Photo courtesy: www.tourismkelowna.com Photographer Brian Sprout - Picture BC Photo courtesy: www.tourismkelowna.com Photographer Brian Sprout - Picture BC Photo courtesy: www.tourismkelowna.com Photographer Brian Sprout - Picture BC Photo courtesy: www.tourismkelowna.com Photographer Brian Sprout - Picture BC Photo courtesy: www.tourismkelowna.com Photographer Brian Sprout - Picture BC Photo courtesy: www.tourismkelowna.com Photographer Brian Sprout - Picture BC Photo courtesy: www.tourismkelowna.com Photographer Brian Sprout - Picture BC Photo courtesy: www.tourismkelowna.com Photographer Brian Sprout - Picture BC

For the first time in the history of mankind, there are four generations in the workforce

by Admin 4. February 2016 12:50

There are 35 million Traditionalists, 84 million Baby Boomers, 68 million Generation Xers and 79 million Millennials or Generation Y. There will be no escaping the demographic reality that in the very near future, there will be 84 million retiring Baby Boomers, followed by 68 million Gen Xers to replace them. This will create an employee vacuum in the workforce that only the 79 million Gen Yers can fill, increasing demand and competition for Generation Y employees, in addition to increasing the ongoing challenge of working with a multi-generational workforce.

To learn more about managing this first-in-history challenge, join us for the first installment of our new series, Leader Skills. "Motivating the Millenials" is a late-afternoon session, with presenter Dr. Gustavo Grodnitzky. He will give a power-hour of honest, tried and true advice, providing you with plenty of food for thought and tangible advice you can implement in both your organization and your personal life. Drinks and appies will be served and great talks amongst like-minded leaders will be had. Don’t forget your notebook and pen – you won’t want to miss this! 

Learn More or Register

 

-KCC 

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Come Aboard our Award-Winning Chamber

by Admin 13. January 2016 12:47

We are currently accepting nominations for the 2016-2017 Kelowna Chamber of Commerce Board of Directors!

In a volunteer capacity, members of the Board of Directors of the Kelowna Chamber provide a leadership role in determining the long-term direction and policy decisions of the Chamber. They provide expertise to maintain a high standard of advocacy, services, programs and opportunities delivered by the Kelowna Chamber. Eight Director positions are available for the coming term. Five incumbent Directors are seeking election; additionally there are 3 vacant positions.

2016-2017 Incumbent Directors:

-Nikki Csek, Csek Creative incumbent .5 term

-Martine Hickman, BDC incumbent 1 term

-Jeff Robinson, Rush Ihas Hardwick incumbent 1 term

-Carmen Sparg, Total Interiors incumbent 2 terms

-Shelagh Turner, Canadian Mental Health Association incumbent .5 term

To be eligible to sit on the Board of Directors, members must be able to commit to a two-year term on the Board and must be a member in good standing for at least 30 days prior to the date of the close of nominations. Applicants require the written endorsement of two other Kelowna Chamber members.

If you are interested in serving on the boardplease click here for the application form. Applications must be received at the Kelowna Chamber office by 4:00 pm on Monday, February 8, 2016 at which point nominations will close. If additional applications are received exceeding the number of eligible positions, a ballot will be e-mailed to all voting members following the close of nominations for an electronic vote. For further information, contact Caroline Grover, CEO at 250-469-7356 or email caroline@kelownachamber.org.

-KCC

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Best. Year. Ever.

by Admin 6. January 2016 10:51
Happy New Year! Before we bid farewell to 2015 and look onward and upward to the new year ahead, we must pay our respects; for 2015 was our most successful year, ever.
 
To that we owe thanks to our sponsors, partners, supporters, affiliates, volunteers and most importantly - our members!  Never in our history have we had more members, and more members joining. And, do they ever display a high degree of commitment to business excellence and community support! Every weekly meeting we hear the report of new members and comment on the diversity of businesses joining the Chamber. This helps us to grow and work together to create business solutions.

Another compelling proof that this has been our best year ever? Recognition from our colleagues, across the province, and across the country. Our Chamber networks are absolutely buzzing with questions, solutions, webinars, and the occasional award: notably in our case, BC Chamber of the Year. What an honour! And, the highest nominee count ever for our prestigious Business Excellence Awards, given out in October.

Learning. We’ve learned so much this year, particularly about the opportunities in Canada’s resource-based industries. Our CEO attended two trips to the oil sands, to see the pipeline operations along the coast of BC– and  brought back her knowledge and experiences to share with staff, businesses and residents of Kelowna. To stay up-to-date on our province's resource sectors, follow Resource Works. We support the sector in their mandates of responsible development, job creation, and the maintenance of a clean and healthy environment.

Identifying shortfalls should always be part of any look-back-and-plan-forward. What do we see? The need for speed – getting planned strategies into place faster, so the evolution and solution of what the plan is meant to fix, is done within a timeframe that delivers needed results, sooner. Actually, all the “shortfalls” are really centered around working with limited staff and resources – a familiar theme for so many of our businesses, small, medium and large. And like a lot of shortcomings, many of them are in our heads, based on the perception that we need to be further ahead than we are – regardless if we are in a really strong, productive position. So perhaps learning to accept where we are while pushing forward is the most sensible plan to make right now.

Looking ahead, the Kelowna Chamber is examining its branding. We realize that in this communications saturated world, we require a continuity of message, of look, and mission in everything we do. We’re hyper-critical of our own communications, so we are ensuring that what we look like to our audience, and how we are perceived has a strength and consistency that will reflect our very best face to our internal and external audiences.

As we look into our roster of speakers in our first quarter of 2016, we see MLAs, MPs (one new), our Mayor (new last year), and our Premier presenting our provincial budget. 2016 also brings a trip to Kelowna’s sister city in Japan, in cherry blossom time, which is sold out, and an exciting excursion in the summer to Haida Gwaii.

In the second quarter, we’ll host the province-wide BC Chamber annual convention and reception for attendees right here in Kelowna. If our hosting the national Chamber convention 18 months ago is anything to go by (yes, delegates are still talking about the party we threw for them), the provincial celebration will be another landmark.

A strong membership; a strong board; a supportive and knowledgeable staff – if the term ‘count your blessings’ is appropriate at this time of year, then, yes, we are doing that. We are now facing 2016 with excitement, learning, involvement, and advocacy. Here's to shared success, inspiration and a prosperous 2016.
 
-KCC 

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Separating Myth from Fact in the TPP Debate

by Admin 30. December 2015 13:56

The TPP is getting a lot of media coverage as the new government tries to decide whether this ground-breaking trade agreement is in Canada’s best interest. The Canadian Chamber of Commerce believes that it is, but any agreement of this scope has its critics and opponents. What are their concerns? Are they valid? Rather than make you comb through thousands of pages of text with the help of a lawyer, we tackle a few of the biggest myths right here.

Tell us if you find any others and we’ll add them to the list.

#1 The intellectual property rules in the TPP will cost Canada billions of dollars

False. Some say the TPP will raise drug prices in Canada and make innovators pay more royalties and licensing fees to foreign companies. But our current laws protecting patents, copyright, and trademarks are strong enough to meet the TPP’s requirements, often by a high margin. The only notable exception is on length of copyright for authors, which Canada will now extend from 50 to 70 years. Instead, the TPP is about ensuring that other countries extend similar protections to Canadian creators and innovators that we already do to theirs.

#2 Foreign investors will be able to sue Canada for environmental and health regulations

Not if they’re done properly. In fact, the TPP reaffirms the right of governments to take measures to protect the environment, health, public safety and other important policy objectives. What it says is that governments need to treat foreign investors in a fair and equitable manner. So if a regulation or law applies to foreign but not domestic companies, destroys the value of a legitimate investment, or is introduced without proper consultation, then the affected company may be able to seek compensation through international arbitration. Canada already has agreements like this with the U.S., China and dozens of other countries.

#3 The TPP will hurt Canada’s auto industry

It doesn’t help. Canada will eliminate a 6.1% import tax levied on vehicles from Japan over five years and make it easier for companies to source parts and inputs from outside North America. This could undermine the business case for investing in Canada, a case that has already become weaker because of tax incentives and lower labour and energy costs in the Southern U.S. and Mexico. On the other hand, not joining the TPP would sever the industry from regional supply chains, and do little to address the underlying problems. The more important question is about the policies and programs we need to help Canadian companies and workers capitalize on proven successes in areas like luxury models and new automotive technologies.

#4 Canadians can’t compete with countries like Vietnam and Malaysia that have lower labour and environmental standards

We don’t have to. Companies make investment and production decisions based on how much a given dollar spent produces in output. Workers in some countries may have much lower wages, but still be more expensive when you factor in the fact that they are less productive. As long as Canada focuses on things like skills, infrastructure, and new technologies, our workforce will remain competitive. Adding to that, the TPP is the first trade agreement Canada has ever signed with fullyenforceable rules requiring countries to protect worker rights and the environment. If a country is found to not be respecting these commitments, Canada and others can put sanctions on their exports. Civil society groups like the World Wildlife Fund have praised this aspect of the agreement.

#5 - The TPP will bring a flood of foreign workers to Canada No. It is true that the TPP allows companies to bring to Canada certain business people, professionals, technicians and tradespeople without having to complete a formal labour market impact assessment. However, they must have a prearranged contract with the company and can only work for a limited duration. Moreover, they must meet all local certification and training requirements. It is up to our professional associations and other certifying bodies to determine which credentials are deemed equivalent. Canada has secured similar access to other TPP markets, which are very important for Canadian companies operating overseas in the engineering, mining, oil and gas and financial services industries.

 

If you have any further questions, please contact Cam Vidler, cvidler@chamber.ca 1-800-661-2930, x230.

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How to Help the Middle Class

by Admin 22. December 2015 14:03

Ho-ho-ho! That jolly sound you’re hearing is Prime Minister Trudeau coming down the chimney with tax cuts for the middle class! Last Thursday, the government passed the ways and means motion so that the cuts come into effect on January 1.

How much gravy are we talking about? The tax rate for the second income bracket (between $45,282 and $90,563) will drop from 22% to 20.5%.This works out to a maximum savings of $680 for those with income at the top of the range (an extra $26 per paycheque). Will it make much difference?

The government argued in favour of these tax cuts because “supporting the middle class is the wise thing to do.” Indeed, we agree the best boost to business is a growing, spending middle class, which helps everyone from the tiny restaurants to the big banks.

There is also hope that tax cuts will stimulate the economy. Here, we are more doubtful. Canadians are drowning in debt—now at a record high of 164% of disposable income. The CD Howe institute reports that 11% of Canadian households have mortgage debt that is more than 500% of their disposable income and will experience financial distress when interest rates rise. This same study shows how vulnerable we are: 20% of households have less than $5,000 available to deal with a job loss or an emergency, and 10% of households have less than $1,500.

Consumer confidence is soft in many parts of Canada. This is translating into a disappointing Christmas for retailers. Sales growth is weak, and Canadians are massively searching for discounts. One retail analyst describes it as a “drawn out, margin-squeezing, profitshaking competitive battle.” Even in the prime Christmas season, retailers have no choice but to offer steep discounts and generous sales to pull in us stingy Canucks.

The point is that the stimulative effects of the middle class tax cut will be modest at best. Most Canadians will do the annoyingly responsible thing and pay down debt as opposed to spending their new-found wealth. As a consequence, consumer behaviour won’t change and economic stimulus will be minimal.

A better approach to helping the middle class is a strategy to increase wages by boosting productivity. Family incomes have been mostly stagnant over the past 15 years, a phenomenon that has affected rich countries all over the world. Historically, Canadian wages performed better than global peers because of high-paying jobs in the energy sector, but these will be fewer in the years ahead. So how do we raise our productivity and our middle class wages?

Firstly, increased investment in skills and education that is aligned with the needs of employers will pull more people into higher paying jobs. Secondly, a booming business environment with a vibrant venture capital regime will create more new companies and new start-ups. Thirdly, Canada must create new international opportunities by ratifying the trade deal with Europe and the Trans-Pacific Partnership while investing in affected industries. Finally, new investments and incentives for innovation will make sure the technologies of tomorrow are made right here in Canada. Making Canada more competitive will benefit the middle class.

We wish Mr. Trudeau a merry Christmas and we appreciate the tax cut, but there is still a lot of work to do in the new year.

-Hendrik Brakel, CCC 

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Climate Change & Canadian Business Pt 2

by Admin 14. December 2015 13:51

The Canadian Chamber participated in the COP21 Climate Conference, which ran from November 30 to December 11. Canadian Chamber staff produced periodic briefing notes to keep our membership apprised of the proceedings and the potential impact for Canadian business. 

The World Agrees at Last

On Saturday, history was made as the world adopted the first-ever universal agreement on climate change. The Paris Agreement differs from all previous COP agreements in the sense that it provides a framework for a bottom-up approach to fighting climate change, whereby each country submits its own voluntary plan of action (its INDC). Previous agreements had attempted to implement top-down approaches (e.g., emissions reductions targets by certain years) that placed a heavy burden on developed countries while placing relatively little responsibility on developing nations, as seen in the Kyoto Protocol. The Paris Agreement is legally binding in the sense that nations are required to report on their progress in meeting their pledges every five years. However, nations are not obliged to meet their targets, and the punishment for not reporting is essentially limited to reputational damage.

As the parties sat down in the final plenary to adopt the agreement, there was a last-minute point of contention regarding Article 4.4. The U.S. insisted that the word “shall” be replaced by “should” in the line now stating “Developed country Parties should continue taking the lead by undertaking economy-wide absolute emission reduction targets.” The article then states “Developing country Parties should continue enhancing their mitigations efforts...” This change of wording is more than a minor edit and speaks to the idea of differentiation, which has been at the heart of these negotiations—the division in responsibility between developed and developing nations in tackling climate change and reducing emissions. Underpinning this idea is the right for developing countries to power their development, if need be, by using the same fossil fuels that propelled developed countries to their current high standards of living. The chatter in the halls was that the U.S. delegation wanted to be able to tell its domestic audience that the U.S. and China are held to the same standards in the agreement, since the latter is still considered a ‘developing’ nation.

 

Canada Represents

“Canada is back” was the slogan uttered by Prime Minister Trudeau during his speech at the conference, and the international community is generally pleased about this. Also keeping true to his promise to be back, Arnold Schwarzenegger made an appearance at COP last week to encourage sub-national governments to take an active lead in fighting climate change.

Despite Canada bolstering its environmental agenda since the federal election, Climate Action Network International presented Canada with two fossil-of-the-day awards, along with other developed nations, for preventing increasing ambition in the text and for supporting the exclusion of compensation and liability in the loss and damage section (referring to financial and other assistance to nations, mainly vulnerable states such as small islands, which are damaged due to the impacts of climate change).

Almost all the premiers were active at COP, in addition to opposition leaders and provincial ministers. But behind the glitz and glamour, Canada’s bureaucrats worked tirelessly from morning to night negotiating the gritty details of the text and deserve to be commended for their tireless efforts.
 
The Canadian Chamber Active on the Ground

The Chairs of our Natural Resources and Environment Committee and our International Strategic Advisory Committee were on the ground last week, following negotiations. We were one of the few business and industry NGOs (BINGOs) at COP, which in the final days of negotiations met with Minister Ségolène Royal, the French Minister of Ecology, Sustainable Development and Energy and the chief of the French delegation, and Special Envoy Minister Manuel Pulgar-Vidal, in order to convey the business community’s thoughts on the draft text. The group expressed its desire to see the following in the final agreement: 1) explicit reference to the private sector as a key stakeholder; and 2) reference to international emissions trading and carbon pricing.

Where the Text Landed

  • Ambition - Parties have agreed to keep the global temperature increase to “well below 2 °C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5 °C.”Canada was one of the first developed countries to support moving toward the 1.5 °C target. However, countries’ submitted commitments (the INDCs) are estimated at best to keep the temperature increase to 2.7 °C. Therefore, to meet the 2 °C target, countries will need to either exceed their current commitments or increase them in the coming years. Also of note, the agreement indicates that in the second half of the century, man-made emissions should be reduced to a level that forests and oceans can absorb.
  • Finance – Developed countries will raise $100 billion a year by 2020, through public and private means, to assist developing countries. This figure will be considered a floor level from 2025 onward. Only part of this sum will pass through the Green Climate Fund, which was set up by the U.N. in 2010 to assist with climate finance.
  • Review mechanism – Each country’s progress in meeting its targets will be reviewed every 5 years, starting in 2023, using a common accounting framework. 
  • Loss and damage – Although referenced in the agreement, there is no liability for financial compensation to be paid to developing nations that suffer damage from the adverse effects of climate change, such as extreme weather events. 
  • The role of business – Business was not explicitly referenced in the preamble of the agreement. However, the preamble does refer to “various actors,” which can be interpreted to include business. The private sector is specifically referenced in parts of the decision text and in article 6 of the agreement, which deals with markets. In article 6, international emissions trading is referenced through the phrase “internationally transferred mitigation outcomes.”

What are the Implications for Canadian Business?
One of the main purposes of the Paris Agreement was to send a strong signal to markets that the world is shifting away from fossil fuels to renewable energy and, thereby, encourage financial flows to move more in that direction. To some extent, the agreement accomplishes this goal. With a target of $100 billion a year by 2020 to assist developing nations (the OECD calculates over $60 billion flowed in 2014), there will be opportunities for Canadian business in the clean technology field to access this money for projects in developing countries.

It is important to recognize that despite the increasing appetite for renewable energy, the fossil fuel industry will continue to form a critical component of the energy mix moving forward. As the federal government offers ongoing support to boost renewable industries, so too will it be necessary to work with fossil fuel industries to reduce their carbon footprint through technologies such as carbon capture and storage.

What Now?
The Paris Agreement will come into effect once it is ratified by a least 55 countries representing more than 55% of global GHG emissions. It should be noted that any party can withdraw from the agreement following a year after giving notice, highlighting its voluntary nature.

On the domestic front, Prime Minister Trudeau has promised to convene a first ministers meeting within 90 days to identify national emissions reduction targets and develop a pan-Canadian framework for addressing climate change. Minister McKenna has indicated that the target Canada submitted at Paris (a 30% reduction in GHGs from 2005 levels by 2030) would be a floor from which to work from. Mr. Trudeau indicated that provinces and territories would be able to develop their own plans and systems for meeting this target, but many questions remain.

Other key pieces on the horizon include federal intentions to: review the environmental assessment process, develop a North American clean energy and environmental agreement with the U.S. and Mexico and develop a Canadian energy strategy. We will keep you informed as these issues progress.
  

Please contact Philip Tomlinson (ptomlinson@chamber.ca) should you have any comments or questions on this brief.

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Climate Change and Canadian Business

by Admin 9. December 2015 08:04

The Canadian Chamber is participating in the COP21 Climate Conference, which is running from November 30 to December 11. Canadian Chamber staff will be producing periodic briefing notes to keep our membership apprised of the proceedings and the potential impact for Canadian business. Formore information, click here.

COP21 From week 1 to 2

Week one of COP is typically regarded as the less interesting one, but that was certainly not the case this year. It kicked off with speeches from global leaders, was packed with informative high-level side events and culminated with French President Holland and UN Secretary General Bank Ki Moon concluding a business-focused Action Day on Saturday.

Negotiations are certainly more technical in the first week, but the side events surrounding the negotiations—discussions by business, NGO and political leaders on all aspects related to climate, from finance to CCS technologies—are where many critical conversations happen to inform climate-related work moving forward. In fact, there is so much going on around the margins of COP, including various business events and forums around town, that the negotiations appear to be the catalyst for most of the critical announcements on climate change.

Enter the ministers

A key milestone occurred on Saturday as the draft text was passed from the working group of negotiators to the French presidency, which will work with ministers this week to try and reach a final agreement by tomorrow. This timeframe would allow for a legal review of the text before the planned adoption on Friday. However, the conference site (Le Bourget) is booked until Monday morning, and it would not be unlikely if negotiations went longer than planned.

In a briefing with a senior White House official, we were told there were concerns that negotiations could get derailed in week one, as negotiators haggled to include preferred options in the text on key issues. It was also mentioned that most of the important developments in climate finance are already occurring in the private sector, outside of the COP discussion on reaching $100 billion in financing by 2020, for which the Green Climate Fund would play a central role. In other words, the private sector and civil society are moving ahead of COP on the climate finance front.

The general feeling is that the ministers have arrived with strong direction to conclude an agreement, as supported by the political will voiced by national leaders at the opening of the conference. The repeated phrase uttered around Le Bourget is that “the world is finally at a tipping point” and that this agreement will succeed were previous ones had failed. But many questions remain as to where the final text will land and how ambitious it will be.

Tackling the cross-cutting issues

The French presidency announced four informal working groups, facilitated by ministers, to work on cross-cutting issues:

 

  • Support – this group is handling the means of implementation on finance, technology and capacity building.

  • Differentiation – This is perhaps the most fundamental issue at COP21—to what extent responsibilities are divided between the developed and developing world? Previous climate change agreements have been based on a binary division, placing a heavy burden on developed countries. Not surprisingly, the developed countries want to spread responsibility more while the developing countries are pushing back and want guarantees of financial and technological assistance. The working group on this topic is tackling issues around mitigation, finance and transparency (referring to a system for monitoring progress on commitments outlined in countries’ submitted plans—the INDCs). Transparency is linked to plans for a review mechanism to assess progress. At present, it seems negotiations are leaning toward a five-year review mechanism following 2020 where countries could voluntarily raise their targets.

  • Ambition – This group is charged with defining a long-term objective to the agreement. The main issue here is whether the text calls for limiting the global temperature increase to two degrees Celsius. Many groups are calling for a 1.5-degree goal, and a clever hand sign for supporters has been making waves around the halls. The text started the week with ‘two degrees’ or ‘well below two degrees’ bracketed as options. However, the current package of INDCs, if implemented, is estimated to result in a temperature increase of 2.7 degrees or more. Hence, achieving a 1.5-degree target would require much more significant emissions reductions plans from nations. Questions remain as to whether other long-term goals should be included, such as zero global emissions, decarbonization (reducing or eliminating the burning of fossil fuels), carbon neutrality (balancing the amount of carbon released with activities that either capture and store carbon emissions or those that support clean and renewable technologies) or a global emissions peak or reduction target by a specific year.

  • Pre 2020 – This group deals with obligations before 2020, as outlined in previous COP agreements, and the possibility of accelerating implementation and efforts on adaptation. In addition to these main working groups, COP21 President Fabius has since announced groups on adaptation, loss and damage, cooperative mechanisms (led by Canada’s Minister McKenna), forests, response mechanisms and legal issues.

 

What's Canada pushing for?

Canadian negotiators have taken a strong stance on including a reference to non-state stakeholders, including indigenous peoples, into the text of the agreement. Depending on whether, where and how such language is included in the final text, there could be implications for domestic policy and natural resource development. In addition, the negotiators indicated they would be supportive of reviewing the INDCs prior to 2020 to ratchet up their ambition, although the EU was pushing for reviews to commence post-2020.

At the daily briefings with the delegation, there is a general sense of support amongst the NGO and Aboriginal communities for the team, with one Aboriginal leader even expressing thanks to the government. However, the business community and the Canadian Chamber are also present at Le Bourget and are taking opportunities to inform Minister McKenna and her team of industry’s position.

In yesterday’s briefing, Canada indicated that it would support a more ambitious target than a two-degree limit in temperature warming and has moved toward supporting the 1.5-degree target. It was also noted that Canada will contribute $150 million to the Africa Renewable Energy Fund.

The week ahead

This week is when the fireworks happen in the negotiations. Ministers will add, remove, modify and compromise on text and options to reach the final agreement. Basically, everything in the text is still on the table, although many of the less controversial clauses were essentially dealt with last week. Now is the time to tackle where to land on differentiation, loss-and-damage (or payment to nations harmed by climate change), finance, mitigation, the reporting/review mechanism, long-term goals and ambition—in other words, there is still much work ahead in the final days.

 

Please contact Katrina Marsh (kmarsh@chamber.ca) should you have any comments or questions on this brief.

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U.S. Interest Rates about to Rise: What Does It Mean for Canada?

by Admin 2. December 2015 13:57

After seven long years with interest rates at zero, the U.S. Federal Reserve will almost certainly raise rates by 0.25% at its next meeting on December 15.

It has been warning about a coming rate hike since 2013. In the last Fed statement, it changed the wording it has used for years about “In determining how long to maintain this target range...” to “In determining whether to raise the target range at the next meeting...” In the obscure language of Fedspeak, this is like waving your arms and hollering. The signal is intended to warn investors and avoid big market gyrations caused by a surprise.

Except, it will still be a surprise and markets will be shocked. Economists have been warning for five years that the economy would recover and rate hikes would be right around the corner. Each time, the date has been pushed back. Like the boy who cried wolf, markets don’t believe the warnings anymore. Expect big swings in stock markets and emerging market currencies.

What does it mean for business? Rates will rise because the U.S. economy is doing so well that the Fed has little choice but to act. U.S. GDP growth should come in around 2.8% this year and 3.3% in 2016; unemployment is down to 5% and wages are picking up. Since there is usually a 12-18 month lag before a change in interest rates starts to impact the real economy, the Fed has to act now if it wants to stop inflation from overheating a year from now.

A stronger U.S. economy is good for the global economy and it’s definitely good for Canadian business. Canada’s manufactured exports are booming. Auto exports are up 14% this year; communications technology rose 13% and aerospace sales have soared a staggering 29%. This growth is expected to continue next year: Export Development Canada is forecasting a healthy 7% rise in Canadian exports in 2016.

For the Canadian dollar, the Fed’s move means more downward pressure. Investors expect rate hikes to continue in the U.S. in 2016. This is in stark contrast to Canada, which has only just emerged from recession. Canadian inflation is low; consumers aren’t spending and our real estate market is showing worrying signs of overvaluation. There is no need to raise rates any time soon.

All this means that investors will be exiting Canadian securities in favour of U.S. bonds where returns are rising.The markets are betting that the Canadian dollar will fall further. The graph below shows the surge in futures and options shorting the loonie (betting it will decline) on the Chicago Mercantile Exchange.

  

 

The Canadian Chamber is expecting the loonie to head lower next year, averaging 73 cents in 2016. Good news for many exporters,but bad news if you’re planning a trip to the U.S.

 

-Hendrik Brakel, CCC 

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What exactly is Venture Capital & where does it hide?

by Admin 20. November 2015 09:34

Venture Capital is a critical part of the Canadian economy because it provides the funding that enables innovative, early-stage technology companies to survive and grow.

These fast growing firms represent just 5 per cent of the companies in Canada but they have a huge impact on our ability to innovate and on our prosperity, accounting for 45 per cent of new job creation.

Designing policies to support and stimulate entrepreneurial ventures is a challenge; there is no single sector they occupy, nor do they have common business strategies. But one problem is common and acute among these unusual enterprises—almost all have difficulty finding the capital they need to realize their business plans.

Improving and growing the venture capital industry is one strategy government can pursue that could significantly benefit most fast-growing entrepreneurial firms. Such a strategy has the potential to transform Canada—to make it more innovative—by creating new businesses, technologies and jobs. It is particularly timely to consider such a strategy.

The Canadian economy is challenged by headwinds that will reduce the rate of GDP growth and job creation in the coming years. The natural resources and commodities that were so central to business investment could be facing many years of price weakness. If Canada’s traditional sources of growth are ebbing, then it needs to increase productivity and innovation in order to expand its economy into new services and technologies.

More importantly, a study by Deloitte shows that many Canadian companies are not ready for “disruptive innovation”—the huge leaps of technology that will put our traditional businesses at risk. Canada must accelerate its own innovation and develop new technologies here at home to avoid getting left behind. What can government do? Canada has already invested massively in R&D. In fact, public spending on research and development, at 0.81 per cent of GDP places Canada ahead of countries like the U.S., the U.K. and Japan (but still behind countries like Germany, Sweden and Finland.) The trouble is that Canada lags on the commercialization of products. How do we get our great ideas developed and into markets? By helping entrepreneurs to build new innovative companies.

A critical ingredient is having a vibrant, thriving venture capital industry that can provide the investment and expertise to turn ideas into innovation.

Venture capital is a form of equity financing for innovation-based early-stage technology firms. These types of start-ups are creating brand new products, so the growth potential is enormous, but the risk of failure is also very high. That is why traditional forms of funding, such as bank loans and asset-based lending, are not appropriate. Firstly, these companies have little, if any, of the tangible assets that are normally used as security in conventional financing. Most of their assets are intangible (software, R&D results, intellectual property and people). Lenders find it difficult to collateralize debt with products that have not yet demonstrated any market success. There is a high level of uncertainty linked to R&D activities and the development of unproven new technologies.

Many companies are seeking to create new needs and new products in markets where it is difficult to foresee what the demand might be. Particularly with technology companies, new solutions and business models emerge all the time and many of these might not work. There is also a high level of information asymmetry between the entrepreneur and the investor for technology start-ups. It is not enough to review the financial statements and business plan. In brand new companies where there are no revenues or profits, the investor needs a detailed understanding of what is going on inside the company to judge whether it is headed for success. Again this illustrates why conventional lenders such as chartered banks, have little incentive to target these clients.

Finally, it often takes a long time, up to seven years or more, to develop, commercialize, market and start generating revenues—the stage where companies can launch an initial public offering (IPO) or are acquired. Venture capital investors do not lend money. Instead, they buy shares of a firm, which gives them products.

The Canadian Chamber of Commerce offers a variety of proposals, supported by the Kelowna Chamber of Commerce, that we will take to government to help transform the venture capital industry in Canada.

- KCC

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The Red Wave: What it Means for Canadian Business

by Admin 9. November 2015 12:58

Canadians have spoken decisively and given the Liberals a majority that no one thought possible. (Why do we even read polls anymore? Maybe we’d be better off scanning the stars.)

Here’s why the pollsters got it wrong. The number of people who voted Liberal shot up a staggering 149%, from 2.8 million in 2011 to 6.9 million this past Election Day. Meanwhile, the Conservative vote didn’t budge, from 5.7 million voters last time to 5.6 million, as the base stayed loyal. Where did all these votes come from? Strategic voting played a small part in Mr. Trudeau’s triumph, as the Liberal surge pulled just under a million votes from the NDP. But mostly, the Libs benefited from a massive increase in people coming to the polls as 69% of Canadians voted, up from 58%, an additional three million newbies. Mr. Trudeau changed the landscape and will enjoy a reasonable honeymoon owing to the size of his victory. But what does it all mean for Canadian business?

The good news is a stable, substantial majority gives much more predicatiblity to business. It’s certainly far better than a shaky Liberal minority being pulled to the left by the NDP, perhaps forced into higher corporate taxes or against the TPP or other “barbaric economic practices.”

Infrastructure will also get a big boost. The Liberals have promised to set aside a portion of their $60 billion plan for roads, ports and gateways and they have committed to improving Canada-U.S. border crossings and cargo inspection. Studies show that every $1 of infrastructure spending adds $1.70 to final GDP. Thus, the added spending could boost Canadian economic growth by almost 1%.

More good news is the renewed focus on trade. The Liberals have told us they’ll continue to pursue free trade agreements. We expect them to implement Canada’s deal with the Europe Union as well as the recently concluded Trans-Pacific Partnership. Trade negotiations with India are currently stalled, but we hope they will also be a priority.

On taxes, the Canadian Chamber was delighted when Mr. Trudeau so eloquently explained that corporate taxes should not be increased (a major drag on investment and competitiveness in a globalized world.) The area the Canadian Chamber is watching with concern is payroll taxes. Firstly, the Liberal government will seek to expand the Canada Pension Plan, a position we support, but it may be politically tempting to push costs onto employers. CPP contributions act as a tax that makes it more expensive to hire staff, which can depress employment. The other major payroll tax, employment insurance, has been pulling in far more money than it was paying out for many years and so it was set to decline from 1.88% to 1.47% in 2017. The Liberals have promised to tax an extra $500 million of revenues from keeping the EI rate at 1.65% in order to pay for additional training. The Canadian Chamber has for a long time been vehemently opposed to using EI premiums for purposes other than funding the insurance it provides.

As the largest business association in Canada, we see a lot of positives in the new government’s platform and we share in the country’s enthusiasm. With new ministers, new staff and a new leadership style from the top, there is an unprecedented opportunity to work with the government and have our voices heard.

 

-Hendrik Brakel, CCC 

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