Government - Canada - Party Comparison - Liberals and Conservatives - December 2016

BY: PAUL YOUNG, CPA, CGADATE: DECEMBER 11, 2016

Agenda• Summary Deficit• Wages• Employment • Millennials• Summary

Deficit - Paul Martin, Stephen Harper and Justin TrudeauComments:

• Global Recession from 2008-2009• Fort McMurray fire 2016• Slow Economic growth since 2000

(2.0% or less)• Martin and Harper cut personal tax

rates • Harper reduced GST from 7% to 5%• Harper reduced corporate taxes to 15%• Justin Trudeau reduced taxes to middle

class and hike taxes to wealthiest• Justin Trudeau new family tax benefit is

only $7/month more than the CPC plan• Justin Trudeau is forcing a carbon tax

on all provinces Source – Stats Canada and https://knoema.com

Wages / Canada • What is Stagnation?• Stagnation is a prolonged period of

little or no growth with wages

• What determine salary increases• Rating systems• Union contracts• Market value

Comments:• Middleclass us under pressure

around the world• UK, Canada and USA have had

similar economic growth• Wages tend to be tied to economic

growthSource: Investopedia, Stats Canada and CNN

Employment / Canada

Source – Stats Canada and CIBC

Comment:• There has been shift for close

to four decades from full-time to part-time jobs (Job quality)

• Goods producing sector struggling due to low commodity prices

• Canada needs to better align education/skills with job opening

• New carbon taxation and/or hikes to CPP will no create jobs, but could impact both wages and jobs

• Canada needs to reduced the red tape to get projects off the ground. Canada depends on FDI

• Canada needs to continue to sign fair and equitable FIPA and Trade Deals

GDP Growth

Source: Scotiabank, Cheatsheet.com, Investopedia and Stats Canada

What does GDP Growth mean?The gross domestic product (GDP) is one of the primary indicators used to gauge the health of a country's economy. It represents the total dollar value of all goods and services produced over a specific time period; you can think of it as the size of the economy.How Do Millennials spend money:• Millennials spent an average of $26,000 a year

on discretionary purchases, such as eating out and travel. This is $6,000 less per year than the average consumer.

• Millennials tend to use cash, a debit card and checks for half of their monthly spending and charge just 30% of their purchases.

• Millennials love their coffee. The only category where millennials spent more money than Generation X and baby boomers is on coffee and fast food.

GDP by Expenditure

Source: Stats Canada and http://www.environicsanalytics.ca/

• Part-time jobs do not have benefits• Most millennials are doing jobs not

necessarily related to their field of studies

• Many millennials still live at home due to housing costs and student debt

• Household spending drives the economy

Housing

Source – Scotiabank, BMO, CMHC and RBC

Comments:• You need earn

over 100K+ to be able to afford a home

• Condos can be cheaper, but come with costs, i.e. maintenance fees

• Apartment rent can vary from $850 to $1,200 a month

Graduates

Commentary:• Canada is producing 500K to 516K grads

per year as compare to the job market which is only creating 200K in new jobs

• Declining enrolment is impacting education

• Healthcare cutbacks are forcing the elimination of healthcare jobs

• Canada is export driven economy. Exports need to expand to new markets. For each $1B in exports is 5,500 jobs

• Retail Channel is evolving to more eCommerce.

• There is a skills gap. Education has not align to jobs in areas like advance manufacturing, Cybersecurity, Analytics, Expert Farming, etc

•

Debt/Deficits on the millennials

Comment:• Approximately 1/3 of income

is taxes• Today’s debt and deficits are

tomorrow taxes• Government is imposing CPP

hikes which will reduced your after tax income.

• Carbon Taxation will impact millennials as they eat out and travel more as part of their spending

• Largest growing segment as such will be impacted more by taxation increases and/or spending cuts

• Many companies as well as government are moving away from defined benefit pensions to defined contribution – FYI no guarantee pension benefit will be the new norm.

Summary• It is not one policy that drives business investment, but many policies• Federal policy changes can be counter productive if either provinces or

municipalities increase hydro rates, personal taxation, user fees, property taxation

• Canada competes for business investment and needs to be competitive with other jurisdiction areas like taxation, hydro rates, reduction of red tape, labor rates, productivity, R&D tax credits

• Canada needs to eliminate interprovincial trade barriers• Canada needs to new equalization, CST, HST and other transfer deals with the

provinces and Territories• Globalization not going away. Canada needs to respond better to globalization

Other Sources• Job Quality -

http://www.slideshare.net/paulyoungcga/job-quality-canada-2015-analyis-and-commentary • Middle class –

http://www.slideshare.net/paulyoungcga/middle-class-analysis-and-commentary-canada • Wealthiest -

http://www.slideshare.net/paulyoungcga/top-1-wealthiest-income-earners-canada-2013-and-2014-analysis-and-comments • Carbon Tax -

http://www.slideshare.net/paulyoungcga/carbon-pricing-or-carbon-tax-impact-on-consumers-december-2016