PROPERTY IS THEFT SOCIALIZE HOUSING

'Vicious cycle' between high interest rates and rents: expert

Jordan Fleguel, BNN Bloomberg

Canadians are grappling with high rent prices being driven up by interest rates, but experts say renters won’t see meaningful relief until significantly more housing supply is built – regardless of where rates ultimately fall.

“It's a bit of a vicious cycle as interest rates and rents are sort of aggravating each other at the moment,” Shaun Hildebrand, president of real estate data and research firm Urbanation, told BNNBloomberg.ca in an interview on Wednesday.

Hildebrand made the comments after the Bank of Canada held its key interest rate steady at five per cent for the fourth consecutive decision on Wednesday. The move was in line with unanimous expectations from economists surveyed by Bloomberg.

The central bank signaled that further rate hikes are unlikely for the time being, opening the door to rate cuts down the line.

However, Hildebrand said that even if rates are cut, relief for renters appears to be nowhere in sight as chronic supply shortages plague Canada’s housing market.

“The rental market is and will continue to be severely undersupplied,” Hildebrand said.

Aled ab Iorwerth, the Canada Mortgage and Housing Corporation’s (CMHC) deputy chief economist, echoed that sentiment, telling BNNBloomberg.ca that the Canadian rental system is “basically full.”

“With these high interest rates people are not moving from rental to ownership,” he said.

“The vacancy rate (for) rentals is extremely low, and there's not enough supply of rental units so there are real pressures in the rental system that are probably being increased by high interest rates.”

Shelter cost inflation

The Bank of Canada said Wednesday that shelter costs, which include rent prices and mortgage interest, continue to be one of the driving factors of inflation, which came in at 3.4 per cent last month – above the central bank’s two per cent target.

Statistics Canada also flagged rental costs as a major factor that drove up inflation in December – and highlighted the role higher interest rates have played in driving up rental costs.

The federal agency said the high-rate environment has increased the cost of home ownership, and put pressure on the rental market as a result, as potential homebuyers stay on the sidelines of the market.

Hildebrand said the relationship between shelter costs and higher rates creates a “complex layer” to the bank’s decision-making going forward, as rates at their current elevated levels will likely push rental prices up even further.

Bank of Canada Governor Tiff Macklem said Wednesday that despite the inflationary pressure that higher rates have put on shelter costs, other factors such as food prices are keeping core inflation "too high” to consider rate cuts just yet.

“I think in order for interest rates and rent inflation to start coming down, we will need to see more easing in some of those other factors like the labour market and population growth,” Hildebrand said.

He added that as the Bank of Canada’s tightening policy slows the economy, higher rates of unemployment will likely follow, adding that he thinks the federal government’s recently announced cap on international students should slow population growth to a degree.

Even with those factors, he said Canadians likely won’t see lower monthly rent bills.

“Ultimately, we're talking about slower rates of rent growth, not rent declines,” Hildebrand added.

Rental housing outlook

Both Hildebrand and ab Iorwerth made the case that the supply issues crippling Canada’s housing market will take many years to fix.

“We’re not building nearly enough purpose-built rentals … the supply situation does not appear to be seeing any meaningful improvement, in fact it’s probably looking worse,” Hildebrand said.

When it comes to the ownership market, ab Iorwerth said that home prices have become so prohibitive that even with lower rates, owning property will likely remain out of reach for many Canadians, keeping them in the rental system indefinitely.

Development barriers

Hildebrand argued that until the construction of rental projects becomes economically feasible, the issues plaguing the system will persist. He added that higher interest rates have made it harder for many developers to secure credit or capital for new builds.

Moves by policy makers to lessen the tax burden on developers have provided some incentive, Hildebrand said, but costs are still high.

“The removal of HST is obviously a good first step, but soaring construction costs, extremely high development charges and property taxes, they all create very large barriers for rental developers to begin construction on new projects,” he said.

“And this is troubling given that, even with rents at record highs, averaging close to $3,000 a month, developers still can't make the numbers work.”

CRIMINAL CAPITALI$M 

'It’s just not right': Passengers call out WestJet for breaching rebooking rules

Christopher Reynolds, The Canadian Press

On a frigid Saturday earlier this month, Mindy Watson learned that her family’s flight that day from Edmonton to Toronto, en route to Cuba, was cancelled.

WestJet offered to rebook their Varadero vacation on Sunday — not the following day, but eight days later on Jan. 21.

"My wife is Canadian military and needs to be back on base at CFB Comox on Jan. 22," Watson said. Her daughter needed to clock into her nursing shift the same day, and another family member on the trip — a veteran with disabilities — had to be home for appointments.

One agent told her he was not allowed to book them on another airline, she said, adding that multiple representatives said the same.

They ended up scrapping the trip, a getaway the family had been looking forward to for months.

Watson was among thousands of WestJet customers whose flights were cancelled amid an extreme cold snap in Alberta earlier this month. And many say the airline would not reschedule them within the required window, in what one advocate framed as just the latest example of a failure to uphold travellers' rights.

If a carrier has to call off a trip for reasons outside its control — severe weather, for example — Canada’s passenger rights charter requires it to rebook passengers on its own planes or those of a partner airline within 48 hours. If it can’t, it must put them on board “the next available flight that is operated by any carrier” to reach their destination.

The Canadian Press has spoken or emailed with more than two dozen passengers who say they were not rebooked within the prescribed time frame — many of them for WestJet trips scheduled this month, but others for flights over the past couple of years across several airlines.

Calgary-based WestJet says it rebooks customers, including with rival airlines, after cancellations in accordance with federal rules.

“We understand how frustrating it is when travel doesn’t go as planned during extreme weather events and are committed to our guests and ensuring their safe and expedient journey,” spokeswoman Madison Kruger said in an email.

"We sincerely apologize to our guests who were impacted by the extreme weather events of the past week, but safety will always be our first priority," she said. 

Kruger said the airline rebooks with a number of different carriers.

“WestJet books reaccommodation flights on partner and non-partner airlines during irregular operations for domestic and international flights in compliance with the (passenger rights charter) and in certain circumstances as a gesture of goodwill.”

Recordings of phone conversations between passengers and WestJet agents suggest that isn't always the case.

WestJet cancelled Winnipeg resident Kelly Regula’s connecting flight back home from Toronto on Jan. 12. In recordings of her phone conversations with airline agents shared with The Canadian Press, company representatives say they were barred from booking her on one of the multiple Air Canada flights apparently available that Friday, slotting her into a Monday departure with WestJet instead — well over 48 hours later.

Regula wound up booking a trip with Air Canada for herself, her husband and child at a price of $2,855.

“It’s just not right," she said. "But I can see why people just give up. It’s exhausting.”

Ashley Armstrong, whose Saskatoon-Orlando flight was also cancelled by WestJet on Friday, Jan. 12, was rebooked for the following Wednesday even after she highlighted other trip options.

“There is an Air Canada flight that travels on Sunday, and so I don't understand why we couldn't get booked onto that flight,” she told the agent the next day, according to a recording she made and shared with The Canadian Press.

“I'm unable to do interline stuff. I can only deal with WestJet,” he replied.

Asked about Armstrong and Regula's experiences, WestJet said it had forwarded their files to its guest team for review to ensure the airline's policies were properly applied.  

Transport Minister Pablo Rodriguez told The Canadian Press on Thursday that airlines "can't and they shouldn't" get away with consumer rights violations. "They have to respect that."

An overhaul of the passenger rights charter is underway, he noted, with stricter rules expected to take effect this year.

Some passengers said carriers informed them of a cancellation by email and that a message on rebooking options would follow — but it never actually landed in their inbox.

Even when it does, customers can spend hours waiting — on the phone or in person — to try for a different booking.

Colin MacRae called the number given to make alternate arrangements after his Toronto-Calgary flight on Dec. 23 was cancelled and he was rebooked on a flight three days later.

"After being on hold for over six hours, we were asked if we wished for a callback. We said yes, we would. They then scheduled their 'earliest possible callback,' which was for 8 a.m. on the 30th of December — the same day as our scheduled return flight," MacRae said.

Some customers, like Regula, simply rebook with another airline themselves and hope to reclaim the cost from the original carrier later. This requires filling out a form on the airline's website and waiting 30 days for a response. If it's denied, passengers can file a complaint with the Canadian Transportation Agency, a process can take up to two years due to a backlog of about 64,000.

Gabor Lukacs, president of the Air Passenger Rights consumer advocacy group, says he believes airlines have been failing to meet rebooking requirements since they came into force in 2019.

“I believe it’s very widespread, and it’s one of the prime examples of airlines blatantly sabotaging the (regulations) with complete impunity," he claimed.

To stress the regulations' intent, he pointed to a 2022 federal impact assessment stating "that large carriers will have to rebook the passenger on the next available flight of any carrier, including competitors."

The Canadian Transportation Agency needs to crack down on rule breakers, he said.

Fines have shot up from a total of $725,000 in 2022-23 to $1.17 million so far this fiscal year, which ends March 31.

But that tally is a drop in the sea of revenue that carriers earn each year — Air Canada alone took in $6.34 billion in the first nine months of 2023. And the penalties were spread across foreign and domestic airlines, as well as railways.

The agency's enforcement team tracks complaints to scan for a pattern of contraventions, and looks to impose fines when it sees a problem as "systemic," said Tom Oommen, the agency's director general of analysis and outreach, in an interview.

"So far, we haven't found that yet," he said of rebooking violations.

The agency plans to ratchet up its maximum fines by a factor of 10 as part of upcoming regulatory reforms, Oommen said.

Over the past four years, the regulator has issued a total of $16,700 in fines for breaches around rebooking. All 30 instances involved WestJet and Sunwing — since bought by WestJet.

The two carriers are not the only targets of customer ire. Last week, a B.C.-based tour operator launched a $28,000 lawsuit against Air Canada, aiming to recoup money it spent on taxis, hotels and flights when 31 British Columbians found themselves stranded in Toronto after heading off for a two-week tour of Newfoundland in June 2022.

The airline offered to book the passengers of Wells Gray Tours three to five days after the cancellation, according to the filing. None of the allegations has been proven in court and Air Canada did not respond to a request for comment about the suit.

As for Mindy Watson, after calling off their Cuban getaway and rebooking a flight back home to Vancouver Island for Jan. 14, the family was again hit with a cancellation and rebooked for three days later.

“We couldn’t incur any more expenses," she said. “We have been trapped in Edmonton for days, waiting to see if today's booking actually happens.”

That flight too fell through. They finally touched down in Comox, B.C., at 3 a.m. last Friday — nearly a week after they tried to leave on vacation, without ever taking one.

This report by The Canadian Press was first published Jan. 25, 2024.

With files from Mia Rabson in Ottawa

 

Colleges Ontario warns of harms from student visa cap

Daniel Johnson , BNN Bloomberg

The association representing Ontario colleges is warning of “long-lasting repercussions” from a federal cap on international student visas, and it’s asking for changes to the controversial policy move.

“The federal government’s cap on study permits for international students is essentially a moratorium by stealth that is already causing significant and unnecessary upheaval for students, employers and communities,” Colleges Ontario said in a Thursday statement.

The group that represents 24 Ontario public colleges accused the federal government of rushing its decision without consulting colleges.

“Ontario’s public colleges are calling for the federal government to treat the post-graduate credentials at public colleges the same way it treats the post-graduate credentials at universities and to exempt them from the cap,” the statement said. 

The group added that it has already been working with the province to address some of its concerns.

It asked that the federal government delay requirements for study permit letters of attestation until a provincial process can be enacted.

Under the new policy, Immigration, Refugees and Citizenship Canada (IRCC) said each study permit must have a letter of attestation from the province or territory as of Jan. 22, but provinces and territories have until March 31 to create a process for the attestation letters.

The group also requested that the federal immigration minister “engage in a dialogue” about exemptions for students in high-demand programs, along with removing barriers to entry into high-demand programs. 

The IRCC did not immediately respond to a request for comment from BNNBloomberg.ca for a response to the statement from Colleges Ontario.

What is the international student visa cap?

Their calls come days after Immigration Minister Marc Miller announced a two-year cap on international student admissions to Canada. It included a 35-per-cent reduction in new study visas this year, with some provinces like Ontario seeing a reduction of 50 per cent more. 

Miller said this week that he hopes the cap will give governments time to curb a system he said takes advantage of elevated international student tuition, and in some instances, provides poor education. 

He said the federal government will work with provinces that did not take action as fast as he would have liked to address the issue. 

The government will also bar students from accessing postgraduate work permits beginning on Sept. 1 if the school follows a private-public model, Miller said. 

Over the next few weeks, the cap will also see that work permits are only accessible to the spouses of students enrolled in masters programs, doctoral programs and professional programs like medicine and law. 

The policy is also being seen as a response to upward pressure on housing prices coming from record-high numbers of immigrants, including international students, entering the country at a time of limited housing supply. 

Ontario Colleges called the policy an “attack” on the college system.

“Ontario’s public colleges are very concerned about the attacks on a high-performing, efficient public college system – impacting our reputation with potentially long-lasting negative repercussions,” Colleges Ontario said. 

With files from the Canadian Press 

Bank of Canada 'keeping an eye' on student visa cap: Rogers

Ben Cousins, BNN Bloomberg

The Bank of Canada is keeping an eye on the federal cap on international student visas, particularly its potential effects on rental housing inflation.

This week, Ottawa announced a two-year cap on international student visas, which would see the number of new foreign students in the country cut by 35 per cent.

Bank of Canada Senior Deputy Governor Carolyn Rogers was asked Wednesday to comment on the policy move as it relates to housing market pressures.

In a Wednesday press conference following the central bank’s latest interest rate decision, Rogers said the bank is not in a position to comment on government policy. But she said they are observing the change and any potential effects it may have on inflation in the housing market, particularly for rental costs.

“What’s happened in the Canadian economy over the last year is we had a particularly big surge in population growth through immigration. It came at a time when there was constrained (housing) supply. You can see this very clearly, most clearly really in the housing sector, in particular in rents,” she told reporters.

“The policies that were announced are on their way to relieving some of that pressure,” she continued.

“We’ll see how they play out, but we will keep an eye on that. It’s definitely one of the things putting pressure on the housing components of inflation.”

Economist warns of consequences

According to the office of Immigration Minister Marc Miller, international education brings $22 billion to the Canadian economy and supports more than 200,000 jobs in Canada.

It’s for that reason that Randall Bartlett, senior director of Canadian economics at Desjardins, warns that any tweak to Canada’s temporary resident numbers, including students, could have harmful effects on the economy.

“There are going to be some consequences when it comes to overall economic activity generated by foreign students coming to Canada, as well as the negative consequences for post-secondary institutions in Canada who have backfilled a lack of financial support from governments with tuitions from foreign students,” he told BNNBloomberg.ca in a phone interview earlier this week.

The move has also ruffled some feathers at the education level.

Philip Landon, interim president and CEO of Universities Canada, said international students amount to as many as 25 per cent of students at some schools and most pay a significant premium to enroll in a Canadian institution, which has some schools worried.

“The potential for a significant financial blow to universities and colleges across the country is definitely there and we’re concerned about that,” he said.

With files from The Canadian Press

Student visa cap will have economic, social consequences: experts

Ben Cousins, BNN Bloomberg

Experts warn that Canada’s new cap on international student visas raises social and economic concerns while having a potentially “marginal” impact on housing prices.

On Monday, the federal government announced a two-year cap on international student admissions that would see new study visas cut by 35 per cent in some provinces.

Canada had more than 1 million international study permit holders as of December. The office of Immigration Minister Marc Miller has said that some institutions are taking advantage of the high tuition rates international students pay, while offering a poor education and exacerbating the country’s housing crunch.

“Through the decisive measures announced today, we are striking the right balance for Canada and ensuring the integrity of our immigration system while setting students up for the success they hope for,” Miller said in a Monday news release on the announcement.

Economic consequences

International education brings $22 billion to the economy and supports more than 200,000 Canadian jobs, according to Miller’s office.

A drop in those dollar figures raises economic concerns for Desjardins economist Randall Bartlett.

Bartlett, senior director of Canadian economics at Desjardins, wrote in a recent report that closing the door to temporary residents, including international students, would deepen the recession and lower Canada’s gross domestic product, while an increase those numbers could help Canada avoid a recession altogether.

“When we look at the measures introduced today, which will significantly reduce the number of foreign students that receive study permits here in Canada, it looks to me like the federal government is making policy on the fly,” Bartlett told BNNBloomberg.ca in Monday phone interview.

“There are going to be some consequences when it comes to overall economic activity generated by foreign students coming to Canada, as well as the negative consequences for post-secondary institutions in Canada who have backfilled a lack of financial support from governments with tuitions from foreign students.”

Economist predicts 'marginal' house price impact

Bartlett believes the move will help cool some of inflation drivers, such as rent prices and consumer goods. But he predicted that housing price relief related to the policy change will be small, as other factors like high interest rates put pressure on the market.

“I think it's going to be pretty marginal in terms of the impact on providing that relief on the cost of housing,” he said.

“Demand isn't the only thing driving up rent prices right now. Interest rates are at the highest level they've been in a couple of decades and inflation back in 2022 was the highest in 40 years, so those high borrowing costs, high input costs, as well as strong demand are leading to higher rents.”

Family impacts

Sarom Rho, an organizer with Migrant Workers Alliance for Change, said the changes unfairly blame international students for Canada’s housing crisis and “cruelly” separate working-class families, as the cap also includes limits on family members of international students.

“It's not right. It's not cool,” she said. “Families deserve to be together. So we're calling on the federal government to reverse this decision.”

Rho made the case that immigration is not to blame when it comes to Canada’s high housing prices, noting that home costs skyrocketed during the pandemic, when immigration was at its lowest.

Statistics Canada data show residential property prices climbed 6.3 per cent in 2020, compared to just 0.7 per cent in 2019. Canada only welcomed 184,500 new permanent residents that year, compared to 341,000 in 2019 and 401,000 in 2021.

“Immigrants and international students are being scapegoated,” Rho said.

“We as people are being told that we should be divided and distracted from who's really responsible and that's the failures of government policy and particularly runaway profiteering. There are a group of people and institutions and corporations in this country who are making a killing off of our shared precarity, and that's not something that any of us want.”

In a statement, a spokesperson for Immigration, Refugees and Citizenship Canada acknowledged the economic growth that international students bring to Canada, but said the government needed to take action on issues “that have made some students vulnerable.” 

“They are not responsible for the shortage of housing, but the growth in the arrival of international students adds significant demand for housing and other services that all Canadians must be able to access,” the statement said.

With files from The Canadian Press Jan. 23,2024

Slowing immigration will reveal dark economic picture: Royce Mendes

BNN Bloomberg

Mortgage renewals at elevated rates have already put Canada in a recession, according to a top economist and strategist at Desjardins who says the country’s immigration boom is masking the problem.

Royce Mendes, managing director and head of macro strategy at Desjardins, said Canadians who renewed their mortgages at much higher rates have already cut down their spending to service their debt.

“Canadians who have been renewing mortgages have already been diverting a lot of income and then spending away from businesses in Canada … now towards debt service,” he told BNN Bloomberg in a television interview on Thursday.

Immigration slowdown could reveal economic picture

That slowdown has been hidden from Canada’s economic data, Mendes contended, as a record number of newcomers have arrived in Canada over the past year.

Mendes said he expects population growth from immigration will slow this year due to a shortage of housing and new federal policies aimed at reducing the pace of immigration.

Ottawa has already begun looking at ways to slow immigration, introducing a two-year cap on international students and slowing its immigration targets. 

Once an immigration slowdown takes hold, Mendes said he expects Canadians will have a truer picture of the economy.

“We won't have that extra boost to (the gross domestic product) and we're going to see the cumulative effects of these mortgage renewals start to show up a lot more clearly in the data,” he said.

“As we move forward, we expect that the economy is going to dip into at least a mild recession this year.”

The case for earlier rate cuts

As the economy darkens, Mendes said he’s observed the Bank of Canada “moving towards a more dovish stance.”

Mendes predicted interest rates will begin to come down in April, which is slightly sooner than some economists’ predictions.

“In my view, if they start a little bit earlier, it gives them the opportunity to be more gradual,” he said.

“I think there are some economists out there who have a later start date for interest rate cuts, but then they might have the Bank of Canada cutting more than 25 basis points at a particular date.”

An earlier rate cut would also offers relief to more Canadians, Mendes argued, because 1.5 per cent of Canadian mortgage holders renew each month, amounting to thousands of people.

“Waiting a few months can mean a big difference for a lot of Canadians,” he said,

“The economy, as I said, is not only facing the challenge for mortgage renewals, (but) population growth, the one driver of economic activity over the past year, is going to be slowing.”

Long-delayed Trans Mountain pipeline to start 

filling with oil

Lucia Kassai and Devika Krishna Kumar, Bloomberg News

The much-anticipated Trans Mountain pipeline will begin filling with crude in February, marking a key step toward start-up. Canadian heavy crude prices jumped on the news. 

While the process to fill a part of the legacy line will begin in February, the bulk of the 890,000 barrel-a-day line will be filled in March and last about 2-3 weeks, Jason Balasch, senior director of business development at the Canadian government-owned company, said in Houston.  Linefill is typically the first stage of startup and includes moving the first batches of oil from shippers.

Heavy Western Canadian Select’s discount to West Texas Intermediate narrowed to the smallest since August after Balasch’s remarks. 

The start-up of the expansion, which is 98 per cent complete and will triple the pipeline’s capacity, is expected to reshape oil flows across the Americas, spur exports to Asia and likely ramp up production of Canadian oil. Traders are closely watching progress on the pipeline, which is running years behind schedule.

The first tanker to carry Trans Mountain oil is set to load in Vancouver in April, Balasch said. Shippers are expected to provide the preliminary loading dates for the new line by Friday. The final nomination process should be completed by March 15.

Since the Trans Mountain expansion was conceived more than a decade ago, its costs have quadrupled to nearly $31 billion. Prime Minister Justin Trudeau’s government bought the pipeline in 2018 to save the expansion from cancellation amid opposition in British Columbia.

Trans Mountain avoided a possible multi-year delay earlier this month when regulators approved a last-minute application to use smaller pipe in a section of the line where construction challenges emerged. 

AIMCo 'would look at' buying Trans Mountain: 

CEO

Jordan Fleguel, BNN Bloomberg

The delayed Trans Mountain pipeline is set to begin filling with Canadian crude next month, and the CEO of one of Canada’s largest investment funds says he would consider purchasing the pipeline when the federal government decides to sell it.

“We have an active file on Trans Mountain,” Evan Siddall, CEO of the Alberta Investment Management Corporation (AIMCo), told BNN Bloomberg’s Jon Erlichman in an interview airing Thursday.

“We would look at it. The government knows that, and we're keeping track of the situation.”

The federal Liberals bought the controversial pipeline in 2018 to save the expansion of the project to the Pacific coast from cancellation amid opposition in British Columbia. They’ve since said they plan to sell it once the project is complete.

Global diversification

AIMCo invests globally and manages nearly $160 billion in assets on behalf of 17 pension, endowment, insurance and government fund clients in Alberta.

Siddall said the fund currently invests about 44 per cent of its capital within Canada, which he added is “probably higher than we should be.”

In addition to diversifying its investments within Canada, Siddall said the fund is looking at expanding its reach in places like Australia, South America and China.

“China is a cheap place right now,” he said, noting that “it may be cheap for a reason,” but he still thinks there’s likely good value to be found in Chinese markets.

“We're significantly underweight in that region, but we're looking at it all the time. We're not opposed to the idea of investing in China … while it's not high growth now, contrarian investing tends to pay off.”

Housing 'a good investment'

Siddall said he believes Canada’s overall economic productivity, which has lagged behind other western nations in recent years, has been impacted by the heavy flow of capital into housing.

“We've made it too easy to invest in housing, and that's sucked investment capital out of retail investors, and out of institutions,” he said. “It does make sense to think about what that means.”

However, Siddall said AIMCo remains actively invested in multi-family housing in Canada.

“We think it's a good investment,” he said.

“It's a strong market in Canada and it will continue to be strong. It’s safe, and we have a very strong support structure around housing in Canada from a financial point of view.”

DON'T BUY TMX,  BUY THE REFINERY

Parkland temporarily shuts down Burnaby refinery after Jan. 21 smoke, odour

The Canadian Press

Parkland Corp. says it has temporarily shut down fuel processing at its Burnaby, B.C. refinery.

The Calgary-based fuel distributor and marketer says it paused processing operations at the refinery earlier this month due to extreme cold weather in B.C., then encountered an issue on Jan. 21 when trying to restart.

In an advisory to area residents posted on its website Jan. 21, Parkland said the issue occurred in one of the refinery units.

It said residents may notice elevated levels of smoke, odours and particulate matter coming from the refinery.

Parkland Corp. said Wednesday it expects the refinery to remain shut down for approximately four weeks.

The company said it has increased imports of fuel into its on-site terminal in order to ensure reliability of fuel supply in the Lower Mainland and on Vancouver Island.

This report by The Canadian Press was first published Jan. 24, 2024.

 

Ontario privacy commissioner feels urgency to address 'Wild West' risks of AI

Tara Deschamps, The Canadian Press

Ontario's information and privacy commissioner says she feels "a sense of urgency" to act on artificial intelligence as her list of concerns with the technology mounts.

Patricia Kosseim's worries about AI include it being used to spread misinformation, dupe Canadians, entrench biases and cause discrimination.

She says AI chatbots like ChatGPT, which can quickly turn simple prompts from users into detailed text, are also concerning.

"When you prompt systems like ChatGPT, what you're getting back is not an organized, curated librarian reference material," she said in an interview.

"It's the Wild West, what you're getting; not knowing what the source is, not knowing how it was created."

Kosseim's remarks come as Canada marks Data Privacy Week, an occasion that coincides with rapid advances in AI that have made the technology a talking point in nearly every industry.

Since OpenAI released ChatGPT in November 2022, an increasing number of companies are exploring how they can deploy AI while regulators consider how they can protect the public from its risks without quelling opportunities. 

Striking the right balance is often on Kosseim's mind as she considers the rapid advances AI has made over the last year.

Those advances are particularly evident when it comes to deep fakes — video, audio clips or photos where technology is used to make someone look, say or do things they have not done.

"This is where conspiracy theorists and other disinformants are just too ready to pounce in and fill those information gaps with disinformation," she said.

Malicious actors have found ways to synthetically mimic executive's voices down to their exact tone and accent, duping employees into thinking their boss is asking them to transfer funds to a perpetrator's account. 

Kosseim has said viral fake images such as one depicting an explosion of the U.S. Pentagon that triggered a brief drop in the stock market and a fabricated video of director Michael Moore voicing support for U.S. presidential nominee Donald Trump are "no laughing matter."

Kosseim feels now is the time to address such risks.

"The penny dropped. Data affects every one of us, every organization will be using and integrating AI in its processes. It is the most fundamental paradigm shift of our generation," she said.

"Technology is not just a remote sort of thing that happens in the corporate tech board rooms or laboratories."

This view is being held by legislators too. The federal government tabled a bill in June meant to place some regulation around AI in June. 

The bill is expected to be implemented no earlier than 2025. In the meantime, the feds have courted tech companies to agree to a voluntary code of conduct, which asks signatories to screen datasets for potential biases and assess any AI they create for “potential adverse impacts.”

Meanwhile, Ontario has created an AI framework to set out risk-based rules for guiding the public sector's use of AI. Kosseim provided comments during the government's public consultation, when the framework was being developed.

Ontario's Trustworthy Artificial Intelligence Framework includes ensuring AI is not used in secret by sharing information around when and how it is being deployed. The other elements of the framework include instilling trust in the use of the technology by defining and preventing its risks and guaranteeing there is a way to challenge decisions made with AI.

But Kosseim says the province needs to go even further.

Since May, she and the Ontario Human Rights Commissioner have been calling on the province to develop and implement effective guardrails on the public sector’s use of AI technologies

While their initial demand didn't outline exactly what the guardrails would be, Kosseim said any mechanisms the province lands on should be "more comprehensive, more robust, granular" and "binding."

"Binding rules backed up by enforcement creates the incentives that organizations need to focus on the right things," she said.

"It's not about punishing them after the fact. It's about encouraging them to pay attention at the front end."

Asked whether she feels her calls will be heeded, Kosseim said, "I'm hopeful. I think they're going to have to."

In response to Kosseim's push, a spokesperson for the Ministry of Public and Business Service Delivery said Ontario has a working group of experts in the sector providing advice on the province's approach to AI.

"Their expertise will help ensure that the Ontario government’s use of AI is responsible, transparent, and accountable," Nicholas Rodrigues said.

This report by The Canadian Press was first published Jan. 25, 2024.

This is a corrected story. A previous version stated Patricia Kosseim worked with tech and privacy experts to create an AI framework for Ontario.

This report by The Canadian Press was first published Jan. 25, 2024.