before the exam changes, to nearly 50 percent in the year after, and pushing those for Vietnamese-born immigrants from 14.8 percent before the exam, to 41.2 percent after.

Immigrants from Australia, England and the United States meanwhile have continued to fare very well on the exam, with only 2 percent failing every year. This indicates that higher language proficiency requirements are the most important result of the increase in the difficulty of the exam.

The Harper government has made proficiency in an official Canadian language a more important part of getting both permanent residency status and citizenship in recent years, including changing the eligibility requirements for the important Federal Skilled Worker Program in 2010 to require a passing grade on an English or French language test to qualify for permanent residence.

Canadians 2nd Most Optimistic About Economy After Brazilians in New Poll

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A view of Rio de Janeiro, Brazil's largest city. Brazilians were on average the most optimistic about their country's economy outlook of the nationalities polled in a recent survey of 13 countries (Ramon)

The results of a new poll commissioned by the International Trade Union Confederation show Canadians behind only Brazilians as the most optimistic citizens of any of the thirteen countries included in the poll.

The poll covered the adult populations of Canada, Brazil, United States, Mexico, France, Germany, Greece, Indonesia, South Africa, Bulgaria, Japan, Belgium, and the United Kingdom, and interviewed 1,000 respondents in each country.

It found Greeks and Japanese the most pessimistic and second most pessimistic. The last place showing for Greece and Japan is unsurprising given Greece’s recent economic crisis, and Japan’s two decade long economic stagnation, mounting national debt, and the widespread destruction caused by the 2011 earthquake, including continuing problems with radiation leakage from the Fukushima Dai-ichi nuclear plant.

The majority of people in all but two of the countries said they believe their country is headed in the wrong direction. In the US, only 35 percent were optimistic about the direction their country was headed, far lower than the 61 percent of Canadians who said the same. Among Brazilians, 69 percent of respondents said they were optimistic about the direction their country is headed.