It will take 20 years for feds to break even with Volkswagen, Stellantis deals: PBO

Nojoud Al Mallees, The Canadian Press

The parliamentary budget officer says it will take the federal and Ontario governments until 2043 to break even on their electric-vehicle battery deals with two automotive giants.

The governments announced subsidies for Volkswagen and Stellantis-LG Energy Solution this year to entice them to build electric vehicle battery plants in Canada.

A report released by the PBO on Tuesday says it will take 20 years for government revenues generated from the production of both plants to equal the production subsidies, which will total $28.2 billion by the end of 2032. 

In March, Canada reached a deal that will see Volkswagen get up to $13.2 billion in production subsidies for batteries they produce at a plant planned for St. Thomas, Ont.

Stellantis later asked for a similar deal for a plant it's constructing in Windsor, Ont., and ultimately secured a $15-billion agreement.

The production subsidies for both plants are supposed to mirror incentives offered by the U.S. through the Inflation Reduction Act, a law passed in the summer of 2022 that makes significant investments in the green economy.

The cost of the Canadian production subsidies are to be shared between the federal and Ontario governments, with Ottawa shouldering two-thirds of the cost.

However, the PBO report includes a notable caveat: the analysis does not include any additional government revenue that may be generated from spillover effects in the economy.

That's in contrast to the federal government's five-year break-even calculation for the Volkswagen deal, which includes expected revenue from production increases across the supply chain.

The Liberals have argued that these hefty production subsidies will have larger effects in the economy by encouraging more companies involved in the automotive industry to invest in Canada. That, in turn, would help push the country ahead with its green transition plans.

Industry Minister François-Philippe Champagne said the PBO's findings demonstrate that the agreements are "good deals." 

"While the parliamentary budget officer's report does not capture many of the broader economic impacts on the supply chain, it does highlight, once again, that the investments will generate economic benefits far greater than our government's contribution," Champagne said in a statement published on X, formerly known as Twitter.

The federal government has not provided a break-even estimate for the Stellantis deal.

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

International Petroleum to expand Blackrod, Alta. facility

Ben Cousins, BNN Bloomberg

International Petroleum Corp. is expanding its facility in Blackrod, Alta., with the goal of producing oil at a new development project by the end of 2026.

The company says the US$850-million project is expected to produce 30,000 barrels of oil daily by 2028. IPC holds a 100 per cent working interest in the project.

“We took a strategic decision at the start of this year to sanction the Greenfield development project, which hasn’t been done in quite some time,” William Lundin, chief operating officer of International Petroleum, told BNN Bloomberg in a television interview on Tuesday.

“This asset has a significant amount of resource at play.”

A greenfield project refers to a development on bare, undeveloped land.

Lundin said the project is particularly exciting given its proximity to a pipeline leading to Edmonton, which can then connect to shipping options through the Trans Mountain pipeline. 

TRANS MOUNTAIN TIMELINE

The beleaguered Trans Mountain pipeline has faced several delays, including the possibility of another nine months due to a route change. In a worst-case scenario, the pipeline won’t be finished until the end of 2024.

“It might be a little delayed potentially, as we’re hearing some rumblings about that, but I think we’ll be in good time,” Lundin said. “By the time Blackrod comes on, I’m sure that pipeline will be in service.”

With files from Bloomberg News

'We have never consumed more oil in history than we have today': Eric Nuttall

Daniel Johnson , BNN Bloomberg 

Sep 11, 2023

One prominent energy investor says the world has never consumed more oil than it currently does, despite narratives of waning demand.

Oil prices have moved higher over the past three months, with West Texas Intermediate (WTI) oil prices closed at just above US$87 per barrel on Monday, up from a relative low point of about US$67 per barrel in June.

Eric Nuttall, partner and senior portfolio manager at Ninepoint Partners, said in an interview with BNN Bloomberg that recessionary fears had been weighing on the demand outlook for oil – despite high consumption of the commodity.

“We've been fighting this narrative about weak demand due to a recession, which we've been hearing about for a year. We have never consumed more oil in history than we have today,” Nuttall said on Monday.

FALLING INVENTORIES

Additionally, OPEC+ has been “curtailing volumes,” Nuttall said, as oil inventories have hit their lowest levels since about 2017 and demand has reached record levels. Earlier this month, oil prices hit $85 per barrel following efforts by OPEC+ to reduce oil output. 

Nuttall, who has been consistently bullish on oil, said he expects falling inventories will keep prices high.

“But because of recessionary fears, you had oil drifting,” he said. 

“As inventories continue to fall this year and next year, we think that will propel oil meaningfully higher.” 

 

NDP wants Suncor CEO to tell MPs why company moving away from focus on clean energy

Mia Rabson, The Canadian Press

NDP MP Charlie Angus will ask the natural resources committee to summon the CEO of oilsands giant Suncor when the House of Commons resumes next week.

Angus said CEO Rich Kruger has a lot of explaining to over his remarks to investors on a conference call in August.

Kruger, who took over as Suncor CEO in April, said the company had a "disproportionate" focus on the longer-term energy transition to low-emitting and renewable fuels. He said it needed to revise its direction toward the immediate financial opportunities in the oilsands.

"Today, we win by creating value through our large integrated asset base underpinned by oilsands," he said on Aug. 15.

Last year, before Kruger took over, Suncor sold off its solar and wind power assets, and expanded its fossil fuel assets by purchasing a new oilsands mine.

Angus, who is the NDP critic for natural resources, called Kruger's comments "shocking" and "irresponsible."

"We've had thousands of people displaced, millions of hectares of forest destroyed, large sections of North America covered in toxic smoke, and as everyone was talking about the urgency of dealing with this, we have Mr. Kruger saying the only urgency he sees is making as much money as possible," Angus said in an interview Monday.

Angus said Kruger needs "to come and explain why they're refusing to accept responsibility or even to take up a role that can reassure Canadians that they have our best interests or any of our interests at heart."

Angus first needs to get the motion on the agenda of the committee, which has not yet set a date for its next meeting. He will then need the support of at least five other committee members for the motion to pass.

Liberal MP and committee member Julie Dabrusin said she needs to discuss the motion with her colleagues before deciding whether to support it, but does feel companies need to show how they will make climate change action a priority.

"Oil and gas is the largest emitting sector in the country and meaningful action to decarbonize is a necessity to reach net-zero by 2050," she said in a written statement.

"The CEOs of Canada's largest emitters must clearly outline how climate change is an economic and environmental priority and be clear with Canadians what efforts they are taking to decarbonize and meet the goals they have committed to."

Environment Minister Steven Guilbeault won't get a vote but has already publicly criticized Kruger's comments.

In an interview with The Canadian Press during last month's Liberal cabinet retreat in Charlottetown, Guilbeault said an oilsands company retreating from clean energy investments proves why the government needs to regulate climate action in the industry.

"To see the leader of a great Canadian company say that he is basically disengaging from climate change and sustainability, that he's going to focus on short-term profit, it's all the wrong answers," Guilbeault said on Aug. 22.

"If I was convinced before that we needed to do regulation, I am even more convinced now."

Later this fall he intends to publish draft regulations setting a cap on greenhouse-gas emissions from the oil and gas industry that will be lowered over time. Companies that exceed the cap will face financial penalties, such as through buying credits from companies that cut their emissions below their capped amount.

The government has not yet said where the cap will be set but the Emissions Reduction Plan seeks about a 40 per cent reduction in emissions from oil and gas production by 2030.

The Pathways Alliance, a consortium of oilsands companies working together to install emissions trapping technology known as carbon capture and storage, has said that is an unrealistic goal.

Oil and gas contributed 28 per cent of Canada's total emissions in 2021, and the oilsands alone account for 13 per cent.

Suncor contributed 17.4 million tonnes, or 2.5 per cent of the national total. Suncor's emissions in 2021 were 50 per cent higher than they were in 2011. Canada's total emissions have fallen six per cent compared with 10 years ago.

Suncor is part of the Pathways Alliance and Kruger said Suncor remains committed to that project.

Suncor did not respond to a request for comment on Monday.

Trans Mountain oil pipeline faces nine-month delay over route dispute

Robert Tuttle, Bloomberg New

The expansion of a Canadian government-owned oil pipeline from Alberta to the Pacific Coast could be delayed by nine months if regulators don’t approve a route alteration, the project’s builder said in a regulatory filing.

The expanded Trans Mountain might not be completed before December 2024 in a “worst-case” scenario where regulators force the company to stick with a plan to tunnel under land that’s important to a local indigenous community, according to a filing with the Canada Energy Regulator. The earliest the tunneling could be completed is by April, the company said.

The Trans Mountain expansion has already faced repeated delays since it began more than a decade ago, causing the price tag to more than quadruple to $30.9 billion (US$22.8 billion). The project — which would more than triple the volume of crude Alberta’s producers can pipe to the West Coast to 890,000 barrels a day — was due to start operations by the end of the first quarter.

Trans Mountain is seeking approval for a route change in British Columbia that would scrap the tunneling project in favor of an alternative that’s more intrusive — but cheaper — after running into engineering challenges. But the local Stk’emlúpsemc te Secwépemc Nation, or SSN, opposes the change, saying the change would do “irreparable harm” to its cultural and spiritual rights. The regulator has scheduled public hearings on the proposed change for this month.

Trans Mountain didn’t immediately respond to an email seeking comment. 

Prime Minister Justin Trudeau’s government bought the project from Kinder Morgan in 2018 after the company threatened to pull the plug on it amid fierce opposition in British Columbia. 

TikTok partnerships plentiful in Canada amid bans, foreign interference accusations

Tara Deschamps, The Canadian Press

In the halls of Parliament, TikTok is banned from civil servants' phones as the government grapples with allegations of foreign interference. But on Canada's red carpets and in sports arenas, the popular social media platform is still welcome.

The video-sharing app has served as the official voting platform for the Juno Awards' fan choice award, livestreamed the Osheaga music festival in Montreal and even emblazoned its logo across the helmets of Toronto Maple Leaf players for the last two seasons.

It's in the spotlight right now as a media partner of the Toronto International Film Festival. Last year, TikTok set up a recording booth along the event's main strip last year and had influencers host red carpets for the premieres of "Glass Onion: A Knives Out Mystery," "The Woman King" and "Bros."

But this year's iteration of TIFF will be unlike the last because Canada finds itself in a very different political climate, where TikTok is being treated with caution and in February was booted from federal devices. It’s also been the topic of an ongoing investigation from Canada's privacy commissioner and three provincial counterparts looking into whether the app complies with the country’s privacy legislation.

The moves stemmed from concerns that data the app owned by Beijing-based ByteDance collects on users could end up in the hands of the Chinese government, or that the platform could be used to push misinformation on users to influence the public in pro-China ways. 

TikTok declined to comment for this story, but chief operating officer Vanessa Pappas has previously insisted China has never requested data from the company and it won’t comply if such an order is made.

Experts say the reasons for TikTok's Canadian partnerships in entertainment and sports are likely twofold: they offer a chance to placate worries by showing big brands are still comfortable being associated with the app, but also a means of boosting the app's userbase and coolness.

"It's a hearts and minds campaign," said Richard Lachman, a digital media professor at Toronto Metropolitan University (TMU).

TikTok has linked itself to brands integral to the Canadian identity like the Maple Leafs, he hypothesized, so that the tech company becomes entrenched in the country's culture.

The thinking, he said, may be this: "We're going to be at all the cultural events you think of so that we are regular, we are mainstream, we're not some something outside the normal. We are part of regular culture in Canada, for sure."

Fostering that link goes hand-in-hand with deflecting attention away from concerns.

"They're trying to say, 'Maybe don't pay attention to these other news stories you might be seeing,'" said Lachman.

In recent weeks, those stories include TikTok being kept off New York City's government-owned devices and a Montana ban on new downloads of the app triggered by FBI and U.S. Secretary of State Antony Blinken's concerns that China could access TikTok data. TikTok is challenging Montana's ban in court.

Brands don't appear to be put off by such headlines.

Asked about the political discourse around the app, the Canadian Academy of Recording Arts and Sciences, which hosts the Junos, said TikTok has been an “important partner” since 2021 and “engagement has been very strong.

“We hope to continue the partnership in the future.”

TIFF spokesperson Alejandra Sosa declined to comment.

The Leafs, which announced a TikTok partnership during the 2021-2022 season and extended it last season, did not respond to a request for comment. The team hasn't announced a partnership extension for this season.

Lachman suspects brands are drawn to TikTok partnerships because they help organizations drum up fans, attention and funding.

But the deals also have something equally lucrative for TikTok: access to wealthy crowds, including people who may control corporate advertising budgets.

"They're hoping to be in front of the business audience who attends regularly, who can afford the season ticket or the full festival pass," said Joanne McNeish, an associate professor at TMU specializing in marketing.

The celebrities, influencers, athletes and "young, more hip" audiences also make sponsorships attractive because they can draw in users that are sought after by advertisers, said Brett Caraway, a professor of media economics at the University of Toronto.

"Things like sports sponsorships, corporate events, concerts, any of that kind of stuff, festivals, are just another way for them to harvest more and more of those valuable users that they need on the platform to attract the people that they care the most about, which are actually advertisers," he said.

TikTok had about one billion global users in 2021, but a March 2023 report from TMU researcher Sam Andrey showed only 29 per cent of Canadians were on the platform.

However, those ranks are swelling. TikTok experienced the fastest rate of growth among top social media apps used by Canadians, nearly tripling its reach from 10 per cent in 2019.

Yet trust in TikTok was particularly low among respondents to Andrey's survey, falling so far that the app replaced Facebook as Canada’s least trusted social media organization.

About 50 per cent of respondents had low trust in TikTok, up from 36 per cent in 2021, while only seven per cent had high trust in the app, down from 16 per cent over the same period.

Despite declining trust, Lachman said many users don't appear to be concerned with TikTok or its brand partnerships.

"It does not seem like there's massive public outcry saying, 'We don't like this brand, we don't like this content. We're worried about Chinese or foreign interference, so we don't want your organization to be affiliated (with TikTok),'" he said. 

"I've not seen that level of backlash."

This report by The Canadian Press was first published Sept. 11, 2023.

Trudeau announces first deal under $4B housing fund

Dylan Robertson, The Canadian Press

More than 2,000 new housing units should be built in London, Ont., over the next three years as the city became the first in the country to sign a deal under the new national housing accelerator fund Wednesday.

Prime Minister Justin Trudeau said he was issuing a challenge to other mayors to "step up with their proposals" and "build more homes faster."

The $4-billion accelerator program was first announced in the 2022 federal budget but applications weren't accepted until July.

Trudeau said London was the fastest to respond to the call for ambitious plans that eliminate municipal barriers to getting homes built more quickly. That includes, for example, zoning rules that limit the kind of homes that can be built in specific areas.

London's proposal, which Trudeau called "absolutely visionary," allows for building high-density housing developments without the need for rezoning and allows four units to be built on a single property even in low-density neighbourhoods.

London will receive $74 million toward the housing projects.

The announcement comes as the Liberals are facing heavy pressure to respond to a housing shortage that is compounded by two years of high inflation.

The Liberal caucus is meeting in London for a retreat before the House of Commons resumes sitting next week, and Trudeau is expected to get an earful from his MPs about the party's flagging fortunes in the polls.

Various media reports have quoted backbench MPs as saying the party isn't communicating its accomplishments well and that Trudeau isn't listening to the concerns of MPs who are not in cabinet.

Quebec MP Brenda Shanahan, the Liberal caucus chair, said Tuesday that her fellow MPs are having "very frank" conversations.

Foreign Affairs Minister Mélanie Joly said those talks are crucial.

"We are going to have conversations that are sometimes not always easy, sometimes difficult, but necessary because we are a government that has been in power for eight years now, a government that has faced several crises and each time, we were able to overcome them.”

Earlier Wednesday, Housing Minister Sean Fraser said there are unprecedented measures coming on housing, and implied the London announcement is just the first of many.

"This (afternoon) announcement is one of a series of measures we're going to be advancing over the course of the fall that are going to have a meaningful impact to get more homes built in this country," he said.

Fraser said Ottawa is planning new measures to tackle the housing crisis, working with the private and non-profit sectors.

"We're going to need to advance measures that are going to help change the financial equation for builders who are dealing with a lot of projects that are actually approved but have been put on pause because of a higher-interest rate environment," Fraser said.

He also said the federal government will "work to change" how long it takes cities to issue zoning permits and find ways to attract immigrants with construction skills to Canada.

Fraser added the government will need to be "investing in innovation, like building homes in factories so we can actually be more productive with the assets that we have, with the investments that we make."

The Liberals are also trying to signal they are prudent fiscal managers. 

An ongoing spending review calls for a $15-billion cut over five years, and a drop of $4 billion each following year. Treasury Board President Anita Anand insisted that won't affect priorities such as housing, affordability and support to vulnerable Canadians. 

"We're going to continue to be focused on those priorities while making sure that our own fiscal house is in order. And that's what all Canadians are doing right now," she said.

Charles Sousa, a Toronto-area MP and Ontario's former finance minister, said the party needs to balance building more in the suburbs with managing federal spending. 

"We have to do more collaboratively with the provinces and municipalities, and we have to find ways to be constructive," he said.

"We redistribute wealth where necessary, but we have to promote growth; we have to promote economic vitality."

MPs are meeting in regional groups Wednesday to touch base on issues their constituents have raised, as well as unflattering polling numbers in surveys the Liberals commissioned this summer.

Yet Vancouver-area MP Ken Hardie claimed his constituents are generally feeling positive. 

"We were talking about this last night. Whatever the polls are saying, we're not hearing it at the doors," he said.

"We were expecting to run into some heavy weather; some people are upset. Most people aren't even paying attention." 

The caucus meeting is taking place in a convention centre with locked doors and heavy security.

On Tuesday, a dozen protesters gathered outside the venue holding flags with expletives seen during the Freedom Convoy protests in 2022. Some in that group were seen that evening lighting off fireworks in the vicinity of hotels where Liberal MPs were staying.

This report by The Canadian Press was first published Sept. 13, 2023.

— With files from Emilie Bergeron

London, Ont.'s housing plan 'uniquely strong': Housing Minister Sean Fraser

Ben Cousins, BNN Bloomberg

London, Ont.’s flexibility when it comes to its housing strategy made it the easy choice as the first city to secure funding under the federal government’s new Housing Accelerator Fund, Housing Minister Sean Fraser said.

On Wednesday, the federal government announced London would receive $74 million toward its plan to build 2,000 new homes in the city. The funding announcement is the first under the government’s $4-billion accelerator program, first announced in 2022.

Fraser called London’s proposal “uniquely strong,” but only awarded the money after the city approved the federal government’s requests for housing projects near public transit and bylaw tweaks to allow four apartment units in a dwelling. 

“When they were able to add the additional competitive features to their application, it made the decision easier to make London be the first successful applicant through this fund,” Fraser told BNN Bloomberg in a television interview Wednesday.

Fraser said the money is intended to help boost the housing supply in the cities and communities that apply for grants, but how they choose to use the money will vary on a case-by-case basis.

This is far from the only announcement either, Fraser said the government has seen “hundreds and hundreds” of applications from cities of all sizes.

“We’ve now set the bar for what we expect,” Fraser said. “We expect cities to legalize housing more broadly, we expect cities to build more housing near transit.”

Fraser also teased that more announcements from the Housing Accelerator Fund would be revealed in the fall.

What homes can median income earners afford across Canada?

Daniel Johnson, BNN Bloomberg

As many prospective buyers struggle to afford homes, new research from Zoocasa is highlighting what median-income earners can afford across each Canadian province. 

Zoocasa shared the findings in a Monday blog post, noting that home ownership is “remarkably difficult” across all provinces and that median incomes were not enough to afford a home anywhere in Canada at benchmark prices.

However, the research highlighted some “hidden gems” across Canada when it comes to homes in an affordable range based on median salaries for that province.

MOST AND LEAST AFFORDABLE PROVINCES 

Newfoundland and Labrador was found to have the highest level of affordability among the Canadian provinces, where the difference between what someone earning the media income could afford and the benchmark price for a home was just over $43,000. 

Prospective buyers in Newfoundland and Labrador with a median income could afford a home worth approximately $246,459, while the provincial benchmark sits at $289,800, the research found.

Ontario and British Columbia were the least affordable provinces, according to Zoocasa’s findings.

In Ontario, the gap between the median income and benchmark price was about $637,000. Ontario homes were priced at about $920,000 on average, while median-income buyers could only afford homes priced up to $283,180. 

In B.C., median-income earners could only afford homes priced up to $277,466, about $722,000 lower than the benchmark price of $998,900. 

However, Zoocasa noted that the gap between median income levels and benchmark prices doesn’t necessarily mean home ownership is out of reach for median-income earners, as there are homes for sale in the range of what those buyers could afford. 

Here is a look at some of the homes listed across Canada within an affordable range for people earning median incomes.

ONTARIO 

In Ontario, Zoocasa highlighted that median-income earners could afford a home in Sault Ste. Marie listed at $229,000. The detached home features three bedrooms and one bathroom but it doesn’t have parking available. 

You can see photos of the home below, courtesy of  Exit Realty True North. 

ALBERTA 

In Edmonton, median income earners could afford a home priced at $319,900. The townhouse features three bedrooms, two bathrooms and two parking spaces. 

You can see photos of the home below, courtesy of  Yegpro Realty.

BRITISH COLUMBIA 

In Fort St. John, B.C., the Zoocasa report showcased a duplex unit with three bedrooms and two bathrooms but no available parking. The home would be affordable to median-income earners at a listed price of $260,900.

You can see photos of the home below, courtesy of  Century 21 Energy Realty.

 

NEWFOUNDLAND AND LABRADOR

Zoocasa highlighted a home in Newfoundland and Labrador listed for $225,000 that is within an affordable range for median-income earners. Located in St John’s, the detached home features four bedrooms, one bathroom and no parking spaces. 

You can see photos of the home below, courtesy of  3% Realty East Coast. 

Related

 

Cameco CEO on production cuts and nuclear outlook

Daniel Johnson, BNN Bloomberg 

Following a production guidance cut from Cameco this month, the Canadian uranium producer’s top executive says the reduction will be short-lived. 

“Our reduction is small and temporary,” Tim Gitzel, president and chief executive officer of Cameco, said in an interview with BNN Bloomberg on Tuesday. 

“In the meantime, we've got capacity to ramp up considerably.” 

Gitzel added that Cameco will increase production, provided it has the business to do so.

The Saskatoon-based mining company announced in its press release this month that it had lowered its 2023 production guidance at both its Cigar Lake mine and McArthur River-Key Lake operations in Saskatchewan.

At the Cigar Lake mine, the release said Cameco lowered production guidance from 18 million pounds of uranium concentrate to 16.3 million pounds. Production at the McArthur River-Key Lake operations is now expected to total 14 million pounds during the year, down from the previous 15-million pound estimate, the release said. 

NUCLEAR AND NET ZERO

As many nations push toward net zero, Gitzel noted that the global sentiment toward nuclear energy is gaining – and that has positive implications for his company.

“With the move to decarbonization, electrification, the race to net zero, and now energy security…there is lots of room for nuclear energy. Countries around the world [are] looking to expand, extend (and) build new SMRs (small module reactors) everywhere,” he said. 

 “It’s really positive for nuclear right now.” 

 

 

Robert Miller, accused of paying minors for sex, to sell Future Electronics for $5B

The Canadian Press

The Future Electronics logo is shown in a handout. THE CANADIAN PRESS/HO

Montreal billionaire Robert Miller, who faces a class-action lawsuit alleging he paid underage girls for sex, is selling his company Future Electronics Inc. for more than $5 billion to a Taiwanese semiconductor distributor.

WT Microelectronics Co. says it has signed an agreement to acquire 100 per cent of the company's shares for US$3.8 billion — more than $5 billion Canadian — in an all-cash deal expected to close in the first half of 2024.

Future Electronics, which Quebec's business registry lists as wholly owned by Miller, is a global distributor of electronics components that employs 5,200 workers across 47 countries.

Co-founded by Miller in 1968, the Montreal-based corporation says it generated US$2.9 billion in revenue and US$184 million in profits in the first half of 2023.

A class-action lawsuit against Miller and Future Electronics saw around 30 women come forward this year alleging he gave them money and gifts in exchange for sex when they were underage.

Miller has denied all accusations, which have not been proven in court. In February he stepped down as chairman and CEO of Future Electronics amid the allegations. 

The encounters allegedly took place at downtown Montreal hotels and two residences in the wealthy Westmount neighbourhood between 1992 and 2012.

The class-action lawsuit, filed in February by the Consumer Law Group, has yet to be authorized by a judge.

This report by The Canadian Press was fist published Sept. 14, 2023.

CONTRADICTIONS OF CAPITALI$M

Statistics Canada says household debt ratio down in Q2 as income grew

The Canadian Press

Statistics Canada says the amount Canadians owe relative to how much they earn fell in the second quarter as disposable income comfortably outpaced the growth in debt and demand for mortgages fell.

The agency says household credit market debt as a proportion of household disposable income, on a seasonally adjusted basis, fell to 180.5 per cent in the second quarter compared with 184.2 per cent in the first quarter of the year.

In other words, Statistics Canada says there was $1.81 in credit market debt for every dollar of household disposable income in the second quarter, down from $1.84 in the first three months of 2023.

Meanwhile, the household debt service ratio, measured as total obligated payments of principal and interest on credit market debt as a proportion of household disposable income, was 14.79 per cent in the most recent quarter, down from 14.90 per cent in the first quarter, when it hit its highest point since 2019. 

The moves came as seasonally adjusted household credit market borrowing fell to $17.1 billion in the second quarter compared with $20.4 billion in the first quarter as demand for mortgage loans fell to their lowest point since 2005.

The seasonally adjusted total stock of household credit market debt in the second quarter was $2.86 trillion, up 0.6 per cent from the first quarter, while mortgage debt totalled $2.13 trillion.

This report by The Canadian Press was first published Sept. 13, 2023.

Credit balances hit record high in Q2: Equifax Canada

Iva Poshnjari, BNN Bloomberg

Credit card balances hit a record high in the second quarter of this year, according to the latest data from Equifax Canada, even as Canadians pull back on spending amid high cost of living.
 
Equifax Canada’s Market Pulse report on consumer credit trends, released on Thursday, said card balances reached an all-time high of $107.4 billion in the second quarter of 2023, while total consumer debt in Canada reached $2.4 trillion.
 
Even with those sky-high figures, the report noted that heightened borrowing costs are causing consumers to be more hesitant on spending overall.
 
“Canadians are demonstrating a shift in their spending habits due to the current economic volatility,” Rebecca Oakes, vice president of advanced analytics at Equifax Canada, said in a press release.
 
"Non-mortgage debt continued to grow in the second quarter, largely due to substantial growth in credit card balances and a notable increase in debt among subprime and deep subprime consumers,” the report said.
  
HOUSEHOLD TRENDS
 
Credit habits varied across household types.
 
Mortgage holders and high-income segments showed the most slowdown in credit card spending, as they have more flexibility to scale back on discretionary spending to meet their increased credit payment obligations.
 
Meanwhile, consumers with depleting savings are facing an uphill battle when it comes to higher inflation and other expenses, resulting in a continued uptick in credit card debt, Oakes explained. 
 
The average credit card balances per credit card consumer have risen by nine per cent, with the largest increase seen in lower credit score segments, up 13.7 per cent year-over-year, the report showed. 
 
CREDIT CARD SPENDING IS SLOWING
 
Credit card spending as a whole has been consistently growing since the end of 2021. But is finally starting to slow, the report said, due to slowing inflation and rising financial pressure from high interest rate credit products. 
 
“Consumers are becoming more prudent with their credit related decisions,” Oakes said.