8 things to watch for in today's federal budget

While Prime Minister Stephen Harper has made a habit of avoiding pre-budget leaks, he and his cabinet have made a point of telegraphing what to expect. Their mantra — and what they believe is a key part of their success — is that they tell voters what they'll do and then they do it.

With an estimated deficit of $33.3 billion and a promise from the government to balance the budget by 2014, here are eight elements to watch for in today's budget.

Harper lit a firestorm in a speech he gave in front of an audience of international business leaders in Davos, Switzerland, in January when he said the Canadian government would be looking at making Canada's retirement income system sustainable. His staff were prepared with Finance Department numbers showing a bulge in costs as baby boomers hit age 65. Finance Minister Jim Flaherty is expected to use the budget to outline changes to OAS, possibly by raising the eligibility to 67 instead of 65, but the actual change won't come until several years after this budget.

Harper also said in Davos that Canada has to change the way it invests in research and development. The government says Canada is one of the world's most generous with R&D funding, spending almost $12 billion a year, but the private sector isn't delivering results to match that investment. Minister of State for Science and Technology Gary Goodyear says the National Research Council, which now gets $700 million a year, could see major changes. A report last fall by business leader Tom Jenkins also said the complicated SRED tax credit system needs to be streamlined to make it easier to apply for funding.

Watch to see how much the defence budget is cut with the Conservatives having sold themselves as the party that cares about the military. The government has increased the department's annual budget by $6 billion a year from the time it took office in 2006, so it is a department seen as having room to cut. It's likely immediate cuts will be on the staffing side and to the number of full-time reservists. Plus, with most soldiers back from Afghanistan and the mission in Libya over, there will be fewer operational costs on the books.

The government has been shifting where it spends its money on diplomacy over the past six years, closing some embassies and opening new trade offices, so watch to see whether any missions will be closed. And the Canadian International Development Agency, which operates independently from Foreign Affairs but doesn't have separate enacting legislation, has been a target for a government trying to make aid more effective. There's a chance it will get wrapped into the Department of Foreign Affairs, but more likely spending will be cut from other budgets, like staff travel to projects they're overseeing in developing countries.

Treasury Board president Tony Clement, who's like the government's chief operating officer, says the Conservatives won't break any collective agreements with public service unions, and he's hoping a lot of the jobs the government cuts will be through attrition or moving around civil servants who want to stay in the bureaucracy. But Harper has said public service pensions aren't sustainable at their current levels, and public service workers will be expected to shoulder a greater burden of their retirement costs.

The Assembly of First Nations has said it needs $500 million in the budget to bring on-reserve schools up to the same standards as other Canadian schools. And after weeks-long controversy over the state of housing in Attawapiskat, followed by a gathering in Ottawa to "re-set" the relationship between the Crown and First Nations, expectations will be high.

Immigration Minister Jason Kenney has been tailoring his announcements to the business community lately, extolling the changes he's made to the immigration system that make it easier to hire skilled foreign workers to fill labour gaps. This has little to do with the federal budget, but Kenney will be on-hand to sell it as good for the Canadian economy.

The Conservatives have promised not to cut transfers to the provinces, including health funding. While the current funding agreement doesn’t expire until 2014, Flaherty shocked the provincial and territorial finance ministers when he gave them the take-it-or-leave-it details of the new agreement in December 2011: health funding will continue to increase by six per cent a year until 2017. Starting in 2017, funding will be tied to nominal GDP, although the federal government is guaranteeing a minimum increase of three per cent. Nominal GDP is the monetary value of all goods and services produced within the country annually, including inflation.

View the original article here

Bombardier wins $600M US New York contract

New York City's mass transit system is set to order for more than 300 subway cars made by Montreal-based Bombardier Transportation.

Gov. Andrew Cuomo will announce the $600 million contract later today. The cars will be built in Plattsburgh, keeping 500 jobs alive and provide stable, higher-paying manufacturing jobs for several years.

Cuomo says the deal will keep 300 workers busy and support 200 more jobs from suppliers.

The Metropolitan Transportation Authority says the new cars will replace the subway's oldest cars, improving service in the massive system. The contract will be paid in part with $305 million in federal money.

The company won the contract by offering the lowest bid. Bombardier has built subway cars for the city since 1981.

View the original article here

Aveos workers await final pay

Employees who lost their jobs following the collapse of Aveos Fleet Performance Inc. say they have not been paid for their final two weeks of work.

The workers had expected their final paycheques to be deposited in the bank on Wednesday, but the funds did not materialize.

"This is just one more straw in the basket," said Liz Miazga, a logistics coordinator who worked at the Winnipeg aircraft maintenance plant for 14 years.

Liz Miazga says she has not been paid for work at Aveos. (Neil Carleton/CBC)

"We are a very frustrated group. We didn't want to transfer to Aveos. We are all long-term Air Canada employees who were forced to transition."

Aveos abruptly shut down on March 18 and filed for bankruptcy soon after, leaving about 2,600 out of work across the country, including employees at its Winnipeg, Montreal and Vancouver facilities.

Aveos, a former maintenance division of Air Canada, became a private company in 2007.

The federal government says it will seek a legal opinion on whether Air Canada broke any obligations that may have led to the closing of the maintenance firm, but said there won't be any bailout for Aveos.

Miazga says many employees were counting on their final cheques to catch up on things like mortgages and car payments.

"This paycheque would be for work that we already performed … for the two weeks previous to being locked out," she said.

"So this would have been our final payment. This would not have included any severance or vacation pay or anything else."

Hundreds of former Winnipeg employees met with their union representatives on Wednesday to discuss their employment insurance claims, as well as provide support to each other.

In a statement, Aveos says it intends to pay base wages earned before March 19, but it needs a bankruptcy court order to do that. Company officials say they expect to be in court next week.

View the original article here

Canadians worried about mortgage rate hikes

As concerns over the state of the Canadian real estate market abound, a new survey says nearly half of Canadians are unsure about their ability to afford their homes if rates rise by as little as two percentage points.

The survey commissioned by the Bank of Montreal study finds 43 per cent believe an interest hike would either hamper their ability to pay or leave them on unsure footing.

Regionally, residents of Alberta were the least concerned, with 73 per cent saying that rising rates would not affect their ability to afford their homes, while residents of British Columbia were the most concerned. Just 48 per cent B.C. residents are comfortable in their ability to handle higher rates.

The survey results come as banks and economists warn about the rising debt levels of Canadian households.

It also comes as some of Canada's biggest banks have started raising variable mortgage rates, even though the Bank of Canada's overnight interest rate remains unchanged.

Earlier this week, both RBC and TD raised the posted rates on five-year mortgages.

That could signal the end of the era of cheap borrowing that has encouraged many Canadians to take on houses they may not have been able to otherwise afford.

BMO anticipates that the Bank of Canada will begin increasing interest rates from the current one per cent next year.

Many in the mortgage industry have recently advised homeowners to take on the previously less-popular variable mortgage rates as interest rates had remained low since the end of the recession, when the Bank of Canada pushed its overnight rate down to an emergency low 0.25 per cent.

But looking ahead, some industry watchers say now is the time to consider switching to lock in longer term rates with shortened amortization periods.

"Our interest rate outlook now projects that fixed mortgage rates will trump variable. While the decision ultimately depends on the individual, the low rate combined with a shorter 25-year amortization will significantly strengthen household financial stability," said Doug Porter, deputy chief economist at BMO Capital Markets.

In a report issued last week, Porter and colleague Benjamin Reitzes argued that with the U.S. recovery gathering steam, central bankers on both sides of the border are becoming more comfortable with the economy and less so with historically depressed interest rates.

Already, financial markets have priced in a near 50 per cent chance that Bank of Canada governor Mark Carney will start hiking his one per cent policy setting before the year's end, they noted.

Both Finance Minister Jim Flaherty and Carney have recently flagged the danger to the economy of Canadians becoming increasingly indebted, mostly through taking advantage of low rates to buy homes or take out home equity loans. Household debt to disposable annual income is above 150 per cent and likely to rise further toward the 160 per cent level that preceded the housing collapse in the U.S., say analysts.

With files from The Canadian Press

View the original article here

Toyota adding 400 jobs at Ontario plant

One of the world's largest automakers is increasing its Canadian presence while creating hundreds of jobs.

Toyota Motor Manufacturing Canada Inc. says it is increasing RAV4 production at its Woodstock, Ont. assembly plant.

The company now expects to increase its annual capacity to 200,000 vehicles in the facility by early 2013, an increase from a target of 150,000 in 2012.

The company says the $80 million investment will result in about 400 new jobs.

Currently, the plant has about 2,000 workers.

Most of the vehicles made in the plant are shipped to the United States. Sales of the model fell about 7 per cent in the U.S. last year to over 22,000 units, although Toyota said much of this was due to a parts shortage caused by the Japanese earthquake and tsunami.

But sales have begun to spring back recently, or at least in this country. Toyota Canada said sales rose 31 per cent year over year in February with 12,384 more Toyota, Lexus and Scion vehicles sold.

"We are optimistic that the market is coming back and we're grateful for the strong sales of the RAV4 in the North American market, which has created this increase in production and jobs," said TMMC chairman Ray Tanguay said.

Somewhat counterintuitive, the rising cost of gasoline in North America has actually created a flood of new vehicle purchases. In fact, sales of both small and large vehicles are up over the past year because increased fuel-efficiency has made refueling cars of all sizes cheaper.

The average age of a vehicle in the United States is about 11 years old, and cars manufactured today are estimated to be about 30 per cent more fuel efficient. So even as gas prices rise, it is expected that consumers looking to save on fuel will replace their old-gas guzzlers of whatever size for a new model.

Adam Jonas, an analyst with Morgan Stanley, expects U.S. vehicles sales to hit 14.8 million this year, up 15 per cent from 2011.

Toyota, as one of the best-selling automakers in the U.S., expects to take full advantage of the rising sales, and today's production announcement is part of that strategy.

Ontario has seen traditional Detroit Three carmakers — GM, Ford and Chrysler — cut tens of thousands of jobs in the last decade as their parent companies restructured in the United States. But Toyota and Honda have expanded their operations in Ontario, Canada's manufacturing heartland.

The company has already announced plans the first Toyota electric vehicle to be built in North America, the RAV4 EV, would be made in Woodstock beginning this year.

Canada's Minister of Industry Christian Paradis lauded the company, saying the move will help to strengthen Canada's automotive industry.

"Our government welcomes the news of increased production at Toyota's Woodstock plant, and congratulates the company on the success of the RAV 4," he said in a statement.

"Together, Toyota's Canadian plants represent one of the company's largest, most successful manufacturing operations in the world, leading to jobs and growth in those communities and for Canadians."

Toyota began its Canadian operations in 1986 in the southwestern Ontario city of Cambridge.

It currently employs about 6,500 Canadians at two plants in Cambridge and one in Woodstock, where the Toyota Corolla, Toyota Matrix, Toyota RAV4, and the Lexus RX 350 vehicles are manufactured.

With files from The Canadian Press

View the original article here

Brian Stewart: Europe's job exodus, Canada's immigration shift

One of this country's most experienced journalists and foreign correspondents, Brian Stewart is currently a Distinguished Senior Fellow at the Munk School for Global Affairs at the University of Toronto. He also sits on the advisory board of Human Rights Watch Canada. In almost four decades of reporting, he has covered many of the world's conflicts and reported from 10 war zones, from El Salvador to Beirut and Afghanistan.

There is one part of Europe's economic suffering at least that suits Ottawa and the provinces just fine.

The high unemployment among the continent's skilled trade workers has opened a motherlode of tens of thousands of prized immigrants of exactly the type Ottawa now wants to encourage — young, well-educated and fluent in either English or French.

In short, the type who will "fit in" fast without needing much help from costly immigration services, though it is never spelled out quite that bluntly.

This is the type of new arrival that employers won't have to train that much, if at all, and who should help counter the drag effect of our aging population.

Europe's exodus of its job-seeking young is a fascinating sub-story of the economic crisis — and puts the recent changes in Ottawa's immigration policies into a new focus.

Since assuming office, the Harper government has given up on the old one-size-fits-all standard for immigration, and is now ceding much of the search for new immigrants to the provinces and territories — and, more recently, to employers.

As practical as this might seem, these interests are far less concerned with shaping a national approach to new Canadians as they are with what benefits their own demographic interests and businesses in the short term.

The result is that the provinces have responded to soaring European unemployment by actively recruiting there, a message that job-worried Europeans are suddenly listening to in ways they haven't for decades.

"Every time something bad happens in the world people think of Canada as an optional destination for them," Montreal-based immigration attorney David Cohen said recently.

A job seeker scans the bulletin board at a jobs fair in London, U.K.

But what is not being discussed here very much is the social impact of a new surge of Europeans to our shores, which will likely have a profound effect on the nature of Canada, as these big, sudden shifts in immigration tend to do.

We became a famously multicultural nation starting in the 1970s when we tightened the tap on traditional European immigration to allow for the first inflows from Asia, South Asia, the Caribbean and Africa.

It was one of the most important — and successful — policy shifts in our modern history, opening us up to the world in a real, human way.

Now we are in the midst of another change and it is not clear how long this swing back to European immigrants will continue.

It could fizzle out when economies there recover. But in the meantime this is no minor event, as is evident in the remarkable and very public surge of young Irish workers to our biggest cities.

More than 40,000 Irish workers poured into Canada in 2010-11 after economic calamity took down the so-called Celtic Tiger. In Toronto alone, a special Irish-Canadian immigration centre is being launched to help the more than 10,000 who arrived on working visas. If the past is any judge, this kind of out-migration from Ireland may be just a modest beginning.

This month thousands of carpenters, electricians, machine operators and the like lined up for hours to attend the Working Abroad Expo in the city of Cork. There they listened to pitches from Canadian and Australian companies who are in strong competition to recruit trades people for mining, construction and health-care.

But even the 300,000 unemployed in Ireland today is but the grim tip of the iceberg when it comes to Europe's economy.

The latest estimates are of 24 million unemployed men and women in the European Union, with jobless numbers running at 23 per cent in Spain (a devastating 49 per cent among young people) and roughly 20 per cent in Greece.

Look at almost any economy except booming Germany and much of Scandinavia and you will find younger workers looking for the exits.

Indeed, the situation is so stark that the EU has even launched a "Youth on the Move" program to help its own young workers pull up stakes and look for work in other countries! Interest from countries like Canada, therefore, comes as a godsend to their beleagured economies.

The federal government recently announced plans to change Canada's clogged immigration system, something that is long overdue, and the focus on Europe surely makes sense at this time.

Still, many of the 600,000 or so potential immigrants now waiting in line for their assessment will resent seeing so many Europeans shoved to the front of the queue as new restrictions and qualifications are implemented.

For a glimpse of the future, we just have to look at Australia, which is a few years ahead of Canada in jumping on the European outflow. (Like Canada, Australia strongly emphasizes English language skills and EU-level standards in trade skills and diplomas.)

"It's quite clear from the Australian evidence that it has the effect of shifting immigration away from non-English speaking countries, China particularly," Mikal Skuterud, an economist at the University of Waterloo, commented in the Globe and Mail recently.

For a country like Canada, which is trying to develop ever-greater trade ties with Asia, this shift could present a delicate balancing act.

The Harper Government is far too politically shrewd to offend specific ethnic groups by reducing their numbers sharply. Canada's immigration will remain multicultural and open to many, at least in theory.

But remember, Ottawa has off-loaded much of the selection process for new immigrants to the provinces, so they will be the ones to have to make the more politically awkward choices over who comes in and who does not.

This new process almost guarantees we'll be seeing a great many more Europeans arriving in the coming years as the complicated new entrance requirement tend to favour them.

Many newcomers will require a guaranteed job in a province before qualifying, which is the kind of thing that these European jobs fairs look to provide.

Of course, how many of these European workers will put down real roots remains to be seen. But they will undoubtedly make a mark.

Interestingly, polls of the Irish who've come here in recent years show most are delighted with their move, and feel they're in much better jobs now and more appreciated.

Fully a third say they would have left even without the economic crisis.

If these views are representative of other younger Europeans who have come here they suggests there may be far more of their countrymen willing to cross the Atlantic with more enthusiasm than Canada even imagined.

It will be interesting to see how our immigrant nation responds to this new face change.

View the original article here

Rebranding part of push to streamline environmental reviews

The federal budget catch-phrase of the day will be "responsible resource development."

That's how sources say the government will be branding its moves to streamline environmental assessment, remove bureaucratic barriers to resource extraction, and change the way the Fisheries Act oversees Canada's waterways.

But since the Harper administration places so much emphasis on nomenclature, environmentalists say it's a loaded term that seeks to replace "sustainable development" as the guiding principle for environmental policy.

The phrase is already all over the website of Natural Resources Minister Joe Oliver.

"Our government is focused on responsible development of Canada's natural resources to create jobs and economic growth as well as future prosperity," says one recent news release.

"Our government has taken great strides toward making our complex regulatory system more efficient, and we remain focused on our goal: one project, one review, in a clearly defined time period."

The budget is expected to include indications that the government will do just that. It will signal the Conservatives' intentions to eliminate overlap with provincial reviews, impose time limits on environmental hearings, and narrow the government's focus to large projects only.

The budget will also signal changes in the way fisheries officials deal with industry. Mining, oil sands and rural municipal officials have long complained that fisheries regulations are too extreme. Leaked drafts of proposed changes to the Fisheries Act suggest the budget will remove Ottawa's oversight over habitat in order to focus just on fish in large quantities.

And to blunt critics who say the Conservatives are dismantling environmental regulations to give free rein to the oil patch, the budget may also contain funding aimed at improving the safety record of pipelines and preventing spills.

The package, along with the "responsible" branding, amount to a throw-back to the days, decades ago, when government did little to stand in the way of business, says environment lawyer Stephen Hazell.

He said the government is required by law to implement a "sustainable development" strategy.

"'Responsible' development has no accepted legal definition that I know of," Hazell said.

"I suspect that the government is using it because Harper and Oliver fully understand that oil sands development is inherently unsustainable. Full sustainability in the oil sands would mean net zero carbon emissions, for example."

But a spokesman for Environment Minister Peter Kent says the "responsible" wording is simply a branding exercise, and nothing nefarious.

"It's just rebranding," said Rob Taylor. "We're in no way diminishing our adherence to environmental stewardship and sustainable development."

He said there has been no edict or suggestion that ministers should stop using the words "sustainable development." But he said the Conservatives do want to differentiate their approach from governments past.

"It's smarter, easier and better government," Taylor said.

"It's the principle Harper has had since the days of opposition. It doesn't have to be complicated."

The uproar over the federal government's environmental oversight has surged since this winter's hearings on the Northern Gateway pipeline to the West Coast began.

The hearings are expected to drag on and on, as officials hear from more than 4,000 interveners. Oliver has called many of the participants "radicals" who are funded by foreign interests trying to undermine Canada's economic interests.

Environmentalists, however, say the government's rhetoric is trying to cover up its attempts to allow industrial development regardless of the costs to the environment.

View the original article here