An Analysis of Financial Flows in the Canadian Economy

An essential but perhaps overlooked way of looking at the economy is a sector financial balance approach. Pioneered by the late UK economist Wynne Godley, this approach starts with National Accounts data (called Financial Flow Accounts) for four broad sectors of the economy: households, corporations, government and non-residents. Here’s how it works: in any given quarter or year each sector […]

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Ontario Electricity Sector V – What they knew, and when they knew it…

Last month I published a full-length article in the “The Monitor” magazine providing a “how we got here” analysis of the Ontario electricity sector and some options for the next Government.  Since then, two things have changed: first on May 31 two investigative journalists, Carolyn Jarvis and Brian Hill, wrote an excellent story for Global News about how successive Liberal […]

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Canada After Harper

Here is the link to buy a new book, Canada After Harper,  edited by Ed Finn and with an introduction by Ralph Nader, just published by Lorimer. Most Canadians know that Stephen Harper has had a tremendous impact on the country since becoming prime minister in 2006. But few have the in-depth knowledge of how far his transformation has gone […]

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The CBC – the Corporate Broadcasting Corp.

A new scandal blew up at the CBC this week when the website Canadaland published an exposé charging that Amanda Lang, the broadcaster’s senior business reporter and host of The Exchange, tried to sabotage an investigative story the CBC produced about abuses committed by the Royal Bank of Canada (RBC) over the temporary foreign worker program (TFWP). The story aired […]

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Andrea Horwath’s Debacle

I can’t remember the last time I laughed out loud when I saw election results. I almost spat a mouthful of my breakfast across the room. Almost nobody expected Ontario’s Liberals to win a majority, least of all the NDP’s Andrea Horwath. Her decision to pull the plug on the Wynne government has to go down as one of the […]

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NDP Sectarianism Returns with a Vengeance

You have to wonder what Andrea Horwath was thinking. By bringing down the Ontario government a week ago and launching an election as a result, the NDP risks opening the door for the provincial Tories reclaiming power. Which would be a disaster for working people across the province, let alone the social fabric of our communities. Yet Horwath’s decision is […]

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Corporate Cash Stash Surpasses National Debt

Today’s National Balance Sheet Accounts indicate that the amount of cash held by private non-financial corporations in Canada soared from $591 billion in the third quarter of 2013 to $626 billion in the fourth quarter of 2013. Corporate Canada’s accumulated stock of cash now exceeds the federal government’s accumulated deficit, which was $612 billion at the end of 2013. Corporate […]

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PotashCorp Projects Low Royalties

Today’s fourth-quarter report indicates that PotashCorp paid “provincial mining and other taxes” of $194 million on potash sales of $3 billion in 2013. In other words, Saskatchewan’s resource surcharge and potash production tax amounted to just 6.5% of the value of potash sold. Adding the basic Crown royalty (which PotashCorp includes in “cost of goods sold”) and subtracting New Brunswick […]

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StatCan Debunks Small-Business Mythology

Canadian economic commentators often worship small business as the supposed source of economic dynamism and growth. This cult of small business has greatly influenced public policy, with federal and provincial governments giving huge tax preferences to small corporations. But new Statistics Canada research finds: “The gap between the levels of labour productivity in Canada and the United States is due […]

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Weir vs. Wall on Potash Profits, Dividends and Royalties

Earlier this week, PotashCorp laid off 440 workers in Saskatchewan. Here are the closing paragraphs from today’s front-page story reporting a letter from Premier Brad Wall asking the company to consider reducing its dividend payments to shareholders in order to maintain jobs in Saskatchewan: Regina economist and former NDP leadership candidate Erin Weir said if Wall truly wanted to transfer […]

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PEF Session at the House of Commons Finance Committee

The Progressive Economics Forum (PEF) normally hosts sessions at the Canadian Economics Association’s annual conference. But the House of Commons finance committee threw most of the PEF members testifying in its pre-budget consultations onto the same panel on November 21 and then moved it to a room without TV. MP Randy Hoback participated in the first hour of the committee meeting, […]

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A Nuclear Error: Uranium Royalty Cuts

On Thursday’s Lang & O’Leary Exchange (at 24:45 in this CBC video), I noted that while the Government of Canada just signed a deal with Kazakhstan allowing Cameco to invest more in that country’s uranium industry, the Government of Saskatchewan recently slashed its uranium royalties to encourage Cameco to invest in the province rather than in Kazakhstan. It’s a win-win […]

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The NSA Scandal is all about Economics

Back in 1998, I wrote a lengthy investigative feature for The Financial Post about Canada’s signals intelligence agency, the Communications Security Establishment (CSE), and its post-Cold War role. You can read it here: http://circ.jmellon.com/docs/pdf/trolling_for_secrets_economic_espionage.pdf The CSE and its sister signals intelligence agency in the US, the National Security Agency (NSA), engage in espionage using solely electronic means. To this end, […]

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The Blackberry mess and what Canada needs

Another year, another dead Canadian tech giant.  Blackberry was sold yesterday for scrap to the Toronto private equity firm Fairfax.  The purchase price of $4.7 billion is essentially valued at its cash of $2.6 billion and the value of its patents.  Blackberry’s active businesses are being valued at essentially nothing.  If Fairfax can stop the incredible burn rate of $1 […]

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How Offshore Tax Havens Destroy Governments

Last fall, Greek magazine editor Kostas Vaxevanis published in his magazine Hot Doc a list of 2,000 wealthy Greeks who were hiding taxable savings in the Geneva branch of HSBC. The list had been furnished years earlier by the then French Finance Minister Christine Lagarde to the Greek government, who did nothing in regards to chasing after the money or the offenders […]

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Statistics Canada Resuscitates Dead Money

Interestingly, the day after the new Bank of Canada Governor gave a speech distancing himself from his predecessor’s “dead money” comments, Statistics Canada released a significant downward revision to the usual measure of corporate cash accumulation. The cash holdings of private non-financial corporations reached $594 billion in the fourth quarter of 2012, so I was curious to see if they […]

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GDP: Resource Exports Cover for Domestic Weakness

Statistics Canada reported today that GDP grew by 0.6% in the first quarter. The volume of energy and mining exports expanded by more than 5%, offsetting lower exports of many manufactured goods as well as a weak domestic economy. Consumer spending growth slowed to 0.2% in the first quarter of 2013, its lowest rate of growth since the first quarter […]

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Ontario Budget: All Quiet on the Revenue Front

As others have noted, last week’s Ontario budget combined modest social investments in areas requested by the NDP with austerity for overall expenditures. Ontario program spending, already the lowest per capita of any province, will be subject to ongoing cuts relative to inflation. This paradox on the expenditure side of the ledger reflects a vacuum on the revenue side. The […]

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More Dead Money

The sector and financial-flow accounts released with today’s GDP figures indicate an expansion of the pool of dead money flagged by this blog and by Mark Carney. The National Balance Sheet Accounts have not yet been released for the second quarter, so we cannot update the accumulated total of $526 billion. However, the updated Financial Flow Accounts report that private […]

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Agrium Halves Potash Royalties

Agrium reports that it paid half as much to the people of Saskatchewan in the second quarter as it had in the same quarter of last year. The company’s quarterly “potash profit and capital tax” payment dropped to $8 million from $15 million a year ago. Agrium’s only potash mine is in Saskatchewan. The value of its potash sales has […]

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Taking Over Nexen

The China National Offshore Oil Corporation’s (CNOOC) bid to acquire Nexen is a large and complex proposal. Canadians should call for a more thorough and transparent review than other foreign takeovers have received under the Investment Canada Act. A preliminary outline of possible costs and benefits follows. The Downside: Chinese Consumer Interests A company like Nexen aims to sell oil […]

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Baskin-Robbins and the Walmartization of Ice Cream

It’s been an unusually hot summer, and soaring temperatures have boosted sales of that quintessential summer food, ice cream. But Baskin-Robbins has decided to shut its production facility in Peterborough, Ont., and lay off 80 workers because of…wait for it… increased demand! From the department of “wait, what?”, here’s the scoop behind this brain-freeze-inducing decision. Baskin-Robbins, home of 31 flavours […]

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Mosaic Profit Argues for Higher Royalties

Today’s Mosaic quarterly report provides further evidence that the Government of Saskatchewan should improve its royalty and tax structure to collect a better return on the province’s non-renewable resources like potash. Quarterly Comparison Despite higher potash prices, Mosaic paid lower royalties and resource taxes to Saskatchewan last quarter than in the same quarter of last year. In the three months […]

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The Economics of Deception

The following is a guest post by Robyn Allan, the former president of the Insurance Corporation of British Columbia who appeared with me on TVO’s panel about Dutch disease. It summarizes her recent paper: An Analysis of Canadian Oil Expansion Economics. There is a chorus singing the praises of the oil industry and its vast economic benefits — from the boardroom […]

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Santa Claus Delivers a Positive Quarter Despite Corporate Scrooges

The Month: Christmas Gift Canada’s economy was buoyed by Christmas cheer as a December bounce more than offset slight declines in October and November to turn the fourth quarter positive. Unfortunately, one month does not make a trend. The key question is whether December’s strength continued into the New Year or whether economic activity reverted to the malaise evident in […]

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Wall of Silence on Canpotex

Saskatchewan’s newspapers reported today that BHP Billiton intends to sell the province’s potash outside of Canpotex, the marketing board that helps to maximize the price for which Saskatchewan potash is exported offshore. BHP executive Tim Cutt stated, “We will not market through Canpotex. We talked to the premier (Brad Wall) about that. He understands that.” Concerns that BHP would undermine […]

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