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Finance Minister Wins Fight For His Choice at Bank of Canada – Bloomberg



Photographer: David Kawai/Bloomberg

If anyone can empathize with the disappointment that Carolyn Wilkins must be feeling about being passed over for the top job at the Bank of Canada, it’s Tiff Macklem, the man who just beat her to it.

Macklem was the presumptive front-runner in 2013, when he was Mark Carney’s top deputy, only to lose out to an outsider himself — the current governor, Stephen Poloz. In fact, an insider hasn’t been given the job since 1994, when a new government promoted Gordon Thiessen amid a dispute about how much control lawmakers should have over monetary policy.

The lesson of the Bank of Canada’s modern history is that the finance minister always gets his pick — all men so far — no matter who is favored by insiders or the board in its “independent” search process.

Finance Minister Bill Morneau had been considering Macklem for the job for two years, when the topic of transition first started coming up in discussions at the department, according to a person familiar with the minister’s thinking at the time. The two men weren’t friends, but the finance minister was impressed with a resume that included top management stints at both the Bank of Canada and government, along with his experience as a crisis manager.

It wasn’t clear whether Macklem still wanted the job, however. He felt humiliated by his rejection years earlier, and had been telling friends as recently as a few weeks ago he was happy at the University of Toronto, having recently signed an extension as dean of its business school.

Early on in the process, Morneau’s instructions to the board were to undertake an exhaustive search for a governor. By the end of February, the selection committee had invited a short list of candidates for interviews in Ottawa — including at least two current members of the governing council, according to people familiar with the process.

The Crisis Hits

The list was then whittled down to two, who were asked to make presentations to the full board.

A letter published Friday by the head of the selection committee suggests Macklem was one of the two finalists. The other was Wilkins, according to people familiar with the events. The interviews took place around March 10, said one person, just as official Ottawa was beginning to be seized by the coronavirus pandemic. On March 13, the Bank of Canada made its first emergency interest rate cut since the 2008-2009 crisis in a coordinated move with the government, which announced the first plank in its virus stimulus package.

The crisis held up deliberations for weeks, including a critical meeting between Morneau and Claire Kennedy, the board member leading the search. As recently as April 10, Prime Minister Justin Trudeau told reporters a decision had not been made.

Wilkins had backers within the prime minister’s office, who at first were unconvinced by Morneau’s championing of Macklem, according to three people familiar with the discussions. Wilkins, the most qualified woman ever to contend for the post, also had the support of Poloz, who had been grooming his top deputy for the job for years — just as Carney had groomed Macklem.

Wilkins’ critical role in the central bank’s response to the crisis — which occurred after her final interview with the board — helped her. She won praise from both the Liberal government and Bay Street. Markets saw her as the front-runner.

One government official involved in the deliberations said that while there were “comprehensive” discussions between Morneau and officials at the prime minister’s office, a consensus did emerge around Macklem. Still, three former officials described the outcome as a victory for Morneau.

Macklem said he was informed that he got the job Thursday. By Friday morning, he was at Morneau’s side at his introductory press conference in the capital.

Carney’s Backing

While Macklem and Morneau are not known to be close friends, they’ve been running in the same Toronto circles for years. After his 2013 defeat, Macklem landed as dean of the Rotman School of Management, while Morneau became part of Trudeau’s first cabinet in 2015 as finance minister, responsible for Canada’s mostly Toronto-based banks.

Their professional lives began to cross. Morneau appointed Macklem, who is on the board at the Bank of Nova Scotia, to chair a panel on sustainable finance in 2018. That same year, Macklem would score a C$25 million investment from the government for a seed startup program run by his business school.

Macklem also had prominent champions in Ottawa and corporate Canada. None was bigger than Carney, who remains influential in government circles. In an email to BNN Bloomberg television, Carney said: “It is tremendous that he will serve our country during this critical time.”

Macklem’s position at Scotiabank, where he leads its powerful risk committee, gave him close first-hand knowledge of how the industry works.

“Tiff possesses a keen understanding and deep expertise of monetary policy and the integral role the Bank of Canada plays in promoting our country’s economic well-being as well as sustaining the strength of our financial system,” Dave McKay, chief executive officer of Royal Bank of Canada, said in a LinkedIn post.

Political Minefield

While finance ministers have always downplayed their involvement in selecting a governor, it’s become a tradition in Ottawa they get the final say. Poloz got the job in 2013 despite reports at the time the central bank’s board actually preferred Macklem. The government felt he had a more compelling story about how monetary policy needed to be more supportive of growth, an appealing pitch to then-finance minister Jim Flaherty.

The politics around governor appointments is perhaps a natural outcome of having a fiercely independent central bank. Elected lawmakers get only one chance every seven years to put their stamp on an institution that makes critical decisions that affect the well-being of all Canadians.

But there is also a personal element to it. Ottawa can be a lonely place for finance ministers, who are often forced to push back against funding demands from other ministers. They see central bank governors as objective-minded allies who often validate their positions.

Over the next few years, Morneau and Macklem will get to know each other even better.

It’s not just the crisis that will bind them. Given the growing importance of fiscal policy and the central bank’s financing of government debt, the biggest change of the Macklem era may be the deepening relationship between the bank and government. It’s a political minefield the next governor will need to navigate and will require a versatile set of skills.

Macklem will need to be politically savvy enough to engage with government officials while avoiding taking sides in policy debates outside the central bank’s purview.

Macklem was an accomplished economist well before he advanced up the management ranks at the Bank of Canada. Based on his remarks Friday, he plans to continue relying on his technical chops to adhere to the central bank’s 2% inflation target as the anchor of the Bank of Canada’s independence.

“We will use our tools as necessary in a way that respects our mandate and I am confident the government will respect our independence,” Macklem said, in French.

— With assistance by Josh Wingrove

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    Unemployment rate increases in Alberta despite more jobs: StatCan – CTV News



    Alberta gained 28,000 jobs in the month of May, according to the latest Labour Force Survey released Friday morning from Statistics Canada. 

    The increase in employment follows a cumulative decline of 361,000 jobs from February to April. 

    Alberta’s job increases were entirely driven by the services-producing sector after the province allowed some businesses such as restaurants and non-essential shops to reopen as of May 14. 

    The unemployment rate in the province increased by 2.1 percentage points to 15.5 per cent, which is now the second highest in the country behind Newfoundland and Labrador at 16.3 per cent. 

    Nationwide, the average rate of unemployment is now 13.7 per cent, topping the previous high of 13.1 per cent set back in December 1982. 

    Canada added a total of 290,000 jobs across the country. According to Statistics Canada data, the total number of hours worked is increasing at a faster pace than employment. 

    Total hours worked across all industries grew by 6.3 per cent in May, compared with an increase of 1.8 per cent (290,000 jobs) in employment. 

    Alberta Economic Recovery Plan

    In response to one of the most dramatic economic downturns in Alberta’s history, the provincial government will start rolling out an economic recovery plan later this month focused on cultivating key industries. 

    Premier Jason Kenney said last week that Alberta’s strategy will take a “pedal to the metal” approach to diversification after a steep decline in the price of oil. 

    On Monday, Finance Minister Travis Toews announced that his financial blueprint will be centred on growing sectors such as energy, agriculture, technology and petrochemical manufacturing. 

    A recent study from the Conference Board of Canada projects Alberta will see its economy shrink by 6.8 per cent this year. 

    Toews called that report realistic and noted the downturn will be measured in months not weeks.

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    Canadian government pushes 3500MHz spectrum auction to June 15, 2021 – MobileSyrup



    In light of the ongoing COVID-19 pandemic, the government announced that it has postponed the 3500MHz spectrum auction by six months.

    The new date for the auction is now June 15th, 2021. Several of the other key dates associated with the auction are listed on the government’s site since they’ve also been pushed back by six months.

    “Canada’s telecommunications service providers are doing their part in this difficult time, providing essential services to keep Canadians connected as we face the realities of the COVID-19 pandemic together. A number of providers have raised concerns, and the Government is implementing measures to address them,” said Navdeep Bains, Minister of Innovation, Science and Industry.

    “The Government will continue to reach out to telecommunications service providers—and to the private sector more broadly—to understand their challenges and support them to ensure that Canadians have access to high-quality networks and broad coverage at low prices.”

    The government’s press release from June 5th, 2020 states that this is in line with what other countries are doing. It will help the telecommunication companies focus on providing robust service to Canadians as many of us are still self-isolating at home.

    Beyond this, a consultation on the 3800MHz spectrum is set to begin in August to get the ball rolling on that slice of 5G spectrum as well. Notably, both the 3500MHz and 3800MHz are considered key due to their ability to transport data at 5G speeds at a reasonable range.

    In a statement to MobileSyrup, Chethan Lakshman, the vice president of external affairs at Shaw, stated, “given the pandemic’s impact on Canadian society and overall business operations, we support the decision to provide additional time for industry and the government to prepare for this auction. A well-run auction process will ensure that Canadians and the Canadian economy will benefit from strong competition in wireless and 5G for years to come.”

    “Our networks are the backbone of so much of our economy and as we continue to rollout Canada’s first 5G network, driving innovation and productivity, we look forward to accessing 3500 Mhz spectrum as soon as it is available,” Rogers said in a statement to MobileSyrup.

    Telus, meanwhile, sent MobileSyrup the following statement:

    “While we would like to see the auction proceed as soon as possible, we appreciate the government’s recognition of facilities-based carriers for keeping Canadians connected at all times, even during the pandemic. Because of our continued investment in building out communications infrastructure, TELUS’ 4G LTE network speeds are among the fastest in the world; faster even than South Korea’s 5G network speeds, according to Opensignal. We have long been ready to make the crucial investment in 3500 MHz spectrum and network infrastructure required to realize the full promise of 5G so that Canadian entrepreneurs, businesses, and innovators can leverage the next generation of connectivity that promises to benefit us all. In the interim, we will continue to provide our customers with access to the fastest and most reliable networks possible and focus our efforts on supporting Canada’s recovery from COVID-19 in whatever ways we can.”

    Update 05/06/20 4:19pm ET: Updated with statements from Rogers and Telus.

    Source: Innovation, Science and Economic Development Canada

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    Canada unexpectedly adds 289600 jobs on gradual reopening –



    Canada’s labour market unexpectedly strengthened after two-straight months of record losses as the country gradually reopens from COVID-19 related restrictions.

    Employment rose by 289,600 in May, Statistics Canada said Friday in Ottawa, surprising economists who had been anticipating more losses last month. The gains were across most industries and provinces, though largely driven by higher employment in Quebec, the province hardest hit by the pandemic.

    The numbers echo recent high-frequency data, which had signaled a recovery is underway, with job postings increasing and more Canadians reporting an increase in work at the end of May. They will be a relief to policy makers who had been scrambling to inject hundreds of billions in cash into the economy to keep it afloat. Still, just under 5 million remain without work or substantially reduced hours with the jobless rate at postwar records.

    “The surprisingly positive readings on employment paint a more optimistic picture of the early part of the recovery, but there’s still a long road back,” Royce Mendes, an economist at Canadian Imperial Bank of Commerce, said in a research report. “The increase in May only represents 10 per cent of the COVID-19-related job losses and absences that occurred over the prior two months.”

    Unprecedented Losses

    The pick up in May follows an unprecedented loss of about 3 million jobs in March and April. More than 2 million employed Canadians continue to experience much lower hours worked than pre-crsisis.

    The unemployment rate ticked up to 13.7% in May, from 13 per cent in April, as people returned to the labor force. Economists in a Bloomberg survey expected a loss of 500,000 jobs, with the unemployment rate rising to 15 per cent.

    Canada’s currency extended gains on the result, appreciating 0.7 per cent to $1.3406 against its U.S. counterpart at 9:46 a.m. Toronto time. Yields on two-year government bonds rose 2 basis points to 0.35 per cent.

    The better-than-expected report suggests the governments programs to cushion the blow to the labor market are working. By mid-May, 179,000 businesses had applied for the government’s 75 per cent wage subsidy program. The pace of applications to Canada’s emergency income benefit program has also decelerated in recent weeks, suggesting the worst of the layoffs and job losses is over.

    In addition to the employment pick up, Statistics Canada said the number of people who worked less than half their usual hours dropped by 292,000. That means the number of Canadians who have either lost their job or worked substantially fewer hours has fallen to just under 5 million, from about 5.5 million in April. Hours worked rose 6.3 per cent in May from the prior month but were still 23 per cent below February’s levels .

    Cautious Reopening

    The surprise jump reflects the cautious reopening of the economy across provinces. By the time the employment survey was taken from May 10 to May 16, some provinces including B.C., Saskatchewan and Quebec allowed some non-essential businesses to reopen.

    Quebec accounted for nearly 80% of May’s gains, the statistics agency said. In contrast, Ontario -– where the economy remained largely shut until May 19 –- saw more losses.

    In the early days of the reopening, employment rebounded more strongly among goods producers, the data show. The goods-producing sector added 165,000 jobs versus 125,000 in services. Lower-wage jobs also rebounded more, particularly in retail trade, accommodation and food services.

    Women Lagging

    Demographically, male employment increased more than twice as fast as that for women, consistent with the more rapid increase in the goods-producing industry. Women were among the earliest victims of the Covid-19 related job losses in March and the latest data suggest they are slower to recover as well.

    “The kinds of jobs that reopened earlier tend to be more male dominated in employment and also that more women don’t know how to get back to work because they don’t know what to do with their kids because schools aren’t open,” said Armine Yalnizyan, a research fellow at the Atkinson Foundation.

    Women with at least one child under age 6 showed a slower return to work than women with older children. Statistics Canada said it will continue to monitor labor market outcomes for men and women with children in the months to come.

    Youth are still suffering heavily from the Covid-19 economic shutdown. While employment recovered by 30,000 for those aged 15-24, the cumulative job losses for this age cohort are still a whopping 843,000 from February to May.

    –With assistance from Erik Hertzberg.

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