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Investment
Why we must prioritise investment into digital investment – Open Access Government
David Hennell discusses why it’s imperative for the future Prime Minister to prioritise digital investment as part of any future ‘Levelling Up’ plans
The ‘Levelling Up’ agenda was a key pillar of the campaign that delivered Boris Johnson his resounding victory in the 2019 election. However, as we look ahead to our next PM, there has been relatively little detail when it comes to future plans to ‘Level Up’ the country from either of our potential future leaders.
Whilst there’s a general consensus that the ‘Levelling Up’ of the United Kingdom has to remain a priority for the next Government, it’s now vital that we see strong words and rhetoric resulting in equally strong action/
A key aspect of any ‘Levelling Up’ agenda has to be bridging the ‘Digital Divide’. Access to fast and reliable broadband is essential for people in both their personal and professional lives, yet we still see a stark imbalance between its provision in urban and rural areas in the UK.
For those who are most digitally disadvantaged, quite simply nowhere near enough progress has been made to bridge this gap. If the next PM is to deliver on the promise of the ‘Levelling Up’ agenda for rural communities in the UK, further and more targeted digital investment will be crucial.
Have improvements in digital connectivity been delivered?
The initial promise from the Government following the 2019 election was to deliver gigabit-capable, full fibre broadband to every single property in the UK by 2025. This not only highlighted the Government’s grand plans to ‘Level Up’ the country but also underlined the importance of digital connectivity. The pledge was at best ambitious and at worst completely undeliverable, and the Government soon revised this to 85% of all UK properties by 2025 and ‘as close as possible to 100%’ by 2030.
However, although allowing for continued investment into improving broadband and digital infrastructure, this revised target meant that there was a severe risk of those in the most hard-to-reach and remote areas being forgotten and ignored.
As Government and broadband infrastructure providers look for the best return on investment, supplying remote and hard-to-reach areas with fibre broadband is frequently seen as too costly, so investment has tended to go elsewhere. Thus in terms of aiming for that 85% target, focus and funding have largely been geared towards more population-dense locations that are easier and cheaper to provision with full-fibre broadband – despite the fact that in general such areas already have access to perfectly fit-for-purpose and good quality connectivity.
Rural communities suffer from the poorest broadband speeds and worst digital connectivity
It is more rural communities that most frequently suffer from the poorest broadband speeds and worst digital connectivity in the country – and yet these are the areas being pushed to the back of the queue. So whilst the Government can point to examples of investment in digital infrastructure, the disparity between rural and urban areas has yet to be adequately addressed. These days, good quality broadband really ought to be seen as a basic need alongside other utilities, such as water and electricity.
Creating a truly digital-first society
The pandemic undoubtedly accelerated our growing reliance on digital infrastructure and connectivity, but it would be foolish to claim we haven’t seen this change coming for some time.
The benefits of improved digital connectivity are monumental. For the individual, it may be as simple as being able to access banking services online or maintaining contact with friends and family, but the impact this has on a person’s daily life cannot be understated. For example, having access to good quality broadband makes hybrid working possible, which can save money. It also enables individuals to run a small business from home, so the significant improvements good broadband can deliver to economic outcomes genuinely can uplift whole households and communities.
Yet we repeatedly see instances where rural homes and businesses are still asked to pay charges that can reach many thousands of pounds just to get broadband services that are suitable for their needs. It’s just not acceptable that numerous rural communities are overlooked, yet their access to high-quality broadband is every bit as crucial as it is for their urban counterparts. We are in the process of an inevitable transition to a ‘digital first’ society, so it’s absolutely vital that the Government ensures no one is left behind.
Driving economic growth in the UK with digital investment
A new study revealed that investing in digital infrastructure could help grow the UK economy by £232bn by 2040. Not only would fully connecting the UK transform the way we work and live but it would also have a huge impact on the productivity and output of society, radically improving the economy and creating jobs.
This is equally if not more vital for rural communities. Ensuring investment into digital infrastructure across the rural rubicon would have a revolutionary impact on rural Britain and reverse years of slow rural decay, by maximising the potential of a community that plays such a core role in our national prosperity.
Take the farming industry, for instance, an essential industry in rural economies and communities. This is an industry already clearly experiencing the negative impact of a lack of digital investment. The National Farming Union recently revealed that 30% of their membership had broadband speeds of less than 2Mbps and only 38% had speeds that were sufficient for the needs of their business. The fact that over a third don’t have access to the standard of broadband required for their business needs again goes to highlight how significant the ‘Digital Divide’ still is.
Such is the low base of digital infrastructure in some rural areas of the country, that it will take carefully targeted investment combined with much broader thinking in terms of broadband delivery technology to have the quickest and most transformative impact. Improving digital connectivity for rural Britain won’t just facilitate the use of exciting new technologies such as the Internet of Things. It will also have an immediate and marked positive effect on economic, social, health and educational outcomes in such locations, as well as potentially attract investment to create rural hubs of innovation in areas that for far too long have been left out to pasture.
Yet in 2022, we are still talking about the issue of farmers in the UK not having access to decent broadband. Surely in this day and age, digital deprivation is an issue that has to be addressed immediately or any talk of ‘Levelling Up’ the country is essentially meaningless.
It’s vital that rural businesses and communities in the UK are no longer ignored by the Government
It’s vital that rural businesses and communities in the UK are no longer ignored by the Government. Our next Prime Minister needs to not only look at urban environments but also invest in rural communities to bridge the digital divide. Without such investment, the promise of the ‘Levelling Up’ agenda will never be realised.
Written by David Hennell, Business Development Director, at alternative broadband specialists National Broadband
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Compound interest is a thing of magic. It’s also one of your best bets if you’re looking to retire rich.
It might take time and patience but there’s not a whole lot of heavy lifting when it comes to a buy-and-hold investment strategy. What matters most is having decades of time in front of you, which will allow you to maximize the benefits of compounded returns. And, of course, choosing the right investments is equally important.
The magic of compound interest
With a decent return, building a million-dollar portfolio might not be as hard as you think. An initial investment of $15,000, returning 15% annually, would be worth just shy of $1 million in 30 years.
First off, 30 years is a long time, which means you’ll need to be planning your retirement far in advance. However, all it takes is one initial investment of $15,000 and the right stocks to build a $1 million portfolio.
Additionally, it’s important to remain realistic and acknowledge that a stock returning 15% annually is not exactly common. That being said, the TSX certainly has its share of dependable companies with track records of returning far more than just 15% per year.
I’ve put together a list of three Canadian stocks that are perfect for hands-off investors who are looking to retire rich.
Constellation Software
It will require a steep initial investment, but Constellation Software (TSX:CSU) is well worth its nearly $4,000-a-share price tag. When it comes to market-crushing returns, the tech stock has been in a league of its own over the past two decades.
Even as the company is now valued at a massive market cap of close to $80 billion, the impressive returns have continued. Shares are up more than 200% over the past five years. That’s good enough for a compound annual growth rate (CAGR) of 25%.
At a 25% annual return, a $15,000 investment would be worth a whopping $12 million in 30 years.
Descartes Systems
Descartes Systems (TSX:DSG) is another tech stock that’s no stranger to delivering market-beating returns. The company is also only valued at a market cap of $10 billion, leaving plenty of room for growth in the coming decades.
There’s a reason why Descartes Systems is one of the few tech stocks trading near all-time highs today. This stock is a proven winner, with lots of growth left in the tank.
Over the past five years, the stock has had a CAGR just shy of 20%.
goeasy
The last pick on my list is a beaten-down growth stock that’s trading at a serious discount.
The consumer-facing financial services provider has been hit by short-term headwinds from sky-high interest rates. With potential rate cuts around the corner though, now could be an excellent time to be loading up on goeasy (TSX:GSY).
Even with shares down 25% from all-time highs, the stock is still nearing a return of 300% over the past five years.
goeasy was crushing the market’s returns before the recent spike in interest rates, and there’s no reason to believe why the company won’t continue to do so for years to come.
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TORONTO, April 24, 2024 /CNW/ – Flagship Communities Real Estate Investment Trust (the “REIT” or “Flagship“) (TSX: MHC.U) (TSX: MHC.UN) announced today that it has completed its previously announced public offering (the “Offering“) of 3,910,000 trust units (the “Units“) on a bought deal basis at a price of US$15.35 per Unit for total gross proceeds to the REIT of approximately US$60 million.
The Offering was completed through a syndicate of underwriters co-led by BMO Capital Markets and Canaccord Genuity Corp.
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The REIT intends to use the net proceeds from the Offering to fund a portion of the approximately US$93 million aggregate purchase price for the REIT’s previously announced acquisition of seven manufactured housing communities comprising 1,253 lots (the “Acquisitions“) and for general business purposes. In the event the REIT is unable to consummate one or both of the Acquisitions, the REIT intends to use the net proceeds of the Offering to fund future acquisitions and for general business purposes.
The REIT has also granted the underwriters an over-allotment option to purchase up to an additional 586,500 Units on the same terms and conditions, exercisable at any time, in whole or in part, up to 30 days after the date hereof.
About Flagship Communities Real Estate Investment Trust
Flagship Communities Real Estate Investment Trust is a leading operator of affordable residential Manufactured Housing Communities primarily serving working families seeking affordable home ownership. The REIT owns and operates exceptional residential living experiences and investment opportunities in family-oriented communities in Kentucky, Indiana, Ohio, Tennessee, Arkansas, Missouri, and Illinois. To learn more about Flagship, visit www.flagshipcommunities.com.
Forward-Looking Statements
This press release contains statements that include forward-looking information (within the meaning of applicable Canadian securities laws). Forward-looking statements are identified by words such as “believe”, “anticipate”, “project”, “expect”, “intend”, “plan”, “will”, “may”, “can”, “could”, “would”, “must”, “estimate”, “target”, “objective”, and other similar expressions, or negative versions thereof, and include statements herein concerning the use of the net proceeds of the Offering.
These forward-looking statements are based on the REIT’s expectations, estimates, forecasts and projections, as well as assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies that could cause actual results to differ materially from those that are disclosed in such forward-looking statements. While considered reasonable by management of the REIT as at the date of this news release, any of these expectations, estimates, forecasts, projections, or assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those expectations, estimates, forecasts, projections, or assumptions could be incorrect. Material factors and assumptions used by management of the REIT to develop the forward-looking information in this news release include, but are not limited to, that the conditions to closing of the Acquisitions will be met or waived in a timely manner and that both of the Acquisitions will be completed on the current agreed upon terms.
When relying on forward-looking statements to make decisions, the REIT cautions readers not to place undue reliance on these statements, as they are not guarantees of future performance and involve risks and uncertainties that are difficult to control or predict. A number of factors, many of which are beyond the REIT’s control, could cause actual results to differ materially from the results discussed in the forward-looking statements, such as the risks identified in the REIT’s management’s discussion and analysis for the year ended December 31, 2023 available on the REIT’s profile on SEDAR+ at www.sedarplus.com, including, but not limited to, the factors discussed under the heading “Risks and Uncertainties” therein and the risk of the REIT’s plans with respect to debt bridge financing for the Acquisitions not being achieved as anticipated. There can be no assurance that forward-looking statements will prove to be accurate as actual outcomes and results may differ materially from those expressed in these forward-looking statements. Readers, therefore, should not place undue reliance on any such forward-looking statements. Forward-looking statements are made as of the date of this press release and, except as expressly required by applicable Canadian securities laws, the REIT assumes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
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Kim Moody: Ottawa is encouraging people to crystallize their gains and pay tax. That’s a hell of a fiscal plan
The Canadian federal budget has been out for a week, which is plenty of time to absorb just how terrible it is.
The problems start with weak fiscal policy, excessive spending and growing public-debt charges estimated to be $54.1 billion for the upcoming year. That is more than $1 billion per week that Canadians are paying for things that have no societal benefit.
Why? Well, for the CEI, virtually every entrepreneurial industry (except technology) is not eligible. If you happen to be in an industry that qualifies, the $2-million exemption comes with a long, stringent list of criteria (which will be very difficult for most entrepreneurs to qualify for) and it is phased in over a 10-year period of $200,000 per year.
For transfers to EOTs, an entrepreneur must give up complete legal and factual control to be eligible for the $10-million exemption, even though the EOT will likely pay the entrepreneur out of future profits. The commercial risk associated with such a transfer is likely too great for most entrepreneurs to accept.
Capital gains tax hike
But the budget’s highlight proposal was the capital gains inclusion rate increase to 66.7 per cent from 50 per cent for dispositions effective after June 24, 2024. The proposal includes a 50 per cent inclusion rate on the first $250,000 of annual capital gains for individuals, but not for corporations and trusts. Oh, those evil corporations and trusts.
Some economists have come out in strong favour of the proposal, mainly because of equity arguments (a buck is a buck), but such arguments ignore the real world of investing where investors look at overall risk, liquidity and the time value of money.
If capital gains are taxed at a rate approaching wage taxation rates, why would entrepreneurs and investors want to risk their capital when such investments might be illiquid for a long period of time and be highly risky?
They will seek greener pastures for their investment dollars and they already are. I’ve been fielding a tremendous number of questions from investors over the past week and I’d invite those academics and economists who support the increased inclusion rate to come live in my shoes for a day to see how the theoretical world of equity and behaviour collide. It’s not good and it certainly does nothing to help Canada’s obvious productivity challenges.
The government messaging around this tax proposal has many people upset, including me. Specifically, it is the following paragraph in the budget documents that many supporters are parroting that is upsetting:
“Next year, 28.5 million Canadians are not expected to have any capital gains income, and 3 million are expected to earn capital gains below the $250,000 annual threshold. Only 0.13 per cent of Canadians with an average income of $1.4 million are expected to pay more personal income tax on their capital gains in any given year. As a result of this, for 99.87 per cent of Canadians, personal income taxes on capital gains will not increase.” (This is supposedly about 40,000 taxpayers.)
Bluntly, this is garbage. It outright ignores several facts.
Furthermore, public corporations that have capital gains will pay tax at a higher inclusion rate and this results in higher corporate tax, which means decreased amounts are available to be paid out as dividends to individual shareholders (including those held by individuals’ pensions).
The budget documents simply measured the number of corporations that reported capital gains in recent years and said it is 12.6 per cent of all corporations. That measurement is shallow and not the whole story, as described above.
Tax hit for cottages
There are also millions of Canadians who hold a second real estate property, either a cottage-type and/or rental property. Those properties will eventually be sold, with the probability that the gain will exceed the $250,000 threshold.
And people who become non-residents of Canada — and that is increasing rapidly — have deemed dispositions of their assets (with some exceptions). They will face the distinct possibility that such gains will be more than $250,000.
The politics around the capital gains inclusion rate increase are pretty obvious. The government is planning for Canadian taxpayers to crystallize their inherent gains prior to the implementation date, especially corporations that will not have a $250,000 annual lower inclusion rate. For the current year, the government is projecting a $4.9-billion tax take. But next year, it dramatically drops to an estimated $1.3 billion.
This is a ridiculous way to shield the government’s tremendous spending and try to make them look like they are holding the line on their out-of-control deficits. The government is encouraging people to crystallize their gains and pay tax. That’s a hell of a fiscal plan.
I hope the government has some second sober thoughts about the capital gains proposal, but I’m not holding my breath.
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