OTTAWA — Bankruptcies are up in Canada, the head of the Bank of Canada said this week, and he expects they’ll rise even more as the central bank continues to hike interest rates.
Governor Stephen Poloz said he hears just how difficult higher borrowing costs can be straight from the people feeling the pain.
“We’re acutely aware that our decisions affect everybody — they affect the financial well-being of everybody and many Canadians are carrying a high debtload,” Poloz told reporters Wednesday after holding the bank’s key interest rate at 1.75 per cent. “I don’t have to work hard to remind myself of that. I get daily correspondence from people explaining to me what their situation is.”
According to the bank, Poloz personally responds to emails and letters addressed to him from the public. Last year, for instance, about 200 people reached out to him directly. The most common themes of the messages are the state of the Canadian economy, inflation and interest rates, a bank spokeswoman said. If they aren’t abusive and they include return addresses, he answers them.
Poloz’s decision to leave rates unchanged this week is likely just a pause on the bank’s rate-hiking path as the country deals with what he described as a temporary economic setback from a sharp decline in oil prices.
The central bank will continue raising rates once Canada gets past the soft patch and the economy builds new momentum, he said. A stronger economy has encouraged Poloz to raise the rate target five times since mid-2017 to keep inflation from eventually running too hot.
But in recent months, the number of Canadians who have run into financial trouble has edged up. Insolvencies have seen a slight increase after spending nearly a decade at very low levels. Following a long period of cheap borrowing, Canadians have amassed record piles of debt.
“On bankruptcy statistics, I understand that they have picked up,” Poloz said when asked about the recent figures. “My understanding of the data points is that they’re picked up from an extraordinarily low level. So, there is, in any point in time, always a certain number of unfortunate folks who may lose their job or what have you and go through this process.
“And it wouldn’t be surprising to see things pick up a little bit when interest rates have risen.”
Poloz added the bank has deliberately been very careful and very gradual in its hiking, while reminding people the low-rate era wouldn’t last.
The Bank of Canada has said it will likely keep pushing its trend-setting rate higher until it hits the so-called “neutral” level between 2.5 and 3.5 per cent. That would mean between three and seven more quarter-point hikes.
Earlier in the week, the latest federal figures showed that consumer insolvencies filed under the Bankruptcy and Insolvency Act rose 5.1 per cent in November compared to 12 months earlier.
Oil-producing provinces saw some of the biggest increases — they’re the parts of the country hit hardest by the low price of the commodity. Alberta led the way with 20.9 per cent more insolvencies compared to a year earlier.
Insolvency numbers are made up of both bankruptcies and “proposals,” which the law describes as offers to creditors to settle debts under conditions other than existing terms.
In the 12 months leading up to November, Canada saw a 12.1-per-cent increase in the number of proposals and a 3.6-per-cent decrease in bankruptcies.
“We’ve started to see a trend that’s going up and that, coupled with high debt ratios, obviously are putting a strain on household spending,” said BMO economic analyst Priscilla Thiagamoorthy.
Benjamin Tal, CIBC Capital Markets’ deputy chief economist, said a very modest increase in insolvencies started in early 2018.
“If you ask me what’s the direction for the next year? Clearly, it’s up,” Tal said. “But it’s not going to be a terrible-type situation. It will be kind of just an adjustment to higher interest rates.”
After climbing during the 2008-09 recession, insolvency numbers slid back down and have stayed low for nearly a decade.
Tal said a bigger concern is that higher borrowing costs could force people to spend more money on financing their debt rather than on consumption. A drop in consumption can affect the economy as a whole and eventually lead to lost jobs, he added.
Unemployment is always the No. 1 reason for delinquencies, he said.
Tal said he used to produce a regular bankruptcy report after the recession, but he eventually stopped because the numbers were flat for many years.
“There was nothing to write about — it was boring,” he said. “Maybe now I have to renew it.”
Andy Blatchford, The Canadian Press
151st Cowichan Exhibition includes new category: best home-grown pot
VICTORIA — One of Canada’s oldest fall fairs is putting a new twist on its annual showcase of local livestock, produce and fruit by adding a new category for best home-grown marijuana.
The Cowichan Exhibition in Duncan, B.C., which dates back to 1868, has created a best cannabis category to embrace legalization and celebrate local pot growers, said exhibition vice-president Bud James.
The fair starts Friday and the cannabis entries will be on display in the main hall at the Cowichan Exhibition Grounds along with the region’s top vegetables, fruits and baked goods. First prize is $5, second is $3 and third place gets a ribbon.
“We just decided this year, because it’s an agricultural product, and it’s been grown in the valley for years, and now that it’s finally legally grown, we would allow people to win a ribbon for the best,” said James.
He said fair officials believe the Cowichan cannabis category is the first of its kind in Canada.
An official at the Canadian Association of Fairs and Exhibitions, a non-profit organization representing rural and urban fairs, said she had not heard of any other cannabis judging contests prior to the Cowichan Exhibition, but couldn’t confirm it was the first.
A fall fair in Grand Forks, B.C., is also judging local cannabis, but the event starts Saturday, one day after Cowichan’s fair. Those who enter the competition in Grand Forks can compete for best indoor- and outdoor-grown cannabis.
James said fair organizers contacted the local council and RCMP prior to adding the cannabis category. The mayor and council did not oppose the contest and the RCMP referred organizers to B.C.’s Liquor and Cannabis Regulation Branch, the agency monitoring retail sales of non-medical cannabis, he said.
Organizers decided to go ahead with the event after its plans were not rejected, James said.
“Our interpretation of the rules are you can’t make it attractive to people under 19 years and we are not making it attractive,” he said.
James said the cannabis entries will be placed in a glass display case and the individual entries will be sealed in clear zip lock plastic bags.
“It’s being judged to the same standard of judging garden and field produce,” he said. “It’s done by uniformity. You want all three buds to be the same size, same shape, same colour. It’s also the dryness, texture and smell. It’s exactly the same way you would judge apples or carrots or hay bales. It’s all done the same way.”
James said the contest doesn’t involve sampling the product.
Bree Tweet, the manager of a medical cannabis dispensary in nearby Ladysmith, will judge the marijuana entries, said James.
The exhibition received 18 cannabis entries and James said the contest created a buzz at the fair.
“The enthusiasm of the entrants, the people bringing their entry forms, they are so enthusiastic it’s unbelievable,” he said. “They are so thrilled that it’s happening, that we’re doing it because they’ve been waiting for years for legalization and now, they finally got it and now they have a chance to show what they can do.”
James, who has entered his prized Dahlia flowers at past fairs, said the addition of the cannabis category has exceeded expectations with the 18 entries.
Dirk Meissner, The Canadian Press
School board defends book pictured on principal’s desk after online uproar
A Toronto-area Catholic school board says an online firestorm that erupted after a book on how to teach black students was photographed on a principal’s desk stems from a misunderstanding over the book’s contents.
The Dufferin-Peel Catholic District School Board says the book, titled “The Guide for White Women Who Teach Black Boys,” has a provocative title but is actually a helpful resource on tackling racial and cultural oppression in education.
Michelle Coutinho, the board’s principal of equity and inclusive education, says such materials are a particularly useful reference given how diverse the student population is in the district and at that specific school.
The controversy emerged this week after a Brampton, Ont., high school, Cardinal Ambrozic Catholic Secondary School, posted a photo of its new principal on Twitter.
The photo, which shows the book on her desk, set off heated debate, with some suggesting it was a sign of racism or incompetence, or a prop meant to bolster the school’s image.
The image was also shared on instagram by 6ixBuzzTV, a popular account with roughly 1.2 million followers.
“LOOOOL. No principal should make it this far while subsequently needing a book like this,” one person wrote on Twitter. “She a bad principal,” wrote another.
Some defended the book, however, and the principal’s efforts to educate herself. “She’s making an effort to connect with her students, it’s more than most principals do,” another tweet read.
The board said it was surprised by the uproar and hoped people would look up the book before jumping to conclusions based on its title.
The principal intends to address the photo in a public announcement and invite any students with lingering questions to see her, said Bruce Campbell, the board’s spokesman.
The book, written by three researchers and published in 2017, aims to improve outcomes for black students by helping teachers create learning environments in which they feel nurtured and engaged. The title references the fact that white women make up the bulk of the teaching force in the U.S.
Coutinho said the book asks educators to challenge the biases they may bring into the classroom.
“We know that we’re steeped in a colonized kind of world view and how do we break out of that in our everyday practices?” she said, noting it has been used in the board’s anti-oppression training in the past.
Cardinal Ambrozic’s new principal was involved in a book study at several schools that delved deeply into the text last year, Coutinho said.
“If we’re going to make any changes to the education system, we have to start talking about these things and talking about them openly and honestly without shame or blame.”
Paola Loriggio, The Canadian Press
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