Higher price tag, repair costs could drive up insurance premiums for EVs, report says

Ritika Dubey, The Canadian Press

Drivers may see higher premiums for their electric vehicles as the insurance industry adjusts to the shift from gas-powered cars to electric alternatives, a new report suggests. 

The price tag of EVs and higher costs for repairs are likely to be key factors that could drive Canadian auto insurance higher in the coming years, similar to a trend seen in the U.K., the report published by Morningstar DBRS on Monday shows. 

EVs are computers on wheels and batteries are central to their operations, said Victor Adesanya, co-author of the report and vice-president of insurance at Morningstar DBRS' Global Financial Institutions Group.

"If the battery gets damaged, the potential for the car to be replaced is very high because they are very difficult to repair and are quite expensive," he said in an interview.

While EVs can have lower maintenance costs compared with gas-powered cars, expensive repairs and a lack of skilled technicians can drive up overall costs — in turn, affecting insurance claims.

"Insurance is a one-year contract," Adesanya said. That means every year upon renewal, the insurance company re-evaluates premiums based on their experience with theft, cost of repairs, inflation and claims.

But high insurance premiums for EV owners are not yet an issue in Canada — partly because of the slow uptake among drivers.

Zero-emission vehicles accounted for 8.9 per cent of light-duty car sales in 2022, up from 5.6 per cent in 2021, according to Transport Canada's analysis of S&P Global Mobility data. 

As more people transition to EVs, Adesanya said insurers will adjust to the trends and could increase premiums.

So far, insurers have sometimes opted to fully replace an EV than pay for pricey repairs. As an example, the Morningstar DBRS report cited British Columbia insurance company ICBC's move to write off an EV because the cost to replace the battery would be the same as buying a new one.

If replacing cars becomes commonplace for insurance companies, that will significantly impact the EV market — driving claim numbers and premiums up, said Matt Hands, vice-president of insurance at rate comparison website Ratehub.ca.

He added that insurance companies are taking a wait-and-see approach in Canada and treating every case individually when it comes to EV claims. 

"Insurance companies are evolving their models with more data," Hands said. "My assumption is that they're using limited data they have to make slight adjustments to their models."  

EV owners are unlikely to see a rate shock, Adesanya said. Instead, increases will be more gradual due to government regulation. 

Canada's auto insurance industry is highly regulated by provincial governments that review and approve requests for premium hikes.

Hands suggested drivers shop around for insurance plans.

"(Insurance) is very specific to the vehicle," he said. "If somebody was considering getting (an EV), shop around, do some price comparisons of insurance."

"If insurance is the one factor you're concerned about and you have a few models or vehicles in mind, speak to an insurance broker," Hands said.

This report by The Canadian Press was first published Feb. 12, 2024

 

Remote software updates transforming auto industry, experts say

Ritika Dubey, The Canadian Press

Picture a broken-down car at the side of the road. Most likely, it's an image of a frustrated driver looking under the hood or using their phone to call for help.

But that may be changing. Advanced software in connected cars is progressing faster, making it possible to fix some problems without a trip to the garage or dealership.

These so-called over-the-air fixes can remotely update entertainment and navigation systems and, in some cases, critical safety features. 

Experts say this is increasingly where the automotive industry is headed. 

In December, Tesla recalled more than two million cars because of a faulty self-driving feature which the U.S. transport agency said has caused fatal collisions. The auto manufacturer was able to deploy a bundle of over-the-air software updates to fix the issue. 

"Software isn't really an option anymore for automakers; it's mandatory," said Dylan Khoo, an automotive industry analyst with ABI Research, based in London, England. 

"You have to have software in the vehicle and software has bugs inherent to it," he said. "With that software will come the requirement to update it and if you can't do that remotely, it's heavily limiting."

Remote upgrades work similarly to changes for connected devices such as mobile phones or laptops in that they can be programmed for certain times, typically overnight, and be delivered without the user having to actively participate, said Khoo.

Mostly, drivers receive notifications on a mobile app or their car's console, alerting them to an available update, which they confirm and schedule, he said. 

Tesla was the first automaker to introduce over-the-air updates more than a decade ago. Such updates have significantly improved consumer experience, said Robert Falzon, head of engineering at cybersecurity firm Check Point Software Technologies, Ltd. 

"You used to have to go (to a dealership) any time there was some sort of software change to the vehicle ... leave it there for a couple of hours," he said. "It was quite a bit of effort."

Vehicle manufacturers create an encrypted piece of software designated for the car's model and send the bundled update through a server, which is then downloaded to the car over Wi-Fi or cellular data. 

Minor updates can download in as little as five minutes, Falzon said, and when the update is for safety reasons, it's free of charge.

Khoo said this is in contrast to how software updates were delivered previously — by downloading them onto a USB stick or taking the car to a dealership and paying them to perform the upgrade.

"The real benefit of (over-the-air) is that the car company can control the software updates and do them more frequently," Khoo said, which is especially true when urgent software changes are pushed against security threats.

But it is not yet a widespread practice, partly because vehicles are built with parts from different suppliers. In Canada, BMW, Ford, General Motors, Jaguar Land Rover, Lucid, Mercedes-Benz, Polestar, Tesla, VinFast, and Volvo have issued remote updates to address recalls, Khoo said.

Even auto manufacturers that do provide some level of remote updates don't yet match Tesla's ability on critical safety remote fixes. Updates fixing critical features are less common generally, Khoo said. Most carmakers are also hesitant to get fully involved in certain kinds of over-the-air updates in case something goes wrong, he added. 

There are a few cases where attempted updates have disabled functionality for vehicles.

Last year, a Ford Mach-E owner shared a photo online of his car's console after an upgrade failure. The prompt read, "Unfortunately, a recent software update was not successful. Your vehicle cannot be driven."

Ford said it was a rare circumstance and the owner received help with the situation.

"As the customer noted in a follow-up social media post, the Ford team responded immediately and resolved the issue," Megan Joakim, communications manager at Ford Canada, said in an email. 

Electric vehicles in general have a better capacity for remote updates compared with gas cars. Over-the-air leaders are mostly companies with a focus on EVs such as Tesla, BMW, and other luxury European brands.

Falzon recalled his EV receiving an over-the-air update that allowed him to choose between a single-button cruise option or a two-click option.

"Small tweaks like that are based on feedback ... and that's all free of charge," he said.

Falzon said the mechanical components are generally less necessary in EVs and are easily fixed remotely. However, he had to bring in his EV for a software update one time after a U.S. agency mandate asked to improve the car's response to charging. 

In 2023, 147 software-related recalls were issued in the U.S., only 18 of which had an over-the-air update option, Khoo said.

Over the past five years, more than 20 million vehicles were recalled for a software-related issue in the U.S. and couldn't be fixed via remote updates, Khoo added. 

Even with remote update capability, cars still require trips to a mechanic for oil changes and other physical repairs.

"Nobody's going to be fixing brakes or transmission problems over the air," said Huw Williams, spokesperson for the Canadian Automobile Dealers Association. Dealerships and mechanics will continue to play a role in aftersales markets for vehicles, he added.

Manufacturers have also been slow to adopt a deeper level of software over-the-air updates -- likely because they have not figured out a consistent revenue model for it, Khoo said.

"That is really because the cost of maintenance usually exceeds the cost of production," Khoo said. "That's why a lot of (manufacturers) aren't pushing into it more aggressively because they're not entirely happy with taking on the cost of things they can't extract revenue from." 

He said a car is going to be on the road for 15 years and the manufacturer's commitment to its customers would determine levels of software updates when a vehicle runs out of warranty.

"One of the big changes needed is working out where the car ends physically and where the software begins," Khoo said, because they are becoming more integrated. 

"It's tough to work out exactly what customers will be happy with and accepting of (when) having a monthly subscription fee for," he said. The subscription-based over-the-air updates are limited to a small number of brands such as Tesla, unlocking self-driving features for extra dollars.

This report by The Canadian Press was first published Feb. 11, 2024.

Rural internet providers divided on whether CRTC should expand wholesale fibre access

Sammy Hudes, The Canadian Press

A national framework that allows smaller internet providers to offer services to customers by using rivals' fibre networks would give residents of remote regions more affordable options, the industry regulator heard on Tuesday.

Rizwan Jamal, chief executive of New Brunswick-based Xplore Inc., said that although his company is seeking to expand its own fibre network in rural and remote areas, it faces a disadvantage competing with bigger carriers when it comes to scale.

"If we want to be able to be competitive from a price innovation perspective with the incumbents over time, it is absolutely critical for us to gain scale," Jamal told a panel of CRTC commissioners.

"Wholesale access will allow us to gain scale, especially in rural and remote Canada."

The federal telecommunications regulator is spending the week hearing from more than 20 groups, including internet providers, advocates and other stakeholders as part of its review into internet competition in Canada.

The five-day hearing focuses on issues such as the current effectiveness of internet services markets, potential changes needed to boost competition, and how the CRTC can incentivize companies to invest in high-quality services.

The CRTC announced last November it would temporarily require large telephone companies, namely Bell Canada and Telus Corp., to provide competitors with access to their fibre-to-the-home networks in Ontario and Quebec within six months.

The decision was meant to stimulate competition for internet services in those provinces, where it noted that smaller providers have been increasingly bought up by bigger companies in recent years.

This week's hearing could affect whether the commission decides to make that direction permanent and apply it to other provinces.

Xplore's fibre internet network currently serves around 65,000 homes, a figure that the company hopes to grow to more than 400,000.

Jamal said the company can afford to build out its network in more densely populated communities with the support of federal and provincial subsidies, but in areas with less density, it can be difficult to achieve a return on investment.

Expanded wholesale rules could help fill in those service gaps, he said.

"Having this mandated access in communities close to or adjacent to the communities we are building will give us scale in those communities," said Jamal. 

"Many of the communities that we service are small and we require local technicians. If they can service larger pockets of homes, it will help our return on investment … as well as offer competitive prices."

But if wholesale high-speed internet access is not mandated in rural areas, Jamal said local residents will fall behind.

"Over time, we would not have sustainable competition," he said.

"In those areas, they would be deprived of the benefits associated with this access being provided in urban and suburban areas, which would benefit those particular households with additional choice, additional competition and more affordable prices."

Other carriers such as Bell have spent the days leading up to the hearing arguing against an expansion of the CRTC's wholesale fibre access rules. Bell has said the temporary rules, which the company is appealing, already diminish the business case for it to invest.

Halifax-based carrier Eastlink also poured cold water on the idea during the company's appearance on Tuesday.

Executive vice-chair Lee Bragg said that if the CRTC prioritizes increasing internet choice for consumers while making it less attractive for companies to spend money to build networks, the result will be "decreased competition and lower quality networks, especially in smaller rural and remote communities."

"Without a wholesale framework that prioritizes the investments … Eastlink will be forced to reconsider our presence in some of our rural communities where the business case to continue investing no longer exists," Bragg warned.

He noted that in recent years, Eastlink has stopped providing service in 62 communities where it could no longer justify the costs.

"In rural and remote communities, the business case to provide service is already extremely challenging," said Bragg.

"These challenges can become insurmountable when there is a requirement to immediately provide wholesale Internet access, especially at rates that do not adequately cover the cost of delivering the service."

The CRTC is set to hear from Telus and Bell representatives on Wednesday.

This report by The Canadian Press was first published Feb. 13, 2024.

BNN Bloomberg is owned by Bell Media, which is a division of BCE

 MONOPOLY CAPITALI$M

Beanfield asks CRTC to tear down Rogers' 'bulk agreements' with condo developers

Sammy Hudes, The Canadian Press

Independent telecommunications provider Beanfield Metroconnect is asking the industry regulator to outlaw arrangements between carriers and developers that provide turnkey internet service for all units of a particular condo building.

In an application filed to the CRTC last September, Toronto-based Beanfield took specific aim at Rogers Communications Inc. for its use of "bulk agreements," arguing such deals "effectively eliminate end-user choice" and "constitute an undue advantage" that limits competition.

It wants the commission to declare that Rogers' bulk agreements violate the Telecommunications Act and require it to terminate such deals.

Todd Hofley, Beanfield's vice-president of policy and communications, said bulk agreements create "monopolistic islands" where rival providers can't compete for residents' service as easily. The agreements typically cover the first five to eight years after the condo is built and see residents pay for internet through their rent or condo fees.

"We are happy to compete against the incumbents whenever that playing field is even and is level," Hofley said.

While Beanfield's application focuses on Rogers' bulk deals, Hofley said it's a practice that has become increasingly common over the past five years by various major carriers, making it harder for companies like Beanfield to sign up customers in new residential buildings.

He said a CRTC ruling in his company's favour could set a precedent that prevents all carriers from entering into them with developers.

Beanfield estimates bulk deals are in place for close to half of all new condo or apartment developments in the Toronto area. That's based on a survey of 110 projects the company reached out to for potential access since January 2022.

Of those, 54 projects already had bulk deals spanning almost 40,000 units, it told the CRTC.

Hofley said bulk agreements also pose a safety issue when there's an outage.

"If you have a building that is bulked by Rogers and everybody's internet is on Rogers, the building's elevator phones are on Rogers, the building's concierge and security system is on Rogers, and that system goes down, you're blind. There's nowhere for you to turn," he said.

"I think we all learned during the Rogers outage of July 2022 how important resiliency in our telecommunications infrastructure is."

Beanfield plans to raise the issue when its representatives appear this week at a CRTC hearing into wholesale high-speed access service.

Rogers spokesman Cam Gordon pointed to the company's official response filed with the CRTC last October to Beanfield's submission. 

Rogers argued its bulk billing arrangements "do not eliminate end-user choice ... and do not constitute an undue preference."

"In fact, these arrangements, which have consistently been endorsed by the commission in the past, enable (multi-dwelling unit) residents to benefit from discounted broadband prices and innovative in-building communications amenities," wrote Rogers vice-president of regulatory Pamela Dinsmore.

Other telecom companies, including Bell Canada, Telus Corp. and Eastlink, also opposed Beanfield's application in interventions filed to the CRTC.

Dinsmore wrote that bulk deals do not prevent rival carriers from selling their services directly to individual residents, even if they live in a building where an agreement with a particular provider has been signed.

"They can — as Rogers does in these circumstances — seek access to … build out fibre to individual units in response to customer service requests or wire the entire building at any time," she stated.

Hofley said Rogers' argument amounts to encouraging residents to pay twice for overlapping services, "which is a fascinating idea of how competition is supposed to work."

"The problem is that they can't pay twice. Because if the market is gone, nobody else is going to build into that building," he said.

Gregory Taylor, an associate professor with University of Calgary's communications, media and film department, said it can be "very difficult to dislodge" an incumbent carrier where a bulk deal exists.

"There is really no way from a financial standpoint for a competitor to come in and offer service," he said.

"The incumbent company will already have everyone locked up as a customer, so getting people to change is difficult. It involves an investment from the new companies coming in."

But he said that for some residents, the convenience factor may be worth the lack of choice. He likened the situation to moving into an apartment that's already furnished.

"Anyone in Canada who has dealt with the hassle of trying to find quality internet service will tell you that often, it can be a pain," said Taylor, adding that buildings with bulk deals generally have high-quality fibre set up.

"In this case, you move into a building and it's there and it's ready for you."

The CRTC said it is reviewing Beanfield's application and other companies' rebuttals but could not yet address the arguments.

"Given that this application is currently before the CRTC for consideration, we are unable to comment," said spokeswoman Mirabella Salem in an email.

With major cities across Canada dealing with questions of density and how to address the national housing shortage, Taylor said Beanfield's application raises an issue with significant ramifications.

"As we build more and more high-density housing in this country, we're going to have to be able to address this question of, 'OK, who provides the wired internet service, the fibre lines into these new dwellings?'" he said.

"Everybody recognizes this now is an essential service. Given what we've learned through the COVID era, this question of access to buildings is an increasingly important question and one which the CRTC and the government cannot duck."

This report by The Canadian Press was first published Feb. 12, 2024.

Bell denied stay of CRTC decision allowing access to its fibre network

Sammy Hudes, The Canadian Press

The Federal Court of Appeal has rejected BCE Inc.'s request for a stay of a regulatory decision that will allow independent companies to sell internet services to their customers through Bell's fibre network in Ontario and Quebec.

The court's decision was delivered Friday, a day after Bell Canada announced it was slashing 4,800 jobs and could further cut network spending based in part on the CRTC's direction.

It also came just ahead of the next phase of the federal telecommunications regulator's study of the same issue. The CRTC kicked off a five-day hearing on Monday as part of its review into internet competition in Canada.

The CRTC announced last November it would temporarily require large telephone companies, namely Bell and Telus Corp., to provide competitors with access to their fibre-to-the-home networks in Canada's two largest provinces within six months. (The rule doesn't apply to Canada's other major carrier, Rogers Communications Inc., which uses a cable network.)

But Bell asked the court for permission to appeal the CRTC's temporary ruling and for a stay of that decision pending the outcome of the court process, which would effectively delay independent companies from obtaining access to Bell's network to sell their internet services this May.

The court will hear the appeal, but dismissed the company's motion for a stay of the decision.

"I find that it has not established that it will suffer irreparable harm if the stay is not granted," Justice Mary Gleason wrote.

In a statement, Bell spokeswoman Jacqueline Michelis said that "while we are disappointed the court did not grant our stay request to stop the interim order, we think the court made the right decision to grant our request for leave to appeal."

"The CRTC’s interim decision to force Bell to provide access to its networks in Quebec and Ontario is already having a negative impact on the build out of our new fibre network," she said.

"The CRTC should prioritize continued network investment over network resale, or risk Canada falling behind in the digital economy."

Bell is also awaiting a decision from the federal cabinet, which it has asked to review the regulator's move.

The CRTC's decision last November was meant to stimulate competition for internet services, noting at the time its review could potentially make that direction permanent and apply it to other provinces.

Its hearing this week, which is set to hear from 22 groups, will focus on three main questions, CRTC chairwoman Vicky Eatrides said in her opening remarks. Those include how well internet services markets are working for Canadians currently, what changes are necessary to ensure a more competitive future, and how the CRTC can provide clarity so companies "can invest in and bring more high quality, innovative services to market."

"In recent years, we have seen declining competition between internet providers," Eatrides said.

"Many internet providers — independent providers — have been bought out by the large companies and those that are left have fewer subscribers than they once did. We also know that telecommunications networks are expensive to build, to maintain and to operate, so unless there is a prospect for returns, investors will put their money elsewhere."

Bell has accused the CRTC of "predetermined" outcomes related to its review, noting the commission's direction thus far reduces its incentive to continue building out its fibre network.

But the Competition Bureau argued Monday during its appearance at the CRTC hearing that effective wholesale fibre access can foster more competition for internet services.

The competition regulator recommended the CRTC update its wholesale access framework to provide independent carriers "access to an increasingly important network while also serving to reduce asymmetry between incumbent facilities-based competitors that can distort competition."

"Competition among internet providers is not only about price and service quality in the short-run, but also about building and improving internet networks in the long-run," said Competition Bureau deputy commissioner Krista McWhinnie.

John Lawford, executive director of the Public Interest Advocacy Centre, urged the regulator not to succumb to the "threats of investment withdrawal" by large carriers.

"The commission has a mandate to achieve the telecommunications policy objectives, not to return monopoly rent to incumbents," Lawford said.

"The incumbents are bullying the commission into using their overheated definition of 'investment' as a trump card that always wins. They must be told 'no.'"

This report by The Canadian Press was first published Feb. 12, 2024.

BNN Bloomberg is owned by Bell Media, which is a division of BCE.

Group says Lululemon is 'greenwashing' as its emissions rise, wants competition probe

A non-profit organization in British Columbia says it has asked Canada's Competition Bureau to investigate athletic-wear giant Lululemon, arguing the company is misleading customers about its environmental impacts.

A statement from Stand.earth says Lululemon has been using the slogan "Be Planet" as part of its "impact agenda" released in 2020, but the company's own reports reveal a doubling of greenhouse-gas emissions since then.

Lululemon's 2022 impact report says its "products and actions help lead (the) industry toward a climate-stable future where nature and people thrive."

It says the Vancouver-based company aims to meet a series of climate action targets by 2030, including a 60-per-cent reduction in emissions intensity for "Scope 3" operations, which encompasses the making and shipping of clothing globally.

But Lululemon's reports, cited by Stand.earth, show total emissions for that category rose to nearly 1.7 million tonnes, up from about 830,000 tonnes in 2020.

Lululemon did not immediately respond to a request for comment.

The company's report shows "Scope 3" activities represent 99.7 per cent of its total carbon footprint.

The report says Lululemon has met its goal to power its own facilities with "renewable electricity," while noting the goal to reduce emissions in "Scope 3" operations "needs acceleration."

Tzeporah Berman, international program director for Stand.earth, told a press conference on Monday that Lululemon's branding amounts to "greenwashing," purporting to be a climate steward while pocketing profits associated with rising emissions.

The Competition Bureau has yet to confirm whether it has received the application from Stand.earth to investigate Lululemon under the Competition Act.

This report by The Canadian Press was first published Feb. 12, 2024.

 

Minister was warned lifting international student work limit could undermine TFW program

Nojoud Al Mallees, The Canadian Press

Allowing international students to work more than 20 hours a week could distract from their studies and undermine the objective of temporary foreign worker programs, public servants warned the federal government in 2022.

The caution came in documents prepared for former immigration minister Sean Fraser as Ottawa looked at waiving the restriction on the number of hours international students could work off-campus — a policy the Liberals eventually implemented.

The Canadian Press obtained the internal documents with an access-to-information request. 

Waiving the cap could help alleviate labour shortages, a memorandum for the minister conceded, but it could also have other unintended consequences.

"While a temporary increase in the number of hours international students can work off-campus could help address these shortages, this could detract from the primary study goal of international students to a greater emphasis on work, circumvent the temporary foreign worker programs and give rise to further program integrity concerns with the international student program," the memo said.

Canada's bloated international student program has been heavily scrutinized in recent months as part of a larger critique of Liberal immigration policies that have fuelled rapid population growth and contributed to the country's housing crunch.

That scrutiny led the federal government to introduce a cap on study permits over the next two years, as it tries to get a handle on the program.

More than 900,000 foreign students had visas to study in Canada last year, which is more than three times the number 10 years ago.

Critics have questioned the dramatic spike in international student enrolments at shady post-secondary institutions and have flagged concerns about the program being a backdoor to permanent residency.

The memo said removing the limit for off-campus work would be in "stark contrast" to the temporary foreign worker programs, which requires employers to prove that they need a migrant worker and that no Canadian or permanent resident is available to do the job. 

Fraser ultimately announced in October 2022 that the federal government would waive the restriction until the end of 2023 to ease labour shortages across the country.

The waiver only applied to students currently in the country or those who had already applied, in order to not incentivize foreign nationals to obtain a study permit only to work in Canada.

In December, Immigration Minister Marc Miller extended the policy until April 30, 2024 and floated the idea of setting the cap at 30 hours a week thereafter.

In an interview with The Canadian Press on Monday, Miller said he extended the waiver because he didn't want to interfere with students' work arrangements in the middle of an academic year.

"What I really didn't want to do is impact students in a current year that have made their financial calculations about how they will sustain themselves and how they will be able to pay for the tuition and rent and food," Miller said.

Miller said internal work by the department shows more than 80 per cent of international students are currently working more than 20 hours a week.

Waiving the number of hours international students could work was the right call given the labour shortages Canada was facing, but the policy was never meant to be permanent, he said. 

Job vacancies soared to more than a million in the second quarter of 2022, but have steadily decreased since then as the economy slows. 

Miller said he's now considering making a permanent change to the cap that would set it somewhere between 20 and 40 hours a week.

"It's not credible that someone can work 40 hours and do a proper program," Miller said.

He said the goal is to come up with a cap that gives students the ability to get good work experience and help them pay the bills, all while not undermining their studies.

"So what does a reasonable number of hours look like for someone here studying, knowing that they are paying three to four times, sometimes five times the price of a domestic student?" Miller said. 

"I think that's above 20 hours."

This report by The Canadian Press was first published Feb. 13, 2024.

Sun Life CEO shares real estate outlook, says 'people are coming back to the office'

Jordan Fleguel, BNN Bloomberg

The president and CEO of Sun Life Financial Inc. says headwinds in the office real estate sector are likely to continue this year, but he remains positive about the industry’s long-term outlook.

“Longer term, we see (real estate) as a good investment class,” Kevin Strain told BNN Bloomberg in a television interview on Monday.

Strain said that despite the challenging economic environment, the office real estate space will eventually “right itself” and will resume its growth trajectory over time.

“We think that people are coming back to the office… I don't think people are going back to work full-time anytime soon either, but you are seeing more and more flow back into the office space,” he said.

Strain’s optimistic comments come after Sun Life reported last week that the total value of its investment properties fell 3.8 per cent to $9.7 billion last year.

The company’s U.S. office investments saw the biggest decline – dropping from $647 million in 2022 to $476 million in 2023.

Strain said Sun Life has still seen strong returns from its real estate assets over the long term, and noted that the company had been preparing for anticipated changes in the industry by offloading some of its office spaces even before the pandemic.

“We are seeing the long-term investment returns being very strong here, so we're not looking to divest in general out of real estate,” he said.

“Although of course we look at different properties and we're always changing the mix of our real estate portfolio.”

Strength in the U.S., Asia

Offsetting Sun Life’s loss in real estate value last year was strong insurance policy sales in Asia and the U.S., where Strain said the company is seeing “really good experience.”

“Broadly, we play in a bunch of different areas in the U.S. group benefits space, which is increasingly becoming a health business for us,” he said.

“Overall, that business performed very well during the year. We saw a tremendous lift in their earnings.”

The company reported last week that underlying net income in the fourth quarter increased 10 per cent from 2022 to $983 million, beating estimates from an analyst survey conducted by Bloomberg.

Meanwhile in Asia, the company’s underlying net income increased by six per cent to $143 million in the fourth quarter, behind a 49 per cent jump in individual sales.

With files from Bloomberg News

 

Housing minister says building homes is vital 'regardless' of interest rates

Mitchell Consky, BNN Bloomberg

Minister of Housing, Infrastructure and Communities Sean Fraser speaks at a news conference in Ottawa on Tuesday, Feb. 13, 2024. THE CANADIAN PRESS/ Patrick Doyle

As the Canadian housing market braces for possible interest rate cuts this year, Housing Minister Sean Fraser says the mission remains the same, to build as many homes as possible, as fast as possible.

In a press conference Tuesday with Minister of Finance Chrystia Freeland, Fraser spoke about the impact interest rates have on restricting housing supply. He explained that based on conversations he has had with developers, a cut in interest rates would spur developers to “start those projects that are marginal today.” 

“Regardless of whether interest rates remain where they are, or come down a whole point or half a point or whatever may happen, the course of action remains the same because we know we need to build millions of homes,” Fraser said.

He added that the interest rate environment “doesn’t change the mission.”

There is a need to simplify the building process at the municipal level, Fraser said, as well as ensuring efficient spending on infrastructure investments and reducing red tape. 

 “We need to make the math work for builders by getting rid of the GST, recapitalizing (the) Canada Mortgage Bond program (and) putting low-cost financing through the Apartment Construction Loan program into the system,” he explained. 

Fraser also mentioned the critical need to invest in affordable housing.

“We need to do everything we can as quick as we can to build as many homes as we can, and that’s going to be true today and six months from now regardless of what we have in the interest rate environment that we’re dealing with,” he said. 

Freedland said in the press conference that “supply is at the heart of the challenge,” and that a major objective is increasing the speed of construction.

Fraser announces $176 million in housing deals with more than 60 rural communities

Nojoud Al Mallees, BNN Bloomberg

The federal government will roll out more than 60 housing agreements with small and rural communities across the country over the next few weeks, Housing Minister Sean Fraser announced Tuesday.

Fraser said in a news conference that the deals are worth $176 million and will help build more than 50,000 housing units over the next decade.

"What we've seen over the course of the past few years is more people have chosen to move to small towns," Fraser said.

"We're seeing the cost of rent has gone up dramatically as vacancy rates get lower. We see that the cost of purchasing a home is far greater today than it was even just a few years ago." 

Fraser said rural communities are being given more flexibility when it comes to their commitments in the agreements, in part because they have different capacities than larger municipalities.

Ottawa has been signing agreements directly with municipalities through its housing accelerator fund, which offers money in exchange for changes to bylaws and regulations that would support more homebuilding.

Municipalities were invited to apply for the federal fund with a plan on how they intend to ramp up construction in their communities. 

The Liberal government has pitched the fund as a key pillar of its economic plan as it faces political pressure to address the country's housing crisis.

Fraser said on top of the deals for smaller communities, the federal government has reached 36 agreements to date that will help construct more than 500,000 housing units over the next decade.

That includes a deal with the city of Ottawa worth $176 million announced on Monday. 

Out of the $4-billion housing accelerator fund, about $640 million remains available to municipalities that have not yet signed agreements, said a spokesman for Fraser.

This report by The Canadian Press was first published Feb. 13, 2024.

British Columbia hatches $2-billion loan plan to boost homebuilding

Thomas Seal, Bloomberg News

British Columbia’s government launched a program to accelerate the construction of thousands of affordable homes, backed with a $2 billion lending commitment and $950 million in spending.

B.C. Premier David Eby said the new body will identify owners of low-cost land, bring them together with contractors and developers, then work with local governments to expedite planning approval.

The provincial government will then offer low-interest financing for new residential developments and grants to nonprofits and First Nations development corporations. The goal is to have at least a fifth of homes under the program made available for rent at rates at least 20 per cent below market, without ongoing government subsidies.

The initiative underscores the acute housing shortage in British Columbia — a problem shared across Canada and other major North American and European cities — and the growing political urgency to do something about it. British Columbia, Canada’s third most-populous province with about 5.6 million people, is expected to hold an election in October, while a national election is expected in 2025. Conservative Leader Pierre Poilievre, who’s Prime Minister Justin Trudeau’s main opponent, has built a sizable lead in polls in part due to public frustration over housing costs.

The private sector has failed to build enough affordable housing, a problem not helped by inflation, interest rates and land costs, the BC government said in a statement.

At a speech in Vancouver, Eby announced an initial project for the plan, known as BC Builds, made up of 400 housing units, with “thousands more units to come.” All units will be income-tested and aim for rents equal to no more than 30 per cent of the earnings of a middle-income household, with overall rents equal to or lower than market rents.

BC Builds has set a goal of cutting the time between concept and construction to 12 to 18 months, down from a typical three to five years.

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Economist says U.S. reducing emissions more than Canada

Daniel Johnson , BNN Bloomberg  

Feb 12, 2024

A new report from TD Bank highlights that while the U.S. has more successfully reduced emissions than Canada, both countries will face challenges to meet emission reduction goals. 

Likeleli Seitlheko, an economist at TD Bank, said in a report Monday that both Canada and the U.S. have made “moderate progress” regarding reductions in greenhouse emissions. Despite this, Seitlheko highlighted that each country will be challenged to meet 2030 emission reduction targets due to the speed that which new investment can be implemented. 

“The two countries may have to prioritize different measures for addressing emissions in the oil and gas sector as carbon dioxide is the main greenhouse gas emitted in the sector in Canada while methane dominates in the U.S.,” Seitlheko said.

Canada has a goal to reduce greenhouse gas emissions by 40-45 per cent by 2030, while the U.S. has a goal to reduce emissions by 50-52 per cent during that same time, according to the report. 

The report highlighted the importance of understanding the reasons behind why Canada’s performance has lagged the U.S. Specifically, the report said the U.S. leads Canada in absolute emissions declines but also “emissions intensity on a per capita and per unit of GDP basis.” 

“Among the main emitting economic sectors, Canada has been more effective at reducing emissions in the electricity sector. However, this sector accounted for a larger share of total emissions in the U.S. and thus contributed more to the decline in overall emissions there,” the report said. 

“Moreover, the U.S. has made stronger inroads in the transportation sector, further tilting the figures in their favour.” 

Seitlheko said that increased support for electric vehicle ownership in Canada is needed to “counteract