Canada’s price on carbon only contributes 0.15 percentage points to inflation, Bank of Canada Governor Tiff Macklem reiterated on Thursday.
Macklem first cited the figure to the Standing Committee on Finance in February, but repeated it while speaking to the Calgary Chamber of Commerce on Sept. 7, amid claims by the Conservatives that the federal carbon pricing plan is a significant driver behind Canada’s high inflation rate.
“The carbon tax goes up periodically and when we forecast inflation, we know what the carbon tax is going to do, so yeah, we build that into our forecast just the way we build in other fiscal decisions,” Macklem said on Thursday.
“The contribution that’s making to inflation one year to the next is relatively small. If you want me to put a number on it, it’s in the range of 0.15 per cent, so quite small.”
The federal carbon price rose on April 1 by $15 per tonne, to $65: the most recent in a 12-year timeline to lift the price to $170 by 2030.
Carbon pricing is based on the idea that higher fuel costs will result in lower usage and an overall decrease in emissions. To counterbalance the impact of those higher costs, the federal government issues rebates to Canadians in the form of the climate action incentive payment.
According to a 2022 report by Parliamentary Budget Officer Yves Giroux, raising the carbon price to $170 per tonne by 2030 will eliminate an additional 96 million tonnes of emissions – equivalent to the emissions of 21 million passenger cars – compared to the current rate of $50 per tonne.
That amount would account for more than 40 per cent of the emissions Canada is seeking to eliminate by 2030 to hit its reduction targets.
However, Conservative Party leader Pierre Poilievre and other members of the official opposition have repeatedly slammed the carbon price for making fuel, groceries and other goods noticeably more expensive for Canadians.
“Carbon tax increases are increasing inflation and raising the cost of basic necessities,” Tracy Gray, Kelowna—Lake Country Conservative MP, said in the House of Commons on June 21.
“After eight years, the Liberals refuse to see the light on how their inflationary carbon tax has made life unaffordable for many families while doing nothing for the environment.”
Poilievre has repeated the claim during campaign-style stops across the country, including one in a Vancouver grocery store on July 14.
When pressed by a reporter to cite evidence that the carbon price raises the cost of living, Poilievre pointed to the Bank of Canada’s data – without mentioning the 0.15 per cent figure itself.
“We know very simply when you raise the cost of the gas and diesel that our farmers use to produce the food and that our truckers use to ship the food, you raise the price of the food itself. Somebody has to pay that price,” he said. “It is magical thinking to suggest that you can raise energy prices on businesses farmers and workers without raising inflation.”
According to Jim Stanford, economist and director of the Centre for Future Work, there’s no magic involved. In a report originally published by the think tank in Canadian Dimension magazine on May 8, Stanford laid out arguments he said proved there is no significant correlation between the carbon price and rising inflation.
Stanford pointed out that the global price of oil tripled between the beginning of 2021 and spring 2022, from US $40 to $120 per barrel – equivalent to a hypothetical increase in the carbon price to CAD $300 per tonne.
“By that measure, the jump in the price of oil – driven by a combination of geopolitics and speculation on world oil futures markets – increased fossil fuel prices by 30 times as much as the $10 carbon price increase in the same period,” he said.
He said almost all industrial countries have experienced a surge in inflation since the onset of the pandemic, whether they have carbon pricing or not. For example, the U.S., Australia, Turkey, and other OECD countries without carbon pricing systems all experienced high inflation, while Japan and Korea – which both have carbon prices – experienced inflation rates lower than Canada’s.
He also weighed the cost for Canadians of carbon pricing against the cost of climate disasters.
“Climate change is already having many negative impacts on the economy, including on inflation,” he wrote. “The impact of climate disasters – droughts, floods, and more – on food prices has been widely acknowledged.”
And while Poilievre cited Macklem’s own admission that the carbon price bumps inflation by 0.15 percentage points, he did not mention something else the central bank’s governor said in the same Standing Committee on Finance meeting where he shared the figure in February.
“I think the initial run-up in inflation was mostly driven by global factors,” Macklem told the committee. “There were much higher energy prices… global supply chains were really gummed up, and we saw a big surge in demand globally for goods. All that drove goods price inflation up very rapidly.”
And then, there was omicron, and the last major wave of COVID-19 infections in Canada.
“Last year at this time we were just coming out of omicron and the economy has never really looked back,” he said. “Nobody could tell us how many waves of this there were going to be. Fortunately, that was the last major wave. The economy reopened. Businesses were not able to keep up with the demand and you saw domestic prices increase quite rapidly.”
TOKYO (AP) — Japanese technology group SoftBank swung back to profitability in the July-September quarter, boosted by positive results in its Vision Fund investments.
Tokyo-based SoftBank Group Corp. reported Tuesday a fiscal second quarter profit of nearly 1.18 trillion yen ($7.7 billion), compared with a 931 billion yen loss in the year-earlier period.
Quarterly sales edged up about 6% to nearly 1.77 trillion yen ($11.5 billion).
SoftBank credited income from royalties and licensing related to its holdings in Arm, a computer chip-designing company, whose business spans smartphones, data centers, networking equipment, automotive, consumer electronic devices, and AI applications.
The results were also helped by the absence of losses related to SoftBank’s investment in office-space sharing venture WeWork, which hit the previous fiscal year.
WeWork, which filed for Chapter 11 bankruptcy protection in 2023, emerged from Chapter 11 in June.
SoftBank has benefitted in recent months from rising share prices in some investment, such as U.S.-based e-commerce company Coupang, Chinese mobility provider DiDi Global and Bytedance, the Chinese developer of TikTok.
SoftBank’s financial results tend to swing wildly, partly because of its sprawling investment portfolio that includes search engine Yahoo, Chinese retailer Alibaba, and artificial intelligence company Nvidia.
SoftBank makes investments in a variety of companies that it groups together in a series of Vision Funds.
The company’s founder, Masayoshi Son, is a pioneer in technology investment in Japan. SoftBank Group does not give earnings forecasts.
Shopify Inc. executives brushed off concerns that incoming U.S. President Donald Trump will be a major detriment to many of the company’s merchants.
“There’s nothing in what we’ve heard from Trump, nor would there have been anything from (Democratic candidate) Kamala (Harris), which we think impacts the overall state of new business formation and entrepreneurship,” Shopify’s chief financial officer Jeff Hoffmeister told analysts on a call Tuesday.
“We still feel really good about all the merchants out there, all the entrepreneurs that want to start new businesses and that’s obviously not going to change with the administration.”
Hoffmeister’s comments come a week after Trump, a Republican businessman, trounced Harris in an election that will soon return him to the Oval Office.
On the campaign trail, he threatened to impose tariffs of 60 per cent on imports from China and roughly 10 per cent to 20 per cent on goods from all other countries.
If the president-elect makes good on the promise, many worry the cost of operating will soar for companies, including customers of Shopify, which sells e-commerce software to small businesses but also brands as big as Kylie Cosmetics and Victoria’s Secret.
These merchants may feel they have no choice but to pass on the increases to customers, perhaps sparking more inflation.
If Trump’s tariffs do come to fruition, Shopify’s president Harley Finkelstein pointed out China is “not a huge area” for Shopify.
However, “we can’t anticipate what every presidential administration is going to do,” he cautioned.
He likened the uncertainty facing the business community to the COVID-19 pandemic where Shopify had to help companies migrate online.
“Our job is no matter what comes the way of our merchants, we provide them with tools and service and support for them to navigate it really well,” he said.
Finkelstein was questioned about the forthcoming U.S. leadership change on a call meant to delve into Shopify’s latest earnings, which sent shares soaring 27 per cent to $158.63 shortly after Tuesday’s market open.
The Ottawa-based company, which keeps its books in U.S. dollars, reported US$828 million in net income for its third quarter, up from US$718 million in the same quarter last year, as its revenue rose 26 per cent.
Revenue for the period ended Sept. 30 totalled US$2.16 billion, up from US$1.71 billion a year earlier.
Subscription solutions revenue reached US$610 million, up from US$486 million in the same quarter last year.
Merchant solutions revenue amounted to US$1.55 billion, up from US$1.23 billion.
Shopify’s net income excluding the impact of equity investments totalled US$344 million for the quarter, up from US$173 million in the same quarter last year.
Daniel Chan, a TD Cowen analyst, said the results show Shopify has a leadership position in the e-commerce world and “a continued ability to gain market share.”
In its outlook for its fourth quarter of 2024, the company said it expects revenue to grow at a mid-to-high-twenties percentage rate on a year-over-year basis.
“Q4 guidance suggests Shopify will finish the year strong, with better-than-expected revenue growth and operating margin,” Chan pointed out in a note to investors.
This report by The Canadian Press was first published Nov. 12, 2024.
TORONTO – RioCan Real Estate Investment Trust says it has cut almost 10 per cent of its staff as it deals with a slowdown in the condo market and overall pushes for greater efficiency.
The company says the cuts, which amount to around 60 employees based on its last annual filing, will mean about $9 million in restructuring charges and should translate to about $8 million in annualized cash savings.
The job cuts come as RioCan and others scale back condo development plans as the market softens, but chief executive Jonathan Gitlin says the reductions were from a companywide efficiency effort.
RioCan says it doesn’t plan to start any new construction of mixed-use properties this year and well into 2025 as it adjusts to the shifting market demand.
The company reported a net income of $96.9 million in the third quarter, up from a loss of $73.5 million last year, as it saw a $159 million boost from a favourable change in the fair value of investment properties.
RioCan reported what it says is a record-breaking 97.8 per cent occupancy rate in the quarter including retail committed occupancy of 98.6 per cent.
This report by The Canadian Press was first published Nov. 12, 2024.
