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Job vacancies up in July Statistics Canada says the number of job vacancies rose in July. The agency says there were 264,000 vacant jobs in the month, up 32,000 from July 2011. There were 5.3 unemployed people for every vacant job in July, down from 6.0 in the same month a year earlier. The agency says the decline in the ratio of unemployment to job vacancies was mainly a result of an increase in vacancies. The national job vacancy rate was 1.8 per cent in the threemonth period ending in July, up from 1.6 per cent a year earlier.
Hudson’s Bay files for initial public offering Canada’s oldest company, Hudson’s Bay Co. will soon be in public hands again after the storied retailer said Wednesday it is going to make a return to the stock market following an upscale makeover. The owner of the Bay, Home Outfitters and U.S. retailer Lord and Taylor filed a preliminary prospectus for an initial public offering of its shares Wednesday after years of hinting that it is in the works. HBC last traded on the Toronto Stock Exchange in 2006 before it was taken private by U.S. businessman Jerry Zucker, who later died unexpectedly. New York-based NRDC Equity Partners acquired the company in 2008 for $1.1 billion from Zucker’s widow. Since then, the company has been working to transform stores that were “tired and in need of renovation” as well as revamp its image after losing “its fashion credibility,” the company said in its filings. “Our investments in Hudson’s Bay since July 2008 have enabled us to add new, sought after brands and Hudson’s Bay is becoming a fashion authority in Canada,” it said. — The Canadian Press
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BUSINESS
Thursday, Oct. 18, 2012
Harley Richards, Business Editor, 403-314-4337 E-mail editorial@reddeeradvocate.com
Stability expected for Alberta economy FASTER GROWTH IS NOT ALWAYS BETTER SAYS ATB FINANCIAL’S SENIOR ECONOMIST BY HARLEY RICHARDS ADVOCATE BUSINESS EDITOR If the decline in Alberta’s growth rate this year is causing you grief, take heart. ATB Financial’s senior economist isn’t losing any sleep over it. “Faster is not always better,” said Todd Hirsch, who was in Lacombe on Wednesday to speak at a Small Business Week event organized by the Lacombe and District Chamber of Commerce. In fact, said Hirsch, the 5.2 per cent growth in real GDP that the province achieved in 2011 posed a danger of the economy becoming too hot and resurrecting pre-recession problems like acute labour shortages. “You want faster growth if you’re Greece or California or Japan,” he explained. “But you don’t really want it if you’re Alberta.” Hirsch expects the province’s “extremely stable” growth to continue in 2013, supported by its strong energy and agricultural sectors. Consumer confidence is high, he noted, with housing starts here now trending upward and July retail sales setting a record. The key to this prosperity continuing rests with oil prices, said Hirsch. Instability in the Middle East will push them higher; a decline in the Chinese economy could pull them down. “My best guess, however, is that we will see oil prices continue probably in that $85-$100US range for West Texas intermediate,” he said, forecasting that geopolitical problems will persist in the Middle East and the Chinese government will be able to use the arsenal of policy tools it still has at its disposal to stimulate that country’s economy. The situation is not as rosy elsewhere in the world, said Hirsch. The central banks in places like Europe, the United States, England and Japan have already lowered interest rates as far as they can, forcing them to turn to the “blunter policy tool” of quantitative easing — the practice of buying financial assets from commercial banks and other private institutions as a way to inject money into the
Photo by HARLEY RICHARDS/Advocate staff
Todd Hirsch, senior economist with ATB Financial, speaks at a Lacombe and District Chamber of Commerce event on Wednesday. economy. “In the U.S., the (Federal Reserve) has now announced its third round of quantitative easing.” Hirsch expects Europe’s economy to produce “heightened levels of anxiety” next year, while the U.S. economy will remain in a “stagnant holding pattern.” “I’m not expecting the global economic situation to really perk up that much in 2013.”
Relief is being stalled by a lack of consensus on how to address the problems. In Europe, some countries are calling for austerity measures and others want increased spending in hopes of stimulating growth; in the United States, Democrats want to boost government revenues and spending, while Republicans favour the opposite.
Please see GROWTH on Page C6
Quebec companies face Commercial heavy tax burden real estate sales BY THE CANADIAN PRESS MONTREAL — U.S. presidential candidate Mitt Romney says Canada is a model of low corporate taxes, just don’t tell that to Quebec companies that are by far the most heavily taxed in North America outside of Mexico, according to a new University of Montreal business school study. The Republican standard-bearer said during a debate Tuesday with President Barack Obama that the U.S. can become more competitive and create jobs by lowering its general corporate tax rate from 35 per cent towards the 15 per cent level in Canada. The actual combined Canadian and Quebec general corporate tax rate is 26.9 per cent, but it’s just part of the overall burden companies face, the HEC Centre for Productivity and Prosperity’s 2012 report said Wednesday. In the end, Quebec companies pay 26 per cent more in overall taxes than the Canadian average and face almost double the tax burden of U.S. companies, it said. Taxes represented 5.1 per cent of the gross output of Quebec businesses, compared with 4.1 per cent for Canada and 2.9 per cent for the United States, according to a Statistics Canada survey of 2008 data. Ontario was the second least competitive province in terms of taxes at four per cent of gross output, followed by Alberta (3.9), B.C. (3.8), Nova Scotia
(3.7), Manitoba (3.7), Newfoundland and Labrador (3.4), P.E.I. (3.1), Saskatchewan (3.0), and New Brunswick (2.6). Payroll taxes were mainly responsible for the higher tax burden. They represented 1.1 per cent of the gross output or 22 per cent of taxes paid by Quebec business. That compared with 0.4 per cent of output or 10 per cent of taxes paid in Canada as a whole and 12 per cent for Ontario. The United States and many Canadian provinces don’t have payroll taxes. The study said these taxes hurt employees and companies alike because they are applied whether the employer is generating profits or recording losses. The study’s author and centre director, Robert Gagne, said Quebec can boost its tax competitiveness on the continent by reducing payroll taxes by as much as $3 billion or $4 billion overall. The government could offset the revenue cut by reducing corporate subsidies by an equal amount, he added. “This approach, this public policy of taxing heavily business firms and subsidizing them heavily is just not working from an economic point of view,” he said in an interview. “We have been doing that for decades and show me the beef. Where are the results. We are lagging behind in terms of investment, in terms of productivity, in terms of standard of living.”
still climbing BY THE CANADIAN PRESS Demand for commercial properties remained strong in major Canadian markets in the first half of the year and is expected to continue well into 2013, according to a new study released Wednesday by the realtor group Re/Max. The Re/Max Commercial Investor Report found that almost all markets saw an increase in commercial sales and dollar volume over the six-month period ended June 30. The report highlights trends in nine Canadian centres — Greater Vancouver, Calgary, Edmonton, Regina, Winnipeg, London, Ont., Greater Toronto, Ottawa and Halifax-Dartmouth. The upbeat report on commercial real estate came just days after a report from the Canadian Real Estate Association pointed to a more lacklustre residential market. CREA said that while September residential sales were up 2.5 per cent from August, they were down 15.1 per cent from a year ago and likely to remain below 2011 levels through the fourth quarter. It cited both tighter mortgage lending rules and an uncertain economy. “While some first-time home buyers may no longer qualify for mortgage financing under the new rules, it is likely that many others are stepping back and reassessing how much house they can realistically afford, which is one of the things new mortgage rules were designed to do,” CREA said.
Please see INVESTORS on Page C6
Telus plan for common shares gets strong approval BY THE CANADIAN PRESS Telus Corp. will have one class of common shares after shareholders voted strongly in favour of the plan on Wednesday, defeating a U.S. hedge fund’s attempt to get a premium for voting stockholders. Telus (TSX:T) said late Wednesday that shareholder support was solid at a vote held earlier in the day, adding that none of Mason’s Capital Management’s four resolutions received the support from common shareholders required to pass. Detailed voting results were not immediately available. The Vancouver-based telecom and New York’s Mason Capital have been battling for months over the Vancouver company’s one-for-one share conversion plan with no premium. “The outcome of today’s shareholder vote is distinctly positive for Telus shareholders. Moreover, the result realized ex-
emplifies the principles of good corporate governance and the fairness of shareholder democracy in Canada,” chief executive Darren Entwistle aid in a statement. Entwistle slammed the hedge fund for its tactics. “Fundamental Telus investor views dominated, prevailing over a self-serving hedge fund engaging in a troubling empty voting trading strategy, negative publicity campaign and multiple court challenges to try to defeat this proposal for their own profit,” Entwistle said. Telus has converted its dual-class share structure, which separates shares that have voting rights and non-voting A shares (NYSE:TU). The telecom company said the courts agreed that a simple majority of the common share class and 66.67 per cent of the non-voting share class were required for its proposal to succeed. Mason has said the threshold for holders of voting shares also should have required
two-thirds support. Mason Capital did not provide any immediate comment. The hedge fund has repeatedly said holders of Telus’ voting shares should get a premium to approve it, something Telus has said its governing rules don’t require it to do. The hedge fund had proposed a minimum premium valuation of either 4.75 per cent — which represents the historic average trading premium of the voting shares over the non-voting shares — or a minimum premium of eight per cent. Mason owns about 19 per cent of Telus’s voting stock, making it the largest voting shareholder. However, Mason sold short almost the same amount in non-voting shares, essentially betting the price of those shares would fall if the share consolidation plan was defeated. Short sellers make a profit when the stock price falls.