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Ontario Economy

Ontario Liberals’ power regime a fiasco – by Terence Corcoran (National Post – December 3, 2015)

The National Post is Canada’s second largest national paper.

At least now it must be seen as official: Ontario’s electricity regime is a gargantuan fiasco, a dysfunctional, overpriced, mismanaged system that for most of the last decade has been abandoned to the provincial Liberals’ gross incompetence and deliberate abuse of governance.

In strong language and clear analysis leading to straight-shooting conclusions, Ontario Auditor General Bonnie Lysyk has delivered one of the most devastating audit reports on government bungling and malpractice in Canadian history.

Ontario consumers and small business owners already know the hard fact: the cost of electricity has almost doubled under the McGuinty/Wynne regimes, from 5.32 cents per kilowatt hour to 10.10 cents, with many more increases to come.

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Ontario’s Liberals have completely broken the electricity system – Editorial (Globe and Mail – December 3, 2015)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

In politics, as we wrote Wednesday, people get upset about the little things. Remember Bev Oda’s $16 glass of orange juice?

In the context of a 12-figure federal budget, or ministerial trips justifiably running into the tens of thousands of dollars, some overpriced OJ hardly mattered.

And yet it galled. Small misdeeds are relatable. A big, complicated and massively costly government screw-up, in contrast, sometimes leaves people cold.

Let’s see if this warms you up. On Wednesday, Ontario’s Auditor-General announced that, between 2006 and 2014, thanks to incompetence and mismanagement on the part of the province’s Liberal government, Ontarians overpaid for electricity to the tune of $37-billion.

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Deciphering Ontario’s job-killing carbon tax – by Christine Van Geyn (National Post – November 24, 2015)

The National Post is Canada’s second largest national paper.

On Nov. 13, Ontario Premier Kathleen Wynne and Environment Minister Glen Murray circulated a discussion paper to industry and business groups outlining some of their proposals for a cap-and-trade scheme.

Unfortunately, the people who will ultimately bear the cost of the program — the public, which will face higher prices on everything from fuel to manufactured goods — are not part of this “discussion.” In fact, the so-called “discussion paper” is not even available on the Ministry of the Environment website.

The 66-page document might as well have been written in another language for all the clarity of terms it provides.

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Industry crisis testing the mettle of steel makers – by Greg Keenan (Globe and Mail – November 14, 2015)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

As a 36-year veteran of the steel mill that dominates Sault Ste. Marie, Ont., Steve Johnson didn’t lose any sleep Monday night after Essar Steel Algoma Inc. was granted creditor protection.

“If I look at the horizon, it hasn’t changed,” Mr. Johnson says. “They’re still making steel. They’re still making iron. We can tell by which smokestack is emitting fumes what’s going on.”

It is the third time in a quarter century that Algoma has been granted protection under the Companies’ Creditors Arrangement Act. The steel maker has interest payments of $25-million (U.S.) that it is unable to make amid a collapse in the price of steel and a court battle with an iron ore supplier.

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Algoma granted creditor protection again amid plunging steel prices – by Greg Keenan and Ian McGugan (Globe and Mail – November 10, 2015)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

Essar Steel Algoma Inc., the economic backbone of Sault Ste. Marie, Ont., for more than a century, will make its third trip through creditor protection amid a collapse in steel prices and a battle with a critical supplier.

The steel maker, which was founded in 1901 to make rails for the growing railway industry, was granted protection Monday under the Companies’ Creditors Arrangement Act, saying it does not have enough money to make $25-million in debt payments due next week or special payments on pension funds with a combined deficit topping $500-million.

“The urgency of the need for immediate cash is unquestioned,” Ontario Superior Court Justice Frank Newbould said in granting the company creditor protection.

The filing underlines the battered state of much of the steel sector in Canada and North America. Essar Algoma joins U.S. Steel Canada Inc., which was granted CCAA protection in September, 2014 – the second trip for the former Stelco Inc. through a court-supervised restructuring.

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Ontario is playing politics with power – again – by Margaret Wente (Globe and Mail – November 3, 2015)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

Do you understand your electricity bill? Me neither. All I know is that it keeps going up. There was a rate increase in May, and Ontarians got another one this week.

The provincial government made it sound like nothing. An increase of only 3.4 per cent, on average. Four bucks and change a month! A latte at Starbucks costs more. But this isn’t the truth, of course. The truth is that residential electricity rates have gone up a whopping 12.6 per cent since last winter, says Tom Adams, an independent energy consultant who is an expert on energy politics in Ontario.

The average Ontario household is paying about a third more for power than in 2010. On Jan. 1, bills will go up again when the government cancels the 10-per-cent rebate that it cheerily calls the “clean energy benefit.” There will also be a new tax to subsidize low-income users. Suck it up, people. There is no end in sight.

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Why privatizing Hydro One is proving politically costly – by Martin Regg Cohn (Toronto Star – November 1, 2015)

The Toronto Star has the largest circulation in Canada. The paper has an enormous impact on federal and Ontario politics as well as shaping public opinion.

Hydro One sell-off not a risk not worth taking — mostly because of the public policy peril, not financial risk.

As Hydro One is slowly sold off, it won’t be so much missed as misunderstood. And misrepresented.

Misunderstood, because most people living in the Greater Toronto Area have never dealt directly with Hydro One and might reasonably wonder what, if anything, its sale has to do with rising electricity bills. (Answers below.)

Misrepresented, because a political fight over the sell-off of this provincially owned utility is obscured by predictable government contortions and opposition distortions. (Miscalculations below.)

Hydro One is back in the news thanks to the foresight of Ontario’s New Democrats.

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Hydro One sale could cost Ontario $500-million a year in lost revenues: budget watchdog – by Ashley Csanady (National Post – October 29, 2015)

The National Post is Canada’s second largest national paper.

The Ontario Liberals’ plans to sell Hydro One could cost the treasury $500-million annually and will eventually increase the province’s net debt, the financial accountability officer has found.

Stephen LeClair’s inaugural report slams the Liberal government’s plans to sell 60 per cent of the utility — which transmits most electricity in the province — as a short-sighted cash grab that will cost more than it makes in the long run.

The report notes that, in the short term, the sell-off will make it easier for Ontario to balance its budget by its planned deadline of 2017/18, but the lost revenues will hurt the bottom line over the longer term and make it harder to balance future budgets. The plan is to sell a 15 per cent stake in the Crown corporation each year until 2019, when the province’s stake will be reduced to 40 per cent.

“Once the full 60 per cent has been sold, the province would experience an ongoing negative impact on budget balance from foregone net income and payments-in-lieu of taxes from Hydro One,” the report notes, putting that number at $100 million annually.

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GLOBE EDITORIAL: TPP-Less than hoped for, less than feared.(Globe and Mail – October 6, 2015)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

The Trans-Pacific Partnership (TPP) trade and investment agreement reached by 12 countries on Monday morning looks like a good deal – good, and not quite as big as promised. Both the positives and negatives in the deal appear to be smaller than hoped, or feared.

The broad strokes of the deal are known, though the precise details won’t be out for a few days. The TPP will open closed sectors of the Canadian economy, such as dairy, poultry and eggs – but by less than expected. In pharmaceutical patents, an area of concern to Canadians, the TPP’s changes to the status quo also appear to be smaller than advertised. And while the agreement, which includes Japan and the United States (but not China), is being sold as the biggest trade deal ever, it is not as revolutionary as all that.

Thanks to three decades of trade liberalization, from the Canada-U.S. Free Trade Agreement to NAFTA to the World Trade Organization, Canada’s trade is already largely free. The remaining old-style tariff barriers are few and generally low. The TPP is mostly about taking one more step down that path.

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Canada’s auto industry could lose 20,000 jobs because of TPP trade deal, union says – by Kristine Owram (National Post – October 6, 2015)

The National Post is Canada’s second largest national paper.

The Trans-Pacific Partnership trade deal could have major ramifications for Canada’s already struggling auto industry, resulting in cheaper vehicles for consumers, but a more competitive landscape for Canadian manufacturers.

Unifor, the union that represents Canadian workers at the Detroit Three, said the deal would put an estimated 20,000 auto jobs at risk by eliminating tariffs and significantly reducing content rules for vehicles and auto parts.

Under the TPP agreement, Canada will phase out its existing 6.1 per cent tariff on imported passenger vehicles over the next five years — a move that is expected to lower the cost of Japanese-made vehicles for Canadian consumers.

“Certainly it’s good news for consumers and to us that means it’s good news across the board,” said Michael Hatch, chief economist at the Canadian Automobile Dealers Association.

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Canada reaches sweeping Trans-Pacific trade deal – by Barrie McKenna (Globe and Mail – October 5, 2015)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

Ottawa — Canada is joining a massive Pacific Rim free trade zone, but has sacrificed some long-held protections for the country’s dairy, poultry and auto industries to gain entry.

Negotiators for the 12 members of the Trans-Pacific Partnership struck a tentative deal in Atlanta early Monday morning that will eliminate most tariffs in a region spanning roughly 40 per cent of the global economy.

But that will come at a hefty price for some sectors, and for taxpayers.

Ottawa said Monday it will spend $4.3-billion over 15 years to compensate dairy, chicken and egg farmers, who are ceding what Canadian officials called “limited access” to their now highly protected markets under the TPP deal. The subsidies will “keep producers whole,” according to a government press release.

The deal, originally slated to be announced Friday, was delayed numerous times over the weekend as countries haggled over last-minute details on autos, patent protection for drugs and agricultural products.

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Wynne’s losing performance: How Ontario’s growth-killing policies are sinking the economy – by Philip Cross (National Post – October 1, 2015)

The National Post is Canada’s second largest national paper.

Ontarians are clearly having buyer’s remorse after re-electing its Liberal government last year, with two-thirds now believing that Ontario is headed in the wrong direction. An exasperated Kathleen Wynne recently asked “What is it that especially disqualifies me for the job I’m doing?” as Premier of Ontario. Well, since she asked, let’s list the problems the Liberal government has created.

Start with persistent slow economic growth. Since 2002, real GDP growth in Ontario has been consistently below the national average, with a total shortfall of over 10 percentage points. Two-thirds of this gap occurred outside of recession years. Meanwhile, Ontario’s unemployment rate rose above the national average in 2007 for the first time on record and has stayed there.

Ontario has lost its traditional above-average income status in Canada. In the decades after World War II, real disposable income per capita in Ontario was 20 per cent above the national average; in the 1990s under the Harris government, it was still 10 per cent above average. In 2012 and 2013, incomes in Ontario fell below the national average for the first time ever.

Ontario now qualifies for equalization payments, confirming its shift from “have” to “have-not” status within Confederation.

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U.S. Steel Canada threatens to leave Canada if court rejects request – by Greg Keenan (Globe and Mail – September 18, 2015)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

U.S. Steel Canada Inc. is threatening to cease operating in Canada by the end of the year if an Ontario Superior Court judge rejects its request to stop paying municipal taxes, halt payments into pension funds, and cut off health care and other benefits to 20,000 retirees and their dependents.

A decision by the company’s parent, United States Steel Corp., to shift production of high-value-added steel to U.S. mills means the Canadian unit requires a “business preservation order” that will allow it to keep operating, U.S. Steel Canada said in a court filing.

Unless the court approves U.S. Steel Canada’s motion to conserve cash by slashing spending, “we don’t see any way to avoid ceasing operations at the end of 2015,” the company’s president, Mike McQuade, said in a separate memo to employees.

The prospect of a shutdown of operations in Hamilton and Nanticoke, Ont., comes as U.S. Steel and its Canadian unit prepare to enter mediation efforts after a year of protection from creditors under the Companies’ Creditors Arrangement Act.

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Southern Ontario ‘The New Rust Belt,’ The Economist Declares – by Daniel Tencer (Huffington Post – August 31, 2015)

http://www.huffingtonpost.ca/

The Economist magazine has published an article on the “puzzling weakness” of Canadian manufacturing, noting the sector’s years-long slide, which the magazine says has turned southern Ontario, Canada’s manufacturing heartland, into a “new rust belt.”

Observers had been expecting Canadian manufacturing to put in a strong performance this year, thanks to a steeply lower loonie that makes exports more competitive.

But so far, the rebound hasn’t happened. Output in Canadian manufacturing was 2.3 per cent lower this May than it was a year earlier, the latest month for which data is available, and job growth has been at half the pace of the broader economy, after years of declining job numbers.

The Economist article adds an interesting talking point to the debate: In 2000, manufacturing was 18 per cent of Canada’s economy, the same level as Germany. By 2013, it had fallen to 10 per cent, the same level as the U.S. and U.K. It attributes that to the long period during which the Canadian dollar was high thanks to high oil prices, harming the competitiveness of non-oil exporters.

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First Mining Finance sees more acquisition opportunities after three-way deal – by Peter Koven (National Post – September 3, 2015)

The National Post is Canada’s second largest national paper.

Canadian mining heavyweight Keith Neumeyer is taking advantage of awful market conditions to snap up promising assets left and right.

First Mining Finance Corp., Neumeyer’s “mineral bank,” unveiled a three-way deal this week in which it will buy Gold Canyon Resources Inc. and PC Gold Inc. for a total of about $66 million in stock. This comes less than two months after First Mining acquired Coastal Gold Corp., its first acquisition.

Vancouver-based First Mining only went public in April, but the company sees this as the ideal time to buy junior mining assets on the cheap. Juniors are suffering through their worst bear market since the Bre-X crisis because of sinking commodity prices and a near-total lack of financing options.

“We don’t want the market to turn around soon, because we really want to load up on assets,” Pat Donnelly, First Mining’s president, said in an interview. “And so the longer this bear market continues, the better for us.”

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