Canada keeps AAA credit rating

Canadian parliament from the Musée Canadienne ...

BY ERIC LAM, POSTMEDIA NEWS JULY 28, 2011

As the debt spectacle continues in Washington, Moody’s Investor Service renewed Canada’s AAA credit rating on Thursday.

While all eyes are on the United States as it tries to hammer out a deal to raise its borrowing limit by Aug. 2, avoid a debt default and a possible debt downgrade, Canada sailed through its annual credit checkup with flying colours.

Moody’s said the country’s high resiliency, government financial strength and low susceptibility to risk were key to the top marks.

Here’s a breakdown of the reasons why Moody’s says Canada deserves the highest possible credit rating:

Economic strength: Very high.

Canada missed the worst of the financial crisis because of the financial strength of its banks and only a mild downturn in the housing market.

The country had a stronger rebound from the recession, with a 3.2-per-cent rise in gross domestic product, compared with 2.9 per cent south of the border. Moody’s said monetary policy and Ottawa’s stimulus program helped the recovery.

There are important differences between the Canadian and U.S. economies that affected Moody’s evaluation of Canada’s strength, including the fact that trade in goods and services makes up more than half of Canada’s GDP, compared with less than one- third in the U.S. This points to a greater degree of openness in the economy, it said.

Canada also has lower federal debt and a stronger banking system and housing market, as well as a higher domestic saving rate, resulting in less reliance on external financial markets.

Institutional strength: Very high.

Fiscal discipline at the Bank of Canada, inflation control, government effectiveness and rule of law all rank highly.

Economic and fiscal policies have remained stable for the past 15 years under Liberal and Conservative governments. Some tax differences exist, but the overall goal of fiscal balance and declining debt has been a constant.

While the proportion of total government debt credited to provincial, territorial and local governments is the highest among major countries, and Moody’s judges the risk of the federal government having to step in to assist these governments with their debt payments as high, it said local ratings indicate little risk that such assistance would actually be needed.

Government financial strength: Very high.

This evaluation is based on a well-established pattern of budget surpluses at the federal level, except during exceptional circumstances such as the financial crisis, leading to declining government debt and debt ratios since the 1990s.

Susceptibility to event risk: Low.

The most important risks are related to the housing market and to separatism in Quebec, although the probability of either affecting Canada’s rating is quite low.

Moody’s maintains Canada Aaa credit rating

Moody’s Investor Services is renewing Canada’s triple-A debt rating, the highest possible.

In its annual report on Canada's sovereign ratings, the firm said the Aaa rating was warranted due to the country’s high degree of economic resiliency, efforts by Ottawa and the provinces to deal with their debt ratios over the coming years and other factors.

The economy’s very high degree of resiliency is demonstrated by a high per capita income, the large scale of the economy, and its diversity, says the Moody’s report. Natural resource industries, a competitive manufacturing sector, and a well-developed and well-regulated financial market also support the country’s resiliency.

While Canada’s public finances deteriorated as a result of the global financial crisis, the federal government and the provinces are now on a track of fiscal consolidation that will improve general government debt ratios over the next few years, according to Moody’s.

Although general government debt, including the debt of the provinces and municipalities, is similar to that of other large Aaa-rated countries, the federal government’s debt position by itself is relatively low. As the provinces are highly rated, Moody’s considers the contingent liability from this source to be low, despite the relatively large size of provincial debt.

Canada’s current account balance returned to surplus in 1999 and remained there until 2008, bringing down the reliance on foreign capital inflows. This has risen somewhat in the past two years but is still not considered a risk to financial stability. Canada’s susceptibility to event risk is low and is related to the housing market and to Quebec’s sovereignty issue.

S&P affirms Canada rating, lauds fiscal discipline

Reuters) - Ratings agency Standard and Poor's affirmed Canada's AAA rating on Friday and lauded the country's strong finances compared with its Group of Seven peers.

The review stood in sharp contrast to growing pressure on the ratings of many Western countries, highlighted by this week's downgrade to Greece's sovereign debt by Moody's Investors Service. [ID:nLDE63L28G]

Standard & Poor's affirmed Canada's AAA long-term and A-1+ short-term sovereign credit ratings with a stable outlook.

"Canada has what we view as strong public finances, a relatively diversified economy, stable public policy, and a sound financial sector," the agency said in a statement.

"The stable outlook reflects our opinion that Canada has the political capacity and will to respond quickly to changing conditions, and the strongest fiscal position of the five 'AAA' rated G7 sovereigns."

The other G7 nations with AAA ratings are the United States, France, Germany and Britain.

S&P cut the outlook on Britain's AAA rating to "negative" on May 21, 2009, a move that typically carries a one in three chance of a downgrade. [ID:nLL292085]

Some analysts have speculated the top-tier credit rating of the United States could be cut one day, an idea rejected by U.S. Treasury Secretary Timothy Geithner. [ID:nN16225360] [ID:nN18366282].

Canada's Conservative government, in presenting its annual budget last month, pledged to turn off the stimulus tap and curtail spending sharply after the economy recovers. [ID:nCFB000108]

"We expect the prevailing consensus on the need for robust public finances, across Canadian regions and political parties, to avoid a return to recurring, structural deficits, in the medium term," S&P said.

The agency also said Canada's financial system is well-developed and sound. The nation's banks did not require government bailouts during the economic crisis and have been ranked as the world's soundest by the World Economic Forum. (Reporting by Jeffrey Hodgson; editing by Rob Wilson)

CIC: COME TO CANADA WIZARD WORKING ITS MAGIC

Prospective immigrants and visitors to Canada now have a new interactive web tool at their fingertips to help them determine if they are eligible to come to Canada. Citizenship, Immigration and Multiculturalism Minister Jason Kenney announced today the launch of the Come to Canada Wizard.

“We understand that our application processes can be complex, but this new tool is a major service improvement,” said Minister Kenney. “The Wizard will make it easier for potential immigrants and visitors to navigate the application process.”

“The Wizard should also reduce applicants’ reliance on immigration consultants and hopefully will make the Department more efficient by decreasing calls to our Call Centre,” Minister Kenney added.

The Wizard simplifies the application process by matching applicants with the federal immigration option that best suits their specific circumstances. The Wizard does this by asking applicants a series of questions and, based on the answers, it provides the best options for them.

The Wizard leads applicants to a results page that breaks down the application steps and provides instructions and forms.

To view the Wizard, go to www.cic.gc.ca/cometocanada.

39% of Canadians see immigration as positive, poll finds

POSTMEDIA NEWS AUGUST 5, 2011

Nearly half the respondents to a groundbreaking global poll believe immigration has had a negative impact on their countries, according to results released Thursday by Ipsos.

And while Canadians have a relatively upbeat attitude on immigration, only a minority of Canadians polled - 39 per cent - viewed its impact as positive.

Forty-five per cent of the 17,601 respondents to the 23-country survey believe "immigration has generally had a negative impact on their country." Only 21 per cent believe immigration has had a positive effect. The rest - 29 per cent - are on the fence.

Thirty-five per cent of Canadians viewed immigration's effects as negative, while 26 per cent were either neutral or did not know.

Countries with the strongest negative opinions were Belgium (72 per cent) followed by South Africa (70 per cent), Russia (69 per cent), Great Britain (64 per cent) and Turkey (57 per cent).

Education made a big difference in respondents' attitudes. Educated Canadians topped the list of people most likely to view immigration positively. Sixty per cent of Canadians with higher levels of education believed its impact on their country was positive, "followed by their highly-educated counterparts in Australia (51 per cent), Saudi Arabia (47 per cent), Brazil (43 per cent), India (43 per cent), Sweden (39 per cent) and the United States (32 per cent)."

The results come at a time when many people seem to believe immigration rates are rising. Some 80 per cent of those surveyed believe that immigration has increased in their respective countries in the past five years.

Ipsos senior vice-president John Wright said he wasn't surprised by the results, given the social end economic tur-moil that has embroiled many of the countries surveyed.

Italy, for example, has dealt with a flood of migrants fleeing strife in Tunisia. Millions of migrants have headed to South Africa from neighbouring African states.

Wright said the survey was a "quick snapshot to find out where the world is" and Ipsos is providing details to academic institutions for study.

Most countries surveyed had more than 1,000 respondents. In those countries, the margin of error is plus or minus 3.1 per cent, 19 times out of 20.

Unemployment rate in Saskatchewan unchanged, lowest in Canada

David Giles, Global Saskatoon: Friday, August 5, 2011

No change in unemployment rate in Saskatchewan, remains lowest in Canada.

Photo Credit: -, Global News

Saskatchewan’s unemployment rate remained steady in July as the province continues to lead Canada with the lowest unemployment rate in Canada.

New numbers released by Stats Canada on Friday has the unemployment rate in the province at 4.9 per cent for July 2011, unchanged from June and down 0.2 per cent from the same time last year. The number of unemployed people actually rose to 27,100, an increase of 300 from June.

Employment in the province also increased in July, with 1,600 more people working than in the previous month. Full-time employment increased by 4,500 while there were 2,900 less people working part-time.

Saskatoon’s unemployment rate dropped 0.1 per cent from the previous month to 5.4 per cent, the fourth lowest in the country for a major centre. Regina held steady at 5.2 per cent, the second lowest in Canada.

"Today's numbers show that Saskatchewan's economy remains strong and steady despite the economic uncertainty south of the border and in other parts of the world," Advanced Education, Employment and Immigration Minister Rob Norris said.

While the opposition NDP was happy to see an increase in jobs, NDP Critic for Education, Employment and Immigration Cam Broten was concerned about the number of unemployed people.

“Clearly, the overall picture released by Statistics Canada this morning is not entirely a pretty one,” Broten said. “With nearly 30,000 people looking for work and with significant job losses in key regions and sectors, there is certainly cause for concern in the latest statistics.”

However, Norris remains optimistic about the future, pointing to job opportunities all across the province and continued growth in the economy.

“Seven major economic forecasters place Saskatchewan's real GDP growth rate at 3.7 per cent in 2011, second highest in Canada."

The unemployment rate in Canada for July was 7.2 per cent.

Pay more, get less, or work longer - these are likely scenarios

As our workforce ages, younger income-earners are being asked to carry more of the tax burden and cost of services such as health care

BY DON CAYO, VANCOUVER SUN AUGUST 4, 2011

Seniors tend to cost governments more money than they pay in taxes

Photograph by: WAYNE HIEBERT, Postmedia files

Seniors tend to cost governments more money than they pay in taxes; younger workers are more apt to pay in more than they get back in services.

As the balance of these two groups changes in Canada - a burgeoning cohort of retirees, and a barely budging number of income-earners - something's got to give. What are the options?

The best choice, though it's unlikely to be sufficient to cover all of the new demand for government services, would be to simply get more productivity out of those who still go to work.

On one hand, there should be scope for this because, compared to other countries, we haven't been improving our productivity very well. On the other hand, our track record is discouraging because - you guessed it - compared to other countries, we haven't been improving our productivity very well.

Also, because productivity gains are tied to investment, our efforts won't be helped by the shrinking of Canada's capital pool as a growing number of seniors stop saving and start drawing down capital to fund retirement.

Another strategy would be to add new workers through immigration.

We're already doing that, and it works - to a point.

An analysis by Schroder Investment Management notes that Canada has the highest immigration rates in the developed world.

"This is why Canada's population will continue to grow, albeit slowly, until 2050, while many other developed countries will shrink," it says.

"By the 2020s, all population growth is expected to come from immigration, and many sectors of the economy (transport, primary industry, construction) will be dependent on foreign workers. In light of this, it seems unlikely that immigration could be raised to high enough levels to completely offset the effect of domestic population aging."

There are other options, of course, but all look less palatable.

One is that governments could simply give Canadians fewer benefits and services. For seniors, this would almost certainly mean cuts to pensions and further erosion of health care, the two biggies that strain government coffers.

Schroder notes that this is, in effect, what Canada already does to keep the growth of its health care costs at a lower rate than most other developed countries.

Health care cost control "has been largely achieved by limiting capacity," the analysis says. "The number of doctors per 1,000 residents has barely risen; the number of nurses and hospital beds has fallen, and Canada has lagged other OECD countries in its stock of medical technology.

"Capacity control does not appear to have adversely affected health outcomes, with life expectancy and infant mortality continuing to improve and outperform the U.S. However, continued demand growth has necessitated health care rationing and the user experience has deteriorated: Waiting lists for procedures are long and it is often difficult to find a family doctor."

Hands up if you're an older person who wants to see us go farther down this road.

A second strategy would be to tax working people more steeply to pay the freight for the growing numbers who don't go to work any more. That's essentially what the federal government did a decade ago when it raised the mandatory contribution rate for the Canada Pension Plan to 9.9 per cent from six per cent of eligible earnings. Hands up if you're a younger worker who wants to see your deductions go higher still.

Finally, it would help - but only to a point - if baby boomers were to put off retirement for a few more years. Governments have recently made this possible by banning mandatory retirement at 65, and misbehaving markets have made it necessary for at least some of us to stay on the job for a few years longer than we once planned. But the next logical policy step would be to add a stick to the carrot by delaying eligibility for pensions and seniors' benefits.

This would likely irk both sides of the generation gap - boomers who are eager to retire, and younger workers who itch to be promoted into the jobs the old guys vacate.

dcayo@vancouversun.com Blog:

vancouversun.com/economy

Age, language are key to better outcomes for immigrants

McMaster University, Toronto, Canada. The Univ...

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ARTHUR SWEETMAN

Special to Globe and Mail Update

Many immigration issues transcend economics, but Immigration Minister Jason Kenney’s cross-country consultation is a remarkable opportunity for an overdue national discussion regarding the role of immigration in the Canadian economy.

Economists, government analysts and others have been documenting the ongoing decline in immigrant labour market outcomes for at least two decades. In 1980, the percentage of immigrants and the Canadian-born living below the low-income cut-off (sometimes called a poverty line) was almost identical at about 17 per cent. Since then, the rate for immigrants increased to more than 21 per cent (in 2005), while that for the Canadian-born decreased to 13 per cent.

Most of the difference appears to be driven by declining labour market outcomes for subsequent cohorts of new arrivals. Immigrants who landed in the late 1970s earned at entry roughly 15 per cent less than comparable Canadians. Since then, the earnings gap has increased significantly and is now in the range of 35 per cent to 40 per cent. The gap narrows as time spent in Canada increases, but it’s not clear that the average recent immigrant will catch up in a reasonable working lifetime.

While federal and provincial governments have taken steps to improve labour market outcomes, more is needed. Research shows there are many factors at play, but two stand out: language ability and age at arrival.

It’s well understood that English- or French-language skills are important for labour market (as well as social) integration for all immigrants, but they’re especially important for the skilled workers we seek to attract.

The Canadian “points” system currently sets the same language requirements for all immigrants. But there’s some evidence that language skills are especially important in facilitating the portability of preimmigration human capital for high-skilled immigrants. Unfortunately, some appear not to have the language skills necessary to fully employ their occupational/educational skills in the Canadian labour market. Putting increased emphasis on language ability at selection for the highly skilled seems to make sense if a “fast start” is desired. Simultaneously, providing settlement resources to allow more extensive language training would be a good investment.

Demographic issues also interact with economic ones. There have been suggestions that immigration’s economic class (as opposed to family or refugee class) be employed to address the dependency ratio associated with population aging. But the actual operation of the system does not appear to have paid any attention to this goal. While those in the skilled worker category are awarded points for “age,” these don’t align with demographic needs. (Strangely, neither do they align with the observed age profile associated with positive labour market outcomes. Rather, they are flat and at their maximum from age 21 to 49.)

As a result, the demographic peak for current immigrants coincides with the peak for the baby boom and, therefore, increases rather than alleviates problems associated with baby boomers’ impending retirement. While a sensible immigration system can only influence our nation’s age structure a little one way or the other, the immigration system could start to “fill in the Generation X valley” between the hills of the baby boom and baby boom echo.

Finally, the immigrant selection system needs better/more management tools and transparency. The “inventory” (backlog) of applications is untenable and requires action. While recent changes are going in the right direction, they appear to be insufficient. One million people are currently waiting to be processed, and more are added to the list every day.

Additional measures – such as increased preliminary screening and stronger proactive management of the application process for the economic class, including adjusting the points threshold to manage the queue – would be beneficial. Coming to admission decisions more quickly and improving economic outcomes for new immigrants will be better for prospective immigrants and for Canada. Increased transparency, including regular detailed reporting of processing times, might also assist in improving system operations.

Arthur Sweetman is a professor in the Department of Economics at McMaster University. He recently presented research findings at the Institute for Research on Public Policy’s conference on Canada’s long-term immigration policy.

RBC tips immigrants to Canada starting a new business

EDITED BY JOHN STOKES

If you are thinking of starting a business in Canada, it pays to know what resources are available. There are several special programs and services offered by the government, and financial institutions to help newcomers become successful business owners in Canada.

"Newcomers should look for start-up incentives, advisory services and step-by-step roadmaps," said Camon Mak, head multicultural markets.

Mak offers tips for getting started:

 Find a small business advisor at a bank who understands your needs as a newcomer. They can provide you with the appropriate advice to help your business succeed.

 Ask your advisor where to look for information on understanding local market opportunities.

 Talk to your advisor about getting connected to important community resources, such as an accountant, lawyer and government services.

Further tips are available online at www.rbcroyalbank.com/tips.

You can also visit www.servicecanada.gc.ca/eng/lifeevents/business, to find more information on how to start your own business in Canada.

Source: http://www.agoracosmopolitan.com/news/business/2011/08/03/389.html

More immigrants are in Canada's national interest

GEOFFREY CAMERON AND IAN GOLDIN

From Thursday's Globe and Mail

Published Thursday, Aug. 04, 2011 2:00AM EDT

Last updated Thursday, Aug. 04, 2011 4:31AM EDT

Immigration Minister Jason Kenney’s announcement that he’s launching stakeholder consultations on Canada’s immigration program presents a timely opportunity for a national conversation. How will we adapt to a century of unprecedented mobility? Will we harness migration to build a more dynamic society and economy, or will we quietly recede from the frontiers of globalization, sacrificing innovation and prosperity for a more static society?

With new policies aimed at clamping down on human smugglers and enhancing U.S.-Canada border security, many perceive that Canada’s door is closing. This is false – so far. Canada accepted 17 per cent more migrants last year than in 2005. In a time of recession when other Western governments are imposing strict limits on migration, Canada admitted 50,000 more migrants in 2010 than in 2009.

Over the past 25 years, the total number of international migrants doubled to more than 200 million. We should expect that number to double again in the next two decades. The world is entering a period of hypermobility, the product of a growing supply of potential migrants from developing countries and a burgeoning demand for both low- and high-skilled workers in developed countries such as Canada. Skype, Western Union, low-cost airlines and other advances are enabling an unprecedented scale of movement.

The drivers of mobility will grow stronger in the coming decades for three reasons:

• Intercountry inequality is increasing rapidly. Millions of Europeans left for the Americas in the late 19th century to seek, among other things, wages that were two to four times higher than those at home. Today, migrants stand to earn as much as 15 times more by moving to another country to work.

• The connected processes of economic development, urbanization and population growth in developing countries are positioning more people to seek their fortunes abroad. Those with the greatest propensity to move are educated young people with access to resources and networks for migration. Climate change will also threaten rural livelihoods, pushing more people into cities and some across borders.

• Demand for migrants will increase as declining fertility and population aging create severe labour shortages, often in developed countries such as Canada. The fiscal burden of an aging population will be borne by a shrinking work force, and staff for nursing homes and retirement facilities will continue to be scarce. Just as Canadian farms rely on temporary foreign workers during harvest time, our elderly population will benefit from the care provided by new Canadians.

We should embrace higher levels of migration because it’s in our national interest. High-skilled migrants innovate at a higher rate than the native-born population, and low-skilled migrants meet crucial service sector gaps. On the whole, migrants contribute more to the public purse than they receive in benefits. It’s no wonder the provinces are seeking increased quotas.

We should also increase levels of migration because it can deliver far more for global prosperity than foreign aid and international trade ever will. Completely opening borders, World Bank economists predict, would produce gains as high as $39-trillion for the world economy over 25 years. These numbers compare with the $70-billion that is currently spent every year in overseas development assistance and the estimated gains of $100-billion from fully liberalizing international trade. If we want to revolutionize our foreign aid policy, we can start by giving more people a chance to work in Canada.

The debate on immigration policy is undermined in many countries by partisan agendas and dysfunctional politics. Other governments are tempted to choke off migration in the interest of short-term expediency and political gain. We must resist this trend, remembering that Canada is a society built with the ingenuity and hard work of generations of migrants.

Geoffrey Cameron, a research associate with the Oxford Martin School at the University of Oxford, works in Ottawa. Ian Goldin is director of the Oxford Martin School and a professorial fellow at Balliol College, Oxford. With Meera Balarajan, they are the authors of Exceptional People: How Migration Shaped Our World and Will Define Our Future.

Immigration Canada