These are stories Report on Business is following Thursday, Nov. 13, 2014.
Behind the numbers
To hear the Canadian government tell it, you'd think we're all going to live long and prosper, as Star Trek's Mr. Spock might put it.
The problem is that we might just believe it.
In its fiscal update yesterday, Ottawa heralded how far we've come since 2006, how Canada's rebound from the depths of the financial crisis has led major economies, and how job creation has been among the strongest in the Group of Seven nations.
Ottawa praised "Canada's impressive success in creating jobs, growth and long-term prosperity" and "the Harper government's continued commitment to its low-tax plan to create jobs and growth," noting that both the International Monetary Fund and the Organization for Economic Co-operation and Development project that our economy will rank among the top-performing in the G7 this year and next.
It boasted, too, of how "all major income groups have seen increases of about 10 per cent or more in their take-home incomes since 2006" and how our employment situation "contrasts sharply" with that of the United States.
All of which is true. But it's how that message is spun that begs a deeper look, particularly where jobs and income are concerned.
As my colleague David Parkinson writes today, Canada's economy has expanded by an average 2.5 per cent annually, when adjusted for inflation, over the last 15 years. But over the same period, the median weekly wage has increased by an average of only 0.6 per cent a year.
As our economics reporter also writes, the top 1 per cent earn 11 per cent of Canada's total income, highlighting the extreme inequality in the country.
It's true that Canada's jobless rate has eased to 6.5 per cent, the lowest level since before the financial crisis began to take its toll.
But some 1.3 million people are out of work, and almost one million more, who are now in part-time jobs, want full-time positions.
It's true that, as the fiscal update noted, Canada's labour force participation rate is more than 3 percentage points above that of the United States. But it's also true that Canada's rate still stands at a 13-year low.
Consider, too, a recently-launched labour market index from Toronto-Dominion Bank, whose report showed that the jobs market "is currently experiencing more weakness than is implied by looking at the headline unemployment rate alone, and has been for nearly two years."
That report cited Canada's "elevated levels of labour underutilization, involuntary part-time employment, and long-term unemployment."
And here's what Bank of Canada Governor Stephen Poloz said just this month, in the text of a speech in Toronto:
"We have been creating jobs at a trend rate of less than 1 per cent, well below what one would expect from an economy that is recovering. Furthermore, much of the recent employment growth has been part-time. There are over 900,000 people in Canada who are working part-time but would prefer to be in full-time positions, and total hours worked are barely growing at all."
Add to that the bleak outlook among our young people.
Remember what Mr. Poloz said when he raised eyebrows by suggesting some of those who are without jobs might gain experience by volunteering, rather than working for pay:
"And then there are the young people who are out of work, underemployed or trying to improve their jobs prospects by extending their education. We estimate that there are around 200,000 of these people, and I bet almost everyone in this room knows at least one family with adult children living in the basement. I'm pretty sure these kids have not taken early retirement."
One of the interesting things here is that this government actually has an enviable record in this post-crisis era. There's no need to spin it or to boast that the IMF and the OECD expect Canada's economy to beat four or five others in the next two years.
To be fair, the government says there's more to do.
And this is, of course, politics. Politics in the runup to an election.
But we need to skip the praise and keep up the pressure, work even harder to accomplish what's needed in such an uncertain climate.
Like getting one million people into jobs. And almost one million more into the full-time jobs they want.
And getting kids out of their parents' basements and into paid work.
- David Parkinson in ROB Insight (for subscribers): Healthy GDP doesn't mean a health economy
- Bill Curry: Falling oil prices, new tax cuts combine to reduce future surplus projections
- Andrew Jackson in ROB Insight (for subscribers): Corporate Canada needs to pony up to reduce youth unemployment
- Tavia Grant: TD's new labour index delves deeper into jobs market
- Read the fiscal update
On the road to surplus
The government also lauds its fiscal showing. And there's good reason for that.
As The Globe and Mail's Bill Curry reports, the update released by Finance Minister Joe Oliver projects a surplus of $1.9-billion in the 2015-2016 fiscal year, followed by surpluses of $4.3-billion, $5.1-billion, $6.8-billion and $13.1-billion through to 2019-2020.
And the government said it would have posted a small surplus in the current fiscal year were not for its tax cuts, rather than the forecast deficit of $2.9-billion.
Here's what some analysts are saying:
"The current year's net debt-to-GDP ratio is pegged at 31.5 per cent, with the pre-recession low (28.2 per cent) set to be breached by 2017/18, en route to a sub-25-per-cent level in five years' time. Ottawa's low and declining net debt burden is a critical element of Canada's relatively enviable fiscal position vis-àvis many of our advanced economy peers." Warren Lovely, CIBC World Markets
"With an election year looming, the release of the federal fiscal update has provided Canadians with renewed clarity as to the expected path of the nation's finances over the next few years. Over all the outlook is positive, with stronger economic growth expected to keep revenues buoyant while spending remains low relative to the size of the economy … The lower fiscal forecast largely reflects the adjustment for risk and tax relief provided to families in October 2014. As a result, there will be little room left to increase spending or cut taxes going forward. Given the modest amount of room available, tough choices will be required." Derek Burleton and Randall Bartlett, Toronto-Dominion Bank
"Recall that last year's deficit came in at $5.2-billion, a whopping $11-billion better than expected in the spring (partly owing to one-time factors, with some of the improvement carrying forward to this year). Additionally, a $1.2-billion increase in underlying program spending (largely due to employment pension and benefit costs) is fully offset by lower debt service costs. Importantly, the $3-billion fiscal cushion remains fully in place for this fiscal year (and throughout the forecast horizon), so we could still see balanced books by the time FY14/15 is officially wrapped up." Robert Kavcic, BMO Nesbitt Burns
PrairieSky buys Range Royalty
PrairieSky Royalty Ltd. is wasting little time after its spinoff from Encana Corp.
The Calgary-based company announced today it will buy Range Royalty Limited Partnership, also an oil and gas royalty company, for $699-million.
After the deal is done, PrairieSky said, it will hike its annual dividend to $1.30 from $1.27, The Globe and Mail's Carrie Tait reports.
"With the acquisition of Range, PrairieSky has consolidated a leading private oil and gas royalty company in Western Canada," said chief executive Andrew Phillips.
BlackBerry Ltd. shares climbed today as the smartphone maker unveiled a partnership with Samsung and introduced new products.
As The Globe and Mail's Omar El Akkad reports from a media event in San Francisco, BlackBerry made several announcements, including the security deal with its rival.
"We're not about phones this time – we're about software," said chief executive officer John Chen.
Buffett buys Duracell
You could call him the Energizer Bunny. But for the fact that he's buying Duracell.
Warren Buffett's Berkshire Hathaway Inc. today announced a deal to buy Procter & Gamble Co.'s Duracell battery operations.
Duracell will be recapitalized, and Berkshire will pay by handing over $4.7-billion (U.S.) in P&G shares that it owns.
Separately, P&G kicked off a meeting with analysts by taking a 28-cent-a-share charge in its current quarter but reiterating it expects an increase in the "mid-single digits" in core earnings per share this year, though pointing out that currency fluctuations "skew the company toward the low end of the guidance range."
Manulife profit up
Manulife Financial Corp. today posted a higher third-quarter profit, supported by investment gains and higher insurance sales in Asia.
The Canadian life insurer's net income was $1.1-billion or 57 cents per share, up from just over $1-billion at the same time last year, The Globe and Mail's Jacqueline Nelson reports.
Earnings were pulled back somewhat as Manulife took a $69-million charge in the quarter as the company completed its yearly recalculation of actuarial methods and other investment assumptions. But this amount was lower than the company's estimate, executives said.
CPPIB assets up
The Canada Pension Plan Investment Board fund earned a 3.4-per-cent return on its investments in its latest quarter, The Globe and Mail's Bertrand Marotte reports today.
CPPIB said its assets grew by $7.6-billion in the fiscal second quarter ended Sept. 30, with assets increasing to $234.4-billion from $226.8-billion in the year-earlier period.
Growth consisted of $7.5-billion in net investment income and $0.1-billion from new contributions.
The modest return is in stark contrast to much higher returns posted last year, as growth in global markets slows.
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