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“The Bank of Canada’s top brass assured a parliamentary committee that Canada’s bloated housing market has not become a risky asset bubble, despite the central bank’s own calculation that house prices nationwide are roughly 20 per cent overvalued.

“We don’t believe we’re in a bubble,” Bank of Canada Governor Stephen Poloz said in testimony Tuesday to the House of Commons Standing Committee on Finance. He said Canada’s long-running boom in the housing market hasn’t been underpinned by the kind of rampant speculative buying that is the hallmark of an asset bubble.”, David Parkinson writes for The Globe and Mail on Tuesday of this week.

Parkinson continued, “Mr. Poloz indicated that he believes the overvaluation is not a symptom of runaway prices and widespread investor speculation, but rather of ongoing strength in consumer demand spurred by historically low interest rates – rates that were cut by the central bank in order to keep consumer demand buoyant to support Canada’s economy during the Great Recession.”

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Raymond Matt, CFP, CLU, TEP, CHS

 “The Canada Revenue Agency has issued a formal statement confirming that Canadians can immediately contribute to the new limit for tax-free savings accounts, a move that comes three days after the measure was announced in Tuesday’s budget.

The Conservative government’s 2015 budget announced that the maximum annual contribution would be increased from $5,500 to $10,000, but Canadians have been asking financial institutions and Members of Parliament to clear up when they can start making the extra contributions.

The budget was targeted to please voters just like Doug Higgins, a 73-year-old retiree who says he is not happy with the mixed messages he received this week from the government as to when he can start making extra contributions,” writes Bill Curry for The Globe and Mail Friday.

Curry continued, “The budget’s TFSA announcement has attracted the most political reaction in the House of Commons, partly because of controversial remarks made by Mr. Oliver in a budget day television interview. Mr. Oliver dismissed concerns from the Parliamentary Budget Officer and others that the measure could shrink government revenues over time.”

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Raymond Matt, CFP, CLU, TEP, CHS

“The Conservative government’s long-promised return to surplus relies on a series of accounting moves that includes slashing the contingency reserve, assuming oil prices will climb and collecting billions more in Employment Insurance premiums than necessary.

While economists say it is of little significance whether federal finances are in a small deficit or small surplus, Prime Minister Stephen Harper and Finance Minister Joe Oliver have made the return to surplus a central political pledge for the Conservatives. “A promise made, a promise kept,” Mr. Oliver said in his budget speech Tuesday. “This budget is written in black ink.”  The government’s critics called it something else: economic sleight of hand.  The 2015 budget promises to climb out of deficit and post a $1.4-billion surplus in 2015-16. That is accomplished, in part, by reducing the size of the annual contingency fund from $3-billion to just $1-billion per year over the next three years. Had Ottawa maintained the contingency fund at the levels used in budgets since 2012, the forecast would show deficits running for another two years,” writes Bill Curry for The Globe and Mail this Tuesday.

Curry continues, “The government is also keeping Employment Insurance premiums at higher rates than necessary to cover the costs of annual EI benefits. The budget shows the EI account will be in surplus in 2015-16 and that surplus will grow to $5.5-billion the following year. The government says it will balance the account over time by dramatically reducing EI premiums from $1.88 per $100 of insurable earnings to $1.49 in 2017-18.”

Read the full article here.

Raymond Matt, CFP, CLU, TEP, CHS

 “The impact of the oil-price collapse is hitting home in Canada’s oil patch and beyond as companies rethink plans to hire and invest.  Businesses are gloomier about adding workers than they’ve been since early 2009, when the country was still reeling from the recession, according to the Bank of Canada’s quarterly business outlook survey, released Monday.  “Lower oil prices continue to dampen overall sale outlook of firms, weighing on investment and hiring intentions,” the central bank said.  Business conditions are worst in the energy sector, but the survey found evidence that companies further down the supply chain and in other industries are also feeling the pain,” wrote Barrie McKenna for the Globe and Mail on Monday.

McKenna continued, “The number of contracts up for grabs in Alberta “has started to slow down,” acknowledged Dennis Dussin, president of Alps Welding Ltd. of Woodbridge, Ont., a custom metal fabricator that does roughly half its work for the oil-and-gas industry.  “But that’s only part of our business, so it hasn’t affected us that much,” he said.  The company, which employs 75 people, does work from the exploration stage to refining, and the downstream end of the business is continuing to generate work.”

Read the full article here.

Raymond Matt, CFP, CLU, TEP, CHS