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As bankruptcies edge up, Poloz personally responds to Canadians’ concerns

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  • 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


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    Funeral today for seven children killed in fast-moving Halifax fire

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  • HALIFAX — Mourners will descend upon a large Halifax hall today for the funeral of seven children who died in a fast-moving house fire.

    The service for the Barho children will begin at 1:30 p.m. at the Cunard Centre on the city’s waterfront.

    Imam Abdallah Yousri says funeral proceedings will follow in the Islamic traditions, but is open to people of all faiths and members of the public.

    He says he hopes that by opening the ceremony up to all who wish to attend, the children’s mother — Syrian refugee Kawthar Barho — will see the widespread support and sympathy from the community.

    Yousri says the traditional portion of the service will be followed by words from community members, including Halifax MP Andy Fillmore, who is trying to help some of the mother’s overseas relatives come to Canada.

    Following the funeral service, there will be a burial at a Muslim cemetery in Hammonds Plains.

    “(Kawthar Barho) doesn’t have family over here in Canada. She does not have friends as well here in Halifax because she moved here five months ago,” said Yousri on Friday.

    “That’s why we are trying to invite her to come see the support and let everybody gather.”

    Shuttles will be organized to and from the Cunard Centre to accommodate those who wish to attend, and ample parking is available at the centre.

    The children’s father — Ebraheim Barho — remained in hospital Friday recovering from extensive burns. He was in critical, but stable condition.

    Early Tuesday, the Quartz Drive house fire killed all of the Barho children: Ahmad, 14; Rola, 12; Mohamad, 9; Ola, 8; Hala, 3; Rana, 2 and Abdullah, who was born in Canada on Nov. 9.

    The cause of the fire remains unclear.

    The scale of the tragedy for the young family who arrived in Nova Scotia in September 2017 as refugees has struck a chord with Canadians.

    A GoFundMe campaign had raised more than $523,846 by late Friday afternoon, with a $1-million goal.

    The Barho family lived in Elmsdale, a 30-minute drive north of Halifax, when they first arrived in Nova Scotia and were embraced by residents there.

    They had moved to the Halifax suburb of Spryfield to take advantage of language training and other immigrant services, and had planned to return to Elmsdale next month.

    The family was among 1,795 Syrian refugees who have come to Nova Scotia in recent years. The Trudeau government granted asylum to 40,000 Syrian refugees in 2015-16.

    A brutal civil war has raged across Syria since 2011, claiming more than 400,000 lives.

    The Canadian Press




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    Funeral today for seven children killed in fast-moving Halifax fire

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  • HALIFAX — Mourners will descend upon a large Halifax hall today for the funeral of seven children who died in a fast-moving house fire.

    The service for the Barho children will begin at 1:30 p.m. at the Cunard Centre on the city’s waterfront.

    Imam Abdallah Yousri says funeral proceedings will follow in the Islamic traditions, but is open to people of all faiths and members of the public.

    He says he hopes that by opening the ceremony up to all who wish to attend, the children’s mother — Syrian refugee Kawthar Barho — will see the widespread support and sympathy from the community.

    Yousri says the traditional portion of the service will be followed by words from community members, including Halifax MP Andy Fillmore, who is trying to help some of the mother’s overseas relatives come to Canada.

    Following the funeral service, there will be a burial at a Muslim cemetery in Hammonds Plains.

    “(Kawthar Barho) doesn’t have family over here in Canada. She does not have friends as well here in Halifax because she moved here five months ago,” said Yousri on Friday.

    “That’s why we are trying to invite her to come see the support and let everybody gather.”

    Shuttles will be organized to and from the Cunard Centre to accommodate those who wish to attend, and ample parking is available at the centre.

    The children’s father — Ebraheim Barho — remained in hospital Friday recovering from extensive burns. He was in critical, but stable condition.

    Early Tuesday, the Quartz Drive house fire killed all of the Barho children: Ahmad, 14; Rola, 12; Mohamad, 9; Ola, 8; Hala, 3; Rana, 2 and Abdullah, who was born in Canada on Nov. 9.

    The cause of the fire remains unclear.

    The scale of the tragedy for the young family who arrived in Nova Scotia in September 2017 as refugees has struck a chord with Canadians.

    A GoFundMe campaign had raised more than $523,846 by late Friday afternoon, with a $1-million goal.

    The Barho family lived in Elmsdale, a 30-minute drive north of Halifax, when they first arrived in Nova Scotia and were embraced by residents there.

    They had moved to the Halifax suburb of Spryfield to take advantage of language training and other immigrant services, and had planned to return to Elmsdale next month.

    The family was among 1,795 Syrian refugees who have come to Nova Scotia in recent years. The Trudeau government granted asylum to 40,000 Syrian refugees in 2015-16.

    A brutal civil war has raged across Syria since 2011, claiming more than 400,000 lives.

    The Canadian Press




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