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Canada: Slow Growth or Possible Recession
The document discusses Canada's slow economic growth and identifies several factors contributing to it. It notes that the Liberal Economic Council is brainstorming ways to increase growth such as easing immigration, retraining workers, and creating infrastructure programs. However, there are no easy fixes as the economy depends on many interconnected areas like exports, consumer spending, commodity prices, and government policies. The document outlines some policy options for various sectors but notes that simply adding regulations will not help and the government cannot rely solely on tax increases from businesses to fund spending.
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Canada: Slow Growth or Possible Recession
- 1. CANADA SLOW GROWTH –WHAT NEEDS TO HAPPEN? By: Paul Young, CPA, CGA Date: December 11, 2018
- 2. PAUL YOUNG -BIO • CPA, CGA • Academia (PF1, FA4 and MS2) • SME – Risk Management • SME – Close, Consolidate and Reporting • SME – Public Policy • SME – Emerging Technology • SME – Financial Solutions • SME – Business Process Change • SME – Supply Chain Management Contact information: Paul_Young_CGA@Hotmail.com
- 3. INTRODUCTION • This presentationwill discuss issues facing the Canadian economy as it heads for slower economic growth.
- 4. AGENDA Slow Economic Growth GDPRates / Slow Growth GDP by Segments Employment Careers What are the next types of businesses? How does the government support new businesses? Training and Skills development Exports Value of Exports What can be done to expand exports? Retail Sales Value of Exports What can be done to expand exports? Housing Market Housing Market Analysis What can be done? Government Spending Housing Market Analysis What can be done?
- 5. SLOW ECONOMIC GROWTH •Liberal Economic Council – Key Quotes “The global expert who heads the Trudeau government’s economic advisory council has offered a glimpse into the group’s brainstorming sessions on how best to lift Canada’s drooping growth prospects. Dominic Barton shared details of the team’s focal points during his appearance this week at a public policy summit in Ottawa. They include easing immigration rules to attract more talent, retraining swaths of the workforce to adjust to the rapid rise in automation and creating what he calls the world’s first infrastructure agency designed to rake in private and foreign capital. Source: http://www.canadianmanufacturing.com/regulation/trudeaus-economic-guru- offers-sneak-peak-on-reviving-growth-177211/
- 6. SLOW GROWTH • Growthis measure by change in GDP. Canada has been experiencing slow growth for over 12+ years. http://www.gbm.scotiabank.com/English/bns_econ/forecast.pdf • You will see based on BNS Analysis Source – Scotiabank Factors impacting Growth • Commodity Prices • Consumer Demand • Exports • Demographics • Government Policies
- 7. CANADA GDP BYSEGMENT Source – Stats Canada GDP Analysis • Approximately 30% of GDP is good producing • Approximately 70% of GDP is the service sector How do you grow GDP? • Opening new markets (Exports) • Innovation/R&D to support next generation of businesses • Government policies related to consumer spending
- 8. WHAT ARE THE NEXT TYPESOF BUSINESSES 3-D Printing Energy Storage Expert Farming Microgrids Digital media Virtual Reality Pre-fab housing Drones Driver-less cars eCommerce Source - http://www.slideshare.n et/paulyoungcga/2016 -employment-outlook- canada or https://www.slideshare. net/paulyoungcga/top- predictions-2019 or
- 9. HOW DOES THEGOVERNMENT CREATE POLICIES TO SUPPORT NEXT GENERATION OF BUSINESS • Cultivate innovation • Focusing on private and public partnership through creation innovation centers at all Colleges and Universities across Canada • Continue to promote tax programs, like R&D Tax Credits or Stock Options or cuts to EI for small to medium size business • Continue to look at programs like SDTC or Next Generation Biofuels or Industry specific funds • Partnering with all levels of government to cut down red tape and regulation to help businesses spend more time growing their business. Source: http://www.slideshare.net/paulyoungcga/canadian-manufacturing-analysis- including-trends-and-assessment-of-government-policies
- 10. REVAMPING EDUCATION Education systemsneeds to be align with needs of business Provincial government need to the apprenticeship programs as part opening up the skills trades to more individuals Tax Policies Hiring credits and/or other training credits should be promoted as part of assisting companies with development of their employees Source: http://www.slideshare.net/paulyoungcga/governme nt-policies-education-skills-development-canada- october-2-2016
- 11. EXPORTS Source – StatsCanada Analysis: • Canada exports account for about 25% of GDP. Canada is export driven country. • For each $1B in exports there is 5,500 indirect/direct jobs created • Goods producing jobs pay on average $350/week as compare to service sector jobs - Sources: http://www.slideshare.net/paulyoungcga/wages-and-employment-canada- july-2016
- 12. EMPLOYMENT • Goods producingjobs lag service sector jobs • The federal government wants to bump up immigration. The economy on average is producing approximately 217,000 jobs per year.
- 13. LIBERALS / MIDDLECLASS Source - https://www.liberal.ca/trudeau-unveils-liberal-platform-for-a-strong-middle-class/ “Stephen Harper wants us to think that if it weren’t for him, our economy would fall apart. But Canada’s economy doesn’t depend on him. It depends on Canadians. It depends on the people I meet all across this country, every single day,” said Mr. Trudeau. “People want economic growth, good jobs, and more money in their pockets. They want to see their voices and values represented in Ottawa. Canadians want a better government, not just a different one. It’s time for real change, and that is exactly what the Liberal Liberal 2015 GDP by PM Wage Growth by Year
- 14. TOP CAREERS /CANADA Source - http://globalnews.ca/news/2944692/the-top-eight-careers-of-the- future-in-canada/ or https://www.trade-schools.net/ca/articles/careers-in- demand.asp Risks • Healthcare funding – Provinces are strapped for cash • Education funding – declining enrolment • Residential/non- residential investment has been sluggish 1. Registered Nurse 2. Truck Driver 3. College or Vocational Instructor 4. Business Management Consultant 5. Welder 6. Licensed Practical Nurse 7. Occupational or Physiotherapy Assistant 8. Software Engineer or Designer 9. Aerospace Engineer 10. Industrial Electrician 11. Aircraft Pilot 12. Pharmacist 13. Psychologist 14. Steamfitter or Pipefitter 15. Construction Estimator 16. Veterinary Technician or Assistant 17. Dispensing Optician
- 15. WHAT CAN BE DONETO SUPPORT EXPORTS Investment in infrastructure that supports moving goods to market (Bridges, ports, roads) More Trade Agreements and FIPA Deals – FYI – Trade Deals to be fair deals Cutting red and regulation down as part getting projects off the ground (mines, pipelines, food processing plants, etc. Provincial Policies Approval of Natural Resource projects Controlling growth in Hydro Rates Reducing red tape and regulations Tax policies Ensure Canada has competitive tax policies with the rest of the world Encouraging more investment in capital assets by keeping the CCA rules for the write-down of machinery and equipment
- 16. RETAIL SALES Areas offocus: Retail sales are approximately $540B and growing at about rate of 1.5% to 2.2% Retail market is going through changes with more and more adoption of eCommerce Retail Market is influence by taxation (Duties, Tariffs, carbon taxation, etc.) Source: Stats Canada / http://www.slideshare.net/pa ulyoungcga/canada-retail- sales-for-july-2016
- 17. WHAT CAN BE DONETO SUPPORT RETAIL SALES Reduction of Tariffs and Duties (USA vs Canadian Pricing) No increases to sales taxes (Provincial or GST) Towing the line when it comes to payroll tax increases Capping growth in hydro rates Reducing red tape and regulations Promote local buying
- 18. HOUSING MARKET Issues: Housing prices onaverage have been growing at rate of 8% for the past few years. The 8% growth rate is higher than wage growth and GDP growth Housing prices are not sustainable as income growth has stagnated Foreign ownership of property has increase the speculation and push up prices Ridiculous bids and asks for housing No Integrated strategy when it comes to the housing market (Provinces, Municipalities, Federal Government and the Private Sector Source: http://www.slideshare.net/paulyoungcga/real-estate-trends- and-analysis-for-canada-august-2016
- 19. GOVERNMENT SPENDING/DEFICITS Issues: Slow economic growthleads to pressure on government revenues Today’s deficit and Debt are tomorrow hike in taxation or spending cut Government needs to be transformed including more value for money as well as balance budget laws.
- 20. HOW DO GOVERNMENT DEFICITS AND DEBT INFLUENCE ECONOMIC GROWTH Highgovernment deficit may force government into making cuts to program spending. Companies do not like to invest in countries due to possibilities of taxes will be increased Raising taxes does not grow an economy. Https://www.youtube.com/ watch?v=hWarBMfshaA Sources: http://www.slideshare.net/p aulyoungcga/what-does- government-deficits-and- debt-mean-to-youppt
- 21. SUMMARY The economic council isa good idea as it brings new ideas to a government . Will the government implement their suggestions? There is no easy solution to fixed slow growth as there many pieces of the puzzle Adding more regulations will not support economic growth – i.e. C69 - https://www.capp.ca/ publications-and- statistics/publications /326232?utm_source =Facebook&utm_me dium=Social Canada needs to become more competitive - https://www.slideshar e.net/paulyoungcga/ business- competitiveness- canada Government cannot do tax increases and then expect business can absorb those new taxes. In the end the business will pass those costs on to the consumers - http://www.slideshare .net/paulyoungcga/h ow-do-corporate- profits-flow or http://www.slideshare .net/paulyoungcga/w Era of using Keynesian economics to support economic growth are done - https://www.forbes.co m/sites/peterferrara/2 012/07/12/obamano mics-the-final-nail-in- the-discredited- keynesian- coffin/#53f9c93cba7d