Federal deficit hits nearly $6B in July October 3, 2009
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Spending by the federal government outpaced revenue by $5.8 billion in July, the Finance Department reported Friday.
A year ago, the government had a surplus of $2.2 billion.
Finance Minister Jim Flaherty projected a deficit of $34 billion in the federal budget in January. It’s now expected reach $56 billion. (Tom Hanson/Canadian Press)
The department said revenue fell by $3.4 billion, or 15.4 per cent, in July as the recession and unemployment hit the incomes of individuals and businesses, and as some tax breaks took effect.
Spending rose $5.1 billion from 2008 with the federal bailout of the auto sector, Ottawa’s two-year, $46.6 billion stimulus spending and higher Employment Insurance payouts.
Lower interest rates also meant reduced interest income.
Ottawa released estimates in September predicting a deficit of $56 billion this year, up from the previous projection of $50 billion.
The government expects annual deficits extending out to 2014-15. The Conservative government has said it does not plan to raise taxes in order to return to a surplus.
With files from The Canadian Press (more…)
N.B. mills get $50M federal grant October 1, 2009
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Aditya Birla Group will get a $50 million grant from the federal government for two New Brunswick mills, including this one in Nackawic.
A pulp and paper company will get a $50-million grant from the federal government for its two New Brunswick plants, the AV Nackawic and the AV Cell mills, CBC News has learned.
The Aditya Birla Group will divide the money between the mills in Nackawic and Atholville, said Shailendra Jain, director of fibre, pulp and spinning.
The money will be used to make improvements to their energy efficiency and environmental performance, he said. It is a direct result of a similar subsidy in the U.S.
The company has already received about $100 million in loans and loan guarantees from the provincial government in the past four years, including $10 million for the Nackawic mill in July.
Jain was quick to defend the funding.
“Through these two operations, we have been able to help the government significantly and the two communities significantly,” he said, noting they employ about 600 people, with annual salaries totalling about $50 million.
“Then, about $22 million goes to the government in various forms, and we generate trade in commerce of $150 milion annually.”
Jain said shareholders have lost up to 15 per cent of their equity in the operations. By comparison, the government’s return on its $100-million investment will be 25 to 30 per cent, plus interest, he said.
“So I don’t think the community or the government is a loser in any case. In fact, we are ? the losers so far.”
Aditya Birla had requested $62 million from the federal government, said Jain.
The company has about two years to complete the green projects, he added.
Federal Reserve holds interest rates steady September 23, 2009
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The U.S. Federal Open Market Committee voted Wednesday to keep short-term interest rates unchanged, at 0.25 per cent.
The committee sets monetary policy for the U.S. central bank, the Federal Reserve. Fed chairman Ben Bernanke and fellow committee members issued a unanimous statement after the meeting which said they expect “inflation will remain subdued.”
Fed chairman Ben Bernanke said last week the U.S. recession is probably over.
The committee said economic activity has picked up following the downturn, financial markets are up, housing activity has increased, and household spending has stabilized but that businesses are still cutting back on staff. It said it is seeing a “strengthening of economic growth.”
Some in the financial services industry have worried that massive government stimulus spending globally will prompt inflation.
The last statement ? issued in August ? made mention of rising unemployment and some consumers and businesses facing tighter credit from their banks.
The Fed has kept its benchmark lending rate at between zero and 0.25 since December.
Bernanke said on Sept.15 that the U.S. recession has probably ended but warned that unemployment would likely take longer to recover.
The committee won’t meet again until November.
Scammers impersonate federal regulator September 6, 2009
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A number of companies and individuals have been contacted by someone posing as the Office of the Superintendent of Financial Institutions and looking for personal information.
About two months ago, several financial companies received faxes on OSFI letterhead requesting confidential and sensitive information, said Jean Paul Duval, OSFI’s communications officer in Ottawa.
The OSFI doesn’t ask for that kind of information by fax, he said, nor does it ask for it by email or phone.
“We have certain ways of communicating,” he told CBC News on Thursday. “A one-off random fax that you receive on a Friday afternoon is not us.”
The federal financial regulator posted an advisory on its site a month ago warning companies to be on the lookout for fraudulent communications. According to Duval, one suspicious element in the faxes was that it listed employee titles that weren’t accurate.
The regulator also sent letters to all of its clients warning them of the scam. “We generated an awareness of this ? just to be vigilant,” said Duval.
Anyone contacted by a suspected scammer should contact Phonebusters, a fraud fighting organization run by the Ontario Provincial Police and the Royal Canadian Mounted Police.
Chrysler Canada offers boost to federal clunker program August 25, 2009
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Chrysler Canada said Friday it is launching a “cash for clunkers” program to supplement the current federal program to encourage drivers to scrap old vehicles for new, fuel-efficient cars and trucks.
The company said it will kick in $500 to $1,500 to supplement the federal “retire your ride” program.
Qualifying customers must be owners of a 1995 or older model year vehicle that is in running condition and has been registered and insured in Canada for the previous consecutive six or 12 months, depending on the province, Chrysler said.
Reid Bigland, the president of Chrysler Canada, said the program is the responsible thing to do. Facilitating the removal of older model vehicles from the road is the right move for the country, people’s health and the environment, he said.
To date, 13,000 Canadians have turned in their old vehicle under the retire your ride program, which also involves the provinces and offers varying incentives.
Chrysler Canada’s cash for clunkers is in addition to its current sales incentives.
Canadian Auto Workers president Ken Lewenza said the union supports such programs that Chrysler and the federal government are offering. But he added that in order to stimulate the economy, there should be a condition on the federal program that it apply to domestically built vehicles
Chrysler Canada’s program follows a move by South Korean automaker Hyundai earlier this week to top up incentives available under the federal retire your ride program.
Quebec to fight federal securities regulator plan July 12, 2009
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The Quebec government is planning a legal challenge to any national securities regulator because it would violate the province’s constitutional and jurisdictional rights, Finance Minister Raymond Bachand said Wednesday.
Securities regulation is a provincial power, but the federal government is pushing for a national body in place of the provincial and territorial securities commissions to fix what Finance Minister Jim Flaherty has called a “glaring weakness.”
The national body, which is still being planned, would provide clearer national accountability, stronger enforcement, better service for investors and lower barriers within Canada, Flaherty has said.
Quebec does not believe that a national commission would be more efficient, and the provincial securities regulators have already harmonized their rules and regulations, Bachand said.
“So the inter-provincial system is working well. It’s closer to the client. It’s closer to the investors and, I think, more efficient that way,” he said.
Flaherty announced an office to help develop the national regulator on June 22.
The office will develop the federal Securities Act, collaborate with provinces and territories and develop a transition plan to cover organizational and administrative matters, the government said.
The office “intends to work collaboratively with provinces and territories that are willing to participate,” the government said.
Alberta has also objected to the proposed national commission.
Quebec is willing to fight the federal initiative to Supreme Court of Canada, Bachand said.
Federal government rolls out $1B aid plan for pulp and paper producers June 17, 2009
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Under a new federal program, mills across the country can apply for money to improve energy efficiency and environmental performance.(Jeff Bassett/Canadian Press)
The federal government is rolling out a $1-billion aid package for Canadian pulp and paper producers.
Natural Resources Minister Lisa Raitt and Denis Lebel, the minister of state for the Economic Development Agency of Canada for the Regions of Quebec, announced the package in Ottawa on Wednesday.
What is black liquor?
Mills have long burned “black liquor” — a byproduct created when wood is processed into fibre — to generate steam energy. According to the Center for Paper Business and Industry Studies, about 240 million tons of black liquor are produced every year around the world.
In March 2009, the financial services group J.P. Morgan released a report suggesting many U.S. mills were “burning black liquor into gold.” Under the U.S. program, mills that combine diesel fuel with a pulp byproduct can qualify for a biofuel tax credit. The report said an average sized U.S. pulp mill would burn more than 175 million gallons of black liquor in a year, earning an annual credit of $90 million US.
Raitt said that only mills producing “black liquor” between January 1 and December 31 of this year will be eligible. Black liquor is a biomass by-product of the chemical pulping process that is used by pulp producers to generate energy for their mills.
The federal government said that under its Green Transformation Program, it will provide 16 cents in funding per litre of black liquor, up to a maximum total of $1 billion.
Raitt said 27 mills across the country will be eligible under the program.
Producers participating in the program will be required to invest the money over the next three years on improvements to their energy efficiency or their environmental performance at any pulp and paper mill in Canada.
The move comes after Canadian firms sought aid from the government in response to a black liquor subsidy received by U.S. producers, who get a tax credit for using the alternative fuel. The U.S. black liquor subsidy is estimated at $6 billion to $8 billion.
Pro and con
The head of a Canadian forestry business group applauded Ottawa’s move, but Canada’s largest forest union denounced it.
“It won’t save any mills or prevent further job loss,” said Communications, Energy and Paperworkers Union president Dave Coles.
The money cannot be used to lower the cost of making pulp, which is necesary to compete with the U.S. mills that are using the U.S. black liquor subsidy to cut their costs and sell more pulp, he said.
“In the short term, mills will still close because in order to take advantage of the subsidy, they must invest in capital,” Coles said. He fears this will lead to more lost forest industry jobs on top of the 55,000 the union says has already disappeared over the last two years.
However, Avrim Lazar, president of the Forest Products Association of Canada, welcomed the program. “This is a government getting it right,” he said, adding that it will lead to a greener industry and will conserve jobs.
“This is very smart spending,” Lazar said.
Federal officials reveal $2.2B deficit for fiscal year May 30, 2009
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A $3.6-billion deficit in March sent the federal government $2.2 billion into the red for the 2008-09 fiscal year, officials said Friday.
The latest reading on the status of the government’s coffers comes just days after Finance Minister Jim Flaherty said the deficit for the current 2009-10 fiscal year is projected to hit more than $50 billion.
For the 2007-08 fiscal year, the government ran a surplus of $11.4 billion.
In its monthly fiscal monitor released Friday, the Finance Department said the government slipped into the hole in March as its budgetary revenues fell $3.1 billion, or 14.4 per cent, from March 2008, due to declines in tax revenues.
For the full 2008-09 fiscal year, the government’s revenues decreased by $9.2 billion, or 3.8 per cent, mainly due to lower corporate income tax and goods and services tax revenues.
Corporate income tax revenue was down $11.1 billion, or 27.2 per cent, year-over-year due to lower business profits and the impact of tax reductions. GST revenues dropped by $4.4 billion, or 15 per cent, reflecting the one-percentage-point reduction in the GST on Jan. 1, 2008.
Government program expenses grew by $6.8 billion, or 3.5 per cent, due to higher transfer payments. That included a $2 billion increase in employment insurance benefits as more people lost their jobs due to the recession.
Public debt charges were down $2.3 billion from last year, due to lower interest rates.
After delivering the news that the government’s deficit projection for the current fiscal year will go from $33.7 billion to more than $50 billion, Flaherty will provide an update to the House of Commons about the government’s finances in June.
MPs approve federal budget February 5, 2009
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Finance Minister Jim Flaherty receives a standing ovation from Conservative caucus members after voting in favour of the federal budget in the House of Commons on Tuesday.(Tom Hanson/Canadian Press)
The House of Commons passed the Conservative government’s budget Tuesday night by a 211 to 91 vote, ensuring the government’s survival.
The NDP and Bloc Québécois voted against the budget, while most of the Liberal party supported the Conservatives’ financial plan.
All six Liberal MPs from Newfoundland and Labrador voted against the budget. Four of them ? Scott Andrews, Siobhan Coady, Judy Foote and Scott Simms ? had argued the budget singles out their province and robs it of an estimated $1.6 billion in federal transfer payments. They said they would be breaking party ranks and opposing the budget in the vote.
The NDP clapped as the Newfoundland and Labrador MPs registered their nay votes while the Conservatives heckled them from across the floor.
There was little reaction from the Liberal members. Earlier Tuesday, Liberal Leader Michael Ignatieff said that he would allow the MPs from the province to break party ranks and have a one-time-only protest vote against the budget. Gerry Byrne and Todd Russell then joined their Liberal colleagues from the province and registered a vote against the budget on Tuesday night.
The budget promises billions of dollars in new spending ? ranging from money for infrastructure projects to aid for worker training and cash for enhanced employment insurance benefits ? to help the country ride out the global economic slump.
The budget forecasts a federal deficit of $33.7 billion for the 2009-10 fiscal year and $29.8 billion the following year.
The bill included a Liberal amendment, which passed through the House on Monday in a 214 to 84 vote. The NDP and Bloc also voted against it.
The amendment requires regular reports to Parliament on the budget’s implementation and costs. The reports are expected in March, June and December.
Each report would be an opportunity for the Opposition to express confidence in the government, Ignatieff said last week.
The Conservatives required the support of the Liberals to ensure the budget bill passed.
A defeat would have toppled the minority Tory government and possibly led to some kind of coalition government or another election.
Politicians gush, business cautious after federal budget January 29, 2009
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Manitoba politicians are salivating at the prospect of new spending on roads, sewers, museums and stadiums but at least one business owner believes Ottawa’s spending splurge will do nothing to boost consumer confidence.
Manitoba Finance Minister Greg Selinger said that at first blush there was something for everyone in the Harper government’s budget.
“We think that waste water and sewers in Winnipeg and in Brandon are important,” he said. “We think that highways are important. We think that social housing is very important. We think specific signature projects such as the Canadian Museum for Human Rights should move forward. We can look at the football stadium as another signature project, so we have a number of things on the table that we can move on very quickly.”
Manitoba’s NDP government has already identified certain priority projects that it plans to cost-share with the federal government, he said.
“There’s no question that this budget has put resources on the table that will help stimulate the economy across the country.”
No confidence
But small business owner Joe Gupta said he’s disappointed since to him it appears the 2009 federal budget will drive the national government deep into debt and will not boost public confidence in the economy.
And he said measures for small business won’t make much difference to his Winnipeg-based company, India Spice House, because consumers just aren’t spending. Tuesday’s federal budget is not going to reverse public worry about the economy or create an environment where consumers will suddenly start spending again, he predicted.
“There’s a lot of unemployment,” said Gupta. “People are not secure with their jobs and all that. They have a scary feeling and they will buy only what is required.”
‘Heart of the Continent’
Winnipeg Mayor Sam Katz said he’s pleased to see Ottawa will fast-track development of an inland port in the city.
The CentrePort idea is to build on Winnipeg’s reputation as an air cargo, rail and trucking transportation hub in the geographic centre of North America. About 20,000 acres of land around Winnipeg’s James Richardson International airport would be dedicated to building transport and storage terminals.
Katz says it capitalizes on the city’s location at “the heart of the continent.”
“There’s a lot more discussion to go on,” said Katz. “But there’s certainly a fantastic opportunity for us.”
Katz echoed Selinger’s comments ? hoping the budget provisions will open the door to construction of a new football stadium for the CFL’s Winnipeg Blue Bombers at the University of Manitoba.
The mayor said the city has placed a priority on repairing back lanes, bike paths and roads. But he said Winnipeg has yet to determine how projects will be cost-shared between governments before deciding how to proceed.
Treasury Board President Vic Toews, the federal minister responsible for Manitoba, said upgrading a dangerous stretch of the Trans-Canada Highway through Headingley, just west of Winnipeg, was specifically mentioned in the budget.
And he said the federal share of funding for a new football stadium will be easier to find. “[The stadium is] not specifically mentioned but it certainly makes it much easier for me to come up with $15 million of taxpayers’ money,” Toews said.
