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Canada should take advantage of a new power innovation

TODD HIRSCH

What do you get when you combine orphaned oil and gas wells, nanotechnology, 3-D printing and a bunch of really smart geologists? Throw in a government committed to eliminating carbon-fired electricity, and you get the perfect conditions for some mind-blowing innovation in power generation.

Geologists and engineers at the University of Alberta are developing something called “low temperature micro-geothermal engines.” It may be an awkward name, but what they’re working on could be an innovative breakthrough for Alberta’s power generation aspirations. The provincial government has announced intentions to eliminate all coal-fired power by 2020 – an aggressive goal that has been applauded by many. Yet the question of how we are going to get there looms large over an economy mired in recession.

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Fed edges toward rate hike, but inflation is key variable

DAVID PARKINSON

The minutes of the Federal Reserve Board’s most recent interest-rate meeting suggest that it is a lot closer to raising rates at its next meeting, in mid-June, than the financial markets have been thinking. Which may actually make a June hike a little less likely.

In the minutes of the April 26-27 meeting of the Fed’s policy-setting Federal Open Market Committee (FMOC), made public on Wednesday, the committee made it quite clear it was happy with most aspects of the U.S. economy.

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Provincial tax systems are ripe for change

GLEN HODGSON

All provincial governments levy taxes on their residents and businesses. That might be the only common thread in provincial taxation across the country. Even though the provinces have access to a similar set of tools for raising revenues and shaping incentives to work and invest, there is little alignment in who and how provinces tax.

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GDP, industrial data to offer clearer picture of Japan’s economic woes

BRIAN MILNER

When Japanese Prime Minister Shinzo Abe swept into power in late 2012 with a bold strategy to revive the sputtering economy, growth was flat, inflation was non-existent, the yen was too strong and the Bank of Japan was reluctant to pursue more aggressive monetary measures.

After more than three years of Abenomics and its emphasis on massive monetary and fiscal stimulus, that revival seems as elusive as ever.

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Mark Carney’s outspokenness lands him in the eye of the Brexit storm

PAUL WALDIE

When Mark Carney headed the Bank of Canada, he earned a reputation as a straight talker, someone who wasn’t afraid to express his views on everything from consumer debt levels and income inequality to moderation in eating.

Now as governor of the Bank of England, Mr. Carney is facing a backlash over his outspokenness about Britain’s future if the country votes to leave the European Union next month. He has clashed with MPs, offered several dire warnings and suggested last week that the country could slip into a technical recession (two consecutive quarters of negative growth) if it opts out of the EU.

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Ottawa should commit itself to removing obstacles to innovation

BRIAN LEE CROWLEY

The new government in Ottawa, like every one of its predecessors in the past 30 years or so, believes Canada is not innovative enough. Scarcely a day goes by without some minister patronizingly explaining why business needs to do more to innovate and how Ottawa will be there to help.

Well, here’s a radical suggestion. Instead of officials telling business how to run itself, perhaps they might ask themselves what obstacles governments create to innovation and then dedicate themselves to removing them.

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Transition to clean energy can drive global jobs recovery

ANDREW JACKSON

It is now often said that the environment and the economy are not in conflict. But it is even more true to say that addressing the crisis of global climate change in a serious way could revive a moribund global economy.

The World Economic Outlook (WEO) released by the International Monetary Fund in April of this year once again forecast very slow growth, and argued that economic stagnation is likely to be self-sustaining. This is owing to very low levels of business investment, combined with high levels of household and public debt that constrain household and government spending.

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Fort McMurray wildfires’ impact could be offset by oil’s gains

DAVID PARKINSON

If you’re trying to figure out how Alberta’s already hurting budget is going to get battered by the Fort McMurray wildfires, don’t get too bogged down in the reports of massive losses in oil production shutdowns. You’re better off keeping an eye on the way the oil price responds to the drama playing out in the Alberta oil patch.

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Canada Post goes back to the drawing board

BARRIE McKENNA

Canada Post may well be the most poked, prodded and analyzed federal entity of all time.

Last week, Ottawa announced yet-another review of the postal service – the third such effort in the past 10 years. Actually, this one is more of a review of the last review.

Canada Post abruptly halted its controversial phase-out of home mail delivery last October, and vowed to work with the new Liberal government to explore “a path forward.”

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Is the Brexit debate to blame for Britain’s economic slowdown?

PAUL WALDIE

Just a few months ago, the British economy seemed unstoppable. Job growth was strong, consumer confidence high and by the end of 2015, Britons had enjoyed 12 consecutive quarters of economic growth. Now all that is over and some are blaming the Brexit debate.

A host of recent economic indicators have illustrated the depth of the slowdown. Manufacturing output and construction activity have dropped to the lowest levels in three years, retail sales are down and the economy grew 0.4 per cent in the first quarter of 2016 from the previous one, which had a 0.6-per-cent gain. That was about the same growth rate as France, a habitual laggard, and the second quarter is expected to be even slower.

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A TPP deal falling victim to U.S. election may be good news for Canada

BARRIE McKENNA

The road to ratification of the massive Trans-Pacific Partnership trade deal was always going to be long and arduous.

The fact that trade-bashing Donald Trump is now the presumptive standard bearer of the U.S. Republican Party makes that journey all the more difficult in the months ahead.

Oddly enough, the demise or postponement of the TPP just might be a good thing for Canada.

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Are we too obsessed with growth as measured by the real GDP?

TODD HIRSCH

Since the end of the global recession in 2010, one question has loomed over economic and central banking conferences: What happened to growth?

From emerging markets to the wealthy, industrialized countries, the pace of economic expansion has failed to impress.

It wasn’t supposed to be this way. The BRICS had held out such bright hope as beacons of global growth, continuing to lift commodity prices and consumer markets for everything from Coca-Cola to new iPhones. But these hopes were always pinned to a flimsy premise. Now, at least two of the BRICS are in recession, and forecasts for the other three have consistently been scaled back.

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Ballooning trade deficit continues Canada’s ‘serial disappointment’

DAVID PARKINSON

Rising exports were supposed to be Canada’s ticket out of its oil-collapse doldrums.

But exports have slumped badly in the past two months, and new March numbers show the biggest trade deficit on record. When you are in a country where “serial disappointment” has become an economic catch phrase (coined by the head of your central bank, no less), it is hard not to be a little nervous – even if the experts are not ready to sound the alarm yet.

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Is Canada ready for free trade with Europe?

GLEN HODGSON AND DANIELLE GOLDFARB

The end is finally in sight for the Canada-European Union Comprehensive Economic and Trade Agreement (CETA). The deal still faces hurdles, but is expected to finally come into effect in 2017. Implementing CETA before the United States and the EU complete their own agreement would give Canadian firms a crucial leg up in earlier enhanced access to the European market. Yet the deal itself is not enough. How Canadian firms adapt to European standards and respond to the opportunities presented will determine whether CETA is a success.

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Alberta’s beef beefs: Indignation won’t help sales

JEFFREY JONES

The Alberta beef industry is having its oil sands moment. Or its BlackBerry moment. Maybe both.

Beef producers were blindsided last week, when Earls, the Canadian restaurant chain, made a big deal about its decision to serve only Certified Humane-labelled beef. The only place where there’s enough of it for Earls to buy is the United States.

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Ottawa to assess regions excluded from expanded EI benefits

RACHELLE YOUNGLAI

Ottawa will scrutinize Canada’s jobs report on Friday to see whether Edmonton and southern Saskatchewan will qualify for additional employment insurance benefits.

The federal Liberal government has been under pressure to help those two areas after deciding to expand EI for unemployed people in 12 regions that have suffered from the commodities slump.

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‘Another Canadian economy’ – but it doesn’t measure up

BARRIE McKENNA

As he wrapped up a recent speech about slumping global trade, Stephen Poloz made a startling observation: Sales generated by foreign subsidiaries of Canadian companies now exceed the value of everything this country exports to the world.

“These foreign affiliates are almost like another Canadian economy out there,” the central bank Governor explained.

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Will TREB ruling lead to Uberization of real estate industry?

BARRIE McKENNA

The gossip among real estate agents across Canada this weekend is likely to be all about the fallout from the Competition Tribunal’s move to undo the industry’s virtual monopoly over key home sales data.

Out of earshot of their clients, that is.

The fear among brokers is that liberating this information will lead to the inevitable Uberization of the residential real estate business, and all that entails.

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Why top-down targets rarely succeed in the public sector

BRIAN LEE CROWLEY

Long is the history of words, originally intended as terms of abuse by their opponents, that are eventually adopted by their original targets. A Tory, for example, comes from a term denoting an Irish highwayman, whereas a Whig was originally a Scottish sheep thief. So too is it with “deliverology.”

The always irreverent British press coined this ugly neologism as a way to send up the earnest professorial efforts of Michael Barber, brought in by then Labour prime minister Tony Blair to help figure out why it was proving so hard to improve the quality and productivity of British public services. Mr. Blair was spending billions on health, education, policing and other public services, but the quality of the results, as experienced by the users of those services, remained stubbornly disappointing. Mr. Blair’s solution was to try and do an end run around the allegedly recalcitrant civil service by creating a command-and-control system centred in the Prime Minister’s Delivery Unit, under Mr. Barber’s leadership. Now that Sir Michael is advising the Trudeau government on the dark arts of deliverology, it is a good time to think about whether it works.

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PBO wins big in transparency with release of budget info

ANDREW JACKSON

The Liberal election platform promised to “make the Parliamentary Budget Officer [PBO] truly independent” of the government and to make sure that the office is properly funded. The platform also promised to make government accounting “consistent and clear.”

It was, then, a bit surprising that the PBO had to make a formal request for information normally provided in the federal budget, and was forced to provide its own estimates for the missing numbers in its report to Parliament on April 6. The Department of Finance finally released the requested information only on April 8, more than two weeks after the budget was delivered in the House of Commons (on March 22.)

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Fed’s decision to hold rate could complicate Canadian recovery

DAVID PARKINSON

In a matter of months, the U.S. Federal Reserve has gone from revving up its rate-hiking machine to what now looks like an extended idle.

The shift presents some untimely complications for Canada’s own economic recovery – unless the U.S. job market can ride to the rescue.

The Fed’s latest rate decision, issued on Wednesday afternoon, was, frankly, about as dull as such things get.

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OECD chief gives Britain blunt warning of Brexit perils

PAUL WALDIE

As an economist, diplomat and Secretary-General of the OECD, you might expect Angel Gurria to offer a dry, academic assessment of global issues. Not when it comes to Britain leaving the European Union.

On Wednesday, Mr. Gurria used colourful flourishes, unusual examples and blunt language to argue that there was absolutely no benefit to Britain leaving the EU. “We see no economic upside for the U.K. whatsoever,” Mr. Gurria told a packed auditorium at the London School of Economics. “The only question is where, on the spectrum of possible losses, the outcome winds up.”

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Investors betting on energy recovery

JEFF LEWIS

Energy investors are looking past the financial carnage left by oil’s collapse to tentative signs of recovery in the sector.

First-quarter results start rolling out this week and the numbers are expected to be grim, marred by hefty losses and heightened concern over debt levels as banks trim credit lines and industry-wide cash flow remains anemic.

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