Newsline Canada
 

Canada's CAs give federal budget a B-plus grade TORONTO, Jan. 27 /CNW/ - The Chartered Accountants of Canada give the federal budget a B-plus rating as the government attempts to navigate through unsettled economic times. Canada's CAs welcome the budget's provision of economic stimulus through targeted spending and new tax initiatives along with a continued commitment to previously announced corporate tax cuts. "Canada's economy needs lifeboats now," stressed Kevin Dancey, FCA, President and CEO, Canadian Institute of Chartered Accountants (CICA). "A flotilla of lifeboats arriving too late will help no one." The CA profession is encouraged by the fact that most of the government's stimulus spending is to take place over the next two years and is to be phased out when the economy recovers. Other budget measures drawing praise were tax related including: A one-year Home Renovation Tax Credit providing up to $1,350 in tax relief per household. Increasing the basic personal amount and the top of the two lowest personal income tax brackets by 7.5 per cent above their 2008 levels, allowing Canadians to earn more income before paying federal income taxes or being subject to higher tax rates. Increasing the amount of small business income eligible for the reduced federal tax rate of 11 per cent to $500,000. The government is forecasting to run deficits until 2013 due in large measure to a spending rush on infrastructure projects to quickly provide a much-needed boost to Canada's struggling economy. The deficits over the coming years will significantly eat away at past debt-reduction efforts. More than 80 per cent of the debt reduced over the past 10 years will be reinstated with the projected deficits outlined in the budget. "There is an uneasiness any time a government turns to deficit financing but these are extraordinary times," said Dancey. "Driving down debt levels is like dieting. It is much easier to put the weight on than it is to take it off. For government, it is much easier to spend than it is to reduce the debt load. It will be important for the government to get back on its diet with a focus on debt reduction once times improve."

Canada budget to help home renovations http://ca.reuters.com/article/businessNews/idCATRE50Q2C220090127 Tue Jan 27, 2009 Canada's federal budget on Tuesday will include incentives for home renovations and a promise of relief for credit-card borrowers as well as tax breaks for middle- and lower-income Canadians, the Globe and Mail reported. Canada's Finance Minister Jim Flaherty plans modest but permanent tax breaks for people in middle- and lower-income tax brackets, with one senior official saying the cuts will apply to those earning up to C$80,000 a year, the paper said. Money will also be provided for home renovations, although it is unclear how much the program will be worth, the paper said. Flaherty will outline his concerns about the lack of a uniform grace period for the payment of credit-card bills and insufficient disclosure of the terms consumers are signing up for when using them, including interest rates, according to the paper. The government will await responses from card companies, the paper said, adding that sources said it expects it will ultimately have to regulate. This week's budget will usher in the country's first fiscal deficit in a decade. A government official leaked to reporters on Thursday that deficits over the next two fiscal years would total C$64 billion ($52 billion). Prime Minister Stephen Harper signaled on Saturday for the first time that the budget will contain permanent tax cuts, not just short-term reductions to lift the sagging economy. ($1=$1.22 Canadian)

Downturn Accelerates As It Circles The Globe Economies Worse Off Than Predicted Just Weeks Ago http://www.washingtonpost.com/wp-dyn/content/article/2009/01/23 By Anthony Faiola - Washington Post Staff Writer Saturday, January 24, 2009; A01 The world economy is deteriorating more quickly than leading economists predicted only weeks ago, with Britain yesterday becoming the latest nation to surprise analysts with the depth of its economic pain. Britain posted its worst quarterly contraction since 1980 on the heels of sharper than expected slowdowns reported from Germany to China to South Korea. The grim data, analysts said, underscores how the burst of the biggest credit bubble in history is seeping into the real economies around the world, silencing construction cranes, bankrupting businesses and throwing millions of people out of work. "In just the past few days, we've had a big downward revision, we're seeing that an even bigger deceleration is on the way than we thought," said Simon Johnson, former chief economist at the International Monetary Fund and a senior fellow at the Peterson Institute for International Economics. The depth of the troubles, analysts say, indicates that nations may need to spend more than the billions of dollars already planned on stimulus packages to jump-start their economies, and that a global recovery could take longer, perhaps pushing into 2010. Analysts are particularly concerned about the slowdown in China and the recession in Europe. There is mounting concern about the stability of the euro and the British pound, which dropped to a 24-year low against the dollar yesterday. Analysts are fretting about the possibility of a debt default in a euro-zone country that could send fresh shock waves through global financial markets. The problems in Europe now appear to be as bad if not worse than those in the United States. In the last quarter of 2008, the British economy shrank at an annualized rate of 6 percent. That is worse than economists expected, but also showed the British recession may be even harsher than the one in the United States, where analysts predict data expected next week will show the U.S. economy to have contracted between 5 and 5.5 percent in the last quarter of 2008. The meltdown is altering high streets in Britain, where retail icon Woolworths shuttered the last of its 807 branches this month after 99 years in business. Marks & Spencer, sometimes described as the bellwether of Britain's retail sector, said this month that it would close 27 stores and cut more than 1,000 jobs. The average price of a house has plummeted to mid-2004 levels, according to Halifax, Britain's biggest mortgage lender. Car sales are at a 12-year low. The number of people out of work has climbed to nearly 2 million, a level not seen since 1997 when the Labor Party came to power. In fact, the only sector to show growth in Britain was agriculture, which accounts for about 1 percent of the overall economy. "The question now is not how bad will 2009 be, but will we recover in 2010 and if we recover, will it only be anemic?" said Andrew Scott, professor of economics at the London Business School, adding that the housing bubble is bigger, consumer debt is higher and the speed of the slowdown faster than in previous recessions. Partial data released in recent days by Germany, Europe's single biggest economy, indicates its economy saw a major contraction in the last months of 2008, posting a 6 percent annualized drop, according to Howard Archer, chief Britain and European economist for IHS Global Insight in London. That could get worse as problems mount in the European financial system. In recent days, major banks in Europe -- including the Royal Bank of Scotland -- reported surprisingly massive losses. European authorities are seen by some critics as falling behind the Americans in dealing with distress in the their financial sectors. Standard & Poor's has downgraded Greek and Spanish bonds and warned that others, including Ireland's, may be next. The sense that some European countries are now more risky has driven up the borrowing costs for even large nations in the region, including Italy. That has made it harder for those countries to raise the vast sums needed to launch major stimulus packages aimed at economic recoveries. Also troubling are signs that China, once a rare light in the global economy, may not prove to be the pillar of strength in Asia that many analysts had hoped. Beijing announced this week that its economy grew by 6.8 percent in the fourth quarter of 2008 -- slower than the 7 percent analysts expected -- bringing total growth for 2008 to a seven-year low. Chinese data, however, are somewhat opaque, and analysts warned the slowdown there may be sharper than Beijing is willing to admit. That is diminishing hopes for China as Asia's economic white knight, with its growth potentially propping up economies in the region. And as China grows at a far slower rate, it is importing fewer goods from neighbors, giving export-dependent nations in the region no way to pick up the slack from plummeting demand in the United States and Europe. Particularly hard hit is South Korea, which saw trade with China soar in recent years. But as China slows, and the United States, Europe and Japan sink into deep recessions, unsold goods are piling up at South Korea docks. This week, the government said the economy in the fourth quarter staged its sharpest drop since the Asian economic crisis swept across the country in 1998. Special correspondent Karla Adam in London contributed to this report.

Statement by Mark Carney Governor of the Bank of Canada on release of the Monetary Policy Report Update http://www.bank-banque-canada.ca/en/speeches/2009/state09-1.html 22 January 2009 The outlook for the global economy has deteriorated since the October Monetary Policy Report, with the intensifying financial crisis spilling over into real economic activity. Heightened uncertainty is undermining business and household confidence worldwide and further eroding domestic demand. Major advanced economies, including Canada's, are now in recession, and emerging-market economies are increasingly affected. Commodity prices – especially energy prices – have fallen as a result of substantially weaker global demand. Stabilization of the global financial system is a precondition for economic recovery. To that end, governments and central banks are taking bold and concerted policy actions. There are signs that these extraordinary measures are starting to gain traction, although it will take some time for financial conditions to normalize. In addition, considerable monetary and fiscal policy stimulus is being provided worldwide. Canadian exports are down sharply, and domestic demand is shrinking as a result of declines in real income, household wealth, and confidence. Canada's economy is projected to contract through mid-2009, with real GDP dropping by 1.2 per cent this year on an annual average basis. As policy actions begin to take hold in Canada and globally, and with support from the past depreciation of the Canadian dollar, real GDP is expected to rebound, growing by 3.8 per cent in 2010. A wider output gap through 2009 and modest decreases in housing prices should cause core CPI inflation to ease, bottoming at 1.1 per cent in the fourth quarter. Total CPI inflation is expected to dip below zero for two quarters in 2009, reflecting year-on-year drops in energy prices. With inflation expectations well-anchored, total and core inflation should return to the 2 per cent target in the first half of 2011 as the economy returns to potential. Global developments pose significant upside and downside risks to the inflation projection. On the upside, the global economy could be stronger, if global fiscal stimulus turns out to be more expansionary than expected, or if aggressive policy actions taken across major economies restore confidence more quickly than projected. On the downside, the global recession could be deeper and more protracted because financial conditions take longer to normalize. The Bank judges that these risks are roughly balanced. Against this background, the Bank lowered its policy rate by 50 basis points on Tuesday to 1 per cent, bringing the cumulative monetary policy easing to 350 basis points since December 2007. Guided by Canada's inflation-targeting framework, we will continue to monitor carefully economic and financial developments in judging to what extent further monetary stimulus will be required to achieve the 2 per cent target over the medium term. Low, stable, and predictable inflation is the best contribution monetary policy can make to long

For Businesses Big and Small, It's Lights Out Instead of Restructuring, More Are Quick to Liquidate http://www.washingtonpost.com/wp-dyn/content/article/2009/01/17 By Annys Shin - Washington Post Staff Writer Sunday, January 18, 2009; A01 With the economy in the tank, companies are doing all they can to stay afloat. For many, though, even the most desperate measures have not been enough. Former giants in American business have recently tilted into extinction. Circuit City announced Friday it would follow Linens 'n Things and Sharper Image into liquidation and sell its assets. Over the next two years, analysts say, countless other businesses will simply fade away. "This is now an unprecedented time as far as how bad things have gotten," said Scott Peltz, managing director of RSM McGladrey, a consulting firm that helps turn around troubled companies. The number of business bankruptcy filings rose sharply in 2008, with 31 percent more companies looking to liquidate -- instead of just restructure their debt -- in the third quarter than in the first. They have little choice. Many companies are loaded down with debt amassed in the days of easy money. Servicing that debt is harder because of falling revenue. Lenders, facing their own troubles, are not as eager to refinance. And the buyers that can afford an acquisition right now are few and far between. Circuit City, for instance, filed for Chapter 11 bankruptcy protection in November and tried to strike a deal with lenders while it also looked for a buyer. On Friday, just over two months later, it said that both of those efforts failed, and that it would close its remaining 567 locations, putting more than 30,000 people out of work. The Richmond retailer owes its creditors more than $2.3 billion, making it one of 146 companies with at least $100 million in liabilities that filed for bankruptcy last year, according to statistics from Edward Altman, a corporate finance expert at New York University's Stern School of Business. In 2007, 38 companies with assets greater than $100 million filed. Many of the headline-grabbing bankruptcy filings recently have come from retailers. But analysts are seeing filings rise across a broad range of industries such as hospitality, gaming and automotive suppliers. This month, Nortel Networks, one of the nation's largest makers of phone equipment, filed for bankruptcy. So did the U.S. operations of petrochemical giant LyondellBasell. Meanwhile, for every major corporation staring at insolvency, there are thousands of smaller and midsize businesses in the same predicament but with fewer resources to weather bad times. The owners of Franklin Equipment Co., a manufacturer of logging tractors in the western Tidewater area of Virginia, said earlier this month that they would file for Chapter 7 and sell off their assets after 46 years in business, putting about 70 employees out of work. Clyde Parker, Franklin's personnel director, said the company was done in by a drop in demand for lumber and paper products, financing issues and a dearth of interested buyers. "We've been through a lot of downturns over the years . . . but none near as severe as the one we're in now," Parker said. Many businesses are paying dearly for the easy terms under which they borrowed money just a few years ago. During the height of the debt craze in 2006 and 2007, lenders let borrowers take a holiday before having to pay down the principal. They also allowed companies that couldn't meet interest payments to add those payments onto the principal. Those types of loans were recent innovations, said Colin Blaydon, director of Dartmouth's Center for Private Equity and Entrepreneurship. Such "covenant light" loans allowed companies to default later than they would have in years past, but when they did, they were worse off. Debt financing also grew more complicated in recent years, as multiple layers of creditors were added, said George Singer, a corporate bankruptcy lawyer in Minneapolis. Although creditor agreements can help avoid disputes, creditors can find themselves at odds among themselves. Those first in line to collect may push for liquidation and a faster payday, while second-tier creditors, seeking to increase their chances of collecting, may want to work out new terms instead. "You've got to get a number of people to sit down to agree. . . . and that's just tougher than in previous downturn cycles," Blaydon said. Last year, there were 64,318 commercial bankruptcy filings, the most since 2005, when debtors scrambled to file ahead of changes in bankruptcy laws, according to Automated Access to Court Electronic Records, an Oklahoma City bankruptcy management and data company. Some changes have made it more difficult for companies to restructure, experts say. Debtors now have a maximum of 18 months to propose or confirm a reorganization before creditors get to step in. They also have a limited time to accept or reject leases, a change that has put more pressure on retailers, in particular, to make decisions quickly. For companies that find restructuring infeasible, another option is a sale to a buyer that would keep the business going. But those buyers, by and large, aren't showing up. Private-equity companies, which once made big profits buying up troubled companies mostly with borrowed money and then selling them, have lately been unwilling to take large equity stakes in companies. Such financing is hard to get now and those private-equity firms that have money to spend want to conserve it, said Patrick Lagrange, president of the Turnaround Management Association. The reason: They aren't sure how soon they'll be able to replenish their coffers. "In times of distress, lending always tightens. The difference is the degree to which it has this time," said Paul Leake, a corporate bankruptcy lawyer with Jones Day in New York. There are some signs that lenders are slowly becoming more willing to renegotiate agreements with their debtors, analysts said. After all, financial institutions trying to shore up their balance sheets don't want to be the new owners of empty commercial office buildings or shuttered amusement parks. For companies whose options for survival are rapidly dwindling, any sign of detente would be a good one, said Peltz, of RSM McGladrey. "Lenders are at loggerheads with their borrowers," he said. "People can't sit and stare at each other forever." Staff researcher Magda Jean-Louis contributed to this report.

Canadian bishop slams oil sands development http://news.yahoo.com/s/nm/20090127/wl_canada_nm/canada_us_energy_bishop_2 By Scott Haggett Tue Jan 27, 1:29 pm ET CALGARY, Alberta (Reuters) – The rapid-fire development of Canada's oil sands region has garnered a new critic -- the Catholic bishop whose diocese extends over the world's second-largest oil reserves . Luc Bouchard, bishop of the diocese of St. Paul, which covers nearly 156,000 square km (60,000 square miles) of northeastern Alberta and includes the massive oil sands developments near Fort McMurray, said this week that "the integrity of creation in the Athabasca oil sands is clearly being sacrificed for economic gain". In a pastoral letter to the region's 55,000 Catholics, the bishop wrote that the exploitation of the huge resource is environmentally unsound, challenging the "moral legitimacy of oil sands production". More than a million barrels of oil a day are produced from Alberta's oil sands, where reserves of 173 billion barrels are second only to Saudi Arabia's. Production was expected to more than double by 2015, but falling oil prices and tightened credit have forced most of the region's operators to set aside ambitious expansion plans until the economy recovers. The bishop joins a growing chorus of environmentalists worldwide who have become increasingly wary of the environmental costs of oil sands production. Bouchard's letter said development has damaged the region's boreal forest and reduced the habitat of wildlife and birds, while the toxic tailings ponds from oil sands mining projects are a threat to aquifers and the water quality of the Athabasca River, which flows through the region. He also condemned the projects' greenhouse gas emissions and their consumption of large quantities of natural gas to extract the tar-like bitumen from the sand. "Any one of the above destructive effects provokes moral concern, but it is when the damaging effects are all added together that the moral legitimacy of oil sands production is challenged," the bishop wrote. Bouchard called for the oil industry and government to halt further development until there are adequate environmental protection measures. The Canadian Association of Petroleum Producers, the lobby group that represents Canada's large oil firms, said producers are already committed to lowering the environmental impacts of their projects. "We strongly believe oil sands development is sustainable, regulated and the cornerstone of Canada's resource supply," CAPP said in a statement. "We look forward to talking with the bishop and others about environmental impacts, progress that has already been made, as well industry's future vision for balancing energy supply, environment and economy in the region."

Over 100 partners announce their support for DiverseCity project http://www.newswire.ca/en/releases/archive/January2009/26/c2677.html?view=print   Private, public and non-profit partners commit to taking Toronto from a "diversity deficit" to a "diversity dividend" TORONTO, Jan. 26 /CNW/ - Maytree and the Toronto City Summit Alliance  today announced the first wave of over 100 partners that have committed their support to "DiverseCity: The Greater Toronto Leadership Project". Partners include private, non-profit and public organizations that are committed to more diverse leadership in the Greater Toronto Area (a full list can be found online at http://www.diversecitytoronto.ca/our-partners/). Over 600 CEOs and other civic leaders gathered today for a sold-out Canadian Club luncheon to discuss the social and economic benefits of diverse leadership and the strategies required to enable a new generation of diverse leaders to emerge. "It is our goal that, over the next three years, 1000 new diverse leaders will be identified and helped to move into positions of leadership and influence," says Ratna Omidvar, President, Maytree. "Ultimately our city will benefit from the competitive advantage diverse leaders bring to the public, private and non-profit sectors." The GTA has a higher proportion of immigrants than any other city, surpassing Miami, Sydney, Los Angeles and New York: forty-four per cent of the city region's population is foreign born. Despite the GTA's multicultural strength, visible minorities are currently under-represented in its leadership. The partners of DiverseCity are committed to change this by realizing the full potential of our people and transforming the GTA's leadership landscape through DiverseCity's eight-point plan (see details below). A Conference Board of Canada report, "The Value of Diverse Leadership", analyzed many of the issues and benefits of diversity in Canadian leadership circles. The report showed that diverse leadership can benefit the GTA and other regions in the following areas: Increased financial performance Greater employee productivity and organizational performance Greater ability to attract and retain talent Enhanced creativity and innovation Increased civic engagement "It is time to reap the benefits of creating a more diverse leadership in the GTA and we are thrilled to be partnering with so many strong organizations," says David Pecaut, Chair, Toronto City Summit Alliance, and Senior Partner, The Boston Consulting Group. "Toronto has the opportunity to turn its diversity deficit into a huge diversity dividend." Participants in the Canadian Club lunch discussed the eight concrete projects of DiverseCity including: Initiatives to expand the region's networks: DiverseCity Nexus will bridge business and social connections between established and rising executives through an annual salon-style speaker series. DiverseCity Fellows will equip 25 next generation civic leaders each year through a fellowship that combines leadership, diversity, exposure to top leaders, and action projects. Initiatives to strengthen the region's institutions: DiverseCity onBoard will strengthen public and voluntary institutions by matching their governance positions with highly qualified candidates from racially and ethnically diverse communities. DiverseCity in Civic Leadership will broaden involvement in the political process by identifying, training and mentoring diverse leaders who will run for elected office and manage election campaigns. DiverseCity Voices will enrich the quality of print, radio and television news by identifying and training diverse spokespeople across a variety of subject areas and connecting them with journalists. Initiatives to advance the region's knowledge: DiverseCity Advantage will build and communicate the body of knowledge on the economic and social benefits of diversity in leadership. DiverseCity Perspectives will create opportunities for dialogue and surface new ideas on the systemic conditions that encourage or discourage diversity in leadership. An initiative to track the region's progress: DiverseCity Counts will produce an annual check-up on the extent to which the GTA's leadership reflects our demographic realities. ABOUT MAYTREE: Maytree is a private foundation that promotes equity and prosperity through its policy insights, grants and programs. In particular, it focuses on creating diversity in the workplace, in the boardroom and in public office, changing the face of leadership in the Greater Toronto Area and Canada. ABOUT TCSA: The Toronto City Summit Alliance is a multi-sectoral coalition of civic leaders who develop and support initiatives addressing issues critical to the future health and wealth of the Toronto region. Since its inception in 2002, over 6000 volunteers have been involved in Alliance initiatives aimed at: expanding knowledge-based industry (Toronto Region Research Alliance); better integrating skilled immigrants (Toronto Region Immigrant Employment Council, with Maytree); promoting affordable housing (Make Housing Happen); strengthening neighbourhoods (Strong Neighbourhoods Task Force); supporting working-age adults (Modernizing Income Security for Working-Age Adults Task Force); promoting our cultural and tourism assets (Toront03 and Luminato); connecting and supporting emerging city-builders (Emerging Leaders Network, the Social Entrepreneurship Summit); and realizing a regional environmental vision (Greening Greater Toronto).