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Immigration caps can help housing, but hurt labour: CIBC – Financial Post

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Caps on newcomers could ease the housing crunch but fuel labour shortages and inflation, says economist

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The federal government’s decision to bring in fewer newcomers in the next few years due to the housing crunch could create labour shortages and inflationary pressures on some areas of the economy if the right balance isn’t maintained, says an analysis by Canadian Imperial Bank of Commerce.

Canada’s record population growth in recent years eclipsed its available housing and the number of jobs the economy has created since 2019, but the increase didn’t have a uniform effect on the economy, the report said.

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“We estimate that while the population has risen by roughly 1.1 million (approximately 35 per cent) more than housing availability could accommodate since 2019, the increase has eclipsed labour force needs by “only” between 200,000-700,000 (five-20 per cent),” the report said.

CIBC economist Andrew Grantham said this means population growth was “way above” what the country could handle from a housing point of view, but it was only “slightly ahead” of what’s needed in the labour force, he said.

“Given the fact that we have an aging domestic work force, that excess population growth is actually a lot less,” he added.

Grantham’s report said if authorities solely focus on adjusting the number of newcomers to match housing availability, it could lead to a shortage in the labour force.

“Everything that has been written on population growth … has really been only on housing,” he said. “But that’s just one part of the issue. We have labour force needs as well. Everyone needs to be aware of this balancing act, whether it be policymakers or the Bank of Canada.”

Prime Minister Justin Trudeau’s government has taken a number of steps in the past six months to slow down the intake of newcomers.

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In March, the government said it will limit the number of temporary residents entering Canada to five per cent of the overall population over the next three years, compared to the existing 6.2 per cent, or 2.5 million students, foreign workers and asylum seekers.

In January, it imposed a two-year cap on new international students and restricted eligibility for work permits for post-graduates and their spouses, and in November, 2023, it decided against increasing the number of permanent residents it wants to bring in from 2026 onward.

The limitations on newcomers, whom Canada has traditionally relied on to boost its economy, were announced after the country posted record population growth of more than two million people in the past two years, primarily due to a rise in temporary residents.

As a result, some economists expect Canada’s population growth rate to decline by about two-thirds to around 400,000 annually in a couple of years, compared to last year’s growth of 1.25 million.

“With so much attention focused on the link between immigration, population growth and housing affordability, it is easy to lose sight of the positive impact that newcomers into the country are having, particularly in the labour market,” the CIBC report said.

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Grantham said that as Canada’s domestic workforce ages, young newcomers have helped slow the decline in labour participation rates. Non-permanent residents and new immigrants have also played an important role in reducing elevated job vacancy levels as the economy was coming out of the pandemic.

“Without this boost to labour supply, wage pressures may have proved even more persistent than they already were,” the report said.

However, it added that the surge in the population eventually “may have been a case of too much, too soon,” and that as the demand for labour eased, newcomers were the “most negatively impacted.”

Canada’s unemployment rate rose above six per cent in March and was largely driven by a lack of jobs for non-landed immigrants and immigrants who moved to the country less than five years ago, the report said. The unemployment rates for these two groups are well above where they stood in 2019, while the rate of joblessness for the remaining population remains slightly below that mark.

Grantham said the “perfect case” would be for some of the government incentives around building the economy to take hold once interest rates start coming down, which would then allow policymakers to bring in the appropriate number of workers for the labour market. But he isn’t sure about the likelihood of that scenario.

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“It’s a very difficult balancing act for the next two or three years,” he said.

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Bank of Montreal economist Robert Kavcic said the changing rules for newcomers shouldn’t be viewed as a “pro-immigration versus anti-immigration question,” but about the right level of inflows.

“Clearly, 1.3 million per year is too much for the labour market to absorb,” he said. “From a long-term perspective, I think permanent resident targets in the 400,000 to 500,000 range are appropriate to offset future retirements, and are just about what we can adequately provide infrastructure for.”

• Email: nkarim@postmedia.com

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A timeline of events in the bread price-fixing scandal

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Almost seven years since news broke of an alleged conspiracy to fix the price of packaged bread across Canada, the saga isn’t over: the Competition Bureau continues to investigate the companies that may have been involved, and two class-action lawsuits continue to work their way through the courts.

Here’s a timeline of key events in the bread price-fixing case.

Oct. 31, 2017: The Competition Bureau says it’s investigating allegations of bread price-fixing and that it was granted search warrants in the case. Several grocers confirm they are co-operating in the probe.

Dec. 19, 2017: Loblaw and George Weston say they participated in an “industry-wide price-fixing arrangement” to raise the price of packaged bread. The companies say they have been co-operating in the Competition Bureau’s investigation since March 2015, when they self-reported to the bureau upon discovering anti-competitive behaviour, and are receiving immunity from prosecution. They announce they are offering $25 gift cards to customers amid the ongoing investigation into alleged bread price-fixing.

Jan. 31, 2018: In court documents, the Competition Bureau says at least $1.50 was added to the price of a loaf of bread between about 2001 and 2016.

Dec. 20, 2019: A class-action lawsuit in a Quebec court against multiple grocers and food companies is certified against a number of companies allegedly involved in bread price-fixing, including Loblaw, George Weston, Metro, Sobeys, Walmart Canada, Canada Bread and Giant Tiger (which have all denied involvement, except for Loblaw and George Weston, which later settled with the plaintiffs).

Dec. 31, 2021: A class-action lawsuit in an Ontario court covering all Canadian residents except those in Quebec who bought packaged bread from a company named in the suit is certified against roughly the same group of companies.

June 21, 2023: Bakery giant Canada Bread Co. is fined $50 million after pleading guilty to four counts of price-fixing under the Competition Act as part of the Competition Bureau’s ongoing investigation.

Oct. 25 2023: Canada Bread files a statement of defence in the Ontario class action denying participating in the alleged conspiracy and saying any anti-competitive behaviour it participated in was at the direction and to the benefit of its then-majority owner Maple Leaf Foods, which is not a defendant in the case (neither is its current owner Grupo Bimbo). Maple Leaf calls Canada Bread’s accusations “baseless.”

Dec. 20, 2023: Metro files new documents in the Ontario class action accusing Loblaw and its parent company George Weston of conspiring to implicate it in the alleged scheme, denying involvement. Sobeys has made a similar claim. The two companies deny the allegations.

July 25, 2024: Loblaw and George Weston say they agreed to pay a combined $500 million to settle both the Ontario and Quebec class-action lawsuits. Loblaw’s share of the settlement includes a $96-million credit for the gift cards it gave out years earlier.

Sept. 12, 2024: Canada Bread files new documents in Ontario court as part of the class action, claiming Maple Leaf used it as a “shield” to avoid liability in the alleged scheme. Maple Leaf was a majority shareholder of Canada Bread until 2014, and the company claims it’s liable for any price-fixing activity. Maple Leaf refutes the claims.

This report by The Canadian Press was first published Sept. 19, 2024.

Companies in this story: (TSX:L, TSX:MFI, TSX:MRU, TSX:EMP.A, TSX:WN)

The Canadian Press. All rights reserved.

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S&P/TSX composite up more than 250 points, U.S. stock markets also higher

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TORONTO – Canada’s main stock index was up more than 250 points in late-morning trading, led by strength in the base metal and technology sectors, while U.S. stock markets also charged higher.

The S&P/TSX composite index was up 254.62 points at 23,847.22.

In New York, the Dow Jones industrial average was up 432.77 points at 41,935.87. The S&P 500 index was up 96.38 points at 5,714.64, while the Nasdaq composite was up 486.12 points at 18,059.42.

The Canadian dollar traded for 73.68 cents US compared with 73.58 cents US on Thursday.

The November crude oil contract was up 89 cents at US$70.77 per barrel and the October natural gas contract was down a penny at US2.27 per mmBTU.

The December gold contract was up US$9.40 at US$2,608.00 an ounce and the December copper contract was up four cents at US$4.33 a pound.

This report by The Canadian Press was first published Sept. 19, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

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Construction wraps on indoor supervised site for people who inhale drugs in Vancouver

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VANCOUVER – Supervised injection sites are saving the lives of drug users everyday, but the same support is not being offered to people who inhale illicit drugs, the head of the BC Centre for Excellence in HIV/AIDS says.

Dr. Julio Montaner said the construction of Vancouver’s first indoor supervised site for people who inhale drugs comes as the percentage of people who die from smoking drugs continues to climb.

The location in the Downtown Eastside at the Hope to Health Research and Innovation Centre was unveiled Wednesday after construction was complete, and Montaner said people could start using the specialized rooms in a matter of weeks after final approvals from the city and federal government.

“If we don’t create mechanisms for these individuals to be able to use safely and engage with the medical system, and generate points of entry into the medical system, we will never be able to solve the problem,” he said.

“Now, I’m not here to tell you that we will fix it tomorrow, but denying it or ignoring it, or throw it under the bus, or under the carpet is no way to fix it, so we need to take proactive action.”

Nearly two-thirds of overdose deaths in British Columbia in 2023 came after smoking illicit drugs, yet only 40 per cent of supervised consumption sites in the province offer a safe place to smoke, often outdoors, in a tent.

The centre has been running a supervised injection site for years which sees more than a thousand people monthly and last month resuscitated five people who were overdosing.

The new facilities offer indoor, individual, negative-pressure rooms that allow fresh air to circulate and can clear out smoke in 30 to 60 seconds while users are monitored by trained nurses.

Advocates calling for more supervised inhalation sites have previously said the rules for setting up sites are overly complicated at a time when the province is facing an overdose crisis.

More than 15,000 people have died of overdoses since the public health emergency was declared in B.C. in April 2016.

Kate Salters, a senior researcher at the centre, said they worked with mechanical and chemical engineers to make sure the site is up to code and abidies by the highest standard of occupational health and safety.

“This is just another tool in our tool box to make sure that we’re offering life-saving services to those who are using drugs,” she said.

Montaner acknowledged the process to get the site up and running took “an inordinate amount of time,” but said the centre worked hard to follow all regulations.

“We feel that doing this right, with appropriate scientific background, in a medically supervised environment, etc, etc, allows us to derive the data that ultimately will be sufficiently convincing for not just our leaders, but also the leaders across the country and across the world, to embrace the strategies that we are trying to develop.” he said.

Montaner said building the facility was possible thanks to a single $4-million donation from a longtime supporter.

Construction finished with less than a week before the launch of the next provincial election campaign and within a year of the next federal election.

Montaner said he is concerned about “some of the things that have been said publicly by some of the political leaders in the province and in the country.”

“We want to bring awareness to the people that this is a serious undertaking. This is a very massive investment, and we need to protect it for the benefit of people who are unfortunately drug dependent.” he said.

This report by The Canadian Press was first published Sept. 18, 2024.

The Canadian Press. All rights reserved.

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