Category Archives: canadian immigration

Finance Minister Wants Corporate Canada to Spend its $525 Billion in Cash

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The headquarters of the TSX, Canada's largest stock exchange. (Mike Russell)

Canadian Finance Minister Jim Flaherty says the Canadian economy needs Corporate Canada to start spending the $525 billion in cash and other liquid assets that it has on hand.

Since the financial crisis of 2008, Canadian corporations have been increasing their current assets in an effort to create a larger liquidity cushion to mitigate the risk from possible future economic volatility. The Finance Minister says spending or paying out as dividends some of the half a trillion dollars in cash and cash equivalents would boost the economy at a time when growth is lacklustre.

Bank of Canada Governor Mark Carney backed Flaherty’s view last week, telling a Canadian Auto Workers union audience that the corporate cash reserves are “dead money” and that “[the corporate executives’] job is to put money to work and if they can’t think of what to do with it, they should give it back to their shareholders.”

Not every one agrees with Mr. Flaherty and Mr. Carney’s assessment. Mark McQueen, President & CEO of Toronto-based Wellington Financial, and a regular contributor to financial analysis website SeekingAlpha, provided his dissenting view in an article published yesterday:

The international financial crisis is still a very recent memory for most in business, and it cannot be denied that Greece, Spain and Italy currently appear to be the sovereign versions of Bear Stearns, Lehman Brothers and Morgan Stanley circa August 2008. Telling a CFO to “get out there and spend” with that backdrop is kind of like advising a heart patient who recently went through an angioplasty procedure that he should rush headlong back to Bardi’s Steakhouse for his favourite 24 ounce Rib Eye.

Then there’s the specific details of these allegedly high corporate cash levels. … When you tally up the debt figures, it tells a different story. None of these poster children have net cash on hand. Whether or not they are underlevered or overlevered entities depends upon their business fundamentals: such as trailing and forecast EBITDA, net income and free cash flow. Those metrics, and their sustainability in the face of a global recession, are the only way to truly gauge whether or not these three media examples are cash rich or digging their way out of an earlier debt hole.

Canadian non-financial corporations have historically held cash with a combined value equivalent to 10 percent of GDP, much less than the 30 percent of GDP that it is worth today.

Financial Posts Advises Canada Follow Australia’s Lead in International Students Policy

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The Financial Post article is one in a series of high profile endorsements of shifting education and immigration policy to attract more international students and give them an easier path to Canadian permanent residence (CICS News)

An article in today’s Financial Post by Diane Francis applauds recent changes that have made Canadian immigration policy more similar to Australia’s and recommends that Canada go further in emulating the other nation’s policies.

It notes that a recent report by a government advisory panel has called for a doubling of international students in Canada and, like Australia, creating an easier path for foreign graduates of Canadian post-secondary institutions to stay in Canada:

Australia’s success has been widely disseminated and last week a blue-ribbon federal task force in Canada released a report that would emulate its policy. The number of foreign students allowed entry into Canadian institutions should nearly double in a decade and those who graduate from Canadian institutions should be eligible to remain, rather than having to return home and wait years to get in.

Francis writes that the success of Australia’s international student policy owes in part to a superior national marketing effort. She suggests Australia provides better information resources for prospective foreign students in the studyinaustralia.gov.au website, and that the federal government should make studyincanada.com a comparable resource.

The article goes on to note that Australian universities charge international students more than Canadian universities, but that they provide the benefit of immigration eligibility upon graduation. Francis says that doing the same in Canada would attract more highly skilled immigrants who have a greater likelihood of being successful in Canada’s job market due to their Canadian credentials.

Francis also criticizes the current combination of low tuition for international students enrolled in Canadian medical schools, immigration laws that prevent foreign graduates of Canadian medical schools from staying in the country to practice medicine, and the difficulty foreign trained doctors have in becoming licensed to practice in Canada, in encouraging Canadian students to go abroad to become doctors and creating a shortage of licensed doctors in Canada:

Worse yet, there are inadequate places for Canadians at Canadian medical schools and the result is that hundreds of Canadians go to Australian medical schools, and virtually all stay, according to University of Melbourne Professor and immigration specialist Lesleyanne Hawthorne.

(This points out another needed immigration reform. As Canadians go abroad to become doctors because foreigners have taken their places, foreigners who study here cannot stay to practice medicine because they must go home and re-apply. No foreign credentials, Australian or even American, are recognized by Canada’s protectionist medical profession.)

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By offering eligibility with an education, universities here can up their fees substantially, and provide more spaces for Canadians.

Next, the article praises Australia’s immigration policy for selectively picking international students with credentials that are in demand for permanent residence eligibility, and rejecting those students who “have not adjusted to the culture or who have not behaved properly”.

Finally, the articles warns that in making the path to immigration for international students easier and working to double the number of foreign students in Canada, the potential exists for “private-school rackets” that hand out low-quality credentials to crop up in greater numbers, and that the federal government would need to prevent this by monitoring institutions that cater to international students.

The Financial Post article is the third recent high-profile publication advising the federal government gear its immigration policy toward international students.

A report published by the Canadian Council of Chief Executives earlier this month and authored by the president of UBC recommends that Canada focus on attracting more international students from Asia, and a government advisory panel released its finding last week that urges the federal government to set a target of doubling the number international students that study in Canada within ten years.

CIBC Economist: Immigrants to Boost Canada’s Housing Prices

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CIBC headquarters in Commerce Court in Toronto, Ontario. A report published today by CIBC World Markets concludes that immigrants will help maintain housing prices over the next decade (Wikipedia)

A report released today by a major Canadian bank says growth in the 25-34 age group and increases in immigration levels will likely push housing prices up over the next decade.

The analysis, by CIBC World Market’s deputy chief economist Benjamin Tal, points to the propensity of Canadian immigrants to buy a home to support its conclusion.

Statistics show that nearly 20 percent of Canadian immigrants who have been in the country for three years or less are home owners, while home ownership rates among immigrants who have been in Canada for ten years or longer is over 70 percent, a figure higher than that of natural-born Canadian citizens.

The report says that owing to recent shifts in immigration targets by the federal government, immigration levels, already at historic highs in absolute terms, are expected to increase over the next few years, which will increase demand for housing.

A pdf of the report can be found online here.

Canadian PM Promotes Resource Projects in Country’s North

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Prime Minister Harper at a press conference in the Yukon during his annual Northern tour (Government of Canada)

Prime Minister Stephen Harper says “tremendous economic opportunity” lies in tapping Canada’s northern resources, describing it as a key to the country’s prosperity. The comments came in a press conference in the Yukon, which he visited as part of his seventh annual Northern Tour.

The tour, which runs from August 20-24, is part of a long-term drive by the federal government to facilitate the development of resource projects in Canada.

The Prime Minister said the Canadian economy can outperform that of the United States, Japan and Europe by continuing to exploit its vast natural resources, much of which lies untapped in the North, and that there are more than 500 new development projects, worth half a trillion dollars, being proposed in the country over the next decade.

The Canadian economy is heavily reliant on natural resources, with $142.5 billion or 11.5 percent of Canada’s gross domestic product (GDP), and a staggering $200 billion in export revenue, amounting to over 50 percent of the net worth of all Canadian exports, being produced by the country’s resource sectors each year.

The announcement of a new Federal Skilled Trades Program (FSTP) last week by the Department of Immigration was largely a reaction to the growing demand for skilled workers like welders, boiler makers and heavy equipment operators in resource extraction hubs, particularly in western provinces like Alberta, as the country’s energy and mineral sectors have boomed, and ageing workers in the skilled trades have begun to retire in greater numbers.

Three Canadian Cities in Top 10 in World Liveability Ranking

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Vancouver placed third in the Economist's annual liveability ranking for the second year in a row, after spending most of the last decade in first place

The Economist’s annual liveability ranking was published on Tuesday and it placed three Canadian cities, Vancouver, Toronto and Calgary, in the top 10.

Vancouver placed third for the second year in a row, failing once again to regain the first place position that it had held in the rankings for nine consecutive years until 2010. Ahead of Vancouver is Melbourne, Australia, which came in first, and Vienna, Austria, which placed second.

Other Canadian cities also placed well, with Toronto coming fourth and Calgary tying Adelaide, Australia for fifth place. The ranking, created by the Economist Intelligence Unit, evaluates a city’s liveability according to five indicators:

  1. stability, which includes threats of crime and war,
  2. the quality and availability of private and public health care,
  3. culture and environment, which includes qualities like absence of social and religious restrictions, average temperature/humidity, number of cultural events, and the availability of goods and services,
  4. the quality of public and private education
  5. infrastructure

The index does not factor in cost of living, which worked in favour of Melbourne, as it placed 15th worldwide in Mercer’s annual cost of living survey this year, far ahead of Vancouver and Toronto which placed 63rd and 61st worldwide respectively.

Canadian Government Pushing Need for Pipeline Construction

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Canadian-based Enbridge Inc operates the largest pipeline system in the world. The company is hoping to get approval to build a pipeline from Alberta through British Columbia to the West Coast. (Enbridge Inc)

Federal Minister of Natural Resources Joe Oliver said that building more pipelines to Canada’s coasts and border is vital to the country’s economic well-being.

The Minister spoke to the Great Saskatoon Chamber of Commerce on Thursday, where he said that the success of Canada’s energy sector depends on the construction of more pipelines.

“Our government believes it is critical that Canada build pipelines west, south and east to ensure we have customers for our energy projects,” the Minister said at the luncheon.

The federal government in recent days has been defending the Enbridge Northern Gateway Pipelines Project, which is a plan to build a pipeline from Alberta to Canada’s Pacific coast to allow Canadian energy exports to Asia. The plan has faced criticism from a coalition of environmental groups and aboriginal activists, who say they don’t want a pipeline to go through British Columbia.

The government insists that transporting oil and gas by pipeline is the safest and cheapest method available, and that the country’s regulators have the tools necessary to keep the risks at acceptably low levels. Prime Minister Harper described the Enbridge pipeline this week as being “in the vital interests of Canada”.

The oil and gas industry, which depends on pipelines to transport its products, constitutes a major part of Canada’s natural resource sectors, which in turn produces over 50 percent of the country’s export revenues, amounting to over $200 billion in exports each year.

The resource sectors played a significant role in the average net worth of Canadian households surpassing that of American households for the first time in history last year, as rising commodity prices buoyed the value of the Canadian dollar.

Rate of Self-Employment Decreases for Sons of Immigrants, Increases for Daughters -Study

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Self-employment rates of Canadian-born sons of immigrant parents are lower than that of their fathers, while those of Canadian-born daughters of immigrants are higher than that of their mothers' generation. (Eric Ward)

A study on intergenerational changes in self-employment rates among immigrant parents and their children finds that the Canadian-born sons of immigrant parents are less likely to be self-employed than their fathers, and are likely to choose self-employment for different reasons, while the Canadian-born daughters of immigrant parents are more likely to be self-employed than their mothers.

According to the Statistics Canada study, 12 percent of Canadian-born sons of immigrant parents aged 25 to 44 were self-employed in 2006, while 14 percent of immigrant fathers were self-employed at the same age in 1981. For Canadian-born daughters of immigrant parents, the self-employment rate increased to 7 percent, from 6 percent for their immigrant mothers in 1981.

The factors “pushing” individuals into self-employment differed between second generation and first generation men as well.

Among immigrant fathers in 1981, the main motivation for choosing self-employment was lack of employment opportunities, while among their Canadian born sons in 2006, there was a higher likelihood that expectations of greater earnings motivated them to choose self-employment.

The study finds that the generational decline in self-employment rates among the Canadian-born sons of immigrant parents is due to a larger trend in the typical life course events of Canadian men. Canadian men aged 25 to 44 have less work experience, are less likely to be married and have fewer children than their fathers when they were at their age.

Conference Board of Canada says Canada Needs More Investment to Utilize Skilled Work Force

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More investment into capital equipment like industrial robots is needed to boost productivity according to an Op-Ed by the Conference Board of Canada (KUKA Roboter GmbH, Bachmann)

A new Op-Ed by the Conference Board of Canada, a non-partisan Canadian economic think tank, makes the case that Canada’s tepid productivity growth over the last three decades is due to an insufficient expansion of physical capital.

The report lauds the quality of Canada’s labour force:

Canada can boast one of the top workforces in the world. Compared with many other developed countries, Canada has a very high proportion of college- and university-educated workers in the labour force. Only Finland surpassed Canada in the Conference Board’s How Canada Performs analysis in Education and Skills– our best showing across six socio-economic categories.

And argues that Canada’s workers, while well-educated and capable, have not been given the “machinery and equipment, technology, and infrastructure” needed to maximize their productivity.

It notes that the ratio of physical capital to human capital decreased dramatically from the mid 1980s onward, and this corresponded with a slow down in productivity growth -from 2.8 percent per year in the 1962 to 1984 period, to just 1.2 percent per year in the 1984 to 2010 period.

The report gives several reasons for the decrease in investment in physical capital:

  • A weakening Canadian dollar in the 1990s and early 2000s, which made foreign-made capital equipment more expensive for Canadian companies
  • The introduction of the capital tax, a tax on the value of a company’s taxable capital, in 1985
  • Trade barriers like tariffs between Canada and other countries
  • Insufficient investment in Canada’s public infrastructure
  • A weak venture capital market which has prevented a greater number of successful firms from being launched in Canada

The authors note that there have been improvements in all of these areas in recent years, with a stronger Canadian dollar since 2003, the elimination of the capital tax in 2006, large investments by the federal government into infrastructure projects since 1999, the elimination of tariffs on machinery and equipment in 2009, and recent inter-provincial agreements to reduce domestic trade barriers, like the TILMA between BC and Alberta.

They say these improvements have resulted in strong growth in capital investment since 2005, including a 25 percent increase in the last two years.

The report recommends more work to develop the venture capital market, improve advanced education, and reduce trade barriers, as well as increasing infrastructure investment, to enhance future productivity.

Statistics Show Bogus Asylum Seekers Racking Up Health Care Costs

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George Dumont hospital in Moncton. The Canadian government spends approximately $20 million a year on health care for asylum seekers. (Stu Pendousmat)

Immigration Canada released statistics on health care spending for refugee claimants yesterday to bolster its case that the recent scaling back of free health care for asylum seekers was necessary.

The statistics show that refugee claimants from Mexico, Hungary, Columbia, the United States and Jamaica, all countries that do not have a record of human rights abuse and persecution, received millions of dollars worth of Canadian health care services for free through the Interim Federal Health Program (IFHP), and proportionally more than asylum seekers from any other country.

Immigration Canada’s data shows that health care costs for 8,819 Mexican asylum seekers came to $7 million last year, for 6,749 Hungarians to $4.4 million, for 4,583 Columbians to $2.6 million, for 3,790 Americans to over $1.4 million and for 809 Jaimaican asylum seekers to $808,000.

Almost all of the claimants from these countries end up not attending their refugee hearings, withdrawing their refugee application, or having their claim rejected by the Immigration and Refugee Board (IRB) of Canada.

Immigration Minister Jason Kenney said that this made it necessary to reduce the range of free health care services provided to asylum seekers to prevent abuse of Canada’s refugee system.

“That does underscore the reasons why we’ve reformed the Interim Federal Health Program. There’s no doubt that it has been a draw factor for many false asylum claims,” commented Mr. Kenney.

Under changes to Canada’s Refugees System with the enactment of Bill C-31 on June 11th, free pharmaceutical, vision and dental care for refugee claimants was eliminated, which supporters of the cuts argue is fair as none of these services are available to Canadian citizens through Medicare.

The extent of the abuse of the Interim Federal Health Program was highlighted by Minister Kenney as he cited interviews Canada Border Service agents have conducted with some Hungarian asylum seekers when they were withdrawing their applications for refugee status, in which the claimants admitted that they had come to Canada to receive free dental care for their children, and now that they had gotten it, there was no reason to stay.

Canada’s Real Wage Growth Stagnant For Last 30 Years -Report

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Average hourly wages increased by only three dollars from 1981 to 2011 after adjusting for inflation

A report published last month as part of Statistics Canada’s Economic Insights series finds that average real wage rates increased by only 14 percent in Canada from 1981 to 2011.

According to the report, real hourly wages, meaning hourly wages after adjusting for inflation, increased from approximately $20.70 in 1981, to $23.70 in 2011, a $3 wage gain in 30 years. Median real hourly wage growth was even more meager, increasing by approximately $2, to $20.90, between 1981 and 2011 -a 10.6 percent increase over three decades.

Different rates of wage growth were observed in the earlier and latter halves of the last 30 years, with average real hourly wages rising by only 4 percent in the 17 year period from 1981 to 1998.

After deep spending cuts by the federal government in the mid-1990s, which brought total government spending levels down from 53 percent of GDP in 1992, to 43 percent of GDP in 1998, the rate accelerated, with wages increasing 10 percent in the 13 year period from 1998 to 2011.

Much of the developed world has experienced wage stagnation over the last four decades. Explanations for the slow down include:

  • the break-down of the Bretton-Woods system, which pegged the world’s currencies to gold, in 1971, and the subsequent increase in monetary inflation, resulting in nominal wage hikes not keeping up with inflation
  • globalization and corporate outsourcing to low wage countries
  • an ‘innovation saturation’ as economies mature
  • the entrance of women into the work force increasing the supply of labour
  • an increase in government spending levels diverting economic output from private sector investments

Nominal wages in Canada increased by 1.1 percent in 2011, substantially less than last year’s annual inflation rate of 3.2 percent.