Gildan's deposed CEO Chamandy wins over big investors in fight with board

Mathieu Dion, Bloomberg News

Gildan Activewear Inc.’s former chief executive officer lashed out at the clothing manufacturer’s board, saying it fumbled when it failed to consult investors about the CEO succession process — and major shareholders are backing him up. 

Five investment firms that hold stakes in the Canadian company have now denounced the board’s decision to fire CEO Glenn Chamandy and name former Fruit of the Loom executive Vincent Tyra as his replacement. 

The unhappy investors include major holders Jarislowsky Fraser Ltd., Pzena Investment Management Inc. and Cooke & Bieler LP. Collectively, the five firms own about 25 per cent of Gildan’s shares, according to data compiled by Bloomberg. 

“Shareholders should decide the future if they’re not happy with the CEO,” Chamandy, 62, said in a phone interview. “The process was flawed, and they didn’t really have a very good plan.” He added that he wasn’t ready to retire and was “excluded completely” from the board’s process. 

Representatives for the company didn’t respond to requests for comment.

Gildan’s board on Monday announced Chamandy’s departure and the appointment of Tyra, sending the stock plunging. “He has no manufacturing experience, and he has been out of the industry for 20 years,” Chamandy said about Tyra. “His track record is not the greatest.” 

Jarislowsky Fraser, a unit of Bank of Nova Scotia, said Gildan Chairman Donald Berg should resign and heaped criticism on the board for its handling of the CEO change. Charles Nadim, Jarislowsky’s head of research, said the abrupt management shuffle was “concerning.” He accused directors of misleading the market with its announcement and failing to perform proper due diligence when it chose Tyra. 

Gildan shares jumped Friday on Bloomberg’s report about Jarislowsky’s comments, closing at $46.15 in Toronto, up 4.1 per cent from the previous day. Still, the stock fell 7 per cent for the week, shrinking the company’s market capitalization to about $8 billion (US$6 billion).

The company’s fourth-largest investor, with 5.8 per cent stake, Cooke & Bieler LP, also came to Chamandy’s cause. 

“We enthusiastically support Mr. Chamandy’s reinstatement as CEO, and we do not see that tenable with Mr. Berg on the board,” portfolio manager William Weber said in a phone interview.

Gildan says it’s one of the world’s largest vertically-integrated makers of t-shirts, underwear, and socks. The Montreal-based company made headlines in 2017 when it bought American Apparel for US$88 million in a bankruptcy auction. It also holds an exclusive distribution of Under Armour socks in the US and Canada.

The Chamandy family has been in the clothing sector since the 1940s. In 1984, Glenn Chamandy and his brother, Greg, turned the family firm into an integrated company with a knitting manufacturing business called Gildan Textiles. 

In 2004, Greg stepped down as co-CEO, leaving Glenn to run it until the latest management shuffle.

Chamandy acknowledged “it’s been a tough week” and that he can’t do more to win back his seat. 

“I’m on the sidelines,” he said. “It’s up to the shareholders to decide ultimately what they want.”

Gildan shareholders seek CEO reinstatement, allege 'grievous error' by board

The Canadian Press

Two of Gildan Activewear Inc.'s shareholders are demanding its former chief executive be reappointed to the company's top post.

In letters sent to Gildan's board of directors, Browning West LP and Turtle Creek Asset Management Inc. called for the Montreal-based apparel maker to reinstate Glenn Chamandy to the board and his prior CEO post.

Earlier this month, Gildan co-founder Chamandy said he was terminated without cause after four decades with the company. He is due to be replaced by Vince Tyra.

Browning West LP, an investment partnership with a 3.9 per cent stake in Gildan, said it believes the company's share price was poised to grow by at least 80 per cent over the next two years under Chamandy's leadership.

Turtle Creek said the board's abrupt termination of Chamandy, which it called a "grievous error," appeared to have been done in haste without meaningful shareholder engagement or consideration of the impact it would have on Gildan.

Gildan did not immediately respond to requests for comment. An autoreply from Chamandy's email said no further statements would be given at this time.

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Rogers reaches deal with rival carriers on TTC wireless access

Sammy Hudes, The Canadian Press

A Toronto Transit Commission sign is shown at a downtown Toronto subway stop Tuesday, Jan. 24, 2023. (THE CANADIAN PRESS/Graeme Roy)

After tense negotiations and public sparring throughout the year, Canada's major telecommunication carriers have reached a deal to offer wireless coverage on Toronto's subway system.

A spokesperson for Industry Minister François-Philippe Champagne's office said the companies reached the agreement on Thursday but declined to comment further.

In a statement, Rogers spokesman Cam Gordon said the terms of the deal could not be disclosed due to confidentiality.

“We stepped up to bring 5G to Toronto’s subway system and committed from the start to work with other carriers to join the network on reasonable commercial terms," he said.

"We’re pleased that we’ve reached commercial agreements.”

Bell declined to comment on the deal, while Telus did not immediately respond to a request for comment.

The two companies wanted a joint build of the TTC's mobile network using a consortium model similar to that of Montreal's Metro, rather than the licensing fee model Rogers had proposed.

The issue came up after Rogers bought the network in April from BAI, which was contracted to build it in 2012 by the TTC but never managed to sign on any of the major carriers.

After acquiring the network, Rogers went about upgrading it, and in August gave its own customers a head start on using it when it activated cellular service in the busiest sections of the Toronto subway system, without a deal in place with the other carriers.

The federal government then mandated that Rogers give Bell and Telus customers equal levels of service on portions of the subway where there was existing cellular infrastructure that was concentrated downtown by Oct. 3, which it did.

Then last month, Rogers turned on wireless service for its own customers at all remaining Toronto subway stations plus tunnels between Sheppard West and Vaughan Metropolitan Centre stations — again leaving its rivals to play catch up.

They now have, with Telus confirming Thursday it is now providing service "in all connected areas of the TTC."

"Now, customers can use their devices to stream content and keep in touch with friends and family while staying safe on transit," said Telus spokesman Richard Gilhooley.

Bell followed suit on Friday, saying that "as of today, Bell customers can now talk, text and scroll in all Toronto’s TTC subway stations and in select tunnels."

"Going forward, our customers can expect access at the same time as Rogers’ customers whenever a new station or tunnel is added to the TTC network," said Bell spokeswoman Jacqueline Michelis.

Freedom Mobile confirmed its customers also currently have service in all TTC stations and an equal portion of the tunnel routes.

Ottawa's decision in September had given the carriers one month to reach a deal over wireless access on the TTC, or face a 70-day arbitration process to solve the matter. The deadline for a decision in that process was set for next Wednesday.

The progress was welcome news, said Shelagh Pizey-Allen, executive director of the TTCriders advocacy group.

"What was not acceptable was some cellphone users getting access before others," she said.

"The infrastructure's there. Everyone should be able to use it no matter who their provider is."

TTC spokesman Stuart Green said he didn't know of any details surrounding the deal, but that the transit commission was pleased to hear about it when contacted by a reporter.

"We welcome any agreement that brings more certainty to the ongoing rollout of wireless service that everyone has been working toward," Green said in an email.

David Soberman, a marketing professor at the University of Toronto's Rotman School of Management who follows the telecom sector, said the issue is both a matter of convenience and safety. He noted Toronto has lagged behind other big cities on the world stage when it comes to cellular access on public transit.

"It's something which people have in other big cities like Paris and London, for example. Why we shouldn't have that in Toronto?" said Soberman.

"Over the last year, we've had an increased number of aggressive events and assaults … I think we can collectively agree that from a societal point of view, it's an important safety issue."

All major wireless providers must offer full network access in every TTC station by June 2024, according to Champagne's office.

Voice, text and data service must be granted by the carriers in 80 per cent of subway tunnels by December 2025, and the entire system a year later.

Pizey-Allen agreed that the access riders have today to call, text or browse the web on portions of the subway line should have been available years ago, especially in a major city like Toronto.

"The public interest should come first," she said. "Transit riders' safety and feeling safe and connected in the subway tunnels should come first before corporate profit."

This report by The Canadian Press was first published Dec. 15, 2023.

ICONIC

Tim Hortons celebrates its 60th birthday in 2024. Here's a timeline of its history

Tara Deschamps, The Canadian Press

Tim Hortons is considered part of the fabric of Canada, but long before the chain became synonymous with the country, it had humble beginnings as a coffee and doughnut shop.

As the company turns 60 in 2024, this is a look back at its history.

May 17, 1964: The first Tim Hortons location opens in Hamilton, Ont.

Feb. 21, 1974: Founder and NHL defenceman Tim Horton dies in a car accident at 44, while travelling back to Buffalo from Toronto after a hockey game between the Sabres and Maple Leafs. 

Tims franchisee Ron Joyce later becomes sole owner of the chain, when he buys out the stake in the business held by Lori Horton, Tim Horton's wife, for $1 million and a Cadillac Eldorado. Lori Horton later lost a court challenge disputing the sale.

1976: Tims debuts bite-sized doughnuts it dubs Timbits.

March 3, 1983: The first non-smoking Tim Hortons location opens in Hamilton, Ont.

1984: Tims enters the U.S. with its first store in Tonawanda, N.Y.

1986: The restaurant launches its first Roll up the Rim to Win promotional contest. 

1993: Tims begins selling sandwiches. Ads show they cost between $2.69 and $3.49 and come in varieties including ham and cheese.

Aug. 8, 1995: American fast food company Wendy’s International Inc. purchases Tim Hortons.

1996: Bagels make their debut on the Tims menu. They sold for about $1.49, plus tax, commercials show. The company also runs its first Smile cookie campaign.

1999: Tims starts selling the iced cappuccino. An ad shows a small costs $1.69 plus tax. 

July 2004: The Canadian Oxford Dictionary adds "double-double" — a coffee with two creams and two sugars that is popular at Tims — to its lexicon. 

July 29, 2005: Wendy's announces plans to sell 15 to 18 per cent of Tims in an initial public offering.

2006: Tims introduces hot breakfast sandwiches. 

March 2006: Tim Hortons raises almost $800 million in an initial public offering priced at $27 per share.

Sept. 28, 2009: Tims announces it has reorganized its corporate structure and the business is spun off to become a public company.

2009: The restaurant partners with Cold Stone Creamery to add the ice cream brand's products to some of its restaurants. The brand was pulled from Tims locations in Canada in February 2014.

Aug. 26, 2014: Tims and 3G Capital’s Burger King Worldwide Inc. sign a deal to merge and form a parent company called Restaurant Brands International.

March 27, 2017: Restaurant Brands says it has enough shares of Popeyes Louisiana Kitchen, Inc. to complete its US$1.8-billion friendly takeover of the fast food chain.

Jan. 10, 2018: Protesters rally outside Tims locations chanting, “Hold the sugar, hold the cream, Tim Hortons don’t be mean.” The demonstration is meant to show support for employees after some franchisees cut benefits and break times following an Ontario minimum wage increase.

May 10, 2018: Then-Tims president Alex Macedo says he is prepared to make amends with a dissident franchisee group the company spent months sparring with over everything from cost-cutting measures to delays in supply deliveries to renovations the firm said would cost store owners $450,000 per restaurant.

April 2018: Tims announces it will move its headquarters from Oakville, Ont., to Toronto.

May 30, 2018: The restaurant says it will pilot all-day breakfast at a handful of Hamilton and Burlington, Ont. locations.

Jan. 6, 2020: Tims announces it will sell Timbits cereal in chocolate glazed and birthday cake flavours in grocery stores. The company has also dabbled with selling granola bars, ice cream and canned soup in supermarkets.

Feb. 2020: Tims makes Roll up the Rim to Win a fully-digital contest, cutting out the work of unravelling coffee cups and renames the promotion Roll up to Win.

April 21, 2021: Tims promises its core menu will be free of artificial colours, flavours or preservatives by the end of the year.

Sept. 30, 2021: Tims launches its first orange sprinkle doughnut campaign in support of Indigenous charities and residential school survivors.

Nov. 15, 2021: Restaurant Brands announces it has signed a deal to acquire sandwich company Firehouse Restaurant Group Inc. for US$1 billion.

Nov. 29, 2021: Tims launches a partnership with Stratford, Ont.-bred pop star Justin Bieber. As part of the deal, Tims sells three "Timbiebs" Timbits — chocolate white fudge, sour cream chocolate chip, and birthday cake waffle flavours. Limited edition beanies, fanny packs, and tote bags are also released.

June 1, 2022: The federal privacy commissioner along with counterparts in British Columbia, Quebec and Alberta find Tims violated the law by tracking the movements of and recording people who downloaded the company's app.

June 22, 2023: Tims introduces its decadent Dream Cookies.

Aug. 5, 2023: Tims launches its first-ever boat-thru on Ontario's Lake Scugog. For one weekend, visitors float by in motorized boats, canoes, kayaks, paddleboards and even a buoyant car to pick up cold drinks.

Nov. 30, 2023: Tims announces it has its first zero-tailpipe emissions electric transport truck making deliveries in southwestern Ontario.

May 17, 2024: Tims to celebrate its 60th anniversary.

— By Tara Deschamps

This report by The Canadian Press was first published Dec. 18, 2023.

Full disclosure: companies face emissions reporting mandates even as Canada lags

Ian Bickis, The Canadian Press

It’s getting harder for companies to hide their dirty secrets.

Regulators around the world are increasingly forcing them to disclose their carbon emissions, along with other key climate change considerations such as how much financial risk they face.

Momentum is building as the rising dangers from wildfires, droughts and floods become harder to ignore, and as the alphabet soup of disclosure regimes get boiled down to clear international standards on the key questions companies most need to answer.

But while both the need and the path forward are getting increasingly clear, experts say Canada is falling behind.

At this year’s UN climate conference in Dubai, Mark Carney, the former Bank of Canada governor and a central player in global climate finance, was talking excitedly about the reporting framework established -- in record time -- by the International Sustainability Standards Board.

“Now countries are starting to implement. It’s been endorsed by the securities regulator IOSCO, the European Union, the U.K., Singapore, Switzerland, Canada,” he said, before pausing.

“Well, Canada’s lagging a bit. But most of the others are starting to implement.”

Whether a slip or a dig, his comments echo what others have been saying about Canada's pace of rolling out rules that will make it much easier to see who the laggards are on action, and where investments are most at risk.

“We're languishing,” said Janis Sarra, a principal co-investigator of the Canada Climate Law Initiative, who noted that even emerging economies like Brazil have already adopted the new standards.

Clear Canadian disclosure rules are needed, said Sarra, to make sure the country is meeting its decarbonizing commitments, to attract foreign investment, to make sure companies aren’t greenwashing and to ensure the overall stability of the financial system.

Companies ranging from banks to grocers have already started to report some climate measures. But with it all voluntary, they’re using different standards, or changing their methodology to look better, all of which makes it hard to compare companies to each other, or even to their own previous reporting, she said.

And of course, many companies choose not to disclose anything at all.

“There’s no regulatory stick, if I can call it that, that makes sure that there's integrity,” said Sarra.

“Voluntary was fine for 10 years ago, but this is urgent now.”

The Canadian Securities Administrators did release a set of proposed rules in 2021 that would make public companies report emissions and other key metrics in annual filings. The rules seem stuck in limbo.

In early July this year, the CSA welcomed the new global standards, saying an update on their own path would follow in the "coming months."

Nearly six months later, there have not been any updates. The message from CSA spokeswoman Ilana Kelemen was still that an update was forthcoming, and Kelemen said she was unable to set up an interview so someone could explain the delay.

One potential reason is the ongoing work to adapt the international standards for Canada, which the accounting industry-funded Canadian Sustainability Standards Board is doing.

The board expects draft rules out by March, and to have them set by the third quarter next year, said Charles-Antoine St-Jean, board chair.

He said Canada isn't so far behind, and is still moving fast to implement the important rules.

“The big push is really to reduce the noise ... to see some discipline, quality and integrity in the reporting system.”

Maybe the biggest snag, though, is that the U.S. securities regulator has also had an extended delay in rolling out rules.

Business groups in that country have vocally pushed back against the agency’s proposals as onerous, especially the potential need to report not only a company's direct carbon emissions, but also those carbon linked to their products and services.

In making the proposal, Securities and Exchange Commission chairman Gary Gensler said the emission disclosures rest on the foundation of modern securities law.

“Our core bargain from the 1930s is that investors get to decide which risks to take, as long as public companies provide full and fair disclosure, and are truthful in those disclosures.”

Canada's securities regulators like to align standards with the U.S., so Canadian regulators are delayed in part by waiting for an SEC decision. Even so, other juristictions are moving ahead.

California passed its own disclosure laws in October that require full emissions accounting for any company with over US$1 billion in annual revenue, public or private, that does business in the state.

The law, along with ones in the European Union that require even more disclosure and have lower business-size thresholds, are part of a thickening web of regulations that will catch an increasing number of Canadian companies, even if rules continue to languish at home.

“The overall theme that we've been telling our clients is, 'Get ready,'” said Don Linsdell, national leader of climate change and sustainability services at EY.

“Because whether you like it or not, you're going to get captured one way or the other.”

Some rules are also moving forward in Canada, including by the banking regulator that issued final guidance on climate disclosures in March.

The Big Six banks will be the first to fall under the mandatory disclosures in Canada next year, followed by all federally regulated financial institutions a year later, actions Canada’s Auditor General noted were overdue and don’t go as far as peers.

The federal government also promised in its fall economic statement that it would work to develop ways to make climate disclosures mandatory for private companies.

But as Canada starts to move on basic disclosures, other countries keep pushing forward on the next important step: requiring companies to set clear climate plans that explain how they actually plan to pollute less.

"When you think about disclosure, it's just the diagnostics," said Canadian senator Rosa Galvez. "So you are just disclosing your vulnerabilities, but you are not reducing your emissions."

Galvez has been pushing a bill that has a full wish list of measures climate advocates have been asking for, which is currently being examined by the senate banking committee, but otherwise there's little sign of rules coming to force full climate plans.

Companies are starting to voluntarily set out climate plans, but those too are falling short.

A report released last week by the financial industry-led Climate Engagement Canada found that of Canada's 41 biggest companies in grocery, rail, aviation and resources, only a third had even partially set short-term emissions targets, and none were directing spending where it needed to go to meet the goals.

Sarra at the Climate Law Initiative said that while it's important Canada catch up on disclosures, it has much further to go.

“We are going to be in serious trouble as an economy and also frankly, our biosystems and everything else, if we don't have a concerted set of transition plans across the country.”

This report by The Canadian Press was first published Dec. 18, 2023.

 

TPG buys stake in Canadian warehouses from Oxford for $1 billion

Ari Altstedter, Bloomberg News

U.S. private equity firm TPG Inc. has acquired a majority stake in a portfolio of warehouse properties around Toronto for $1 billion, according to people familiar with the deal.

TPG will get 75 per cent ownership of two industrial parks in the suburban cities of Brampton and Vaughan, the people said, declining to be named because the deal has not been officially announced. The seller, Oxford Properties Group, will retain a 25 per cent interest and continue to manage the assets, the people said. 

It’s a rare sign of life in a commercial real estate market that’s been ground to a near-halt by interest rates stuck at multi-decade highs. But investors have still been bullish about the outlook for warehouse and logistics properties, one of the market’s best-performing segments, even as the surge in e-commerce activity has cooled since the end of the pandemic. 

Vacancy rates for warehouses in many Canadian cities are some of the lowest in North America, and supply remains constrained by difficulties in getting new ones built.

That has made Canada’s industrial real estate a target for foreign investors. In February, GIC, Singapore’s sovereign wealth fund, completed its $5.9 billion buyout of Summit Industrial Income REIT in partnership with a local player, Dream Industrial REIT. And Blackstone Inc. has been building its portfolio of Canadian industrial real estate for years.

Meanwhile, Oxford — the property arm for the pension plan representing Ontario’s municipal employees — has been following many of its peers in selling off some of its real estate holdings in Canada, where pension funds are already some of the biggest landlords. Instead, those funds have started to focus more on building new properties as an avenue to generating bigger returns. In Ontario, Oxford has sought to develop new industrial properties.

The TPG transaction values the 5.1 million-square-foot (473,800-square-meter) portfolio at $1.3 billion.

 

Housing co-op selling community bonds to fund first property

Daniel Johnson , BNN Bloomberg

The president of a housing co-operative currently fundraising to build its first residence says the living model can help alleviate Canada’s housing affordability crisis.

Lindsay Harris is president of B.C.-based non-profit housing cooperative Propolis, where residents will contribute to owning and operating the building that they live in after paying a membership share. 

She told BNN Bloomberg that the model is one way to ease affordability struggles in Canada as residents face high rental and mortgage costs.

“Non-profit co-operative housing is a great tool to ensure affordability and it's a really important solution to contribute to solving the housing crisis,” Harris said in a television interview. 

COMMUNITY BOND CAMPAIGN

Membership shares for Propolis are currently set at $2,000, Harris said. Residents will get the money back when they move out.

Propolis is currently looking to raise $1.1 million for the purchase of its first property, with the full proposed development to cost around $15 million. 

The proposed six-story development is set for a site in Kamloops, B.C. with about 50 affordable units and 9,000 square feet of commercial space at ground level. The co-operative intends to have people move in by 2026.

Propolis is selling community bonds to fund the project, Harris said, which yield an interest rate of between 2.5 and 3.5 per cent. 

“The benefit of a community bond is that people can invest in a cause that they care about so they can invest in helping to solve the housing crisis in Kamloops. And at the same time they can earn a financial return on their investment,” she said. 

Currently, bond offerings from Propolis are not eligible to be held in a registered retirement savings plan (RRSP) or tax-free savings account (TFSA). 

FEDERAL FUNDING 

The federal government has also turned its attention to co-op housing as a means to ease pressure on the hot housing market.

On Tuesday, Ottawa announced $71 million in funding for co-op housing. The money will be used to build and repair 16,000 co-op homes across Quebec, British Columbia, Ontario and New Brunswick. 

“We are working with every level of government and communities across Canada to help build the homes Canadians need at prices they can actually afford,” Housing Minister Sean Fraser said in a news release. 

“By unlocking over 1,600 co-op homes across Canada, we are helping Canadians get a roof over their heads.”

The announcement comes after the government promised $1 billion in funding in its fall economic update to go towards its Affordable Housing Fund, which will finance non-profit, co-op and public housing providers to build over 7,000 new homes by 2028. 

 

The time for renters to move is now, report suggests

Ben Cousins, BNN Bloomberg

A new report suggests now is the ideal time for renters to move as rents in Canada’s priciest markets are falling.

A Canadian rent report from Zumper published Thursday found nine of Canada’s 10 most expensive markets saw month-over-month declines in the average rent prices for a one-bedroom apartment in December, while the tenth-priciest  – Kelowna, B.C. – remained flat.

“Most renters prefer to avoid apartment hunting during the holiday season, with the challenges of moving in cold unpredictable weather while juggling travel plans, so the rental market is much less competitive in the winter than the rest of the year,” the report said.

Zumper found 10,000 buildings on its platform had offered move-in specials for the month.

“Property owners also tend to price down units to fill vacancies faster ahead of the holidays as well,” the report stated.

“Renters should consider a winter move if they want a deal.”

FIRST MONTHLY DROP IN MORE THAN A YEAR

Overall, the national rent index for a one-bedroom fell 0.2 per cent to $1,890 per month, marking the first monthly drop since summer 2022.

When it comes to two-bedroom apartments, the national rent index only climbed $10 per month to $2,360.

The acceleration in prices is also slowing down on a year-over-year basis.

One-bedroom apartments climbed 10.6 per cent in December, compared to a 13-per-cent hike last month. 

Vancouver remains the most expensive Canadian city to rent an apartment in, with one-bedroom apartments costing an average of $2,730 per month, while Toronto and Burnaby $2,490 rounded out the top three at $2,500 and $2,490, respectively.

Kingston and Montreal were the only two cities in the top 15 to see month-over-month rent hikes, Zumper said, at 5.8 per cent and 6.3 per cent respectively.

What to know about Canada's proposed share buyback tax

Jordan Fleguel, BNN Bloomberg

A new levy on Canadian companies that repurchase stock from their shareholders is expected to come into force on Jan. 1. 

Here’s what you need to know about the proposed share buyback tax, with insights from a tax professional.

WHAT IS THE TAX?

The tax was first introduced in the 2023 federal budget and received its first reading in the House of Commons last month. It would see publicly traded Canadian companies taxed at two per cent of the value of repurchased equities over the course of one year.

The law may not be passed right away, but Jonathan Willson, partner in the Tax Group at Stikeman Elliott, told BNN Bloomberg that companies are preparing for its retroactive effects in the coming calendar year.

“In Canada, we're comfortable with retroactive legislation. So these rules apply Jan. 1, and I think investors can assume that will be exactly what happens,” he explained.

In a Thursday television interview, Willson also discussed the government’s aims with the legislation.

“The objective is to impose a bit of a toll charge when those public issuers have cash which might otherwise be available for reinvestment to leave the system,” Willson said.

The proposed tax would be levied on publicly traded corporations, Willson said, as well as REITs, and certain other publicly listed partnerships or trusts.

“It has a potentially fairly broad net, but it’s publicly traded entities, that's where it's going at,” he said in a Thursday television interview.

CHANGES TO THE PROPOSED LEGISLATION

Willson said that since it was first introduced, the legislation has been amended a number of times to ensure it’s achieving its policy objective and doesn’t punish companies that are using buybacks as a way to reinvest.

“The government wants to impose a tax on money leaving corporate solution, leaving the system. They don't want to capture an investment which is changing in its form,” he said.

Willson explained that the tax is meant to be levied on most substantial issuer bid  buybacks, which is when a company makes a one-time offer to repurchase a significant number of its shares directly from shareholders and distribute the funds amongst them.

“There are other kinds of repurchase type transactions such as a corporate reorganization, a corporate spin out or something like that, and that isn't necessarily within the scope of the rules,” he said.

IMPACT ON INVESTORS

Willson said investors in mutual funds or ETFs will most likely not be impacted by the tax, and noted that levies would be paid out directly by the company, not shareholders.

He added that where investors may notice the tax is in the price offered by companies during buybacks in the future, or in the number of buybacks offered.

“You have to assume that if a company, just to use a silly example, wanted to return $20 to their shareholders, if there's a little bit of a tax toll, that's coming out of what's going into the shareholders pockets,” Willson said.

“I don't imagine companies will be increasing to cover that tax.”

How high inflation and interest rates tanked the Liberals

Nojoud Al Mallees, The Canadian Press

Justin Trudeau's government has had to weather many storms over the last eight years.

The SNC-Lavalin controversy. An old yearbook photo with the prime minister in blackface. Multiple ethics violations. The COVID-19 pandemic.

But as the governing Liberals continue to slide in the polls, the slow-moving hurricane that may actually end up blowing them away appears to be the economy.

For many, the pandemic has receded into little more than a bad memory. But the economic domino effect it touched off lingers on, wreaking electoral havoc on incumbent governments around the world.

High inflation and interest rates have left people feeling worse off, even as the Canadian economy outperforms expectations in many ways.

Polls suggest the governing party is badly trailing the Conservatives. Cost-of-living issues are dominating federal politics and a resurgent Tory party is placing the blame for the erosion of affordability squarely on Trudeau's shoulders.

When did things start going so wrong for the Liberals?

Support for the Conservatives took off this summer, just as the Bank of Canada began raising interest rates again after pausing its rate-hiking cycle earlier in the year.

"That was when people were starting to cycle through the first wave of mortgage renewals," said Tyler Meredith, a former head of economic strategy and planning for Finance Minister Chrystia Freeland.

Canadians renewing their mortgages this year are seeing higher monthly payments as they pay more in interest to finance their homes. That leaves less money on the table for everything else.

The federal government doesn't actually set interest rates, but data suggest a close correlation between the Bank of Canada's rate hikes and the bottom falling out of public support for the Liberals.

Even before this year's spike, Abacus Data polling at the time suggested the Conservatives first started to overtake the Liberals after the central bank's first post-pandemic rate hike in March 2022.

"I do think that was a turning point," said David Coletto, the CEO of the Ottawa-based polling and market research firm.

A range of polling indicators have turned against the Liberals since then, he added.

For months, the federal government has faced relentless scrutiny, partisan and otherwise, for its perceived role in the affordability crisis.

Some economists accused Ottawa of spending too much in the face of soaring inflation, during a time when they said fiscal policy needed reeling in.

Housing advocates, policy experts and economists have also called out the Liberals for mismatched housing and immigration policies.

They argue that rapid population growth amid constrained housing supply compounded the effect of higher interest rates on affordability.

But much of what the Liberals are experiencing is also a global phenomenon. Inflation has ravaged economies around the world, pushing central banks to aggressively raise interest rates and turning voters against incumbent governments.

Inflation is now falling in many of the same countries. Yet incumbent leaders are still struggling.

In the United States, President Joe Biden is near an all-time low in his approval rating. There, the inflation rate was 3.2 per cent in October, while the Federal Reserve's benchmark interest rate sits at about 5.4 per cent, the highest level in 22 years.

In the United Kingdom, Conservative Prime Minister Rishi Sunak's approval rating has also plunged to a record low — even lower than that of Liz Truss, who had to resign after only 49 days in office.

The U.K.'s inflation rate was 4.6 per cent in October, while the Bank of England's benchmark interest rate sits at 5.25 per cent.

In the Netherlands, inflation has fallen by a lot since peaking above 14 per cent last year. But concerns over immigration — and its perceived impact on affordability — led to the demise of a four-party coalition government in the summer.

The far-right Party for Freedom won the most seats in an election last month. Its leader, Geert Wilders, ran an anti-immigration campaign that was also focused on the cost of living.

"Inflation's a cancer on government popularity, and there's no easy treatment," Coletto said.

Indeed, the treatment has been punishing in its own right. Central banks have responded to high inflation with hefty interest rate hikes that have made it more expensive for consumers and businesses to borrow money.

The Bank of Canada's key interest rate currently sits at five per cent, the highest it has been since 2001.

The pullback in spending has slowed the Canadian economy this year and pushed up the unemployment rate, trends that are expected to continue in 2024.

At the same time, Canada's economy has done much better than economists have expected over the last couple of years. It bounced back after the pandemic, pushing the unemployment rate to a near all-time low of 4.9 per cent in the summer of 2022.

The country has also skirted a recession so far, contrary to many forecasts. And inflation is 3.1 per cent, down significantly from last year's breathtaking highs.

Yet people still feel down about the economy — a phenomenon Meredith described as a "vibe-cession."

"To a lot of people, it looks and feels like a recession, even though we're not actually in a recession yet," he said.

The political challenge for the Liberals is finding a way to bridge the disconnect between negative public sentiment and the truth about the economy, Meredith added.

Meanwhile, Conservative Leader Pierre Poilievre's aggressive yet simple cost-of-living message has been catching fire online. His 15-minute video about the housing crisis garnered millions of views on social media since it was released earlier this month.

The explainer-style video, which uses graphics and statistics to illustrate the scale of the housing crisis, argues that Canada's housing affordability crisis has a simple cause: Trudeau himself.

But it's too early to conclude that it's over for the the Liberals, said Meredith, noting that a lot can happen between now and the next election. That contest is scheduled to take place by fall 2025, though it could be called before then.

On the economic front, things are supposed to look different by that time.

Most economists anticipate inflation will return to two per cent by 2025, while the central bank is expected to start cutting rates sometime next year.

Lower interest rates would signal a better outlook for the economy, but that won't necessarily mean lower mortgage costs for everyone.

The central bank has been signalling that interest rates may not return to pre-pandemic levels, even as inflation gets more manageable. That means many Canadians will continue to renew their mortgages at higher interest rates, even as rates fall.

As for inflation, Canadians are stuck with higher prices, even if the pace of price growth comes back down to two per cent.

Given the anxieties people are feeling about the costs they're facing, Meredith said the Liberals need a different economic message.

"If we say, 'jobs and growth' — which has often been a mantra that the government has repeated — I'm not sure that means anything to anybody," he said.

"To get over that, you have to get in front of the issue and say, 'Here's what we're doing to lower costs for you.'"

This report by The Canadian Press was first published Dec. 12, 2023.