A man waves the Russian national flag as he arrives at the patriotic concert at the Red square in downtown Moscow ahead of Russia Day on June 11, 2023.KIRILL KUDRYAVTSEV/AFP/Getty Images
John Rapley is an author and academic who divides his time among London, Johannesburg and Ottawa. His books include Why Empires Fall (Yale University Press, 2023) and Twilight of the Money Gods (Simon and Schuster, 2017).
When Russia invaded Ukraine two years ago, the Western alliance rallied to both support Ukraine and isolate Russia. In addition to arming Ukraine and taking in refugees, Western countries took swift and decisive measures to cut the oxygen to the Russian economy: requiring their companies to close operations there, barring imports from Russia and preventing its ships from using their ports or insurance companies, and most importantly, blocking exports of the high tech needed in both Russia’s defence and energy sectors.
They intended to impede Russia’s ability to fund a long-term war, all while providing Ukraine the assistance it needed to repel the invasion. At first, the West looked triumphant. Not only did Ukrainian forces withstand Russia’s attempt to take Kyiv, but the Russian economy began contracting.
Two years on, though, things look very different. The Russian economy suffered a shallower recession than expected in 2022, and last year it bounced back. Whereas Western countries, in particular West European countries such as Germany that had depended on Russian energy imports, are floundering, Russia’s economic growth rate now rivals that of the U.S.
Meanwhile, far from being hobbled, its defence industry has managed to expand significantly. The country now produces three million artillery shells a year, almost three times the combined output of U.S. and European factories. Each day on the battlefield, it fires five times the number of shells as Ukraine. As Ukraine is bombed to rubble, its economy has imploded. After losing nearly a third of output in 2022, it remains far from recovery.
It goes without saying that reports of Russia’s economic demise proved premature. Several factors account for the country’s surprising resilience. First off, it put itself on a war footing. Defence spending shot up, such that over 7 per cent of the country’s economy is now committed to defence. This boost in demand, coupled with the fact that Russia is not directly affected by the war – Western allies insist Ukraine not use their weapons to target Russia directly, for fear of widening the war – has jolted the economy back to life.
Second, it found inventive ways around sanctions. After Western countries stopped exporting the computer chips used in modern weaponry, Russia started importing non-prohibited items, such as refrigerators, microwaves and dishwashers, then cannibalizing them for chips. Equally, it has maintained shipping by operating through shell companies that find ports willing to turn a blind eye, and has thereby maintained its trade. For many intermediary countries, especially in the developing world, sanctions-busting has become morally easier to justify since the outbreak of the Gaza war, given what they see as Western double-standards on who should be sanctioned.
Third, Russia found new markets for its exports. When Western countries cut their imports of Russian oil and natural gas, countries such as India and China happily stepped in to mop up supply. Admittedly, they did so at a cost to Russia, buying the products at a discount to the world price in such a way that they could observe the letter if not the spirit of the sanctions. India’s Energy Minister was thus able to recently say with a straight face that “the world is grateful to India for buying Russian oil,” since it has kept down oil prices on the world market.
Fourth, European countries softened the impact of sanctions on their own economies by trading with Russia through the backdoor. Western Europe’s trade with countries in Central Asia and the South Caucasus has taken off – German car sales to Kyrgyzstan suddenly rising some 5,500 per cent in one year, while Kazakhstan’s exports of electronic equipment to Russia increased 18-fold in the same period. It’s pretty clear what’s going on: European countries are trading with Russia through intermediaries.
Nevertheless, if Russia seems to have won its battle with the West, the future of its war still looks in doubt. Although it’s finding markets for its exports, the discounts it’s being forced to absorb mean that its revenues are less than they would otherwise be. All the while it is growing ever more dependent on trading partners, such as China and India, which aren’t doing it any favours. Beyond defence, Russia’s manufacturing and high-tech sectors, which it wanted to develop, are struggling. As a result, Russia is turning back into a Third World country.
Should the war drag on, Russia’s resource well will start to run dry, and the country will then find itself poorer and weaker than before. Vladimir Putin is gambling this won’t happen. He appears to reckon that Western electorates, softened by the easy life, will press their governments to cave on Ukraine, sue for peace and resume regular relations.
If he’s right, he’s headed for victory. But if he’s wrong, if Western countries dig in and support Ukraine over the long haul, Russia’s long-term prospects look grim.
Israel's central bank chief Amir Yaron speaks at a news conference in Jerusalem on Jan. 7, 2019.STEVEN SCHEER/Reuters
The Bank of Israel on Sunday warned of economic damage if more ultra-Orthodox Jewish men do not join the country’s military, weighing in on a contentious issue that has caused a rift in Prime Minister Benjamin Netanyahu’s wartime government.
In its 2023 annual report, the central bank said Israel’s war against Palestinian Islamist group Hamas in Gaza that began on Oct. 7 had highlighted the personnel needs of the military and has added a burden to the economy due to the sharply increased amount of service days that will be required for both conscripts and reserve soldiers.
This, it said, impairs the soldiers’ economic output as well as the spouse’s employment. “As the burden of military service is divided among a higher number of soldiers … the economic impact on each of them declines, as does the aggregate impact on the economy,” the Bank of Israel said.
“Expanding the circle of military personnel to include the ultra-Orthodox population … will therefore make it possible to answer the increasing defence needs while moderating the impact to personnel and to the economy.”
Netanyahu’s government said in February that it would seek a way to end exemptions to military service for ultra-Orthodox Jews, which date to the foundation of Israel in 1948, to spread the wartime burden across society more fairly.
But the decision met with a backlash from ultra-Orthodox Jewish parties and created a rift in the coalition.
Sunday had been the deadline for the government to come up with legislation to resolve the issue but Netanyahu filed a last-minute application to the Supreme Court for a 30-day deferment.
The Bank of Israel said that the fast growing ultra-Orthodox sector is now 7% of the economy but will be 25% in 40 years time. Only 55% of ultra-Orthodox men work and if this trend continues, Israel will lose six percentage points of gross domestic product by 2065, while the tax burden will jump.
Bank of Israel Governor Amir Yaron also said that to maintain fiscal discipline, the plan to boost annual defence spending must be met with cuts to civilian spending – although doing so also has an economist cost.
“It is important that if there is an additional increase in that budget, beyond what was already decided, it should be accompanied by fiscal adjustments that will at least prevent an enduring increase in the public debt to GDP ratio,” Yaron said in a letter to cabinet ministers and parliament members.
Lawmakers this month approved an amended 2024 state budget that added tens of billions of shekels to fund the war, while Israel intends to add some 20 billion shekels ($5.4 billion) of spending toward defence a year going forward.
The Canadian economy is outperforming expectations to start 2024, Statistics Canada data shows.
The agency said Thursday that real gross domestic product in the first month of the year rose 0.6 per cent from December, beating most economists expectations.
The ends and beginnings of some labour disruptions were creating a few one-time impacts on the economy in January, Statistics Canada said.
StatCan pointed to a rebound in education services, tied largely to the end of public sector strikes in Quebec, as driving the growth in January. The beginning of a strike by the Saskatchewan Teachers’ Federation in the month hindered growth to a degree, StatCan added.
The agency also said that an end to the Screen Actors Guild – American Federation of Television and Radio Artists (SAG-AFTRA) strike in November meant that film and TV production in Toronto and Vancouver picked back up in January, driving growth in this sector.
Canada’s real estate, rental and leasing sector meanwhile grew for the third consecutive month. Higher sales in Ontario’s Golden Horseshoe area were responsible for the gains, StatCan said.
First-time buyers have ‘lowered expectations’ for finding dreamhome in Ontario
The manufacturing industry in January also fully offset declines seen in December, StatCan said. Output from the automotive sector snapped a four-month streak of declines as production resumed at some auto assembly plants at the start of the year.
Oil and gas extraction was down in January, tempering gains for the overall economy.
Initial estimates show real GDP is expected to have kept growing at a clip of 0.4 per cent monthly in February, though StatCan cautions that those early readings can be revised.
With signs of a strong start to the year, real GDP is tracking for an annualized gain of 3.5 per cent in the first quarter, well above the Bank of Canada’s expectations for 0.5 per cent.
BMO chief economist Doug Porter said in a note to clients Thursday morning that the early signs of growth could prove to be a “statistical illusion.” The economy was off to a hot start this time last year amid a similarly mild winter, he notes, but effectively stalled through the rest of 2023.
Economic growth has been slowing nationally amid higher interest rates from the Bank of Canada aimed at taming inflation.
Inflation has shown signs of slowing – dropping to 2.8 per cent annually in February – but the Bank of Canada is looking for signs growth is still cooling as it weighs whether or not interest rates need to remain elevated. Policymakers have also said they do not want to leave rates high for too long and risk a worse economic outcome.
Porter said that the economy’s “surprisingly healthy” start to 2024 could make the Bank of Canada a “bit less comfortable with the inflation outlook.”
BMO is maintaining its call for interest rate cuts to begin in June, though Porter notes that signs of similar economic strength in the second quarter would give the central bank “much less urgency to cut rates any time soon.”
Bank of Canada says it’s still ‘too early’ to cut interest rates
CIBC senior economist Andrew Grantham also said Thursday that the January GDP figures give the Bank of Canada “no urgency” to ease its policy rate. He said in a note to clients however that much of the growth seems to be tied to the lifting of supply constraints rather than fresh spending demand from Canadians that would fuel inflation.
TD Bank economist Marc Ercolao said in a note he is less convinced of a spring rate cut, calling the January growth figures “robust” and a “more difficult challenge” for the Bank of Canada.
“Over the past two months, the Bank has received solid evidence that inflation is cooperating, but strong GDP data prints like today’s will keep them on their toes. Market pricing is still hopeful of a first interest rate cut happening in June, though we think a July cut is more likely,” Ercolao wrote.
Money markets slightly trimmed their bets for a first 25 basis point rate cut in June to 69 per cent from just over 70 per cent before the GDP numbers were released, according to Reuters.
The Bank of Canada is widely expected to hold its key rate steady at its next decision on April 10 and a rate cut in July is fully priced into the markets. The central bank will also release revised forecasts for inflation and the economy at its April policy decision.
A new proposed strategy aims to build a"dynamic and thriving" nighttime economy in Edmonton and some stakeholders believe it could transform the city's art and tourism sectors, and its overall nightlife.
Authored by city staff, Explore Edmonton and U.K.-based Night Time Economy Solutions, Edmonton's Nighttime Economy Strategy seeks to play a pivotal role in helping businesses flourish after the sun goes down.
The report, published Thursday, examines trends in the economy and tourism that would help Edmonton create a "dynamic and thriving nighttime economy" that prioritizes unity, connectivity, protection, progressiveness and uniqueness.
Two of the report's main priorities are improving transportation and safety.
According to the report, many stakeholders, particularly female participants, shared feeling uncomfortable taking transit or the LRT, as they were highlighted as "hotspot areas" for drug use, gravitating toward driving or ride-share services like Uber should they want to go out.
Those surveyed said they have noticed an increase in crime and disorder as the night progresses and wanted to see a more active and visible presence of police and peace officers.
Puneeta McBryan, executive director of the Downtown Business Association, told CBC News the strategy doesn't contain a lot of new information, especially when it comes to the importance of safety.
Puneeta McBryan, executive director of the Edmonton Downtown Business Association, said she’s curious to see what city council does with the information in the report. (Craig Ryan/CBC)
She said business owners have called for measures to improve safety for a long time.
"People need to feel safe if we want them to go places," McBryan said.
"It's really affirming that this thing we've been saying for a long time has been validated … There's a lot in here that's validating for us, but not a lot that's new."
McBryan said she's curious to see what Edmonton city council does with the information in the report, which includes what she calls some "really helpful data" to quantify the importance of a nighttime economy plan.
When it comes to safety, she said the landscape has changed significantly in downtown areas.
"Our downtown beat officers are there during the day, but what that presence looks like at night has really changed since COVID," she said.
"I'd be really curious to find out, even compared to 2018, how many officers we have out on a typical Friday or Saturday night."
Tyson Boyd, co-owner of the Starlite Room, said improving safety is going to be a major factor in helping to grow foot traffic within Edmonton's downtown. (Julien Latraverse/Radio-Canada)
Tyson Boyd, co-owner of the Starlite Room, said businesses are itching to rebuild and strengthen the downtown core, and improving safety is going to be a major factor in helping to grow foot traffic.
Some of his own staff have told him they feel nervous taking transit because of their safety concerns. It's a hot topic for customers too, he said.
"When you have larger events and people are coming down, it's a power in numbers type thing," Boyd said.
"When people are all coming down at a specific time, you have the comfort of being with a number of people riding the train, versus when it's a little bit more of a slower time and there are fewer people."
Boyd said more measures in place, such as better-lit streets and beat officers, would make people comfortable and create a generally safe environment downtown.
Rob Browatzke, co-owner of Evolution Wonderlounge, said the strategy looks great at first glance, but its success will depend on how the city implements it. (Travis McEwan/CBC)
Rob Browatzke, co-owner of Evolution Wonderlounge, said the strategy looks great at first glance, but its success will depend on how the city implements it. Much of the plan focuses on transportation and crime, two major issues impacting nightlife, he said.
"Downtown is a lot less safe than it was four years ago," Browatzke said.
"People are really quick to scapegoat that onto Edmonton's unhoused population. I get that, but that's not where we're seeing most of the safety issues. I think people forgot how to be people during COVID."
Improving transportation options and safety would change things for the better, especially since Browatzke's venue closes at 2:30 a.m. But doesn't feel like a nightlife-focused committee should be tasked with fixing Edmonton's bigger issues.
Instead, he'll be curious to see if city staff can come up with promotional vehicles that businesses can use to spread the word about upcoming events.
"It's all going to come down to who's on this committee and how much power the committee actually has, and what this committee can actually do," Browatzke said.
The proposed strategy is slated for discussion at council's Executive Committee on April 10.
The Canadian economy still has some gas left in the tank, with robust gains in the first two months of this year, bolstering the Bank of Canada’s case for a patient stance on interest rate cuts.
Preliminary data suggest gross domestic product rose 0.4 per cent in February, with broad-based increases led by oil and gas, manufacturing and finance, Statistics Canada reported Thursday in Ottawa.
That followed a 0.6 per cent expansion the previous month, beating expectations for a 0.4 per cent increase in a Bloomberg survey of economists. January’s gain was led by a rebound in education after strikes in Quebec ended. December’s GDP was downwardly revised to a 0.1 per cent contraction.
Combined, the gains in January and the February flash estimate point to the strongest growth since early 2022, when the economy was rebounding from the pandemic.
The data were released at the same time as GDP figures in the U.S., where the two main measures of economic activity posted strong advances at the end of last year.
After the releases, traders shifted bets on a Bank of Canada rate cut in June to about two-thirds, from a three-quarters chance previously. Canadian government bond yields rose and the loonie strengthened.
Overall, the industry-based numbers are tracking an increase of 3.5 per cent annualized in the first quarter of 2024, assuming March output is flat, versus 1 per cent growth between October and December. That’s much faster than the 1 per cent consensus estimate in a Bloomberg survey and the Bank of Canada’s forecast of 0.5 per cent.
Thursday’s report shows economic momentum that will buy the Bank of Canada time before it starts easing policy rates. Policymakers are waiting for more data to convince them that the downward path to the 2 per cent inflation target can be sustained before reducing borrowing costs.
Governor Tiff Macklem and his officials held rates steady at their last meeting earlier this month, and the data released since then have signaled easing price pressures. Inflation has been within the bank’s control range since the start of this year, and core inflation cooled further last month. Population gains continue to outpace employment growth and wage growth is softening.
Prime Minister Justin Trudeau’s government last week announced plans to reduce the temporary resident population, which is expected to weigh on economic growth over the next three years and help slow shelter price gains.
The data clearly suggest there is no urgency for an immediate reduction in interest rates, Andrew Grantham, an economist with Canadian Imperial Bank of Commerce, wrote in a report for investors.
“However, with inflation also undershooting the bank’s prior expectations at the same time, it appears that much of the growth we are seeing is coming from an easing of supply constraints rather than necessarily a pick-up in underlying demand, and as a result we still see scope for a gradual reduction in interest rates starting in June,” he wrote.
In a separate release on Thursday, Canadian non-farm payrolls rose 39,800 in January and average weekly earnings were up 3.9 per cent from a year ago.
The central bank’s next rate decision is on April 10, when officials will also update their economic projections. Economists widely expect the bank to hold policy rates at 5 per cent again for a sixth straight meeting.
At face value, the resilience in economic activity could be interpreted as offering the Bank of Canada a motive to delay rate cuts, Jimmy Jean, chief economist at Desjardins Securities, wrote in a report to investors.
“However, demographics continue to flatter these numbers,” he wrote, pointing out that population data released Wednesday set a fresh record for growth in Canada.
When controlling for demographics, the cumulative weakness in per-capita GDP since mid-2022 is similar to what was experienced in the 2008-2009 recession, Jean said.
Marc Ercolao, an economist at Toronto Dominion Bank, said the data present a more difficult challenge for the central bank.
“Make no mistake, these growth figures are robust,” he wrote in a report to investors. “Over the past two months, the bank has received solid evidence that inflation is cooperating, but strong GDP data prints like today’s will keep them on their toes.”
In January, there was broad-based growth with 18 of 20 sectors increasing. Services-producing industries rose 0.7 per cent, led by a rebound in educational services after public-sector strikes in Quebec ended. Goods-producing sectors were up 0.2 per cent with utilities and manufacturing rebounding from declines in the previous month.
The education sector grew 6 per cent and was the largest contributor to growth. The health care and social assistance sector, which was also affected by the strikes in Quebec, rose 0.8 per cent, the largest growth rate since October 2020.
The manufacturing sector fully recouped December’s decline with a 0.9 per cent increase. Utilities posted its largest growth rate since January 2022 with a 3.2 per cent gain, partly due to a sudden drop in temperatures mid-January in parts of the country.
Real estate grew 0.4 per cent, the third straight monthly increase, with higher activity in the Greater Toronto Area, Hamilton-Burlington and most markets in Ontario’s Greater Golden Horseshoe contributing to the growth.
Oil and gas extraction dropped 4.4 per cent, and oilsands extraction fell 5.2 per cent.
The Canadian dollar CADUSD strengthened against its U.S. counterpart on Thursday, clawing back some recent declines, as faster-than-expected growth in the domestic economy reduced pressure on the Bank of Canada to cut interest rates in the coming months.
The loonie was trading 0.2% higher at 1.3535 to the U.S. dollar, or 73.88 U.S. cents after trading in a range of 1.3526 to 1.3613. Last Friday, it touched a three-month low at 1.3614.
Canada’s gross domestic product increased 0.6% in January from December, its fastest growth rate in a year, led by a bounce back in education services as public sector strikes ended in Quebec. A preliminary estimate for February showed growth of 0.4%.
“The Canadian economic data that came out this morning was more positive than expected,” said Rahim Madhavji, president at Knightsbridge Foreign Exchange. “If the economy is humming along, the Bank of Canada can keep rates higher for longer.”
The Canadian central bank has left its benchmark interest rate on hold at a 22-year high of 5% since July. Money markets see a 68% chance the BoC will begin a rate cutting campaign in June, down from 70% before the data.
Adding to support for the loonie, the price of oil, one of Canada’s major exports, settled 2.2% higher at $83.17 a barrel as investors weighed prospects of tighter oil supplies.
Canadian government bond yields rose across the curve in a shortened session ahead of the Good Friday market holiday.
The 2-year was up 4.5 basis points at 4.187% after earlier touching its highest level since March 19 at 4.210%.
High interest rates are expected to take a toll on Ontario's economy this year, the province said in its 2024 budget, which includes projections of weak economic growth and a ballooning deficit.
Finance Minister Peter Bethlenfalvy tabled the government's $214-billion budget at Queen's Park Tuesday, saying it is investing in housing, roads and public services during a time of uncertainty without raising taxes.
"These investments and more are a signal to Ontarians of our commitment to keep building Ontario while retaining a prudent, targeted and a responsible approach to public finances," Bethlenfalvy said at a news conference.
"We're not backing down from investing in what matters most and we are not going to increase costs on our people."
WATCH | Finance minister speaks about province's growing deficit:
Ontario 2024 budget: Finance minister speaks about province’s growing deficit
2 days ago
Duration 1:09
Finance Minister Peter Bethlenfalvy tabled the government’s 2024 budget at Queen’s Park Tuesday. High interest rates are expected to take a toll on Ontario’s economy this year, with the budget including projections of weak economic growth and a ballooning deficit.
The 200-page document forecasts Ontario's deficit will more than triple from $3 billion last year to $9.8 billion in 2024-2025 — the highest non-COVID budget deficit since former premier Kathleen Wynne's 2014 spending plan.
Last year's budget predicted Ontario would be back in the black with a modest surplus of $200 million by 2024-2025. Now, the province doesn't expect to return to balance until 2026-2027 — the year of the next election — when a $500 million surplus is projected.
Slow economic growth leads to deficit
The increase to the deficit was largely caused by slowing economic growth projections leading to lower tax revenues, an official with the Ministry of Finance said at a technical briefing for the media, but also due to an expected drop in revenue caused by the federal cap on international study permits.
Also driving spending upwards are more than $6 billion in payments to public sector workers last year and this year as a result of the provincial government's wage-restraint legislation being found unconstitutional and another extension to the gas tax cut, the budget says.
WATCH | What this budget tells us about Ontario's housing starts:
Ontario housing starts expected to be lower this year, budget shows
2 days ago
Duration 2:23
Ontario’s finance minister said new home construction is still a priority for the government, even though the 2024 budget forecasts less building than in previous years. CBC’s Lorenda Reddekopp has more on what the province is promising.
The outlook for economic growth has "deteriorated significantly" over the last year, the government says, with gross domestic product (GDP) expected to slow to 0.3 per cent in 2024, down from the estimate of 1.2 per cent in last year's budget.
While GDP is expected to recover to 1.9 per cent in 2025 and 2.2 per cent over the next two years, those numbers are still below previous forecasts.
Inflation is expected to slow from 3.8 per cent in 2023 to 2.6 per cent in 2024, before returning to the Bank of Canada's target rate of two per cent in 2025, according to projections from the finance ministry.
"We're not immune from global forces in the economic environment, so our revenues are down and the costs for many things are up, including for governments," Bethlenfalvy told reporters.
"You can either put on the brakes or you can keep going forward, supporting the infrastructure spend, supporting the economy, supporting workers, and that's the way we've chosen."
WATCH | Ontario opposition leader concerned over 1.3% increase in health-care budget:
Ontario opposition leader concerned over 1.3% increase in health-care budget
2 days ago
Duration 0:52
The provincial government tabled its 2024 budget on Tuesday, with base spending on health care increasing below the inflation rate. Ontario NDP leader Marit Stiles said that’s "deeply concerning" amid emergency room closures and a family doctor shortage.
With the budget now tabled, it will be debated by MPPs and is guaranteed to pass given that the Progressive Conservatives have a majority of seats in the legislature.
NDP Leader Marit Stiles said the budget won't help Ontarians with the cost of living, people without a family doctor struggling to access health care or those seeking affordable housing.
"What we got today just goes to show how deeply out of touch and out of ideas Doug Ford's Conservatives are," Stiles said.
"It's half-measures after half-measures and, you know, really at the end of the day, we're spending more and getting less at the end of the day from this government."
Bonnie Crombie, the Ontario Liberal Party Leader, said the government's "bad decisions" around Bill 124, among other fiscal management missteps, left it with "no margin for error."
"This is a do-nothing budget. It's not worth the paper it's printed on," Crombie said. "There's nothing in the budget to help families dealing with the affordability crisis, to help build healthy communities or to grow our economy in emerging sectors," Crombie said.
Key budget takeaways
New money in the budget includes an additional $2 billion over three years for home and community care, a $200-million community sport and recreation infrastructure fund and more money for autism therapies.
In total, the province is forecasting $205.7 billion in revenue in the coming fiscal year, and $214.5 billion in spending, up from $207.3 billion spent last year.
Base spending on health care, the largest slice of the budget pie, will increase from $74.6 billion last year to $75.6 billion, a below-inflation increase of only 1.3 per cent amid an ongoing family doctor shortage and a growing population.
Key health spending initiatives include $564 million over three years to connect approximately 600,000 people to primary health care teams and a $155 million construction subsidy to fast-track the construction of long-term care homes.
Bonnie Crombie, the Ontario Liberal Party Leader, said the government's 'bad decisions' around Bill 124, among other fiscal management missteps, left it with 'no margin for error.' (Evan Mitsui/CBC)
Amid a shortage of family doctors, the province will establish a medical school primarily focused on family medicine at York University in Toronto.
But in a statement, the Ontario Confederation of University Faculty Associations said the budget doesn't contain enough details on how that school will be funded or its faculty will be hired.
With major nursing shortages also hitting Ontario, the government says it will also invest an additional $128 million over three years to boost nursing student enrolment at universities and colleges.
The budget says the money will help support enrolment increases of 2,000 registered nurse seats and 1,000 registered practical nurse seats.
Mike Schreiner, Leader of the Green Party of Ontario criticized the budget for not including increases to the financial assistance provided through the Ontario Disability Support Program (ODSP) and Ontario Works program.
Advocates have called on the government to increase the supports as people struggle with the cost of living.
"We have the financial resources to more than double ODSP and OW rates," Schreiner said.
Ontario Green Party Leader Mike Schreiner criticized the budget for not including increases to the financial assistance provided through the Ontario Disability Support Program (ODSP) and Ontario Works program. (Evan Mitsui/CBC)
"I think the government needs to be held accountable for their moral failure to end legislative poverty in Ontario."
The government is planning a big increase in spending to improve high-speed internet access across Ontario, with $1.3 billion allocated this year, up from $300 million in each of the previous few years.
Capital plan spending has also jumped, with $190.2 billion set aside for major infrastructure projects like building highways, hospitals and schools over the next decade.
Affordability measures
To help Ontarians cover increased costs, the province will extend until the end of the year a tax cut that reduces the gas tax by 5.7 cents per litre and the diesel fuel tax by 5.3 cents per litre. The cut, which was scheduled to expire on June 30, has saved households an annual average of $320 since it was introduced, the province estimates.
More Ontarians will be eligible for subsidies that reduce their electricity bills, a move that will push the cost of that program above $7 billion.
WATCH | Can Ontario fix the province's family doctor shortage?:
Canada’s economy in 2024: 4 things to watch
3 months ago
Duration 3:52
High interest rates, inflation and a slowing economy hit Canadian wallets hard in 2023. CBC’s Peter Armstrong breaks down the financial outlook for 2024 and why there’s still a lot of uncertainty ahead.
The province will also expand access to the Ontario Guaranteed Annual Income System (GAINS) program, which is expected to help around 100,000 more seniors annually, and index those monthly payments to inflation.
The budget also pledges to "modernize" the auto insurance system with reforms that will provide drivers with the option to opt out of certain coverage benefits to lower their premiums.
New funds for housing
To support the province's housing plans, the government is investing more than more than $1.8 billion in two funds that will help municipalities build "housing-enabling" infrastructure, including roads, bridges as well as drinking water, wastewater and stormwater infrastructure.
The province will also allow all single- and upper-tier municipalities to impose a tax on vacant homes. Currently, only Toronto, Ottawa and Hamilton have that authority. A new policy framework will also encourage municipalities to set a higher rate for foreign-owned vacant homes.
Municipalities will be allowed to lower their property tax rates on new purpose-built rental housing to encourage construction of more of those units.
The moves are meant to speed up the construction of homes toward the goal of building 1.5 million new homes by 2031.
But figures in the budget show the province is falling behind.
There were 89,300 housing starts in Ontario in 2023, with 87,900 projected for 2024, 92,000 for 2025 and 94,400 for 2026. All are well below the pace of at least 150,000 per year needed to achieve the province's goal.
Falling fertility rates could bring about a transformational demographic shift over the next 25 years.
It has been described as a demographic catastrophe.
The Lancet medical journal warns that a majority of countries do not have a high enough fertility rate to sustain their population size by the end of the century.
The rate of the decline is uneven, with some developing nations seeing a baby boom.
The shift could have far-reaching social and economic impacts.
Enormous population growth since the industrial revolution has put enormous pressure on the planet’s limited resources.
So, how does the drop in births affect the economy?
And regulators in the United States and the European Union crack down on tech monopolies.
Ontario is facing a larger than anticipated deficit but the Doug Ford government still plans to balance its books before the next provincial election.
The 2024 budget, titled “Building a Better Ontario” and released Tuesday afternoon, builds on provincial promises made over the last year. It places a focus on infrastructure and healthcare spending while also ensuring taxpayers don’t have to reach into their pocketbooks.
“We’re sticking to our plan,” the 200-page document stresses, noting that Ontario “continues to face economic uncertainty.”
The government’s budget has surpassed last year’s in terms of total spending, making it the largest in the province’s history at about $214.5 billion. Close to $194.5 billion of that is for programming.
At the same time, the province’s deficit for the last fiscal year is projected to land at about $3 billion, which is significantly higher than the $1.3 billion projected in the 2023 budget but less than the third-quarter projection of $4.5 billion.
The province is forecasting a spike in the deficit for 2024-25, with Ontario landing about $9.8 billion in the red.
This will lower to $4.6 billion in 2025-26, with a $500 million surplus projected in 2026-27, just in time for the next election.
Last year, the government said it would balance the budget by 2025, but officials noted a “fiscal deterioration” that was “beyond the province’s control.”
"It's a plan that provides certainty to markets and confidence to people that their government is ready to face any challenge the global economy might throw our way,” Finance Minister Peter Bethlenfalvy told reporters on Tuesday.
“I think fiscally we're being responsible. We're also investing in the things that matter to the people of Ontario and our plan to build. And I just believe you can walk and chew at the same time.”
The largest expense for the 2024 fiscal year is in healthcare, where the government has pledged about $85 billion in funding compared to $81 billion last year.
This includes some new money to boost primary care. The province has promised to invest $546 million over three years to support “connecting” about 600,000 people to team-based health-care teams and expanded interprofessional care teams.
An additional $2 billion over three years will be used to boost home and community healthcare.
Vaughan, Ont. is also getting a new medical school through a partnership with York University, with a focus on training family doctors. No official cost has been attached to this project, although officials say that about $9 million has been earmarked for planning.
The province will also spend about $1 billion to fund a new municipal housing infrastructure program, which was announced last week. The money will be used to support core infrastructure projects that support housing, such as roads. This money is in addition to the $625 million earmarked for repair and expansion of water infrastructure.
The budget pushes forward existing spending plans for highways and roads, with no new cost breakdowns for the Progressive Conservative government’s flagship projects like Highway 413 or the Bradford Bypass.
About $37.6 billion will be spent on the education sector and $40 billion will be put into “other programs”
Interest on debt takes up about $13.9 billion of provincial spending.
Keeping costs down
There are no new tax cuts or fee reductions in the 2024 Ontario budget other than the gas and fuel tax rate cut and a confirmation of the Guaranteed Annual Income System (GAINS) expansion, which was announced last year and goes into effect in July.
$214.5B
Overall planned spending for 2024-2025
$1B
New Municipal Housing Infrastructure Program
$625M
To repair and expand water infrastructure
$200M
Community sport and recreation fund
$546M
Over 3 years to hire 600K people in primary health care
$620M
Extending the gas rate tax cut
$46M
GTA safety, including purchase of police helicopters
The government announced Monday that it would be extending its 5.7 cents per litre gas and fuel tax rate cut until Dec. 31, 2024. According to the budget, this will cost taxpayers about $620 million for 2024-25.
Prior to the extension, the price tag for this policy was about $320 million for 2023-24 and $325 million for 2024-25.
The government says its tax rate cut has saved Ontario households an average of $320 since it was first introduced in 2022.
Changes will also be coming to auto insurance, although the province hasn’t attached a dollar figure to it. The Ford government says it will move forward with reforms that will “empower Ontario drivers with more affordable options.”
Auto insurance will still be mandatory for medical, rehabilitation and attendant care benefits, but the government notes all other benefits would become optional.
“This would provide drivers with an opportunity to lower their premiums by taking advantage of a wider range of coverage options to meet their needs,” the budget document says.
Bethlenfalvy said he doesn’t know how much these changes could save drivers or whether they could help reduce premiums. Rather, it is about providing individuals with more convenient options, he said.
“This is something that we are committed to because we want insurance to be affordable for many,” he said.
Where does Ontario stand on housing?
The province says it has achieved about 99 per cent of it’s 2023 housing goal, creating 109,011 new homes.
This includes 89,297 housing starts, 9,879 “additional residential units” and 9,835 long-term care beds.
Housing starts, a measure used to track new residential construction, are projected to remain under 100,000 for the next three years. This could impact the province’s goal of building 1.5 million homes in 10 years, although the finance minister did not seem to be concerned.
“I've been around long enough to see interest rates cycles up and down, economies up and down, housing starts up and down,” Bethlenfalvy said.
“ I know that this too shall pass.”
Officials noted the cumulative impact of interest rate increases has elevated mortgage costs, which have weighed on the province’s housing market.
The average home price declined in 2023 to about $872,100, the government said.
The government has said it will invest an additional $152 million over the next three years to support individuals facing unstable housing conditions and dealing with mental health and addictions challenges. This money can be used to provide rent supplements and maintain dedicated supportive housing.
The province also said it would be putting forward a new provincial policy framework that “sets out best practices for implementing a Vacant Home Tax on the municipal level while also strengthening Ontario’s Non-Resident Speculation Tax. Few details were provided on what these amendments would entail, with officials only noting it would “support compliance and improve fairness.”
Minister of Finance Peter Bethlenfalvy receives a standing ovation from party members as he rises to table the Ontario provincial budget at the legislature at Queen's Park in Toronto on Tuesday, March 26, 2024. THE CANADIAN PRESS/Nathan Denette
Opposition parties argue this year’s budget spends a lot of money while promising few results.
“Nothing that the government laid out today helps hardworking people breathe a sigh of relief, or gives them confidence that what's causing them stress matters to their government,” New Democratic Party Leader Marit Stiles told reporters.
“This was a time for bold leadership, but the message that the conservatives sent today is that what matters most to people right now—accessible health care, affordable housing, the cost of living—don't matter to them.”
Ontario Liberal Leader Bonnie Crombie noted the budget does little for families struggling to fund a doctor or put their children in daycare.
“This is a do-nothing budget. It’s not worth the paper it’s printed on. The Minister concedes economic growth is down and the debt and deficit are up, but he does nothing to help families and local businesses who are struggling,” Crombie said.
“The sad reality is Doug Ford has no intention of making life better for Ontario families and businesses.”
New sport and recreation fund
The province announced Tuesday it will be investing $200 million over three years for a “application-based local Community Sport and Recreation Infrastructure Fund.”
Officials said the money will be used to support sport, recreation and community facilities for youth and families.
An additional $152 million will also be spent over three years for mental health and addiction supports.
What's missing?
No new funding is being provided for the Ontario Disability Support Program (ODSP) or the Ontario Works (OW) program, despite documents showing a 15-year “steadily growing caseload.”
The figures were part of a report included in the transition binder for Minister of Children, Community and Social Service Michael Parsa and obtained by CTV News Toronto in a freedom of information request.
Almost 900,000 people are receiving funding through one of the province’s social assistance programs, representing about 6.9 per cent of the province’s population. This number has “steadily” increased over the last 15 years, the documents read, and is expected to grow further due to the uncertain impact of the pandemic.
The province has increased ODSP payments by five per cent, which would add about $58 a month to a recipient’s paycheck.
Copies of the Ontario provincial budget are shown on a desk at the legislature at Queen's Park in Toronto on Tuesday, March 26, 2024. THE CANADIAN PRESS/Nathan Denette
However, advocacy group ODSP Action Coalition condemned the lack of further supports in the 2024 budget, arguing that keeping benefit rates so far below the poverty line “leads to exponentially higher costs further downstream through increased homelessness, Emergency Room visits and involvement with the judiciary.”
“This budget illustrates just how out of touch this government is with the daily struggles of disabled Ontarians living in deep, deep poverty, particularly those who are unable to work,” Trevor Manson, a co-chair with ODSP Action Coalition, said in a statement.
Ontario education unions say the Ford government’s budget intentionally underfunds the public education system.
The 2024 budget provides a 2.7 per cent projected increase to the education budget compared to last year’s spending, the union said, arguing that amount is lower than inflation and does not account for rising enrollment.
“Politics is all about choices,” said Ontario Secondary School Teachers’ Federation President Karen Littlewood in a statement.
“The Premier and his government continue to choose to put students last, and this budget is no different. They’ve ignored the severe underfunding of elementary and secondary schools as well as in post-secondary education, which has contributed to an acute staffing crisis, rising violence in classrooms, and significant cuts to special education programming across the province.”
The buyer of Clorox Co. assets in Argentina expects consumption in the South American country to recover in coming months from a steep decline early in the year due to President Javier Milei’s austerity measures.
“In the general consumer sector there has been stabilization and growth in some categories. We are expecting the second half of the year to be substantially better than the first,” said Pedro Palma, a managing partner at private equity fund Apex Capital.
(Bloomberg) -- Argentina posted a third negative economic print during President Javier Milei’s first full month in office, affirming views that the country likely entered into another recession at the start of the year.
Economic activity fell 4.3% in January from a year ago, less than expectations for a 6.3% drop, according to analysts surveyed by Bloomberg. On a monthly basis, activity declined 1.2%, the third straight month in the red, according to government data published Tuesday.
Read More: Argentina’s Economy Was Slumping Even Before Milei Shock Therapy
Milei’s shock therapy economic measures, including lifting price controls and a 54% currency devaluation, caused consumer spending to tank in January as workers’ wages suffered a record drop from the previous month. His austerity measures helped cool monthly inflation in January and February, albeit at extremely elevated levels.
Economists surveyed by Argentina’s central bank forecast gross domestic product contracting 3.5% this year, according to a February poll.
The co-founder of the firm leading the charge to encourage Canada’s pension funds to invest more at home says that increased domestic investment would strengthen the Canadian economy, and the funds themselves in turn.
Daniel Brosseau, partner at Montreal-based investment management company Letko Brosseau, told BNN Bloomberg that Canada’s pension plans should look at more than just near-term returns when deciding where to invest capital.
“Domestic investments have an enormous impact, which (pension funds) can't see because they're just looking at the returns on their investments,” Brosseau said in a Tuesday morning television interview.
“(They’re) missing out on the economic impact of the investments on the local economy, which is considerably larger… the wellbeing of the pensioners has something to do with the wellbeing of their incomes.”
Brosseau said he acknowledges that the fundamental responsibility of a pension plan is to secure the best returns for those who have paid into it, but added that “the question is then how this responsibility is filled.”
He said the Canadian stock market has outpaced most other emerging global market economies over the past 30 years and has been competitive against U.S. markets in recent decades if the “Magnificent 7” are removed.
“(For pension funds) to say that their ability to fulfil their obligations vis-a-vis their pensioners is dependent on not investing in Canada is a little bit of a stretch,” he added.
The letter was signed by nearly 100 business leaders, including Rogers CEO Tony Staffieri and Canaccord Genuity Group CEO Dan Daviau, but it has since been opposed by a number of other stakeholders.
Brosseau said he finds those kinds of counterarguments to his firm’s point of view “quite constructive,” as they have opened a dialogue and allowed people to examine all sides of the issue.
“One of the objectives of the open letter was to initiate the discussion, and it's a very important discussion for Canada because of the size that this savings pool represents,” he said.
“It's in fact the largest institutional savings pool in Canada, and the only one that can take on the type of long-term equity risk that's required to build the country… we have to pay attention to this.”
'Canada needs a lot of investment'
Brosseau said that Canada lags behind the U.S. and its other G7 peers when it comes to domestic investment of any kind, which has created a competitive disadvantage and hampered Canadian economic output.
“Canada needs a lot of investment. We invest 10 per cent of GDP (gross domestic product) in non-residential investments; that's 30 or 40 per cent less than the U.S. does,” he said.
“For every dollar we invest in startups, the U.S. invests $40. In research and development, we're ranked amongst the lowest in the G7… so Canada has a lot of things to do.”
Brosseau argued that with that in mind, finding reasons to keep investment dollars at home shouldn’t be hard for Canadian pension funds, considering the many economic advantages Canada already has.
“Canada is the largest democratic country in the world by landmass, it's rife with resources, it has a well-educated population and its government and legal systems are sound,” he said.
“So if you can't find a way of making money with that… I don't know.”
The Bank of Canada is warning that waning productivity growth in the country is an “emergency” that can force higher interest rates and limit rising wages for Canadians.
Senior deputy governor Carolyn Rogers gave a speech in Halifax on Tuesday in which she sounded the alarm on Canada’s lagging productivity rates.
Rogers argued that productivity is a way to “inoculate the economy against inflation,” while sustaining “faster growth, more jobs and higher wages.” An economy with strong productivity growth also does not need to rely as much on interest rates when price pressures start to get out of hand, she said.
“You’ve seen those signs that say, ‘In emergency, break glass.’ Well, it’s time to break the glass,” she told the crowd.
Why does productivity matter?
Productivity can be measured in a few ways, but in general it’s the level of economic output per hour worked. Improving productivity doesn’t necessarily mean Canadians working harder, but rather equipping them with the tools they need to accomplish more in the same amount of time, Rogers said.
One of the main issues dragging down Canadian productivity rates is a lack of business investment. Canadian businesses routinely lag their global counterparts when it comes to investment in machinery, equipment and intellectual property, she noted.
Experts who spoke to Global News in January about the country’s productivity ills said Canada is a “significant laggard” behind the United States and other nations when it comes to equipping workers with “capital stock.”
Some global risks to Canada’s inflation remain: Macklem
This can refer to infrastructure like roads, machinery to accomplish a task, research and development funding or even leveraging software — anything that makes a job easier and more efficient to perform.
“Imagine if I were working in construction with a shovel versus somebody working with a backhoe,” said Conference Board of Canada chief economist Pedro Antunes at the time.
Many economists, and the Bank of Canada, expected Canada’s productivity rates to accelerate in the recovery from the COVID-19 pandemic. Rogers noted that while productivity has indeed taken off in the U.S., Canadian levels are on par with where they stood about seven years ago.
Canada is in the middle of the pack of countries in the Organisation for Economic Co-operation and Development (OECD) when it comes to productivity, according to a November analysis from BMO chief economist Doug Porter.
Rogers also pointed to a lack of competition across Canada’s industries as not driving companies to invest. When companies have high profit margins and feel their dominance in an industry is unchallenged, they have little incentive to make their operations more efficient, she argued.
Canada’s Competition Bureau will have more time to review, stop mergers: Champagne
“Simply put, businesses become more productive when they’re exposed to competition,” she said.
“Competition drives companies to become more productive by innovating and by finding ways to be more efficient. In doing so, competition can make the whole economy more productive.”
Better matching newcomers to jobs can boost productivity: Rogers
Businesses also need more certainty in the Canadian policy environment to be able to invest confidently in their operations, Rogers added.
Government incentives and regulatory approaches that change year-to-year do not inspire confidence among business, Rogers said.
She noted that the pandemic and recent global trade tensions have been external sources of instability, and she said the Bank of Canada’s role is to ensure price stability in order to put businesses in an environment that encourages investment.
The Bank of Canada is set to make its next interest rate decision on April 10. Annual inflation has cooled to 2.8 per cent, according to the latest report but the central bank has said it wants confidence that inflation will cool all the way back to its two per cent target before it eases the policy rate from its current elevated levels.
One of the key metrics the Bank of Canada has consistently said it watches to help determine its interest rate path is the impact of wage growth. It is thought that businesses will pass on the costs of higher wage growth onto consumers, unless they come alongside gains in productivity that allow employers to raise wages without hiking prices.
Wage growth in the Canadian labour market has recently shown signs of easing, but annual rates were still above five per cent in StatCan’s the latest jobs report. The Bank of Canada has flagged annual wage growth between four and five per cent as inconsistent with achieving two per cent inflation if it doesn’t come with associated productivity gains.
Canada is also “too often” failing to make proper use of skilled newcomers joining the labour pool, Rogers said, which has major implications for productivity rates.
“And too often these people wind up stuck in low-wage, low-productivity jobs. Doing better at matching jobs and workers is crucial to the future of Canada’s economy,” she said.
Canada’s inflation rate slowed to 2.8% in February, beating expectations for 2nd consecutive month
