These are stories Report on Business is following Thursday, Feb. 7, 2013.
What Flaherty got
In 2011, when Jim Flaherty commissioned a report into why Canadians are paying higher prices than Americans for some products, he expressed his “irritation” at the price gap.
One wonders if Canada’s Finance Minister is still somewhat irritated this morning after the release yesterday of the report from the Senate committee on national finance.
Government and government-commissioned reports have a tendency to simply recommend more government and government-commissioned reports, and this one, a crucial one given the level of consumer frustration, was no exception.
Of four recommendations, three call for further study or analysis. All of which probably means we’ll keep paying higher prices.
As The Globe and Mail’s Marina Strauss and Barrie McKenna report, the committee recommended the government help close the gap by slashing tariffs and bringing down barriers, adding that Canadians are paying the price of less competition than U.S. consumers have.
But here’s the thing: Only Recommendation No. 2 calls for immediate action, if you can call it that, by urging the Canada-U.S. Regulatory Cooperation Council to “continue to integrate” safety standards between the two countries.
Recommendation No. 1 calls for Mr. Flaherty to “conduct a comprehensive review” of tariffs, No. 3 suggests the government “analyze the cost and benefits of increasing the de minimis threshold for low-value shipments in Canada,” and No. 4 calls for the Heritage Minister to “study the costs and benefits of reducing the 10-per-cent mark-up that Canadian exclusive distributors can add to the U.S. list price of American books imported into Canada.”
Chief economist Douglas Porter of BMO Nesbitt Burns, who has studied the price gap in-depth, said he found the report “fascinating,” but he concluded that the issue’s a complicated one and that, in the end, there’s little public policy can do to address it.
Even if all four recommendations were followed, he said, it may not make much difference.
“Really the main message here is that the currency is overvalued,” Mr. Porter added, perhaps by about 10 per cent.
Or, looked at the other way, the Canadian dollar should be in the 90-cent range and, in the longer term, “really has no business being close to parity.”
To be fair, I’ve focused solely on the recommendations, while all of it is backed up by a 75-page report into this complex issue.
But for the record, here’s what Mr. Flaherty said when he asked for the probe: “Canadians are rightly irritated when they see large price discrepancies on the exact same products being sold on different sides of the border. I share their irritation.”
While “irritated” Canadians wait for all this study and analysis, they might just be heading for Buffalo, N.Y., or Bellingham, Wash., where their dollar is worth $1.005 U.S. as I write this.
- Senate report cites barriers at border for price gaps
- What our readers say: Price disparities between U.S., Canadian retailers have us feeling gouged
- Some price differences
- Compare Canadian and U.S. prices on popular products
- Read the committee report
A group of British Members of Parliament wasted no time in going after Mark Carney today, questioning him on everything from his political ambitions, to his salary, economic outlook and plans as the incoming head of the Bank of England, The Globe and Mail's Paul Waldie reports from London.
For more than three hours, the 13 members of the House of Commons Treasury Committee pressed the Bank of Canada governor on a host of issues. At one point after a series of questions about inflation targeting, committee chairman Andrew Tyrie smiled and said: “You have certainly demonstrated you know how to handle committees like this.”
The committee pulled few punches during the hearing, challenging Mr. Carney from the start about the unusual nature of his appointment, which came long after the deadline for applications and after months of saying he wasn’t interested in the job.
- 'Rock star' Carney treated like anything but by British MPs
- ROB Insight (for subscribers): Carney emerges from grilling with barely a scratch
- ECB says will monitor impact of euro strength
BCE hikes dividend
Canada’s BCE Inc. posted a 45-per-cent jump in fourth-quarter profit today, boosting its dividend by 6 cents at the same time.
The telecommunications giant earned $708-million or 91 cents a share, The Globe and Mail’s Rita Trichur reports, compared to $486-million or 62 cents a year earlier.
It hiked its annual dividend to $2.33.
Manulife beats forecasts
Manulife Financial Corp. topped analysts’ estimates today with a fourth-quarter profit of $1.1-billion.
As The Globe and Mail’s Jacqueline Nelson writes, strong investment gains and growth in its business in Asia bolstered Canada’s biggest life insurance company.
Manulife earned 56 cents a share, compared to a loss of 5 cents a year earlier.
Air Canada profit rises
Air Canada has bounced back from a quarter loss a year ago to a profitable quarter.
The airline earned $8-million or 3 cents a share in the fourth quarter, The Globe and Mail’s Guy Dixon reports, compared to a loss a year earlier of $60-million or 22 cents a share.
Earnings pour in
Several other companies also reported quarterly results today, including Cineplex Inc., whose revenue and profits soared to record heights, The Globe and Mail’s Steve Ladurantaye reports, and Teck Resources Ltd., whose profit slumped.
- Cineplex posts record year on strong slate of Hollywood blockbusters
- Falling commodity prices bite Teck Resources
- Shoppers hikes payout amid higher sales
Streetwise (for subscribers)
- Canadian bank stocks on fire, despite downgrades
- Panel to reconsider three-year time limit in shareholder suits
- Why union survival isn't just about the money
- Ahead of 2013 budget, Flaherty should be serious about investing in public infrastructure
- The rising risk of a tit-for-tat currency war
ROB Insight (for subscribers)
- A palace coup at Apple?
- Carney emerges from grilling with barely a scratch
- Suncor woes a harbinger of wider crisis in oil sands
- Apple hit with shareholder lawsuit by Einhorn hedge fund
- Ireland hails historic debt deal with ECB
- Canpotex snags supply deals with customers in India
- Activist fund bets on troubled SNC-Lavalin, sees 'compelling value'
- S&P hires top defence attorney for $5-billion lawsuit
- RIM adds 2 former telecom executives to board of directors
- Alcatel CEO to quit after $1.9-billion loss
- U.S. jobless claims fall, trend reading at near five-year low
- Sony stems flow of red ink, eyes comeback