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Canada's economy shrank for the first time this year in August

Written By doni icha on Jumat, 31 Oktober 2014 | 22.40

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Canada's economy contracted for the first time this year in August. (Norm Betts/Bloomberg)

Canada's gross domestic product shrank for the first time in eight months in August, contracting 0.1 per cent as a small expansion in services wasn't enough to offset a drop-off in sectors that produce goods.

Statistics Canada said Friday that the oil and gas sector declined, as did manufacturing. Utilities expanded, as did the public sector, wholesale trade and the finance and insurance sectors.

"The good news, such as it is, is that the weakness was largely due to a pullback in oil & gas," BMO economist Doug Porter said of the numbers, "and the rest of the economy is still plugging ahead."

Canada's economy had expanded in each of the first six months of the year, before a flat showing in July and slight contraction in August. In both July and August, the weak performance was less than what economists had been expecting — and makes September's number even more important to see if the sudden weakness becomes a worrying trend.

"This means that the outlook for Canadian GDP in Q3 is mediocre," Scotiabank said. "Even a very strong bounce in September in the area of 0.5 per cent would only get GDP by industry up to 2 per cent," the bank said, speaking of the quarter as a whole.

"The Canadian economy pretty much took the summer off," Porter noted.

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Some Air Canada staff hate the new carry-on bag policy as much as you do

It's been a month since Air Canada launched its carry-on crackdown where customer service agents stop and confront travellers at check-in to ensure their cabin bags meet size limits. Bags that don't make the cut now must be checked.

The move has made some passengers hostile. And a number of agents find crackdown duty so unpleasant, they don't want to do it, according to Air Canada service agent and union representative, Sheila Fardy.

And it may be about to get worse. This Sunday, Air Canada starts charging $25 for the first checked bag for domestic economy-class travel.

Fardy says Unifor, the union representing the agents, has asked the airline to recruit only willing volunteers to do the job which she describes as "horrible." She says, generally, agents get to "bid" on customer service shifts with the most senior staff getting priority. But, so far, she adds, Air Canada won't let workers have a choice in whether or not they are tasked with inspecting carry-on bags. Consequently, says Fardy, the union "will grieve it unless we can come to a solution."

The crackdown has upset and even angered some passengers. "You have a lot of unhappy customers today," a distressed traveller informed a stoic Air Canada agent after she learned her bag — which she'd taken on board for years — didn't meet airline requirements and had to be checked.

Hard to cope

"Some agents are having quite a difficult time with [the job]," says Fardy, who works at Toronto's Pearson airport — the first airport to tackle the crackdown.

'Some passengers have been quite abusive'- Sheila Fardy, Air Canada service agent and union rep.

"Some passengers have been quite abusive," she says. "Passengers can be quite aggressive and swearing and stuff like that."

As a lead agent, Fardy says colleagues have complained to her about the gig: "I've had people walk up to me and say, 'Sheila, I've been doing this for four hours, get me the frig out of here.'"

"People push by them, are rude, they invariably give you a list of all the other times I brought that [bag] on board an aircraft," adds Fardy. She notes that most passengers are pleasant and co-operative but "the bad five per cent can make for a difficult day."

Looking for volunteers

Fardy believes allowing workers to bid on the job would solve the problem. She says more junior staff would volunteer for the gig because they don't have much say in their shifts and signing up for the job would give them more stability.

"Somebody with two years who doesn't have enough seniority to do anything, they'll take it," explains Fardy. And, she adds, everyone benefits because "if somebody chooses it, they'll at least know what they're in for. They'll be less resentful."

Air Canada says, so far, the crackdown has been "highly effective. We have had a great deal of positive feedback from customers who appreciate that [airline overhead bin] space is being apportioned more equitably," says spokesperson, Peter Fitzpatrick.

CBC News repeatedly asked Fitzpatrick for a comment about the union's request to allow workers to choose if they want to police carry-on bags. We did not receive a response in time for publication of this story. 

Why the anger?

Aviation analyst Fred Lazar says Air Canada's crackdown has sparked passenger anger because the airline hasn't consistently enforced its carry-on limits in the past, so some travellers are taken by surprise. "Basically [the airline has] looked the other way and front-line employees are [now] going to be the brunt of the resentment by passengers."

But Lazar believes Air Canada will continue its crackdown and, in six to nine months, "most [passengers] will become accepting of it and the hostility will die down."

However, the York University professor predicts heightened short-term hostilities starting this Sunday when the airline starts charging the new $25 checked bag fee. That means some travellers with carry-on that exceeds the size limits will also be hit with an extra charge. WestJet began charging a similar fee on Thursday.

Lazar estimates the checked bag charge will generate tens of millions of dollars in extra revenue for Air Canada. He suggests the airline could appease disgruntled front-line employees by offering them a portion of the profits: "They should somehow share in the additional revenue that should be generated when passengers are forced to check in and pay for carry-ons."

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Banks, credit card firms agree to cut fees charged to retailers

Canada's major banks and credit card companies have reached a deal with the federal government to cut the fees charged to merchants for credit transactions, sources familiar with the negotiations say.

The voluntary agreement could mean cost savings for up to 700,000 large, medium-sized and small businesses across the country. However, it remains to be seen whether the cuts will translate into savings for consumers.

The deal will result in lower interchange fees charged to retailers and service providers for using credit cards to complete direct transactions, said sources speaking on condition of anonymity because they weren't authorized to discuss the matter publicly. The fees would then be capped for an unspecified period of time.

The agreement comes after years of back-and-forth among retailers, the federal government, banks, credit card companies and the Competition Tribunal. Interchange fees currently range between $1.50 and $3 or more for every $100 worth of transactions, depending on the credit card.

Sources said the voluntary agreement gives price stability to retailers.

Karl Littler, vice-president of the Retail Council of Canada, said merchants would be happy with a self-policing deal.

In an interview with CBC's The Exchange with Amanda Lang, Littler said the cost of interchange fees is pushing up prices for consumers.

"Our issue is the overall cost has been driven up by the profusion of premium cards and now super- premium cards in the mix," he said.

"That's having a big, big effect. It's $5 billion in total fees, and interchange fees are the biggest portion — that's $4 billion a year. That's a lot of money that consumers are bearing in higher prices," he added.

Littler said the banks stand to lose the most from any deal to reduce fees, as they are the biggest beneficiaries.

"The credit cards do make some money — there is a network fee — but actually most of the money goes to the cardholder's bank," he said.

"So what happens is when somebody pays with a credit card, the merchant gets a discounted price and the discount is held by the cardholder's bank. The bank then pays out a certain amount of it in rewards … it's actually judged to be a very lucrative line of business for banks, even more than it is for credit card companies," Littler said.

The federal Competition Bureau came up with the estimate of $5 billion annually in credit card acceptance fees in 2010 and that figure has likely grown since.

There are roughly 76 million credit cards issued to Canadians, who use them to pay for about half their overall purchases. The Retail Council of Canada says high-cost premium cards have hurt merchants the most. It says a majority of the savings from recent interchange fee reductions in the U.S. were passed on to customers.

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Cliffs Resources officially closing Wabush Mines

The provincial government has been notified by Cliffs Natural Resources of the company's plans to officially close Wabush Mines in Labrador.

"We have all known for some time that the closure of the mine in Wabush was a possibility. However, this does not make it any easier for the workers of the mine and their families, as well as residents in the Labrador West area," Natural Resources Minister Derrick Dalley said in a statement on Friday. 

"Our government is aware of this and will continue to support those impacted."

Dalley said government will ensure Cliffs follows provincial legislation, and has a closure and rehabilitation plan in place.

In February, the company idled operations at the site, citing the rising cost of production at the iron ore mine.

MFC Industrial was in talks with Cliffs about the potential sale of the mine, but a spokesperson with MFC told CBC News discussions had been terminated earlier in October.

Roughly 500 workers employed at the site will be affected. Of the 50 employees still currently working at the mine, Cliffs said that number will be reduced to 10 before the end of the year.

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Bombardier's $3.4B Russian venture on hold amid sanctions

Bombardier is suspending negotiations on a $3.4-billion proposal to assemble turboprop aircraft in Russia due to the country's political situation and weak economy.

"We're not moving ahead because the conditions are not right at this point in time for a joint venture in Russia," president and CEO Pierre Beaudoin said Thursday during a conference to discuss the company's third-quarter results.

The Montreal-based train and aerospace concern was hoping to conclude negotiations this year with Russian's Rostec for the assembly of 100 Q400 regional jets.

The decision comes after Canada slapped sanctions against Russian individuals and entities, including government agencies, over Moscow's involvement in unrest in Ukraine.

Profit down on layoff costs

Bombardier said a reorganization announced in July that cut 2,900 aerospace and transportation employees caused its net profit to plunge by half to $74 million US in the quarter, despite a 20 per cent increase in revenues.

About 2,000 aerospace employees were laid off, above the company's earlier forecast for the elimination of 1,800 non-union administrative positions. An additional 900 transportation jobs were cut, about 100 less than originally planned.

The changes resulted in $63 million of additional expenses in the quarter, including $57 million for workforce reductions.

Over time, the changes are expected to boost earnings by $268 million a year — $200 million in the aerospace division and US$68 million in the transportation segment.

"In both groups, a new lighter structure will result in a more nimble organization which brings reduced costs and contributes to increased profitability," Beaudoin told analysts.

Revenue up 20%

Bombardier, reporting in U.S. dollars, earned $74 million US or three cents per share in the quarter ended Sept. 30, down from $147 million or eight cents per share in the third quarter of 2013.

Revenues were $4.9 billion, up from $4.1 billion a year earlier.

Excluding special items, Bombardier's adjusted net income rose by 35 per cent from a year earlier to US$222 million or 12 cents per share — beating analyst estimates by three cents per share.

Analysts had estimated nine cents per share of adjusted profit and 10 cents before adjustments with $4.8 billion of revenue, according to Thomson Reuters data.

Meanwhile, Bombardier said flight testing of the new CSeries commercial jet is progressing well, with 450 hours of flight tests now recorded, a 36 per cent increase since testing resumed Sept. 7, following a three month pause resulting from an engine failure. Flight hours are expected to accelerate as two flight test aircraft are added in the coming weeks, including the one damaged in the May incident during ground testing.

One year to go on CS100

The company continues to say the CS100 will enter into service in about a year. Employees hired to assemble the aircraft are expected to gradually be added, starting around the second quarter.

Analysts said the results were strong, but investors will be concerned about the use of free cash flow, which was $368 million, above their forecast of $184 million, but down from $522 million last year. About $180 million of the free cash flow was consumed by aerospace, $81 million by transportation and $107 million by income taxes and interest payments in this year's third quarter.


The first of the CSeries jets could be available by next year, Bombardier said. (Bombardier)

"With capital expenditures declining in the third quarter, we believe that Bombardier is moving in the right direction to improve its balance sheet and we would see any weakness as a buying opportunity," wrote Benoit Poirier of Desjardins Capital Markets.

In the third quarter, Bombardier Transportation, the rail division, generated $2.3 billion of revenue, up 12 per cent from $2.1 billion, excluding the impact of currency fluctuations. New orders totalled $1.1 billion, resulting in an order backlog of $34.5 billion as of Sept. 30, up from $32.4 billion as of Dec. 31, 2013.

Bombardier Aerospace revenue increased by 29 per cent to $2.6 billion from $2 billion. It delivered 71 aircraft, up from 45 in the same period a year before. It also received 76 additional orders, compared with 26 in the third quarter of fiscal 2013.

Critical of Quebec tax credit cut

For the first time in six quarters, Bombardier beat rival Gulfstream as the world's leading business jet manufacturer, according to the General Aviation Manufacturers Association. It delivered 45 aircraft for a value of US$1.72 billion, up from 36 planes worth US$1.38 billion last year. Gulfstream shipped 31 planes worth US$1.68 billion, down from 38 planes for nearly US$2 billion in the 2013 period.

Meanwhile, Beaudoin denounced Quebec's moves this year to reduce tax credits by 20 per cent, suggesting it might affect investment decisions by the major provincial employer and its suppliers.

"We believe that the tax credits towards the aerospace industry have tremendously contributed to our economy," he said in response to a media question.

"When you invest in programs and you want to remain competitive on the world market you have to see what the best place is to do the work."

Bombardier also said the company is looking at offering a lower-priced subway car to better compete in markets such as Latin America.

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'I'm proud to be gay,' Apple CEO Tim Cook says

Written By doni icha on Kamis, 30 Oktober 2014 | 22.40

Apple chief executive Tim Cook has come out of the closet.

The public declaration, in an essay written for Bloomberg Businessweek magazine, makes public what had been widely known in some corporate circles. And more importantly, it likely makes Cook the highest-profile gay person in corporate America.

"Plenty of colleagues at Apple know I'm gay, and it doesn't seem to make a difference in the way they treat me," Cook wrote. "Of course, I've had the good fortune to work at a company that loves creativity and innovation and knows it can only flourish when you embrace people's differences. Not everyone is so lucky."

Cook said that while he never denied his sexuality, he never publicly acknowledged it, either. Cook wrote in the column published Thursday that it wasn't an easy choice to publicly disclose that he is gay, but that he felt the acknowledgement could help others.

"I've come to realize that my desire for personal privacy has been holding me back from doing something more important," he wrote.

Three days ago, Cook spoke out publicly against his home state of Alabama to ensure the state take steps to ensure the rights of the lesbian, gay, bisexual and transgender community.

Alabama is among the states that do not recognize same-sex marriage, and it doesn't offer legal protections on the basis of sexual orientation or gender identity. Cook is a native of Robertsdale, Ala., and attended Auburn University.

"So let me be clear: I'm proud to be gay, and I consider being gay among the greatest gifts God has given me," Cook said.

Cook succeeded Apple founder Steve Jobs as chief executive officer of Apple Inc. in 2011.

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Voice calls during flights mulled by U.S.

Airline travel already has delays, cramped seating, luggage fees and expensive extras like, oh, sandwiches. Here's another potential irritation for that list: loud talkers on cellphones.

A U.S. Department of Transportation committee is examining the idea of allowing passengers to use cellphones for voice calls on commercial aircraft.

The advisory committee for aviation consumer protections met in Washington, D.C., Wednesday, where it heard from experts and stakeholders on the controversial issue.  

One of the first speakers was the Transportation Department's Robert Gorman, who told the committee the department got an earful when it first asked for public comment on the idea of removing the ban on voice calls.  

"Ninety-six to 98 per cent of [comments] were in favour of a ban. I would say 92 per cent of them were written in all caps. 'NOOOOOOO!'" said Gorman, as he mimed a furious tapping on an imaginary keyboard.  

"The average number of O's [in NO] was about 10," said Gorman.

No technical reason for ban

Cellphone use has been banned on airborne aircraft since 1991. The original concern involved potential interference with ground-based communication networks.   

That issue has since been overtaken by advances in technology.

These days, cellphones on airborne aircraft can send a lower-powered signal to a system on board the plane, which then sends that signal to a satellite or a dedicated ground network.  

Although passengers have been told for years in onboard announcements that cellphones could affect systems on the aircraft, the transportation official said that's not the case.

"Cellphones do not in fact interfere with the avionics systems, from a technical perspective, on airplanes," said Gorman. 

In October 2013, the U.S. Federal Aviation Administration announced some new rules relaxing restrictions on handheld devices on planes. Passengers would be allowed to use their devices during all phases of the flight, including during take off and landings. Passengers would also be able to access Wi-Fi during flight, if the air carrier offered that service.

In May 2014, Transport Minister Lisa Raitt announced Canada would also allow handheld devices to be used at any time during flight, but said passengers would still be restricted from using Wi-Fi.

Both the U.S. and Canada maintained the ban on voice calls.

Who gets to choose?

Kevin Rogers, CEO of AeroMobile Communications Inc., a manufacturer of in-flight connectivity systems, said the absence of safety concerns regarding signal interference means airlines and consumers themselves should be the ones to decide whether voice calls are allowed on aircraft.

"Sitting in this [committee] room, you have the choice of Wi-Fi or cellphone coverage," said Rogers. "Airlines more and more believe it should be no different in the cabin of the airline."

Rogers said AeroMobile's system, which has passengers paying international roaming fees to their home operator, is currently being used by 13 airlines around the world, on 269 aircraft, and more than 500 flights daily.  

Access to voice calls is important to the business traveller, Rogers said. On transatlantic flights, usage is high during the day and low coming back at night, and the average voice call lasts two minutes, he said.

Rogers said passengers regulate themselves.

"There's a strong anecdotal belief that most of the voice service is used for what I call quiet voice: listening to voice mail and seeing the fact that you've had a missed call," Rogers said.  

Don't want to hear it

But many who work on airplanes are strongly opposed to the idea of voice calls.

"We've all had similar experience with an obtrusive caller in a grocery checkout line, a restaurant, or even on the airplane prior to departure," said Julie Frederick of the Association of Professional Flight Attendants.

Frederick told the committee that aircraft cabins are noisy and people already typically speak louder on mobile phones, which could make it harder for passengers to hear safety instructions and emergency announcements.

She pointed out that U.S. security officials have raised concerns that terrorists or other criminals could use air-to-ground communication to co-ordinate an attack.

And she said voice calls could lead to an increase in air rage.

"We believe there will be a spike in confrontation between passengers that will, in the end, create moments of chaos in the cabin," said Frederick.

"[Passengers] have told us loud and clear, that silence is golden."

If you have a consumer issue, contact Aaron Saltzman, CBC's senior reporter, consumer affairs 

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Transport Canada aware of deadly GM defect 8 months before recall

Transport Canada was aware of a potential problem with ignition switches in the Chevrolet Cobalt eight months before General Motors Canada issued a recall notice for the deadly defect, the fifth estate has learned.

General Motors has so far accepted 29 wrongful death claims related to the ignition switch failure in the U.S. and Canada. In all, it has received claims for more than 150 deaths.

One Canadian death has been linked to the defect. But an investigation by the fifth estate and Radio-Canada's Enquete reveals that the faulty GM ignition switch is being probed as the "probable explanation" of a second fatal crash that occurred in Quebec just over one month after the recall.

Canadian investigation

General Motors has acknowledged that a defect in the ignition switch in hundreds of thousands of its vehicles caused the ignition to inadvertently move from the "Run" to "Accessory" position, causing the vehicle to stall and preventing the airbag from deploying in a crash.

Transport Minister Lisa Raitt told Parliament last May that her department, "was not aware of an ignition switch issue prior to receiving its first notice from GM Canada" in February 2014.

But government documents, safety records and crash reports unearthed by the fifth estate and Enquete suggest that may not be accurate.

Dany Dubuc-Marquis

Dany Dubuc-Marquis, 23 (left), seen here with his mother, died in his Chevrolet Cobalt in June 2013 near Roxton Pond, QC.

Dany Dubuc-Marquis, 23, was killed on June 22, 2013, on a highway near Roxton Pond, Que., after his 2007 Chevy Cobalt left the road and slammed into some trees. The driver-side airbag in the Cobalt failed to deploy. 

GM has stated one of the 29 deaths linked to the ignition defect took place in Canada, but has never confirmed if it was the Dubuc-Marquis crash.

Dany's father, Normand Dubuc, had told Transport Canada his son had been drinking heavily with friends that night. But when he saw the fatal wreck, Dubuc also noticed something that troubled him.

"I told the police the airbags didn't deploy," Dubuc says in the exclusive CBC report. "There's something not normal with that. They also found it wasn't normal."

According to a Transport Canada investigation log obtained by the fifth estate and Enquete, the department opened an investigation three days after the crash — on June 25, 2013 — and soon discovered an issue with the ignition switch.

Ten days later, on July 4, the Transport Canada investigator at the Ecole Polytechnique in Montreal sent an internal email, "to verify if the fact the ignition switch was in Accessory position could have influenced anything with the non-deployment event."

Then on July 10 there was an internal telephone call, "to discuss the possible influence on the airbag system of the ignition switch in Accessory position," according to the Transport Canada logs.

Dany Dubuc-Marquis crash

Dany Dubuc-Marquis was killed in 2013 after his Chevy Cobalt left the highway and slammed into trees near Roxton Pond, Que.

The documents obtained by the fifth estate and Enquete through Access to Information show that Transport Canada eventually determined that at some point after Dubuc-Marquis's Cobalt left the road — but during what Transport Canada called "the collision event" — the ignition somehow moved from "Run"  to "Accessory."

Kash Ram, director general of road safety and motor vehicle regulation at Transport Canada, says the department looked into various reasons why the key in the ignition switch could have moved. 

"At the time it was reasonable to believe that one contributor could've been a bumping of the switch. We have seen that before in a number of cases," Ram told the fifth estate's Bob McKeown.

However, Transport Canada dropped its investigation into the Quebec crash that summer, and the Cobalt was sent to a scrap yard. It wasn't until after GM announced the recall in February 2014 that Transport Canada recovered the vehicle and further investigated the crash.

The fifth estate

Watch "The Switch from Hell" on CBC television's the fifth estate on Friday, Oct. 31 at 9 p.m. ET on CBC Television.

Raitt told CBC's Amanda Lang on Wednesday that her understanding was that investigators and Quebec police looked into the case and "after a while it was determined that perhaps there was something involved with the victim in terms of the airbag not deploying, or the ignition switch having an effect on that."

Raitt said that "our people did take a look" at the case and that there were "a number of other complaints, too, that are in the process of being investigated by Transport Canada."

She said all of that information would be used by local police investigating cases.

The fifth estate program describes how investigators in the United States who worked for the family of one of the crash victims in Georgia kept pursuing the connection between the ignition switch defect and the fatal accidents. They discovered that GM had secretly switched the defective part in new models of the cars without telling anyone.

Transport Canada apparently didn't pursue that angle.

A Quebec coroner's report released today confirms that the "deployment of the airbags was impossible" because Dubuc's car had a "defective ignition switch" that has shifted to the Accessory position.

But the coroner said Dubuc fell asleep at the wheel after drinking and was not wearing his seat belt. The Dubuc family has sharply criticized the report for not sufficiently taking into account "certain determining factors" including the deadly defect that potentially caused "the deaths and injuries of several hundreds of people in North America."

Public recall

As for exactly when GM Canada became aware of the defect, Raitt has told the House of Commons that, "we do not have information as to whether" GM Canada knew of the fatal defect before the public recall last February.

But the internal Transport Canada investigation documents obtained by the fifth estate and Enquete reveal that the federal regulator passed on details of the Dubuc-Marquis investigation to General Motors in October 2013 — five months before the recall.

GM ignition switch

An ignition-switch column from one of GM's Chevrolet Cobalts. (CBC)

GM Canada CEO Kevin Williams declined the fifth estate's interview request.

In a written response, GM Canada said it, "participated in company meetings in mid-December 2013, when the ignition switch issue was raised" — two months before the recall was announced.

What's more, in 2005 GM in the U.S. and Canada issued a service bulletin to dealers informing them that the ignition key in vehicles including the Chevy Cobalt, Saturn Ion and the Pontiac Pursuit could be inadvertently rotated out of the "Run" to the "Accessory" position.  

The Pursuit was a vehicle only sold in Canada, so GM Canada had to know about the problem. But at the time GM didn't view the issue as a safety defect, and so consumers and regulators were never informed.

Lisa Raitt

Transport Minister Lisa Raitt told Parliament that her department, "was not aware of an ignition switch issue prior to receiving its first notice from GM Canada" in February 2014. (Canadian Press)

In the U.S., the government can order a recall of dangerous vehicles, but Transport Canada does not have that power — it can only request that companies do so and take them to court if they don't.

"I think that's an issue we are struggling with right now," Raitt told CBC Wednesday. ""Of course auto companies don't want ministers to have those kinds of powers."

Raitt said it's an area her department is looking into in an effort to better protect the "safety and security" of Canadians. She said she expected to talk more about the issue in the weeks ahead but offered no specifics on what changes might be coming.

"The problem is that in North America safety is not job No. 1 for any of the car companies, and any of the regulatory agencies here in the U.S. or Canada are not up to the job of policing the auto industry," says Clarence Ditlow of the U.S. Center for Auto Safety.

"And when it comes to recalls, it looks like Canada is a hand-me-down country."

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Income-splitting changes coming from Tories

Prime Minister Stephen Harper will on Thursday unveil a scaled-down version of the Conservatives' 2011 campaign commitment to allow income-splitting by parents with children younger than 18 once the federal budget is balanced.

Sources tell CBC News that Harper's announcement at a community centre north of Toronto will cap the amount of tax savings at $2,000 per couple.

The change is intended to cut the estimated $2.7 billion cost of the program, without altering the core commitment to allow the parent with the higher income to transfer up to $50,000 in income to the other. And it potentially frees up hundreds of millions of dollars in surplus monies for the Conservatives to spend on other priorities heading into an election year.

There are reports that those priorities could include an expansion of the universal child care benefit, which now pays $100 a month for each child regardless of income. The government has already doubled the children's fitness tax credit.

The prime minister is expected to frame Thursday's announcement as part of the Conservatives' family agenda. The change could also help shield the government from the accusation that the income-splitting measures stand to disproportionately favour richer Canadians.

Wide support among MPs

Cost aside, income-splitting enjoys wide support among Conservative MPs. They saw it as a vote-getter in suburban ridings around Toronto and Vancouver where families with single-income earners are more common.

The plan would lower their overall tax bill by allowing the transferred money to be taxed at a lower rate, with the family pocketing the savings.  The Conservatives also say it will make it financially easier for couples who want one of the parents to stay at home to raise the children.

But critics of the program, including former finance minister Jim Flaherty, argued it would primarily benefit a small minority of the richest Canadians who least need a tax cut.

For example, for a couple in which one spouse earns $60,000 a year and the other earns nothing, the savings would be about $1,400 in federal tax. But for the same couple where the income earner brings home $191,000  which Statistics Canada's 2011 survey identified as the cutoff for the top one per cent of income earners  the savings jump to more than $7,000.

Sources tell CBC News that Harper shared those concerns.

Joe Oliver 20140923

Finance Minister Joe Oliver has previously promised tax cuts for families. (Adrian Wyld/Canadian Press)

But a promise is a promise, so the government will argue Thursday that it is making good on the commitment, beginning immediately. That means couples will see the benefits of the tax savings next spring when they file their 2014 income tax returns.

Finance Minister Joe Oliver will be at Thursday's event at the Schwartz-Reisman Centre in Vaughan, Ont. a suburb north of Toronto.

"The prime minister will be talking tomorrow and we'll find out then,'' Finance Minister Joe Oliver told reporters Wednesday when asked. "And I'll be there with him."

Not for single parents

While the announcement should placate Conservative supporters, it will do nothing to mollify opponents who see it as a form of social engineering. The tax benefit is not available to single parents, and would have little impact on families with two income-earners who bring in roughly the same amount. It also doesn't reflect how many children a family has.

The program will also have an impact on provincial revenues, since their tax systems are based on payable federal tax.

But income-splitting is shaping up as the biggest issue separating the Conservatives from their political opponents.

The New Democrats announced a $15-a-day child-care plan earlier this month as part of an ambitious plan to create or maintain a million affordable daycare spaces across the country.

Liberal Leader Justin Trudeau has already vowed he'd reverse the Conservative policy if his party forms a government.

"It doesn't help the people who need it most and it costs Canadians an awful lot to do. It doesn't make sense," he told CBC News last week.

Conservatives immediately accused Trudeau of planning to increase taxes.

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TransCanada formally applies to NEB for Energy East pipeline approval

TransCanada has officially filed for government approval for the $12 billion Energy East pipeline project with the National Energy Board.

The company has submitted a formal application for the project, which would carry 1.1 million barrels per day of crude oil from Alberta eastward to refineries on Canada's East Coast.

At a press conference at 10:30 a.m. eastern time, numerous company officials and other backers of the project were on hand to lay out why the proposal makes sense.

"Our application outlines how Energy East will be built and operated in a safe and environmentally responsible manner, while generating significant benefits for all Canadians," TransCanada president and CEO Russ Girling said.

The company says it has filed 30,000 pages worth of documents outlining the project which, if completed, will take oil for more than 4,600 kilometres across six Canadian provinces.

Currently, most Canadian oil heads south via various routes for refining and export through U.S. ports. The idea for Energy East is to take Alberta oil to terminals planned for Quebec and New Brunswick, enabling shipments to Europe, India and other destinations while not relying on American infrastructure.

About two-thirds of the pipeline is already essentially in place — the project would involve expanding and extending a series of existing pipelines.

Backers of the project say it will create jobs and economic growth while cementing Canada's status as an energy independent oil superpower. TransCanada claims the project will directly or indirectly create 14,000 jobs, and help create $36 billion worth of economic activity.

But like other superpipelines, including Kinder Morgan, Northern Gateway and TransCanada's own Keystone XL, the project faces opposition from local environmental and native groups who say any such project is an environmental accident waiting to happen.

Others have criticized the project on an economic level, noting that the plan makes less sense with oil hovering at around $80 a barrel — and critics note that repurposing natural gas pipelines into oil pipelines could lead to shortages of gas in Atlantic Canada.

But the company says it's planning to build an additional 250 kilometres of natural-gas pipeline in the region anyway, to more than offset any lost pipeline capacity.

"Converting one of the pipelines in the Canadian Mainline natural gas transmission system to crude oil service will make better use of capacity on the Canadian Mainline that is no longer needed to export natural gas to the United States," the company said.

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