MONTREAL — The Conference Board of Canada says U.S. softwood lumber duties will cut $700 million from Canadian exports over two years and result in the reduction of 2,200 jobs.

The board released a report Wednesday that says curtailed exports should lower the industry’s pre-tax profit to $1.1 billion in 2018, down from $1.8 billion last year and $1.4 billion this year, despite growing revenues.

The U.S. government recently imposed preliminary countervailing duties ranging between three and 24 per cent on Canadian softwood lumber exports.

Anti-dumping duties to be announced next month are expected to raise tariffs to about 30 per cent, half of which should be absorbed by Canadian producers.

Michael Burt, director of industrial trends for the board, says that without tariffs, Canadian wood sector employment would grow by 1,000 to reach 93,300 next year, but with the tariffs employment is projected to fall to 91,100.

The board’s report says duties paid at current export levels will cost Canadian producers $1.7 billion a year until a softwood settlement is reached.

The gloomy forecast comes after the Canada industry last year enjoyed its strongest performance since the U.S. housing collapse in 2006, as exports grew 13.5 per cent to reach $13.2 billion.

The experts promised us a “barnburner” of a first quarter for Canada’s economy, and the economy delivered.

Canada’s GDP grew at a 3.7-per-cent pace in the first three months of 2017, more than tripling the U.S.’s 1.2-per-cent pace, StatsCan reported on Wednesday.

“Wasn’t it America that was supposed to be made great again? And yet boring old Canada was a first quarter pace of growth that more than tripled what was seen for the U.S. ,” commented TD Bank senior economist Brian DePratto.

DePratto noted that, with this quarter’s results, Canada has seen the fastest pace of economic expansion since 2010, when the country was recovering from the global financial crisis.

Household spending was one of the largest contributors to growth this quarter, increasing at a 4.3-per-cent pace. Auto sales were particularly strong.

But, as CIBC economist Avery Shenfeld noted, consumers’ savings dropped at the same time, suggesting Canadians spent their savings and went further into debt to consume this quarter — a reality that can’t continue forever.

Canada’s housing boom, which seems to be on shaky ground lately, was also a major contributor. Business investment in housing grew at a 3.7-per-cent pace, more than double the 1.5-per-cent rate in the last quarter of 2016.

If there was bad news to be found in the report, it was in exports, which slid 0.1 per cent on the back of a 0.5-per-cent decline in service exports.

However, most analysts expect the current rapid pace of economic growth to slow in the coming quarters.

A new forecast from ratings agency Moody’s predicts Canada’s growth for all of 2017 will come in at around 2.2 per cent, behind the U.S. and second-best among G7 countries.

The “modest pace” of global economic expansion “should continue barring a negative move toward increased protectionism in the U.S.,” Moody’s said.

 

Some of Ontario’s business leaders were suffering from sticker shock on Tuesday, following the provincial government’s announcement it will raise the minimum wage to $15 per hour by 2019.

Groups representing businesses across the province wasted no time attacking Premier Kathleen Wynne’s newly announced plan.

The move “betrays the trust of Ontario businesses,” lobby group Restaurants Canadasaid in a statement.

The hike represents a nearly 32-per-cent increase to the minimum wage in the space of 18 months, the group said, costing the average Ontario restaurant an additional $47,000 a year. That’s enough to more than wipe out the average profit margin of $23,450, the group said.

kathleen wynne
Ontario Premier Kathleen Wynne has announced plans to hike the province’s minimum wage to $15 per hour.

“Today’s announcement is devastating to the thousands of small business owners who hire and train high school students, newcomers to Ontario and others looking for a first start in the labour market,” Restaurants Canada’s vice president for Ontario James Rilett said.

“There is no question this will lead to fewer jobs, fewer hours, and fewer employers.”

Rilett predicted the changes would impact young people negatively.

“We’re going to see more young people living in their parents’ basements longer.”

restaurant
Restaurants Canada predicts Ontario’s $15 minimum wage will mean fewer jobs at restaurants, and fewer restaurants overall.

In a statement issued Tuesday, The Canadian Federation of Independent Business (CFIB) argued the government of Premier Kathleen Wynne sideswiped businesses with the announcement.

“This government took the politics out of the process by indexing minimum wage increases to the rate of inflation in 2014,” said Julie Kwiecinski, director of Ontario provincial affairs at the CFIB, which represents 109,000 small and medium sized businesses in Canada.

“Now they’ve done a complete 180 and are pushing this through on the backs of employers, with no consultation whatsoever, or any economic impact analysis.”

In its announcement Tuesday, Premier Kathleen Wynne’s government stressed the need to address precarious work in Ontario, which has the highest rate of minimum-wage workers of any Canadian province, and the hike to $15 will mean about a quarter of the province’s workers will get a raise.

Ontario will see its minimum wage rise to $14 per hour on Jan. 1, 2018, followed by an increase to $15 on Jan. 1, 2019.

Additionally, the governing Liberals will also mandate equal pay for part-time, temporary, casual or seasonal workers as for full-time employees. All employees will be given a minimum of two days’ emergency leave per year, and minimum vacation time will rise to three weeks from two, for those employed at a company for five years or more.

“The economy has changed. Work has changed. It’s time our laws and protections for workers changed too,” Wynne said in a statement.

“Too many families are struggling to get by on part-time or contract work and unstable employment. And no one working full time in Ontario should live in poverty. With these changes, every worker in Ontario will be treated fairly, paid a living wage and have the opportunities they deserve.”

Once implemented, the new policy will make Ontario the second province to hike its minimum wage to $15, after Alberta, which will see its minimum wage rise to $15 in October, 2018.