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Canada's first-quarter GDP report was not just "atrocious," as predicted by Stephen Poloz. It was downright negative: total real GDP shrank at an annualized rate of 0.6 per cent (fastest pace of decline since the 2008-09 recession). Nominal GDP fell faster (annualized rate of 3 per cent), as deflation took hold across the broader production economy (led, of course, by energy prices).
The biggest change in Canada's tax policy over the last generation was the steep reduction in corporate income taxes (CIT) engineered since 2000 at both the federal and provincial levels. Advocates of CIT cuts promised they would stimulate more business investment and thus generate trickle-down benefits for all Canadians. Free-market economists built theoretical models to show that lower corporate taxes would boost investment, productivity and even wages.
You could hear jaws dropping onto factory floors right across Ontario's auto belt last month. Export Development Canada (EDC) announced a $525-million loan to Volkswagen. The money was not to lure the company -- the world's largest automaker -- to Canada. To the contrary, we're helping finance Volkswagen's growth 4,000 kilometers away: with expanded factories in Mexico and Tennessee, and a new plant in Mexico (producing luxury Audis).
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In light of the latest NAFTA Chapter 11 decision to go against Canada, I was asked to put together some background notes for our Unifor leadership on this bizarre quasi-judicial kangaroo court system. Here they are, in case they are useful for anyone else getting up to speed on the whole investor-state dispute system.
Some very good and more detailed resources on the subject include:
Canada's economy has been thrown into turmoil by the dramatic decline in oil prices over the last six months. World crude prices have plunged by half: from around $100 (US) per barrel in summer 2014, to around $50 today (see Figure 1). Worse yet, Canada's oil output receives an even lower price: our unprocessed heavy oil exports sell for only about $35 per barrel in the U.S. market (because of its lower quality and a regional supply glut).
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Acres of newsprint have been devoted in recent weeks to the possibility that lower oil prices might push the federal budget back into a deficit position. As I argue in my column, this drama is mostly political theatre -- and progressives should be cautious about accidentally accepting the Conservative frame for this debate.