This week a number of Canadian statistics were released; Retail Sales fell in December by 0.5% with 9 of the major 11 sectors registering declines including automobiles. The Canadian consumer price index rose .9%. Inflation now sits at 2.1%. Despite the decline retail sales however posted a 4.5% growth. In a previous post I discussed the growth of a couple of Canadian retailers. Again this is simple math; they are either selling to more people or they are increasing their prices within the existing base! Not too hard to figure out.
The annual inflation rate took its highest jump in the last two years, the leader? Gasoline! The price of which has increased over 20% - the largest increase in six years. How did our friends south of the border do? Well they don't have an issue as their gas prices decreased at the pump over the same period. Oh, and no they didn't see a carbon tax either!
This POST will build on one of my previous posts re all the Canadian expats that are now living in the US. In a July 2013 FP article titled Why Is Canada Failing at Tech it was estimated that 350,000 Canadian technology professionals were living in the San Francisco Bay area. The Reason? "a veritable lost generation lured by good, high-paying tech jobs and access to collaborators and capital." It's not getting any better, in fact most Canadian proffesionals would gladly head south if the opportunity arose
The following are excerpts from the February 16th. George Takach, senior partner at McCarthy Tétrault LLP article Canada's Patent Deficit....
"relative to our key trading partners, and especially the United States, we are not as innovative and have not invested as heavily in information technology and other productivity-enhancing devices, systems and methodologies (such as state-of-the-art e commerce platforms). This gap – this deficit – threatens our future prosperity. For example, roughly 3 per cent of our workforce is made up of people in information and telecommunications jobs. In leading digital countries, that percentage is between 6 and 8 per cent.
How dismal is the state of patent-filing in Canada? Even the North Koreans are outperforming us! We are simply not among the top 20 countries in terms of patents filed per capita. Read the full article here.
Many Canadian companies state that finding qualified engineers and programmers has always been a challenge. It’s only getting harder. Forecasts indicate that in a decade there will be a staggering 1.5 million jobs unfilled in Canada
What is our Federal and Provincial Governments doing to keep our talent in Canada once educated? Oh ya, take 53% of their income in taxes and more.
Global gas prices are on the rise—about 4.4 percent on average in Q4 2016. It’s a big jump, but the burden of filling up is felt differently in every country. Bloomberg ranked 61 countries by three economic measures; The average price of a gallon of gas at the pump, Affordability, the average daily income and Income Spent.
Canada ranks #17 in Price at the pump, a gallon of regular gasoline cost $3.46 US/Gallon or $1.20 CDN/LTR. In Affordability we are #9. It takes 3.07% of a persons daily wage (before tax) to purchase a gallon of gas.
In Income Spent we rank #58. The average Canadian driver will spend 2.75% of their total income on gasoline. Only Greece, Mexico and South Africa rank worse!
Our politicians want to be seen as leaders on global warming by implementing carbon taxes on businesses and consumers that, as of January 1st. will affect these numbers negatively more than likely pushing us past Greece.
It costs about $41.00 a barrel to produce oil in Canada. Our southern neighbours can do it for $36.00 a barrel and in Saudi Arabia it's less than $10.00. Oil is currently selling for Oil sales account for approximately 8.9% of Canadas GDP. It is estimated that Canadian producers looses about $3.00 per barrel combined oil sands/traditional methods.
Canada has the world’s third largest oil reserves, but refineries in Eastern Canada still import around 80 per cent of their oil supply. Canada spends approximately $20 Billion Dollars on foreign oil. Maybe we should focus on an Eastern Canada Pipeline for our own use rather than the Keystone Pipeline that will provide the US with oil at a loss to Canadian producers. Would prices at the pump come down, probably not, but at lease we would be using our own oil.
Today the EU signed off on the Comprehensive and Economic Trade Agreement (CETA). The agreement provides for duty-free trade between Canada and the EU (for 98% of industrial products) and offers agricultural producers additional market access. One of the holdups was that Belgian farmers did not want more competition from Canadian dairy products, you know the ones we pay more for than our American neighbors! The Conference Board research estimates that elimination of EU tariffs will lead to $1.4 billion more in exports in 2023. We currently have trade deficits (2015) with Germany: -$10.7 billion, Italy: -$4.0 billion and France: -$2.9 billion. With Belgium we enjoy a $614.4 million surplus. Most EU Countries have been trading with Canada under the MFN (“Most-Favoured-Nation Tariff”) status and, as such, many goods have, up till now, entered Canada tariff free. http://www.cbsa-asfc.gc.ca/trade-commerce/tariff-tarif/2016/01-99/01-99-t2016-3-eng.pdf
The EU and Canada have agreed to scrap 100% of tariff’s on industrial and fisheries products. With regards to agricultural products, the EU and Canada will eliminate 93.8% and 91.7% of tariff’s respectively. Some agricultural products seen as “sensitive” (e.g. eggs or chicken and turkey meat) are not covered by CETA, while for some others (e.g. beef ) duty-free access will only be granted for limited quantities. CETA does not prevent the EU and Canada from keeping a number of regulatory and licensing requirements in place it’s comprised of 600,000 pages of rules and exceptions!
According to a Canadian Government presentation; CETA will create jobs, open new markets and unlock new opportunities in Europe for the benefit of Canadian workers and businesses in every region of our country. It is equivalent to creating almost 80,000 new jobs or increasing the average Canadian household’s annual income by $1,000. This will directly benefit hard-working Canadians through more jobs, higher wages and greater long-term prosperity. http://www.international.gc.ca/trade-agreements-accords-commerciaux/assets/pdfs/ceta-aecg/final_sectors_content-eng_v11.pdf
So what will CETA’s impact be on you, the average Canadian consumer?
Will the price of French, German and Italian wine go down at your Provincial outlet? The deal is said that it will chip away at a trade barrier that currently protects Ontario wines and hard liquor, ultimately making European booze less expensive. Don’t hold your breath though, the provinces will probably eat up this advantage through higher alcohol taxes etc.
The agreement will more than double the quota of cheese imported from the European Union to about 30,000 tonnes per year, which could take a bite out of Ontario and Quebec dairies’ market share. However, Ottawa has assured the provinces it will pay compensation to cheese producers, and that it will set up a marketing campaign for local cheese. (Your tax dollars at work again.)
Under CETA, Canada has agreed to adopt EU measures on so-called “patent term restoration.” Drug patents typically last for 20 years but if it takes more than five years between when a patent on a new drug is filed and marketing authorization is granted, the drug maker will now get an extra two years of patent protection as compensation. This could raise Canadian drug prices and cost provincial health plans, but the federal government believes the price hikes will be small and won’t kick in for years. (Have the ever lied to us before?).
For Canadian consumers, the end of a 6.1 per cent tariff on European imports will make German-made BMW’s and other vehicles like Audi, Ferrari, Maserati and Lamborghini more affordable. (Don’t all rush out at once!)
Did you know that the average price of food in global markets has fallen by 14.5 per cent in the last year as wholesale prices fell for oil, grains and other food products, according to the UN FAO Food Price Index?
Do you know that the cost of food will increase by up to five per cent in Canada in 2017?
According to a Canada’s Food Price Report 2017, released by Dalhousie University That means an average Canadian family of four will spend around $420 more on food in the coming year. Some of our staples, like meats, vegetables and seafood will have the greatest hike: up to six per cent. There’s a few reasons to account for the increase. While one might expect inflation to be a huge driver for prices, the report says the effect it has is minimal. Rather, the report suggests climate and trade policies are the main factors that bring up the cost of groceries. I would also like to add that the low Canadian dollar is not helping the consumer either. it is a fact that virtually all imported goods, including food products, are paid for in U.S. Dollars. The reverse is also a fact, Canada growers and food producers are encouraged to export their goods as they will be paid in U.S. Dollars. Just take a look at how little "Product of Canada" is on your grocers shelves.
Since 2014 the average Canadian family of four has seen their annual food bill increase by over $325.00 per year. In November 2015 Loblaw Companies Ltd. says it earned $166-million in its latest quarter, up nearly 17 per cent from a year ago. They have continued to steadly post increases in profits quarter over quarter. Now the population of Canada has not increased significantly since 2014 so if sales are to the same base then only one thing will account for the increases ; higher consumer prices for same goods.
For those living in Provinces with new "carbon taxes" you can expect this to impact your cost of food even more as the extra costs to shippers, warehousing and retailers is passed on to the consumers.
What do Ryan Gosling, Ryan Renolds, Keefer Sutherland and William Shatner have in common? How about Celine Dion, Michael Buble, Justin Bieber and Drake? Here’s a few more… James Cameron, Seth Rogan, Ivan Rietman, Peter Jennings, Keith Morrison and John Roberts and finally Wayne Gretzky.
These are just a few of the multi-million dollar actors, entertainers, musicians and sports figures that have left Canada and established American residence. Why? It can't be because of travel issues, you can reach virtually any city in the world from one of Canada’s major international airports. No it’s because of our taxes! Anyone in these industries that are either a success or see success on the horizon seek out US Visa’s, Greencards and Citizenship as soon as they can. In addition to the approximate 1,200 that fall into the above categories there are even more in education, business, education and medical professions.
Why do they leave? Very simple just take a look at the following Income Tax comparison.
At CDN$100K you are paying more, percentage wise, on your earnings than someone in the US making US$630KUS (thats CDN$1M). So if you had the chance to keep 15%, 20%, 25% or more of your "hard earned" money wouldn't you want to bail as well?
This being said then what is the impact on the middle class when they make up the top 5% of wage earners leave the country? Well of course you are expected to bear the brunt, You are taxed, tariffed and used fee'd into submission. According to a Globe and Mail article in 2014 when Jean Chrétien became Prime Minister, personal income taxes represented 44 per cent of government revenue. By the time Stephen Harper took over in 2006, the share was up to 46 per cent. In 2018, personal income taxes will account for 50 per cent of total federal revenue! Corporate taxes currently make up 14 per cent of total revenue. Other taxes, including the GST and tariffs, account for 17 per cent.
The Liberal government is counting on the 264,030 taxpayers who make up Canada’s top 1% to help fund billions in campaign promises. The Liberal platform however promised to raise taxes on the top 1 per cent. Interestingly the income cutoff for entry into the 1% club is now $222,000 nationally. I'm thinking that we are going to drive even more of the 1% club out of Canada.
Why is electricity so expensive in Ontario? A substantial amount of what you pay goes toward the overpaid bureaucrats. At least 148 make more than a quarter million dollars per year and 12,500 who make more than $100,000 a whopping 77.5% of Ontario Power Generation employees according to the Globe and Mail,
During the past 8 years the cost of hydro in Ontario has increased by 140%, hurting consumers and crippling businesses. In the past 7 years NOTHING has risen faster than electricity prices.
Take it in because it's the last list you will see. Since the governent sold off 15% of Hydro One in 2015 Hydro One salaries are no longer required to be published.
Ontario exports power to NY, MI and Quebec at the Hourly Ontario Electricity Price (HOEP) of $15.31/megawatt hour (MWh) or 1.53 cents per kilowatt hour (kWh). For 10.6 TWh we get paid approximately $30M however it cost us $250M to produce that much electricity so rather than providing lower cost excess power to our own manufacturers and consumers the the provincial ratepayers subsidize this sale to the tune of $250M.
In the private sector this would be a "Going out of Business" SALE!
As far as I know Niagara Falls is still flowing at the same rate it did 10, 20 even 100 years ago!
Trump has clearly stated that NAFTA is a "Bad Deal" for the U.S. Well I also think that it is a bad deal for the Canadian Consumer. If we take a look at what some of the points are that Trump wants to renegociate we can see how it will benefit the Canadian consumer...
The U.S. publishes an annual list of complaints about trade practices in other countries.
A marketing board is an organization created by many producers to try to market their product and increase consumption and thus prices. We have 120 marketing boards in this Canada. Prices for most board regulated products have increased excessively in Canada compared to the rest of the world—in fact prices in Canada are almost three times as high as other countries. Interesting to note that a family pays less for three liters of pop/soda than for three liners of milk - sad state of affairs!
Canadians pay some of the highest prices in the free world for alcoholic beverages. The price of a bottle of Budweiser in Ontario (Beer Store) is $1.75. In the U.S. (Safeway) it's $0.56. Smirnoff Vodka Ontario (LCBO) $57.00 U.S. (Safeway) $9.95.
Canadians are not allowed any Duty Free purchases unless they are out of country for more than 24 hours. If more than 24 hours but less than 48 hours $200. CDN but no alcohol. After 48 hours $800. CDN ($608. U.S.) one bottle allowed.
Don't believe this one take a look at your TV, Internet and Phone bills!
When I was graduating High School my Dad asked me what I wanted to do and had I given any thought to a career. I told him that I was considering a few things and he told me that my opportunities were unlimited!
Well here we are in 2017 Canada, house prices are through the roof, cars cost is through the roof, insurance rates are through the roof etc. so what do we say to our kids and grandkids? Easy - "Your opportunities are unlimited - as long as you work for the government!!!!
According to a recent Frazer Institute Study "Comparing Government and Private Sector Compensation in Ontario finds that government employees in Ontario—including federal, provincial and municipal workers—receive 13.4 per cent higher wages, on average, than comparable workers in the private sector and also enjoy much more generous non-wage benefits."
I am a concerned Canadian that is fed up seeing companies and people leave Canada due to the high cost of doing business and living.