Usually I try to provide readers with short essays on the issues of the day. But while doing research or monitoring the media I come across items that have been ignored or inadequately covered in the media, or provide updates to subjects dealt with in the Nova Scotia Observer. This being Canada Day, here are some items that shed some light on the state of the federation and Nova Scotia’s place in it.
Still Alberta bound
This may have been reported somewhere in the local media, but if it was I missed it. StatsCanada released its Quarterly Demographic Statistics the other week showing that despite the impact on the Alberta economy of the drop in oil prices the province is still a magnet for Nova Scotians going down the road. Quarterly demographic statistics released June 17 show that between Jan. 1 and March 31 this year 1,560 Nova Scotians moved to Alberta while only 906 moved from Alberta to here. The net loss of 654 people to Alberta was the main factor in an overall population decline over the three-month period. The loss to Alberta was partially offset by a net gain of 112 folks moving here from the other provinces and territories as well as net international migration of 385. However, deaths exceeded births by 492, leaving our population at the end of March 649 below what it was at the beginning of the quarter.
The good news, if it can be so described, is that the first three months of the year are always bad, especially for deaths over births, and overall numbers usually pick up in the final three quarters. In 2014, a net loss of 873 in the first quarter was offset by a gain of more than 1,700 in the next two quarters. And in the misery loves company department, our Atlantic neighbours fared even worse. New Brunswick had a net loss of 941, Newfoundland and Labrador, with half our population, lost 573 souls and P.E.I., which is one-sixth our size, experienced a population drop of 162 over the period. If, as many insist, we are facing a demographic crisis, it is clearly regional in scope. Unfortunately, the response has been piecemeal and ignores the impact of national economic and fiscal policies. Happy Canada Day.
Download milestone reached
Back on Dec. 3, 2014 I posted an article pointing out that despite its boasting, the Harper government has not actually reduced Canada’s government debt, it has simply offloaded more of it onto provincial and local governments. Calculations based on Finance Canada’s on-line Fiscal Reference Tables, show that when the Conservatives took office the all-government net debt equalled 60% of GDP, with the feds responsible for 63% of the debt and the provinces and municipalities 37%. By April 1, 2014, total debt had risen to 64% of GDP, with the feds responsible for 56% and provincial and local governments 44%.
The news has become even worse for the provinces since then. Statistics Canada, which uses a slightly different method of calculating net government debt, reported recently that the ratio of federal government net debt (expressed at book value) to gross domestic product rose to 31.3% in the first quarter of 2015 up 0.9% from the previous quarter while the ratio for other levels of government reached 31.7%, up 2.7% from the fourth quarter of 2014. According to the Globe and Mail, the first quarter of 2015 marked the first time ever that provincial and municipal debt as a percentage of GDP (31.7%) exceeded the federal (31.3%) level.
This history-making event was buried at the bottom of a story in the Business Section “Household debt stable, but outlook still dim” – June 13, 2015. While I have no reason to doubt its accuracy, I’m not sure of the Globe’s source for such a sweeping assertion – StatsCanada’s on-line records go back only as far as 1990. But there is certainly a story in those records. In 1990, net federal debt was about 52% of GDP, provincial and local debt about 17%. In 2000, the ratio was 54% of GDP for the feds and 26% for provincial and local governments. Over the next eight years, net debt as a percentage of GDP dropped for all levels of government. But from 2008 to the present, federal debt as a percentage of GDP has remained stable, while provincial and local debt to GDP has gone from 17.5 to 31.7 per cent, an increase of more than 80%. This increase in debt is accruing to the levels of government responsible for delivering the health care, education and infrastructure that Canadians rely on. And, of course, there are large disparities in the ability of provincial and local governments – like ours – to pay for those needed services. Happy Canada Day.
Banks Still Booming
There was a time in this fair land when Canadians tended to see red over bank profits. Back in the 1990s when the first of the Big Five banks crossed the billion-dollar profit threshold it made headlines. According to one study, overall bank profits rose from $3.6 to $9.7 billion during the 1990s, triggering a public backlash that forced the Liberal government of the day to reject bank efforts to become even bigger through mergers. But nowadays, we appear to be so thankful the Big Five did not need to be bailed out during the 2008 financial meltdown that excessive bank profits rate barely a mention.
Thanks to the Globe’s Report on Business magazine for July/August, we have some good numbers with which to stir the pot. According to ROB, in 2014, a single bank – the Royal Bank of Canada – had profits nearly as great as the entire sector had at the end of the 1990s – $8.9 billion. RBC was the most profitable corporation in the country in 2014, followed in second to fourth spots by three other members of the Big Five – Toronto-Dominion, Bank of Nova Scotia and Bank of Montreal. The poor old Canadian Imperial Bank of Commerce lagged behind in tenth place overall. In total, the Big Five raked in $31.96 billion in after tax profits in 2014 (almost enough to fund the operations of the Nova Scotia government for three years).
Thanks to the ROB magazine (and my pack rat tendencies), it is possible to compare the 2014 results with a past year – 2003. In 2003, the Big Five had profits of $10.45 billion. So there has been a three-fold increase in profit over the 11-year period. And in holding down the first four spots in the corporate race for profits, the Big Five were more dominant in 2014. By comparison, in 2003, RBC and Scotiabank were the second and third most profitable companies. with CIBC slotting in at fifth, BMO seventh and Toronto-Dominion a distant 19th. A bright spot for Canadians who are not holders of bank shares is the significant increase in Big Five employment since 2003. According to the ROB, there were 332,991 employees of the Big Five banks in 2014, up from 197,411 in 2003. The increase in employment of 68.7%, was far short of the 205.9% increase in profits. But it’s Canada Day so be thankful for small mercies.