SATURDAY,OCTOBER19,2019 | THEGLOBEANDMAILO REPORTONBUSINESS| B7
Canadian exporters desperately need to diversify.
In 2018, 70.5 per cent of Canadian exporters sent their goods to a
single foreign market, the highest share in Statistics Canada data
going back to 2010. For the most part, that single market was the
United States – and that, too, is a problem.
“For one, such a large exposure to one trade partner (i.e. the U.S.)
makes Canadian exporters more vulnerable to U.S. economic cy-
cles,” Krishen Rangasamy, senior economist at National Bank of
Canada, said in a May research note.
“More importantly, as we’ve seen with [the United States-Mexico-
Canada Agreement], the lack of diversification reduces leverage for
Canadian trade negotiators as they attempt to assuage an increas-
ingly belligerent trade partner.”
Even then, Canada emerged from the North American trade
negotiations relatively unscathed – a win of sorts for the Liberals.
They also pushed a trade deal with the European Union into frui-
tion, and managed to get the U.S. to lift crushing tariffs on its steel
and aluminum exporters.
With so much turbulence in the rear view, trade talk is somewhat
scant in the Liberal platform.
Not so for the Tories. According to their platform, they “will sign”
trade deals with Britain and some South American and Southeast
Asian countries. They would also create an “accelerator” program to
help Canadian exporters find customers in markets covered by
newer trade deals.
Help appears needed. Earlier this year, a survey commissioned by
Global Affairs Canada found that 7 per cent of small- and medium-
sized exporters were familiar with details of Canada’s trade deal
with the European Union. Most had not heard of it.
The NDP platform is heavy on the party’s trade principles, but
lighter on concrete proposals. The Greens serve up a variety of bold
moves, such as a “revamp” of trade policies to bring them in line
with climate-change plans. This would include reducing the dis-
tance food can be shipped.
Within our borders, the business community would likely ap-
plaud some upheaval.
Both the Liberals and Tories have pledged to break down barriers
in interprovincial trade. That may prove easier said than done: The
current version of the federal-provincial agreement is rife with
exceptions and opt-out measures, and they continue to cost our
economy billions by the year.Howdowefix(and
diversify)trade?
THE GLOBE AND MAIL, SOURCE: STATSCAN71%70.57069.56968.568
2010 2012 2014 2016Canadianexporterswithonepartnercountry‘We’reverymuchbehindvirtuallyevery
otherdevelopedcountryinattachingthe
characteristicsthatgoalongwithdifferentjobs
–theskillsets,bothhardandsoft.’
It’s a time-worn issue, resulting in a “skills gap” that costs the Cana-
dian economy billions every year. More than one-quarter of compa-
nies report a labour shortage that affects their ability to meet de-
mand, according to the Bank of Canada’s most recent Business Out-
look Survey. You wouldn’t know it by looking at monthly job figures.
The Canadian labour market is a pocket of strength, with a torrid
pace of hiring sending the jobless rate to near four-decade lows.
But while hiring happens, it’s not always the right fit. About 13 per
cent of workers have skills mismatched to their jobs, according to a
recent C.D. Howe Institute study.
“You’re facing an aging population, the labour market is changing
and because of technological changes, skills demand is changing,”
says Parisa Mahboubi, senior policy analyst at C.D. Howe, and the
study’s author. “So the problem may become severe.”
As always, party platforms are filled with plans to better prepare
Canadian workers. The Liberals say they will “move forward” with
their Canada Training Benefit, introduced in the last federal budget,
that included a refundable tax credit for training, up to a lifetime
limit of $5,000. They’re also proposing “guaranteed training” for
apprentices in the Red Seal Program, which sets nationwide stan-
dards for skilled tradespeople.
The Conservatives would cancel the Liberals’ training credit, say-
ing it has “no standards for relevant courses.” The party would ex-
pand the Red Seal Program to “harmonize apprenticeship training
and trade certification” between the provinces and territories. More-
over, the Tories would “rework” the Temporary Foreign Workers
Program to fill vacancies Canadians won’t.
The NDP platform includes a raft of proposals, including a change
to Employment Insurance rules allowing those who quit jobs for
school to receive benefits. It would also “require” employers to spend
at least 1 per cent of their payroll every year on training for employ-
ees. To mesh with bold climate policies, the Greens have proposed a
“just transition framework” for workers in fossil-fuel sectors. Its
platform says this would include “income protection, jobs guaran-
tees, retraining and resettlement.” No cost is provided for the plan.
Still, there is one overarching problem with wiping out skills gaps:
data. “What we’re missing is the details on the characteristics on the
jobs that are vacant,” Queen’s University economist Don Drummond
told The Globe earlier this year. “We’re very much behind virtually
every other developed country in attaching the characteristics that
go along with different jobs – the skill sets, both hard and soft.”
Thus, governments of all stripes may be throwing money at a
problem they don’t truly understand.WithfilesfromDavidParkinsonandTheCanadianPressHowdowe
gettheright
peopleinthe
rightjobs?
THE GLOBE AND MAIL, SOURCE: BANK OF CANADA BUSINESS OUTLOOK SURVEYCanadianlabourshortage
Percentage of companies reporting labour shortages
that restrict ability to meet demand40%3020100
2010 2011 2012 2013 2014 2015 2016 2017 2018
THE GLOBE AND MAIL,SOURCE: NATIONAL BANK FINANCIAL/NOTE: DOWN PAYMENT NOT TAKEN INTO ACCOUNTHousingcosts
Monthly mortgage payment on a medium-priced dwelling (25-year amortization, five-year
term) as a percentage of median household income90%80706050403020
2001 2005 2009 2013 2017Toronto area Montreal area Vancouver area Calgary areaIn recent months, Canadian real estate activity has come back to
life.
The flip side is that, in many markets, prices are on the rise and
increasingly out of reach for would-be buyers looking to build their
wealth through home ownership.
Renters are getting dinged, too. In places such as Toronto and
Vancouver, the combination of inadequate purpose-built construc-
tion and strong demand has led to a surge in monthly rates.
Canada’s major parties have unveiled a variety of ways to tackle
home affordability – except that some measures could serve to
further inflate prices, experts say.
The Liberal Party has proposed an expansion to its First Time
Home Buyer Incentive, which allows buyers to get an interest-free
loan from thegovernment. The program currently allows a maxi-
mum purchase price of roughly $565,000 – a meagre amount in
some markets. The expansion would bring the maximum qualifying
amount to nearly $800,000 in the Toronto, Vancouver and Victoria
areas.
In its current iteration, the program “doesn’t do anything to
improve your buying power,” says Robert McLister, founder of
RateSpy.com. The expansion, however, “will see some uptake” in
those markets, he added.
The Conservatives have proposed to extend the maximum amor-
tization period on insured mortgages for first-time buyers to 30
years from 25. (So, too, has the NDP.) It’s a move aimed at reducing
monthly mortgage payments – which in turn, would allow families
to buy pricier homes.
“I don’t think that was a well thought-out plan,” Mr. McLister
says. “When you ease credit, it makes it easier for people to get into
the market and pay more for a home. And that is not a long-term
affordability solution.”
Mr. McLister was encouraged by two Conservative plans: remov-
ing the stress test on mortgage renewals, and freeing up surplus
federal land to increase supply.
By comparison, the NDP and Green platforms place considerably
more focus on rental housing, including affordable units. The NDP
has vowed to build 500,000 units of affordable housing over the
next decade, and to entice developers, it would waive the federal
portion of GST/HST on the construction of affordable units.
The Greens would restore tax incentives to spur purpose-built
rental construction. (Canada built considerably more rental units in
the 1960s and ’70s, owing in large part to favourable tax incentives.)
It would also pivot the Canada Mortgage and Housing Corp. to focus
on supporting “non-market” housing.
“We have to face the reality that being a renter is going to be the
reality for more and more people,” said Robert Hogue, senior econ-
omist at Royal Bank of Canada.ShouldOttawareally
trytomakehousing
moreaffordable?