Global youth unemployment set to rise, UN warns

Youth unemployment is set to rise around the world, creating a "generation at risk" that faces lower earnings and job prospects years into the future, the United Nations' labour office warns.

An estimated 73.4 million people between the ages of 15 and 24 are expected to be out of work this year, putting the global youth unemployment rate at 12.6 per cent, according to a report released Wednesday by the International Labor Organization (ILO). That's an increase of 3.5 million between 2007 and 2013.

"The long-term consequences of persistently high youth unemployment include the loss of valuable work experience and the erosion of occupational skills," said José Manuel Salazar-Xirinachs, the ILO's assistant director-general for policy.

"Moreover, unemployment experiences early in the career of a young person are likely to result in wage scars that continue to depress employment and earnings' prospects even decades later," he added.

In 2012, the global youth unemployment rate was at 12.4 per cent. By region, the Middle East had the highest jobless rate, with 28.3 per cent of youth out of work, followed by North Africa, where 23.7 per cent were unemployed.

In wealthier nations, including the European Union, the youth unemployment rate hit a decades-long high at 18.1 per cent, and is not predicted to drop below 17 per cent until at least 2016.

Six countries — Austria, Germany, Japan, the Netherlands, Norway and Switzerland — had rates below 10 per cent last year.

Trapped in precarious work

In six of 10 developing countries surveyed, more than 60 per cent of the young people were either unemployed or trapped in low-paying jobs, the report found.

"The waste of economic potential in developing countries is staggering," said Sara Elder, a co-author of the report, who concluded that for many of them "a job does not necessarily equal a livelihood."

Meanwhile in advanced economies, those who do find work are less selective and find themselves settling for part-time or temporary jobs out of desperation.

'The waste of economic potential in developing countries is staggering.'—Sara Elder, report co-author

"Secure jobs that were once the norm for previous generations — at least in advanced economies — have become less easily accessible for today's youth," said Salazar-Xirinachs.

"The growth of temporary and part-time work, in particular since the height of the global economic crisis, suggests that such work is often the only option for young workers."

The report suggests that youth unemployment is fostering the generation's distrust in the socio‐economic and political systems, pointing to protests and anti-austerity movements in Greece and Spain. In those two countries, more than half of young jobseekers are unemployed.

The rise of skills and occupational mismatches is one of the factors contributing to the youth job crisis, the report says. Some jobseekers are undereducated and under-skilled while others are overeducated and over-skilled.

Moreover, long stretches of unemployment are leading to the obsolescence of some qualifications. This growing mismatch may become entrenched without policies to re-skill jobseekers, the ILO warns.

The report urges governments, employers' organizations and trade unions to take action, recommending solutions such as support for education, training, and youth entrepreneurship; employment and labour policies; and recruitment incentives for employers.

With files from The Associated Press

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Enbridge looks to increase U.S. pipeline capacity

Enbridge is seeking U.S. approval to pump more crude through an Alberta-to-Wisconsin pipeline — a process the company expects to be easier than the one TransCanada is facing with its Keystone XL pipeline.

"I think I'd point out that this is a little bit of a different situation," Enbridge CEO Al Monaco told analysts on a conference call Wednesday to discuss the company's first-quarter results.

The Calgary-based company won't be laying down any new pipe to boost the Alberta Clipper pipeline's capacity from 450,000 barrels per day to 800,000 barrels per day by 2015. Rather, capacity will be expanded by adding new pumping equipment to the existing line in two phases.

"We're talking about a relatively limited amount of work here from an environmental point of view and from an equipment point of view," said Monaco.

Keystone XL, on the other hand, involves building new pipe through the American heartland. Much of the controversy has been centred around Nebraska, where TransCanada was forced to reroute the line to avoid ecologically sensitive areas.

TransCanada hopes to obtain its permit from President Barack Obama — a requirement for pipelines that cross the Canada-U.S. border — some time later this year after numerous delays.

Enbridge already has a presidential permit for Alberta Clipper, which it is looking to amend.

"Obviously there's no questions as to routing implications, because the pipe is already there. It's in the existing right of way and what we're talking about is some additional station work," said Monaco.

While work on the pipeline itself might be less complicated in the case of Alberta Clipper than Keystone XL, Monaco doesn't deny that there will be "some focus" from environmental groups.

Much of the opposition to these projects has been less about the pipe itself than what would flow inside of it. Many environmentalists are opposed to pipelines such as Keystone XL on the grounds that they would enable greater development of Alberta's oilsands, which they consider a particularly dirty source of oil.

Higher than expected earnings

Earlier Wednesday, Enbridge reported higher first-quarter adjusted earnings that beat expectations, but warned it doesn't expect that pace to last.

The pipeline company posted profits of $488 million, or 62 cents per share — beating the average analyst estimate by 10 cents per share, according to Thomson Reuters.

During the same period a year earlier, Enbridge earned $373 million, or 49 cents per share.

"Although we're pleased with that result, we don't expect this pace will be maintained through the year," Monaco told analysts.

"As a result we're holding our (earnings per share) guidance range at $1.74 to $1.90 a share and if we're able to achieve the mid-point of this range it would represent a 12 per cent increase over 2012."

Enbridge's net earnings, a measure that includes one-time items such as hedging gains and losses, were $250 million, or 31 cents per share, compared with $261 million, or 34 cents per share a year earlier.

Revenue for the quarter totalled $8.02 billion, up from $6.63 billion in the first quarter of 2012.

Northern Gateway expected focus of AGM

Protesters against the Northern Gateway pipeline stand outside of Enbridge's annual general meeting in Calgary Wednesday. (Colleen Underwood/CBC)

Enbridge's Northern Gateway pipeline — a contentious proposal to ship oilsands crude to the West Coast for export — was scarcely mentioned on the analyst conference call.

However, it's expected to be a focus at Enbridge's annual general meeting in Calgary later Wednesday, where several project opponents are expected to speak.

John Ridsdale, hereditary chief with the Wet'suwet'en First Nation, said the project is as good as dead, but it's important to keep up the pressure on Enbridge.

"If we don't constantly give them the message, they'll be out there telling the public and making public perception that it is a done deal, when in fact it is far from being done, far from being approved and far from being a good investment for shareholders," he said.

For the past few years, retired CEO Pat Daniel was the one to field questions from Northern Gateway opponents at Enbridge's annual meeting.

This year, Monaco will face shareholders for the first time as chief executive.

"I think it's interesting that Al Monaco has said that he's prepared and recognizes the need to seek social licence," said Karen Tam Wu, with environmental group Forest Ethics.

"I think what we really need to reiterate to him is that social licence cannot be bought and particularly for this project, social licence will never be earned."

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Missing B.C. man kept secret offshore accounts

A B.C. man who vanished a decade ago in a possible underworld killing set up offshore companies and bank accounts before he went missing, and is among the 450 Canadians named in the recent massive leak of tax-haven data.

Greg Cyr's ex-wife is now asking police to take a new look at his disappearance, after CBC News showed her secret financial documents found amid the leaked files.

Cyr, a 40-year-old drywaller, disappeared in 2003 after heading to a meeting in Vancouver with what police later told Miriam Byrne were her former husband's "underworld connections."

"What's frustrating for me is it took years … years to put a picture together," Byrne said after looking at some of the records. The files were part of an unprecedented leak of financial data obtained by the Washington-based International Consortium of Investigative Journalists and shared with the CBC and other global media outlets.

"If we would have had this..." Byrne said, pausing. "I'm speechless."

The documents show that the year before Cyr disappeared, he set up two companies through a firm called TrustNet, which provides offshore services in the Cook Islands, a South Pacific tax haven.

Cyr used one of his companies, Sentinel Holdings, to buy a $1.5-million property on Beach Drive in Victoria. The area is an exclusive waterfront neighbourhood adjoining the Royal Victoria Yacht Club and Victoria Golf Club. But Cyr kept his ownership of the house a secret from his ex-wife, even as he did construction work on it.

"I thought it was his employer's," she said.

Devoted dad

By then, Byrne and Cyr were divorced, with a five-year-old son.

Byrne said their marriage ended after Cyr confessed he had shipped some marijuana from British Columbia to Whitehorse.

Cyr eventually convinced her he had straightened out, Byrne said, and he was gradually permitted more time with their son.

Cyr once told his ex-wife that 'the one thing I've done right in my life is be a dad,' she said. (Courtesy of Miriam Byrne)

As a drywaller, he'd be up at dawn to head to job sites. Later, he ran a tile and wood import business. He became a devoted father who doted on their son.

"I remember him on the phone saying to me, 'Miriam, the one thing I've done right in my life is be a dad,'" Byrne recalled.

Their son cherished his father's visits. "Greg would ring the doorbell, our son would run up and next thing you know, all they did was roll around and wrestle," Byrne said.

So it came as a shock one day in October 2003 when Cyr failed to pick their boy up from school. He has never been heard from since.

Byrne later applied to the B.C. Supreme Court to have Cyr declared dead, so she could claim a life insurance payout for their son.

The judge heard evidence that as a youth, Cyr sold drugs and associated with the Hells Angels, and that Vancouver police had told Byrne her ex-husband was murdered by associates.

Cyr's girlfriend at the time described him in an affidavit as "frightened … like a child about to be left alone" on the day he went to the meeting from which he never returned.

But Judge Malcolm Macaulay rejected Byrne's bid, finding it was equally likely that Cyr earned money through the illegal drug trade, had sizable hidden assets and was motivated to disappear.

Cyr had fled before. Born Brent Thurston, he ran from a charge of narcotics possession in Manitoba in 1988. A warrant was issued for his arrest. Cyr eventually moved to Yukon and changed his name. The warrant is still outstanding.

It was a history Cyr kept mainly hidden from Byrne until after they were married. But she never believed he could do it again.

"He would have had our son not feel like he'd lost biggest most important thing in his life," Byrne said. "He wouldn't do that"

TrustNet stonewalls

Armed with that conviction, Byrne appealed to TrustNet for answers. She had obtained a duffle bag of documents linking Cyr to the offshore-services firm from his girlfriend. And in January 2004, three months after Cyr vanished, Byrne picked up the phone and called the company in the Cook Islands.

"I remember it like it was yesterday. I remember my heart racing and sitting at my desk and trying to be very professional and not emotional," she said.

"At that point we just wanted to get any clue as to where he might have gone, what might have happened. Something."

A record of that call is among the documents obtained by CBC News.

"Miriam Byrne called," TrustNet employee Amanda Keu wrote in a memo in Cyr's offshore account.

Keu noted that Byrne "appeared to be very distressed and was crying" about her missing ex-husband, who she believed was dead

"She just wanted to know if he was alive," Keu wrote.

But Keu clung to the Cook Islands' strict financial-secrecy laws and refused to acknowledge anything about Cyr. After hanging up, TrustNet employees tried to reach Cyr by phone and email. There is no record he ever responded.

"I remember just thinking, 'Can someone just tell me something?'" Byrne recounted.

Byrne says the files about her ex-husband, documents discovered amid a massive trove of offshore financial records, point to the need for police to interview more people in the Cyr case. (CBC)

TrustNet continued to stonewall inquiries about Cyr four months later when a receiver in B.C. faxed and called with a court order empowering him to act on Cyr's behalf. The employee who responded said TrustNet "did not recognize foreign judgments."

Privately, though, the firm eventually started having concerns. Seven months after its client went missing, the company filed a report with the Cook Islands Financial Intelligence Unit, indicating Cyr might have been involved in criminal transactions or money laundering.

But TrustNet continued to frustrate the B.C. receiver. A TrustNet employee told him that "unless he was a shareholder or office holder of the company, we could not divulge any information" about the "structure of business affairs of the company".

Secrecy for sale

In contrast, Cyr met with very little scrutiny when setting up his companies and their bank accounts.

TrustNet asked him to provide details about his business, and Cyr wrote that the purpose of Sentinel Holdings was "financing other companies and business ventures," and that the source of his funds was an import-export business.

Cyr also had to provide a bank reference, which amounted to a form letter from his local branch of TD Canada Trust vouching for the fact that Cyr had a chequing account.

The annual fee for maintaining his offshore company was about $1,500. For that price, Cyr got secrecy. A note on his file makes it clear that "the owner, Mr. Cyr, does not want his name revealed as the beneficial owner of the company."

"It was strictly superficial," money-laundering investigator Gary Clement said about TrustNet's due diligence in vetting Cyr as a client.

CBC News showed the Cyr files to Clement, who spent 30 years with the RCMP and now manages an international financial consulting firm in Ontario.

"It really enabled people like Mr. Cyr to set up businesses, set up a number of accounts using different companies without really establishing his bona fides. And that really is the case here," Clement said.

Still listed as missing person

TrustNet eventually complied with the court order in Cyr's case and revealed his assets, which didn't amount to much more than the house in Victoria.

Byrne's lawyer, Greg Harney, said he doesn't fault TrustNet for withholding information about its clients, if all that exists are suspicions of criminality.

Cyr "was a businessman, and there were perhaps issues, and none of them were ultimately confirmed by anybody, including the police," Harney said.

The Vancouver Police Department still lists Cyr as missing person on its website, even though in 2010 Harney was successful in getting the B.C. Supreme Court to declare Cyr dead.

Robert Chernochan's name appears in Cyr's offshore records. Chernochan was arrested in September in California and is charged with drug trafficking. ((Tehama County Sheriff's Department))

The department declined to discuss the case, but Harney thinks investigators might be interested in a discovery CBC News made after examining the leaked TrustNet files.

Those documents show Cyr shared details about his secret company with a friend, Robert Chernochan. Cyr authorized Chernochan, who was a real estate agent at the time, to handle details connected with the Victoria house he bought.

Last September, Chernochan was arrested in California at a truck inspection station. He was driving a tractor-trailer north to Canada. Highway patrol officers found 66 kilograms of cocaine in a hidden compartment.

Chernochan is now in jail on narcotics trafficking charges, held on $5-million US bail. Neither he nor his lawyer responded to requests for interviews.

Clement said Chernochan is someone police should talk to.

"If I was still in law enforcement and this was my case, I definitely would make that overture to the authorities in the United States to see if we could get co-operation."

Byrne said she recalls police telling her 10 years ago that they had tried to speak to Chernochan as part of the investigation into Cyr's disappearance, but he proved elusive. She had no idea at the time about TrustNet, the offshore accounts it set up and Chernochan's role in them.

"If I had this," Byrne said, "I would have marched this down to the police to say please, please ... please interview them."

If you have more information on this story, or other investigative tips to pass on, please email investigations@cbc.ca

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Canadian Tire to spin off real estate holdings into investment trust

Canadian Tire Corp. Ltd. announced Thursday that it will create a $3.5-billion real estate investment trust to unlock the value of its property holdings, with an initial public offering expected later this year.

The move follows on the heels of a similar plan by grocer Loblaw Companies Ltd.Canadian Tire 3-month TSX chart

It came as the high-profile retailer of general merchandise, sporting goods, financial services and automotive products and services announced a 2.9 per cent increase in first-quarter earnings amid a 1.7 per cent increase in total revenue.

The proposed new REIT would acquire a majority of the company's real estate, including a geographically diverse portfolio of some 250 properties comprised largely of Canadian Tire Retail stores, Canadian Tire anchored retail developments and one distribution centre.

Canadian Tire says the properties, totalling about 18 million square feet, have an approximate market value of $3.5 billion.

"We are executing a strategy that reinforces the strength of our company while pursuing new growth opportunities organically and through acquisition," president and CEO Stephen Wetmore said in a statement.

"Today's announcement regarding a REIT would increase CTC's financial flexibility, providing us with the ability to access funds at an attractive cost of capital as we continue to invest in and grow our business."

Canadian Tire to own majority of new REIT

Canadian Tire owned properties currently comprise a total of about 25 million square feet and the company said that retail stores that are being considered for replacement, relocation, or further development would initially be retained and not be part of the REIT.

CTC would retain a significant ownership interest of 80 to 90 per cent of the REIT with the remainder of the REIT's units offered to the public via an initial public offering anticipated in the fall.

The company said the REIT's financial statements would be consolidated with CTC's financial statements and that it expected there would be only a minimal impact on consolidated net earnings, cash flow and debt metrics.

On the earnings front, Canadian Tire reported net income in the first quarter increase to $73 million or 90 cents peer share from $71 million or 87 cents in the same 2012 period.

Total revenue was up 1.7 per cent to $2.48 billion from $2.44 billion, while retail sales increase 0.8 per cent to $2.444 billion from $2.42 billion.

Canadian Tire employs more than 85,000 people at over 1,700 retail and gasoline outlets from coast to coast, including its almost 500 locally run Canadian Tire stores as well as Mark's and various corporate and franchised banners under FGL sports, including Sport Chek, Hockey Experts, Sports Experts, National Sports, Intersport and Atmosphere.

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New home prices edge higher

A key index of new home prices edged up by 0.1 per cent in the month of March, largely on the strength of the booming Calgary real estate market, Statistics Canada said Thursday.

New house prices rose 0.3 per cent in Calgary from February's level, making it the biggest contributor to the rise in the agency's new home price index.

"Builders indicated that increases in material and labour costs as well as market conditions were the main reasons for higher prices," Statistics Canada said in a statement.

On a month-over-month basis, the largest increase occurred in Regina (0.7 per cent). But because Regina is a smaller market, Calgary's increase had a bigger impact on the national index. Saskatoon and Windsor, Ont., reported monthly prices rises of 0.5 per cent.

Toronto-Oshawa saw prices edge up by just 0.1 per cent, while prices fell 0.2 per cent in the once booming Vancouver market. Statistics Canada said builders in Vancouver were lowering their prices to stimulate sales.

On a 12-month basis, the new home price index was 2.0 per cent higher than it was a year earlier. Winnipeg new home prices rose the fastest — 5.1 per cent. that was the fourth straight month that Winnipeg's new home prices have led the country's urban markets.

Annual prices rose 4.3 per cent in Calgary.

New home prices in B.C.'s biggest urban markets continued to fall on a year-over-year basis. Vancouver's prices fell 0.7 per cent, while Victoria's dropped 1.6 per cent.

Canada's real estate market has been unmistakeably cooling for many months now. Almost all housing indicators — new home prices, resale prices, numbers of sales, housing starts, and residential building permits — have been moderating or edging down recently.

Analysts say last summer's move by Finance Minister Jim Flaherty to further tighten mortgage lending rules has played a part in the cooling of a market that some observers say had become overheated.

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Rogers seeks order that Bell sell Movie Network if Astral takeover is allowed

Bell should be forced to sell Astral's Movie Network pay TV service if the CRTC is going to allow the $3.4-billion revised merger of the two companies to go ahead, Rogers Communications Inc. said Tuesday.

However, Rogers also told the CRTC hearing reviewing the revised deal it would like to buy Astral's Movie Network for itself and add it to its own services, including mobile and on-demand.

Rogers said it expects Bell will impose financial terms to make it more difficult to get the English-language pay TV service's movies and programs and ultimately make it more expensive for consumers.

"These are premium services that hold the multi platform rights to 'must have' feature films and HBO series," said Ken Engelhart, vice-president of regulatory at Rogers.

"They are the jewels in the Astral crown. We think it would be unwise to allow these services to be acquired by Bell Media."

Original takeover rejected

The CRTC turned down Bell's purchase of Astral Media last fall, saying it wasn't in the best interests of Canadians and would have made Bell too powerful, especially in the TV market.

Rogers had asked the CRTC to make Bell sell off the English pay TV assets during the last round of hearings too, but wouldn't say at that time if it definitely wanted to purchase them.

At the hearing Tuesday, Rogers told the CRTC it was an interested buyer.

"We would at least take a look at TMN," Engelhart said of Astral's Movie Network.

When asked by the CRTC who else could buy the English pay TV services other than Rogers, Engelhart replied: "I think with the amount of money that thing generates there will be a buyer."

Rogers said the Movie Network's films and series have been the "cornerstone" of its new services, Rogers on Demand and Rogers Anyplace TV and worries that Bell will make purchasing this content more expensive and difficult.

Bell said it looks like Rogers wants Astral's Movie Network for itself.

"Rogers claims that forcing us to sell TMN would somehow solve their problem of getting access to that content," said Mirko Bibic, chief legal and regulatory officer at Bell.

"Yet they already have access to TMN content through a long-term agreement with Astral. They're demanding that the regulator ensure their access to something they already have. It's a very curious argument, and we can only assume they simply want TMN for themselves," Bibic said in an email.

Competition with Netflix

Bell and Astral also have said combining the two companies will better allow them to compete with companies like Netflix.

Rogers replied that most major Canadian TV providers will roll out some kind of competitor to online TV and movie provider Netflix.

"I don't think you need to approve the transaction in its current form in order to have that kind of competition in the marketplace," said Dave Purdy, Rogers vice-president of digital television products.

"We certainly plan on rolling out our own subscription products that will compete with Netflix," Purdy told the Canadian Radio-television and Telecommunications Commission.

Telus opposes merger

Telus Corp. which doesn't own any TV or radio stations, said Tuesday it's still opposed to the deal.

Telus said if Rogers were able to buy the Movie Network, it still wouldn't have the same heft as Bell owning the Movie Network and other Astral assets.

"They could buy three TMNs and still not be in the same ball park as Bell Media," David Fuller, Telus's chief marketing officer, said after his company's presentation.

But Telus said if the deal goes ahead it would like the code of conduct the industry uses, for such things as access to content and commercial negotiations, strengthened.

The telecommunications company also said Bell's proposal to sell off some of Astral's TV channels and radio stations doesn't change how this merger will affect the communications industry.

"If this transaction is approved, Bell will still become the largest television content aggregator, the largest radio operator and one of the most significant advertising suppliers, over and above being Canada's largest telecommunications provider," said Ted Woodhead, senior vice-president of federal government and regulatory affairs at Telus.

Telus also expressed Rogers' concerns that Bell would use its significant power over content and advertising to raise prices its competitors.

Bell and Astral are seeking approval of a revised deal that among other things would see Bell sell all of Astral's English language specialty services and one of its English pay TV services. However, it would keep eight specialty and pay of Astral's channels including the Movie Network.

Consumer group says merger bad for competition

A consumer advocacy group also asked the CRTC to turn down the revised deal for a second time, saying a bigger Bell won't be better for competition or choice.

The Public Interest Advocacy Centre said there would be more Bell content and services available to consumers, but at Bell's price and on Bell's terms.

"Bell's version of the public interest envisions a bigger Bell that provides more Bell services and content to consumers on Bell platforms — or on a competitor's platform, but at Bell's price and on Bell's terms," said Janet Lo, legal council for the Ottawa-based group.

Singer Suzie McNeil told the CRTC she's in favour of the deal because both Bell and Astral support Canadian artists.

McNeil said Bell has helped support her career. Her song, "Believe" became Bell's fundraising song for its "Own the Podium" campaign and she was selected to sing at the Vancouver Winter Olympics closing ceremonies.

"Significant benefit dollars that will result from this transaction will enable more artists like me," she said.

Bell has said it will also sell 10 of 84 radio stations owned by Astral and will acquire less than half of Astral's French language specialty services.

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Dow closes at record high above 15,000

The Dow Jones industrial average closed above 15,000 for the first time ever on Tuesday as the world's best known stock market measure extended its recent rally.

The Dow closed at 15,056.20, up 87.31 points on the day. The Dow first crossed the 15,000 threshold in intraday trading last Friday but slipped below that level by the close. The gains followed last week's better-than-expected U.S. employment report.

Dow Jones industrial average 3-month chart

So far this year, the Dow Jones industrial average has risen an impressive 14.8 per cent. It has doubled since late 2008, when the recession was at its worst.

Other U.S. stock measures are also performing well. The broader S&P 500 index has jumped more than 13 per cent year-to-date and has technically entered bull market territory, as it's risen 20 per cent from its November lows.

Strong corporate earnings have helped to power U.S. stocks higher. Earnings reports from the more than 400 members of the S&P 500 which have reported first-quarter results show that two-thirds of them have beaten market expectations.

U.S. markets are trading at record levels on optimism that the U.S. economy is recovering and that the Federal Reserve will continue its easing policy to keep long-term interest rates low.

"We don't think people are giving enough credit to the strength of the economy," said Ryan Detrick, a senior technical strategist at Schaeffer's Investment Research. "We still like the market."

German and Japanese stocks surging

It's not just U.S. stock markets that have been soaring lately. Germany's DAX index hit a new record high on Tuesday as official figures showed industrial orders rose strongly for a second straight month.

In Japan, the benchmark Nikkei 225 index hit its highest level in almost five years Tuesday – closing with a 3.6 per cent gain at 14,180.24. It's the first time the Nikkei has breached the 14,000 mark since June 2008.

Japanese stocks have been marked up heavily this year after the Bank of Japan announced a new aggressive monetary policy to get the country out of its near two-decade stagnation.

Here at home, the S&P/TSX composite index is still 20 per cent below its all-time high set in mid-2008 as weak commodity prices have weighed on resource stock prices. The benchmark index rose 10.19 points Tuesday to close at 12,464.11.

The Canadian dollar closed at 99.56 cents US, up 0.24 cents. That's near a three-month high.

With files from The Associated Press

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Harper says foreign worker program is being fixed

The government has been acting on problems with the temporary foreign worker program for more than a year, Prime Minister Stephen Harper said Tuesday in response to opposition accusations the government was hiding information and denying that it wasn't working properly.

The accusations arose during several feisty exchanges in question period between the government and the NDP over the temporary foreign worker program following a CBC story about a memo for Human Resources Minister Diane Finley on the controversial program.

CBC News reported on Monday that Finley was warned last year that employers were hiring temporary foreign workers in the same jobs and same locations as Canadians who were filing employment insurance claims. One example cited in the memo showed the number of temporary foreign workers who were allowed to work as food counter attendants and the number of people who claimed employment insurance who cited experience in that sector in the same province.

The briefing note prepared by Finley's deputy minister last May was obtained by CBC's Power & Politics under the Access to Information Law.

In the House of Commons on Tuesday, NDP Leader Tom Mulcair accused Harper of denying that there were any problems with the temporary foreign worker program until changes to it were announced last week.

"Exactly the contrary is true. The government indicated for some time that it would be reforming the temporary foreign worker program," said Harper, adding that measures were already introduced to better match job vacancies with people on employment insurance.

"We've been very clear we need to do a better job of matching the demand for EI and the demand for temporary foreign workers, that's precisely what the government has been doing for a year and a half while, by the way, the NDP's been writing us demanding more temporary foreign workers for their ridings," Harper said.

The temporary foreign worker program has been the subject of much controversy lately on Parliament Hill. Last month, CBC reported that dozens of employees at RBC were losing their jobs to temporary foreign workers.

Earlier this year, two labour unions took Huiyong Holdings Group to court, after the mining company hired more than 200 temporary foreign workers from China for its coal mine in northeastern B.C.

Mulcair accuses government of hiding information

Mulcair asked whether Finley has been hiding information from Harper or if Harper has been hiding information from Canadians about how the temporary foreign worker program was being used.

"The minister brought in changes last year to make sure that people who are on EI, employment insurance, get first crack at jobs rather than temporary foreign workers, but guess what? Guess who opposed that? The NDP opposed it," Harper responded.

Finley and Citizenship and Immigration Minister Jason Kenney defended the government's actions on reforming both the employment insurance and temporary foreign worker programs.

"We recognized this problem a year ago and in fact before that and we've been talking about it publicly since and in fact that's exactly why we introduced changes to the employment insurance and temporary foreign worker programs," said Finley.

Employers are more aware of qualified unemployed people and those seeking work are more aware of employers who are seeking to fill vacancies, she said.

Kenney said the information in the memo was being cited in speeches and interviews a year ago and that it's the NDP that is behind on the issue, not the government.

"Why did it take the NDP a year to catch up with reality?" he said.

New study on labour market

The debate on Parliament Hill came as a new report suggested Tuesday that the increasingly controversial system "could be distorting" the natural supply and demand of the country's labour market.

The University of Calgary study suggests Canada isn't facing a wide-scale labour shortage but rather is experiencing a "serious mismatch" between the skills of its labour force and the demands of the labour market.

Kevin McQuillan — lead author of the study titled "All the workers we need: debunking Canada's labour shortage fallacy" — said improving the balance in the labour marketplace does not require an increase in the labour supply.

"Indeed, the TFWP (temporary foreign worker program) is sometimes being used to fill jobs with foreign workers in regions that already suffer from relatively high unemployment rates," wrote McQuillan.

"Temporary foreign workers could be distorting the labour market forces that would bring together more Canadian workers and jobs."

McQuillan suggested an improved immigration policy — that could adjust intake levels with labour market needs and reduce the number of temporary foreign workers brought in — as part of the solution.

"The country is not likely to benefit from a growing class of low-paid, temporary residents," he wrote. "Canada needs to make more effective use of its homegrown human resources."

Education could address labour needs, report says

In 2012, some 213,516 people entered Canada via the temporary foreign worker program, more than three times the number admitted a decade ago.

The private sector brought in 25 per cent more foreign labourers last year than the number of economic immigrants accepted by the government, which has long insisted caps on its own programs are necessary so as not to flood the Canadian labour market.

McQuillan's report conceded there are worker shortages in specific industries and certain regions, but he argued that young Canadians need to be encouraged to pursue an education and careers in fields where jobs are available.

He said this could be done through government funding into educational institutions with programs that match labour market needs and tuition pricing that charges more for study in a field where there is already an excess of labour.

He also suggested the government should find ways — such as a tax break — to entice Canadian workers to move from high-unemployment regions to provinces where workers are needed.

Statistics Canada's labour market survey placed the unemployment rate at 7.2 per cent in March.

Proposals come amidst overhaul

Tuesday's report refocused attention on the temporary foreign worker program, which the Conservative government was recently forced to admit is due for an overhaul after weeks of public outcry over the scarcity of Canadian jobs.

Under the proposed changes, employers will no longer have flexibility to set the wages for foreign labour, putting an end to a rule that allowed businesses to pay foreign workers up to 15 per cent below median wages, if that's what they were paying Canadians.

The Conservatives also called for a temporary freeze to a program that fast-tracked the ability of some companies to bring in workers from outside Canada through what's known as an accelerated labour market opinion.

The two key changes are part of a larger overhaul of the program that also includes stricter rules for applications, new fees for employers who apply and a promise of stricter enforcement.

With files from the Canadian Press

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Tim Hortons profits drop; appoints new CEO

Tim Hortons Inc. (TSX:THI) has reported a slight contraction in net income in what was expected to be a "soft" first quarter as the iconic coffee and doughnut chain announced the appointment of a new president and CEO.

Marc Caira, a longtime senior executive at Nestle, will take over from Paul House effective July 2. House will become non-executive chairman, while Caira will stand for election as a director at the annual meeting of shareholders.

Caira, 59, was most recently global CEO of Nestle Professional and was also a member of the executive board of Nestle SA, the world's largest food and beverage company.

Ontario-based Tim Hortons, with more than 4,200 locations across Canada and in the United States, said net income attributable to stockholders was $86.2 million or 56 cents per share in the three months ended March 31.

That was down 2.9 per cent from $88.8 million, also 56 cents per share, in the same 2012 period when the company had more shares.

Adjusted earnings were $137.4 million, up 4.4 per cent from 131.6 million in the 2012 quarter.

Revenue totalled $731.5 million, up 1.4 per cent from $721.3 million.

"While it was a soft quarter as expected, we are taking important steps to continue to expand and enhance our system, improve the guest experience and build value for our shareholders," House said in remarks in which he also touted the appointment of his successor.

New CEO comes from Nestle Canada

He described Caira, who previously served as president and CEO of Parmalat North America and as president, food services and Nescafe beverages for Nestle Canada, as someone with "a keen understanding of the global food services industry and specifically the hot beverage and food sectors that is second to none."

"We look forward to his leadership as we continue to hone our strategies to support future growth and fulfil our ongoing commitment to generating strong shareholder returns."

Tim Hortons is one of the largest publicly-traded restaurant chains in North America based on market capitalization, and the largest in Canada. As of March 31st, Tim Hortons had 4,288 systemwide fast-food restaurants, including 3,453 in Canada, 808 in the United States and 27 in the Gulf Co-operation Council.

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Housing construction slows in April, but no crash yet

Canada's once-sizzling housing market continues to fall back to more sustainable levels, but as yet is managing to avoid the earmarks of a damaging crash that would spill over into the general economy.

The latest data on housing starts from Canada Mortgage and Housing Corp. shows construction fell to 15,390 for a seasonally adjusted annual rate of 174,858 units in April, moderately lower than the upwardly revised 181,146 recorded in March.

The dip was concentrated mostly in Ontario, British Columbia and Atlantic Canada and mostly came in the condo market.

"Canadian homebuilders are facing the new reality that the decade-long housing boom has ended, and are retrenching in orderly fashion," said Sal Guatieri, a senior economist with BMO Capital Markets.

"They are cruising below annual household formations of about 185,000, reducing the risk of a supply glut now that demand has slackened."

End of housing boom

TD Bank economist Sonya Gulati noted the long-held concerns about Canada's housing market, particularly from the International Monetary Fund and the Bank of Canada, but said the recent trend should ease some of the fears. Even when the market was overheating, she said, that was mostly due to the influence of Toronto and Vancouver and not widespread.

"Both have been recording fewer starts over the past six months. If the slower pace continues to prevail, the concerns of too many projects in the absence of actual demand will subside," she wrote in a note to clients.

Analysts said the housing market will likely act as a small drag on economic growth this year, after contributing 0.4 per cent to gross domestic product output in 2012.

Most if not all housing indicators — starts, resales, building permits and prices — have cooled considerably since July 2012 when Finance Minister Jim Flaherty's new tighter regulations for mortgages and lending practices went into effect.

April housing starts meet expectations

Last month, Bank of Canada governor Mark Carney told a parliamentary committee that all indicators were moving in the right direction and that household debt accumulation had stabilized, albeit at an extremely high level of 165 per cent of disposable income.

April starts were on the mark with economist expectations and slightly below the first quarter average.

The seasonally adjusted annual rate of urban starts was down 2.5 per cent, led by a 3.5 per cent decline in multiple urban starts. Single urban starts remained relatively unchanged from March.

Regionally, starts fell by 41 per cent in Atlantic Canada, 15 per cent in Ontario and six per cent in British Columbia.

Offsetting the losses, starts rose by 15 per cent in Quebec and nine per cent in the Prairies.

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Bell CEO says takeover of Astral good for Canadians

Consumers will get more content and Bell will play fair with its competitors, the media company promised as it made a revised sales pitch to the CRTC seeking approval for its $3.38 billion takeover of Astral Media that was turned down last year.

George Cope, chief executive of Bell parent company BCE Inc., said Monday the merger will be good for Canadians and the industry after a warning from the CRTC that the burden rests with Bell and Astral to prove its case.

CRTC Chair Jean-Pierre Blais says Bell must prove that the deal is in the public interest, as well as in the interest of the Canadian broadcasting system.

Astral CEO Ian Greenberg says the deal is the best way to protect Canadian interests from foreign companies like Neflix.

It's Bell's second attempt to take over Astral, following a change to the $3.38 billion deal that would see Bell sell off a majority of Astral's TV assets in an attempt to ease the regulator's worries about competition.

John Lawford, executive director of the Public Interest Advocacy Centre, disagrees with says the deal is bad for consumers.

"Increased media concentration into the hands of few large, vertically integrated telecommunications and media companies will not result in more competition in the market."

Bell's second attempt

Bell's original takeover bid was rejected by the Canadian Radio-television and Telecommunications Commission last fall, because the regulator felt it would restrict choice and raise prices for consumers.

At the time, CRTC commissioner Jean-Pierre Blais said the deal would mean Bell would control almost 45 per cent of Canada's English TV viewership, and almost 35 per cent of the French-language audience.

As well, it would have become the largest radio-station operator in Canada and would have controlled more than half of TV pay and specialty services.

In November, Bell launched a revised bid for Astral.

Under the new plan, Bell's parent company BCE would keep eight of Astral's 25 specialty channels, including the Movie Network, HBO Canada, and French-language SuperEcran, as well as 77 of its 84 radio stations.

Bell would also be required to allow other providers access to the new channels at a reasonable price.

The plan has been approved by the Competition Bureau of Canada.

Less market control

Bell and Astral Media have pointed out they will control less of the market under the revised deal.

"Even after the sale of half of Astral's French-language specialty TV services, Bell Media would increase its viewing share in this market to 22.6 per cent — still less than the 31 per cent viewing share enjoyed by Quebecor, but a significant enhancement to market competition nevertheless," Bell Media president Kevin Crull said recently.

Telecom consultant Eamon Hoey said the question remains whether the acquisition is in the public's best interests.

"It's going to take some guts for the CRTC to turn it down," said Hoey, managing partner at Hoey Associates Management Consultants Inc. in Toronto.

Media concentration is still a big concern, he said.

"It's only moving the pieces of chess around the board," Hoey added.

Cable company Cogeco is opposed to the new plan, saying it will lead to higher prices and less choice for consumers.

The hearings will be held in Montreal all this week.

With files from The Canadian Press

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Wal-Mart regains top spot on Fortune 500 list

Wal-Mart Stores Inc. once again leads Fortune's list of the 500 biggest U.S. companies by revenue, as the world's largest retailer succeeded in posting strong growth despite a challenging economy for its shoppers.

The Bentonville, Ark., company's revenue grew nearly 6 per cent in 2012 to $469.2 billion.

Exxon Mobil Corp. dropped to the second spot, with revenue of $449.9 billion, but was still the most profitable. Energy companies continued to dominate the top of the list, with rival oil and gas producer Chevron Corp. holding steady at No. 3 and refiners Valero Energy Corp. and Phillips 66, spun off from ConocoPhillips last year, joining the top 10.

Moving up two spots to No. 5 is Warren Buffett's Berkshire Hathaway Inc., which owns everything from insurers to railroads to newspaper publishers and is in the process of acquiring Heinz Co. Manufacturing stalwarts General Motors Co., Ford Motor Co. and General Electric Co. slipped in the survey but all remained in the top 10.

Apple cracks the top 10

Bigger sales of iPads and iPhones helped Apple Inc. jump 11 spots to crack the top 10 for the first time, landing at No. 6. The Cupertino, Calif., company's soaring stock price also made it one of the most valuable companies by market cap last year, though shares have since posted a double-digit decline.

Another technology bellwether wasn't as fortunate. Hewlett-Packard Co. slipped to No. 15 from No. 10 as the Palo Alto, Calif., technology pioneer struggled with a broad consumer shift from PCs to smartphones and tablets and its own accounting missteps.

Also off the top 10 is government mortgage provider Fannie Mae, which dropped four spots to No. 12.

Meanwhile, social media powerhouse Facebook Inc., which last year went public in one of the biggest initial public offerings ever, debuted at 482 on the Fortune 500.

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Microsoft changing Windows 8 to address 'learning curve'

Microsoft is retooling the latest version of its Windows operating system to address complaints and confusion that have been blamed for deepening a slump in personal computer sales.

The tune up announced Tuesday won't be released to consumers and businesses until later this year. The changes, part of a software package given the codename "Blue," are a tacit acknowledgment of the shortcomings in Windows 8, a radical overhaul of Microsoft Corp.'s ubiquitous operating system.

'There is a learning curve (to Windows 8) and we can work to address that.'—Tami Reller, Microsoft

With the makeover it released last October, Microsoft hoped to play a more prominent role in the growing mobile device market while still maintaining its dominance in PCs. But Windows 8's design, which emphasizes interactive tiles and touch controls, seems to have befuddled as many people as it has impressed. One leading research firm, International Data Corp., says Windows 8 contributed to a 14 percent decline in worldwide PC sales during the first three months of the year — the biggest year-over-year drop ever.

Meanwhile, sales of smartphones and tablet computers are booming.

Despite the troubling signs, Microsoft insists it's pleased with Windows 8's performance.

100 million sold

The company, which is based in Redmond, Wash., says more than 100 million Windows 8 licenses have been sold so far, up from about 60 million licenses in January. The licensing volume "is in the same general ballpark," as Microsoft's previous operating system — Windows 7 — at a similar juncture of its sales cycle, according to Tami Reller, who serves as the marketing and financial chief for Microsoft's Windows business.

In an interview, Reller said Microsoft still realized changes need to be made to make Windows 8 easier to navigate and capable of taking full advantage of technology improvements that have come out since October.

"Are there things that we can do to improve the experience? Absolutely," Reller said "There is a learning curve (to Windows 8) and we can work to address that."

For now, Microsoft isn't saying what kind of changes will be introduced with the release of Blue, which the company plans to anoint with a different name when the update is available. Microsoft also isn't saying whether it will charge existing owners of Windows 8 devices to get the fixes in Blue. The company plans to release Blue in time for the holiday season.

Preview of new features in June

Reller said more details about Blue will be released before Microsoft holds a developers conference in San Francisco in late June. Some of Blue's features are expected to be previewed at that conference.

Windows 8's design emphasizes interactive tiles and touch controls, tailored for swiping through programs with a finger instead of using a computer mouse. (Richard Drew/Associated Press)If Blue is meant to make people more comfortable, the changes may incorporate more of the elements from earlier versions of Windows.

A common complaint has centered on the lack of a "start" button in the Windows 8 menu.

Other critics have pined for an option that would allow the system to begin in a desktop mode suited for running applications designed for earlier versions of the operating system. Windows 8 currently starts off showing a mosaic of interactive tiles tailored for swiping through programs with a finger instead of using a computer mouse.

Blue also might make it easier to find a set of controls — known as "charms" in Windows 8's parlance — that currently must be pulled out from the right side of a display screen.

Besides responding to customer feedback, Blue also will improve Windows 8's ability to work on smaller tablets with 7- and 8-inch display screens, Reller said. She declined to say whether Microsoft intends to make smaller version of its own Surface tablets. In a conference call with analysts last month, Microsoft Chief Financial Officer Peter Klein said the company was working with other manufacturers to make smaller tablets.

Dearth of apps

One thing that Blue won't fix: the relatively small selection of mobile applications tailored for Windows 8. Reller said the Windows 8 store now has more than 60,000 apps. By contrast, there are more than 800,000 apps available for Apple's mobile's devices and nearly that many for Android devices, too. In one of the most glaring omissions on Windows 8, Facebook Inc. still hasn't designed an app to make its online social network more accessible on that system. Facebook has about 750 million mobile users.

Microsoft's decision to tweak Windows 8 so soon after it went on sale may reinforce perceptions that the product is a flop.

Reller is trying to frame the changes as evidence that Microsoft is becoming more agile and nimble as it responds to a rapidly evolving technology market. Smartphones and tablet computers have been at the epicenter of the upheaval, diminishing the demand for PCs as more people and businesses opt for the convenience of increasingly powerful mobile devices.

The mobile computing movement is the main reason that Microsoft made the most dramatic redesign of its Windows operating system since 1995. Given how different that Windows 8 is from its predecessors, Reller said Microsoft always knew it might have to make some adjustments less than a year after the software came out.

"It had to be a very big change to take advantage of the mobile opportunity," she said.

Touch-screen laptops hit market

Analysts say one reason Windows 8 got off to a slow start is because there weren't enough devices designed to take advantage of the system's touch-screen features. But that is about to change as HP, Dell and other PC makers prepare to roll out a wide variety of laptops and tablets with displays that respond to touch. More than 2,400 devices have now been certified to run on Windows 8, up from 2,000 in January, Reller said.

Most of the touch-screen laptops will sell at prices $50 to $250 below the first wave of comparable machines running on Windows 8, reductions that Microsoft hopes will prod more people to check out the system.

"As we look at Windows 8, it's important to remember a lot of its full potential won't be realized until there are more touch devices on the market," Reller said.

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WestJet reports "best ever" earnings in Q1

WestJet is reporting its "best ever" quarterly earnings, while also announcing deal to sell 10 of its oldest jets and replace them with 10 newer ones.

The Calgary-based airline says its first-quarter net income rose 33.3 per cent to $91.1 million or 68 cents per share. That compared with net earnings of $68.3 million or 49 cents per share in the same 2012 period.

Total revenue was up 8.6 per cent at $967.2 million from $891 million a year ago.

These results mark WestJet's 32nd consecutive quarter of profitability.

Based on the trailing 12 months, the airline achieved a return on invested capital of 14.3 per cent, up from the 13.7 per cent reported in the previous quarter

"We are very pleased to report our best ever quarterly earnings and, for the third consecutive quarter, we exceeded our 12 per cent ROIC target by achieving 14.3 per cent," WestJet president and CEO Gregg Saretsky said in releasing the company's earnings report Tuesday.

Plane sales

WestJet did not identify the "third party" buyer of its oldest Boeing Next-Generation 737-700 aircraft, but said the sales would be made in 2014 and 2015.

Meanwhile, it has an agreement with Boeing to purchase 10 Next-Generation 737-800 aircraft, also in 2014 and 2015. That will effectively reducing the average age of WestJet's fleet by about a year, the airline said.

WestJet has also deferred the delivery of five Boeing Next-Generation 737-700 aircraft from 2014 and 2015 to 2016 and 2017.

"These agreements are part of our strategy to optimize and modernize our fleet mix, which will improve CASM (cost per available seat mile), while maintaining fleet flexibility going forward," Saretsky said.

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Consumer advocacy group speaks out on Bell-Astral merger

A consumer advocacy group is asking the CRTC to turn down the Bell-Astral merger for a second time, saying a bigger Bell won't be better for competition or choice.

The Public Interest Advocacy Centre says there would be more Bell content and services available to consumers, but at Bell's price and on Bell's terms.

The CRTC has already turned down Bell's purchase of Astral Media once and the group's legal counsel, Janet Lo, says approval of a revised deal won't increase consumer confidence when it comes to competition.

The advocacy group says the market already isn't meeting consumers' expectations for choice, flexibility and affordability, and approving the deal doesn't promise to make the situation any better.

The new plan would see Bell sell all of Astral's English language specialty services and one of its English pay TV services, the Family channel. It would keep eight of Astral's channels including the Movie Network.

Bell also said it will sell 10 of 84 radio stations owned by Astral and will acquire less than half of Astral's French language specialty services.

The telecom giant also said it's making a commitment to keep all local television stations open and plans to increase air play for emerging Canadian artists to at least 25 per cent on relevant radio stations.

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Nurses, IT analysts among top 10 fastest-growing temp jobs

Despite Canada's bleak employment numbers in recent years, there has been an increase in jobs such as nursing, banking and landscaping — as long as you're a temporary worker.

Job search site CareerBuilder.com released a list Friday of the top 10 fastest-growing temporary jobs in Canada based on percentage growth.

Topping the list are licensed practical nurses, an occupation that has grown by 60 per cent — or 296 jobs — since 2010.

Information systems analysts and consultants come in second, with a 44 per cent increase — or 541 jobs added.

Financial clerks, including bank tellers and insurance clerks, are third, with 163 new jobs added, a 43 per cent increase.

Rounding out the top 10 are: landscaping and grounds maintenance workers, purchasing and inventory clerks, records management and filing clerks, payroll clerks, light duty cleaner, registered nurses and computer network technicians.

"There is a myth that temporary positions are just that, temporary, but nearly two in five employers say they plan to transition their temporary workers into fulltime roles sometime this year," said Ross Levadi, director of staffing and recruiting at CareerBuilder.com.

Precarious employment, which includes contract, part-time, self-employment or temporary work, is becoming more common, according to a report by the Law Commission of Ontario.

"Over the past several decades there has been a significant increase in part-time, temporary and casual forms of work. This type of work lacks security and provides workers with limited benefits," the December 2012 report reads.

Canada's economy shed 54,500 jobs in March, the worst month for Canadian employment since before the last recession, in February 2009.

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Building permits jump 8.6% in March

Statistics Canada says municipalities issued $6.5 billion worth of building permits in March, up 8.6 per cent from February.

The federal agency says March provided the third consecutive monthly advance, which came mostly from the non-residential sector in Ontario and Alberta.

The value of non-residential building permits rose 19 per cent to $2.8 billion, a second consecutive monthly gain.

In the residential sector, the value of permits increased 1.7 per cent to $3.6 billion after an 8.1 per cent decline in February.

In the institutional component, the value of permits more than doubled to $980 million in March, following a 28.1 per cent increase in February.

The value of permits issued in the commercial sector totalled $1.4 billion, down 9.6 per cent from February.

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U.S. stocks hit record highs on strong jobs report

America's two largest benchmark stock indexes each hit all-time highs on Friday after new data emerged showing the U.S. economy cranked out 165,000 new jobs last month.

The Commerce Department reported Friday that America's jobless rate dropped to 7.5 per cent in March, the lowest level in more than four years as the U.S. economy added 165,000 new positions.

That was enough to light a fire under U.S. stocks, with the Dow Jones Industrial Average gaining 142 points to almost 14,974, just off the all-time high above 15,000 it reached earlier in the day. The broader S&P 500 index also closed higher, up more than 16 points to1,614.

"There's euphoria today," said Stephen Carl, the head equity trader at The Williams Capital Group. "That's what you'd have to call it."

Both gains were of more than one per cent, and cap an extended bull run.

"All things considered, 165,000 isn't the biggest monthly gain in payrolls you'll every see, but it's enough to assuage concerns that the economy had stalled again," said Paul Ashworth, chief U.S. economist at Capital Economics.

The strong signs of growth in America's economy were enough to power oil higher, moving the price of a barrel of crude up $1.62 in New York to $95.61.

That spread some of the gains to Toronto, where the stock market depends heavily on commodities. The S&P/TSX composite index closed at 12,438, up about 58 points.

"We're breaking through psychological barriers and that will continue to bring investors off the sidelines," said Darrell Cronk, regional chief investment officer for Wells Fargo Private Bank.

The loonie gained about a fifth of a cent, closing at 99.23 cents US.

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Cheap American flights threaten Canadian airport business

The promise of cheaper flights is driving many Canadians across the border to U.S. airports — costing millions of dollars in lost revenue in Canada — but the federal government says it won't subsidize air travel.

The trend of more Canadians flying out of the United States is disconcerting to Canada's aviation industry, which is calling on the federal government to do something to lure back those travellers.

"What we really need to do is get airports, airlines and government in the room together to develop a new national air travel strategy," said Daniel-Robert Gooch of the Canadian Airports Council.

He and other people in the aviation industry were in Winnipeg this week for the Western Canadian Aviation Forum, a conference paying close attention to the problem of air travellers taking their business elsewhere.

"It's a growing problem," said Senator Dennis Dawson, chairman of the Senate transport and communications committee.

Developing into habit

"It has been a problem for a few years, but every year it grows by about 15, 20 per cent, so that means it is revenue lost for Canada. When you have over five million Canadians flying out of American airports, it's more people than are flying out of the fifth biggest airport in Canada," he said.

'Why would a Canadian taxpayer want to subsidize a trip to the Caribbean?'—Minister of State for Transport Steven Fletcher

"These people are developing a habit of going to American airports, [and] all of these airports are growing to the detriment of your local airport. The reality is there have been estimates of thousands of jobs lost [in Canada]."

Manitoba is one of the provinces seeing the exodus of travellers. Close to half the cars in the parking lot at the Grand Forks International Airport have Manitoba license plates these days.

Victor Matos, Melodie Ralph and their family saved more than $1,000 by flying to Orlando through the North Dakota city instead of leaving from Winnipeg.

"We have a lot of friends that do it, and do it regularly, like once [or] twice a month, going to Florida and other sun destinations right out of here," Matos told CBC News at the Grand Forks airport.

Geography blamed

Ralph said if they found a cheaper alternative in Winnipeg, they'd take it. But so far, there isn't one because of "all those extra surcharges and taxes and fees that are added on," she said.

"We like to travel; we love to travel," Ralph said.

"We are going to find the most economical way to do that. If that means driving an hour and half to Grand Forks to save a thousand dollars, that's what that means."

The reason for the vast price differences in the U.S. and Canada has much to do with geography, said Dawson.

"We are a smaller market dispersed on a bigger country. That is not something easy to deal with but in addition to that, the government has imposed rents on airports," he said.

"The government is making money out of security taxes for CATSA [Canadian Air Transport Security Authority]. They shouldn't be making money out of security taxes. All of those are costs the government can control."

Additionally, unlike in Canada, the U.S. government picks up security costs rather than pass them down. It also does not charge rent to airports for the lands they sit on.

Air industry officials say the fees charged on this side of the border make Canadian airports uncompetitive and are driving passengers south at a loss of $2.3 billion a year.

"We have to look at the fees and taxes that are levied on travellers in Canada," said Gooch.

Lower rates, fees, says senator

A new federal strategy is needed so Canada can better compete with American airlines and airports, Dawson said, and that starts with addressing the rents airports pay, as well as other fees and charges added onto airline tickets.

"They can lower the rates of rents. They should. They should abolish them completely but, at best, let's ask them to lower them," he said.

"These fees are one of the biggest impediments that can easily be controlled. We can't make our country smaller, and we can't get 10 million people more.

"If we lower those, we'll encourage people to fly out of Canada."

But Steven Fletcher, Canada's minister of state for transport, said he doesn't think taxpayers' money should go towards subsidizing people's flights.

"Why would a Canadian taxpayer want to subsidize a trip to the Caribbean? Because that's essentially what is being argued," Fletcher said on Friday, after he met with aviation industry stakeholders.

"That's not what happens in Canada. That's what happens in the United States. But in Canada … you use it and you pay for it, and no tax dollars go into it."

Canada's air industry is based on the "user-pay principle," meaning taxpayers do not subsidize air travel in Canada, and those who fly pay for the system.

"Our government will continue to keep taxes and fees as low as possible, while ensuring the ongoing sustainability of our airports," a government spokesperson told CBC News in an email.

The spokesperson added that Ottawa recently made it mandatory for airlines to advertise all-inclusive airfares that include taxes, fees and surcharges.

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Bell must justify Astral takeover, CRTC says

Bell is making the case for its proposed takeover of Astral Media a second time as a new round of public hearings begin today.

CRTC Chair Jean-Pierre Blais says Bell must prove that the deal is in the public interest, as well as in the interest of the Canadian broadcasting system.

It's Bell's second attempt to take over Astral, following a change to the $3.38 billion deal that would see Bell sell off a majority of Astral's TV assets in an attempt to ease the regulator's worries about competition.

John Lawford, executive director of the Public Interest Advocacy Centre, says the deal is bad for consumers.

"Increased media concentration into the hands of few large, vertically integrated telecommunications and media companies will not result in more competition in the market."

Bell's second attempt

Bell's original takeover bid was rejected by the Canadian Radio-television and Telecommunications Commission last fall, because the regulator felt it would restrict choice and raise prices for consumers.

At the time, CRTC commissioner Jean-Pierre Blais said the deal would mean Bell would control almost 45 per cent of Canada's English TV viewership, and almost 35 per cent of the French-language audience.

As well, it would have become the largest radio-station operator in Canada and would have controlled more than half of TV pay and specialty services.

In November, Bell launched a revised bid for Astral.

Under the new plan, Bell's parent company BCE would keep eight of Astral's 25 specialty channels, including the Movie Network, HBO Canada, and French-language SuperEcran, as well as 77 of its 84 radio stations.

Bell would also be required to allow other providers access to the new channels at a reasonable price.

The plan has been approved by the Competition Bureau of Canada.

Less market control

Bell and Astral Media have pointed out they will control less of the market under the revised deal.

"Even after the sale of half of Astral's French-language specialty TV services, Bell Media would increase its viewing share in this market to 22.6 per cent — still less than the 31 per cent viewing share enjoyed by Quebecor, but a significant enhancement to market competition nevertheless," Bell Media president Kevin Crull said recently.

Telecom consultant Eamon Hoey said the question remains whether the acquisition is in the public's best interests.

"It's going to take some guts for the CRTC to turn it down," said Hoey, managing partner at Hoey Associates Management Consultants Inc. in Toronto.

Media concentration is still a big concern, he said.

"It's only moving the pieces of chess around the board," Hoey added.

Cable company Cogeco is opposed to the new plan, saying it will lead to higher prices and less choice for consumers.

The hearings will be held in Montreal all this week.

With files from The Canadian Press

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Nurses, IT analysts among top 10 fastest-growing temp jobs

Despite Canada's bleak employment numbers in recent years, there has been an increase in jobs such as nursing, banking and landscaping — as long as you're a temporary worker.

Job search site CareerBuilder.com released a list Friday of the top 10 fastest-growing temporary jobs in Canada based on percentage growth.

Topping the list are licensed practical nurses, an occupation that has grown by 60 per cent — or 296 jobs — since 2010.

Information systems analysts and consultants come in second, with a 44 per cent increase — or 541 jobs added.

Financial clerks, including bank tellers and insurance clerks, are third, with 163 new jobs added, a 43 per cent increase.

Rounding out the top 10 are: landscaping and grounds maintenance workers, purchasing and inventory clerks, records management and filing clerks, payroll clerks, light duty cleaner, registered nurses and computer network technicians.

"There is a myth that temporary positions are just that, temporary, but nearly two in five employers say they plan to transition their temporary workers into fulltime roles sometime this year," said Ross Levadi, director of staffing and recruiting at CareerBuilder.com.

Precarious employment, which includes contract, part-time, self-employment or temporary work, is becoming more common, according to a report by the Law Commission of Ontario.

"Over the past several decades there has been a significant increase in part-time, temporary and casual forms of work. This type of work lacks security and provides workers with limited benefits," the December 2012 report reads.

Canada's economy shed 54,500 jobs in March, the worst month for Canadian employment since before the last recession, in February 2009.

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U.S. stocks hit record highs on strong jobs report

America's two largest benchmark stock indexes each hit all-time highs on Friday after new data emerged showing the U.S. economy cranked out 165,000 new jobs last month.

The Commerce Department reported Friday that America's jobless rate dropped to 7.5 per cent in March, the lowest level in more than four years as the U.S. economy added 165,000 new positions.

That was enough to light a fire under U.S. stocks, with the Dow Jones Industrial Average gaining 142 points to almost 14,974, just off the all-time high above 15,000 it reached earlier in the day. The broader S&P 500 index also closed higher, up more than 16 points to1,614.

"There's euphoria today," said Stephen Carl, the head equity trader at The Williams Capital Group. "That's what you'd have to call it."

Both gains were of more than one per cent, and cap an extended bull run.

"All things considered, 165,000 isn't the biggest monthly gain in payrolls you'll every see, but it's enough to assuage concerns that the economy had stalled again," said Paul Ashworth, chief U.S. economist at Capital Economics.

The strong signs of growth in America's economy were enough to power oil higher, moving the price of a barrel of crude up $1.62 in New York to $95.61.

That spread some of the gains to Toronto, where the stock market depends heavily on commodities. The S&P/TSX composite index closed at 12,438, up about 58 points.

"We're breaking through psychological barriers and that will continue to bring investors off the sidelines," said Darrell Cronk, regional chief investment officer for Wells Fargo Private Bank.

The loonie gained about a fifth of a cent, closing at 99.23 cents US.

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Lululemon sued over corporate bonuses ahead of recall

A U.S. pension fund is suing Lululemon Athletica Inc. over its decision to increase potential bonuses for executives prior to announcing problems with a batch of pants that were too see-through.

The lawsuit, which did not cite the damages sought, was filed Friday at the Court of Chancery in Delaware by the Hallandale Beach Police Officers and Firefighters' Personnel Retirement Fund.

Lululemon was incorporated in Delaware.

The fund says it wants to examine any corporate books or records to investigate whether the maker of trendy workout gear breached their duties to protect the interests of their shareholders.

It also stated that it will consider "bringing any further action that may be necessary under Delaware law," following the inspection.

A spokeswoman for the Lululemon, which sells athletic apparel popular with yoga enthusiasts, refused to comment on the case when reached Friday.

Claim alleges 'severe quality control issues'

But in the eight-page claim, the fund alleged Lululemon has suffered "several quality control issues" this year, with the most recent recall of its black Luon pants estimated to cost the company approximately $60 million.

The allegations have not been proven in court.

Lululemon began pulling the pants off shelves on March 18. The pants represented 17 per cent of the company's woman's pants inventory. Since then, it has said that the fabric used in the pants did not meet their standards. Its chief product officer has also left the company.

The court documents allege that about a week before the pants were pulled from store shelves, Lululemon's board of directors approved to increase the maximum amount allowed for paid bonuses by 33 per cent.

Lawyer Gustavo Bruckner, who is representing the pension fund, would not comment on the lawsuit when contacted in New York.

Shares in Lululemon fell 41 cents or 0.53 per cent, to $76.96 Friday on the Toronto Stock Exchange.

The company operates 211 stores in North America and Australia.

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Cheap American flights threaten Canadian airport business

The promise of cheaper flights is driving many Canadians across the border to U.S. airports — costing millions of dollars in lost revenue in Canada — but the federal government says it won't subsidize air travel.

The trend of more Canadians flying out of the United States is disconcerting to Canada's aviation industry, which is calling on the federal government to do something to lure back those travellers.

"What we really need to do is get airports, airlines and government in the room together to develop a new national air travel strategy," said Daniel-Robert Gooch of the Canadian Airports Council.

He and other people in the aviation industry were in Winnipeg this week for the Western Canadian Aviation Forum, a conference paying close attention to the problem of air travellers taking their business elsewhere.

"It's a growing problem," said Senator Dennis Dawson, chairman of the Senate transport and communications committee.

Developing into habit

"It has been a problem for a few years, but every year it grows by about 15, 20 per cent, so that means it is revenue lost for Canada. When you have over five million Canadians flying out of American airports, it's more people than are flying out of the fifth biggest airport in Canada," he said.

'Why would a Canadian taxpayer want to subsidize a trip to the Caribbean?'—Minister of State for Transport Steven Fletcher

"These people are developing a habit of going to American airports, [and] all of these airports are growing to the detriment of your local airport. The reality is there have been estimates of thousands of jobs lost [in Canada]."

Manitoba is one of the provinces seeing the exodus of travellers. Close to half the cars in the parking lot at the Grand Forks International Airport have Manitoba license plates these days.

Victor Matos, Melodie Ralph and their family saved more than $1,000 by flying to Orlando through the North Dakota city instead of leaving from Winnipeg.

"We have a lot of friends that do it, and do it regularly, like once [or] twice a month, going to Florida and other sun destinations right out of here," Matos told CBC News at the Grand Forks airport.

Geography blamed

Ralph said if they found a cheaper alternative in Winnipeg, they'd take it. But so far, there isn't one because of "all those extra surcharges and taxes and fees that are added on," she said.

"We like to travel; we love to travel," Ralph said.

"We are going to find the most economical way to do that. If that means driving an hour and half to Grand Forks to save a thousand dollars, that's what that means."

The reason for the vast price differences in the U.S. and Canada has much to do with geography, said Dawson.

"We are a smaller market dispersed on a bigger country. That is not something easy to deal with but in addition to that, the government has imposed rents on airports," he said.

"The government is making money out of security taxes for CATSA [Canadian Air Transport Security Authority]. They shouldn't be making money out of security taxes. All of those are costs the government can control."

Additionally, unlike in Canada, the U.S. government picks up security costs rather than pass them down. It also does not charge rent to airports for the lands they sit on.

Air industry officials say the fees charged on this side of the border make Canadian airports uncompetitive and are driving passengers south at a loss of $2.3 billion a year.

"We have to look at the fees and taxes that are levied on travellers in Canada," said Gooch.

Lower rates, fees, says senator

A new federal strategy is needed so Canada can better compete with American airlines and airports, Dawson said, and that starts with addressing the rents airports pay, as well as other fees and charges added onto airline tickets.

"They can lower the rates of rents. They should. They should abolish them completely but, at best, let's ask them to lower them," he said.

"These fees are one of the biggest impediments that can easily be controlled. We can't make our country smaller, and we can't get 10 million people more.

"If we lower those, we'll encourage people to fly out of Canada."

But Steven Fletcher, Canada's minister of state for transport, said he doesn't think taxpayers' money should go towards subsidizing people's flights.

"Why would a Canadian taxpayer want to subsidize a trip to the Caribbean? Because that's essentially what is being argued," Fletcher said on Friday, after he met with aviation industry stakeholders.

"That's not what happens in Canada. That's what happens in the United States. But in Canada … you use it and you pay for it, and no tax dollars go into it."

Canada's air industry is based on the "user-pay principle," meaning taxpayers do not subsidize air travel in Canada, and those who fly pay for the system.

"Our government will continue to keep taxes and fees as low as possible, while ensuring the ongoing sustainability of our airports," a government spokesperson told CBC News in an email.

The spokesperson added that Ottawa recently made it mandatory for airlines to advertise all-inclusive airfares that include taxes, fees and surcharges.

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Caterpillar closing Toronto plant, 330 workers to lose jobs

Heavy equipment giant Caterpillar Inc. says it is closing a tunnel-boring machine factory in Toronto by mid-2014, throwing 330 workers out of a job.

Caterpillar acquired the facility in 2008 when it bought Lovat Inc. and got into the tunnelling business, but now says the plant is no longer a "strategic growth opportunity" and will be shut down.

Employees at the plant recently worked on four boring machines being used to chew through ground for the construction of the Eglinton-Scarborough Crosstown light rapid transit line in Toronto.

The company says the 330 workers are being offered a severance package as well as assistance to help them find new jobs.

It says the closure will not impact existing customer contracts, with parts and service support to be continued through 2016.

The closure comes after some 500 employees were let go when a London, Ont., locomotive plant owned by a Caterpillar subsidiary was shut last year after a month-long lockout over a wage dispute with workers.

A company executive said the Toronto tunnelling business is no longer a good fit for Caterpillar.

"We know this is difficult news for our employees and their families. We acquired a great team when we bought this company, and while they have demonstrated an ability to build quality products, the future prospects of this business no longer align with our expectations," customer and dealer support president Stu Levenick said in a release.

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Nurses, IT analysts among top 10 fastest-growing temp jobs

Despite Canada's bleak employment numbers in recent years, there has been an increase in jobs such as nursing, banking and landscaping — as long as you're a temporary worker.

Job search site CareerBuilder.com released a list Friday of the top 10 fastest-growing temporary jobs in Canada based on percentage growth.

Topping the list are licensed practical nurses, an occupation that has grown by 60 per cent — or 296 jobs — since 2010.

Information systems analysts and consultants come in second, with a 44 per cent increase — or 541 jobs added.

Financial clerks, including bank tellers and insurance clerks, are third, with 163 new jobs added, a 43 per cent increase.

Rounding out the top 10 are: landscaping and grounds maintenance workers, purchasing and inventory clerks, records management and filing clerks, payroll clerks, light duty cleaner, registered nurses and computer network technicians.

"There is a myth that temporary positions are just that, temporary, but nearly two in five employers say they plan to transition their temporary workers into fulltime roles sometime this year," said Ross Levadi, director of staffing and recruiting at CareerBuilder.com.

Precarious employment, which includes contract, part-time, self-employment or temporary work, is becoming more common, according to a report by the Law Commission of Ontario.

"Over the past several decades there has been a significant increase in part-time, temporary and casual forms of work. This type of work lacks security and provides workers with limited benefits," the December 2012 report reads.

Canada's economy shed 54,500 jobs in March, the worst month for Canadian employment since before the last recession, in February 2009.

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U.S. stocks hit record highs on strong jobs report

America's two largest benchmark stock indexes each hit all-time highs on Friday after new data emerged showing the U.S. economy cranked out 165,000 new jobs last month.

The Commerce Department reported Friday that America's jobless rate dropped to 7.5 per cent in March, the lowest level in more than four years as the U.S. economy added 165,000 new positions.

That was enough to light a fire under U.S. stocks, with the Dow Jones Industrial Average gaining 142 points to almost 14,974, just off the all-time high above 15,000 it reached earlier in the day. The broader S&P 500 index also closed higher, up more than 16 points to1,614.

"There's euphoria today," said Stephen Carl, the head equity trader at The Williams Capital Group. "That's what you'd have to call it."

Both gains were of more than one per cent, and cap an extended bull run.

"All things considered, 165,000 isn't the biggest monthly gain in payrolls you'll every see, but it's enough to assuage concerns that the economy had stalled again," said Paul Ashworth, chief U.S. economist at Capital Economics.

The strong signs of growth in America's economy were enough to power oil higher, moving the price of a barrel of crude up $1.62 in New York to $95.61.

That spread some of the gains to Toronto, where the stock market depends heavily on commodities. The S&P/TSX composite index closed at 12,438, up about 58 points.

"We're breaking through psychological barriers and that will continue to bring investors off the sidelines," said Darrell Cronk, regional chief investment officer for Wells Fargo Private Bank.

The loonie gained about a fifth of a cent, closing at 99.23 cents US.

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Cheaper pizza for Canadians on the horizon

Pizza lovers could soon be paying less for their favourite pies.

A ruling made this week by the Canadian Dairy Commission could soon allow Canadian restaurants to buy deeply discounted mozzarella cheese.

The commission changed the rules used to classify mozzarella cheese, putting the milk product in its own class and essentially removing it from supply-management pricing. Before the ruling, the price for mozzarella cheese in Canada was artificially high when compared to the world market.

The new class, to take effect June 1, is expected to result in lower costs for Canadian-made mozzarella for restaurants that prepare and cook pizzas on site.

Bob Abumeeiz, who owns Arcata Pizzeria in Windsor, Ont., said the ruling could drop the price of a large pizza by as much as 10 per cent.

Price drop 'unheard of'

"I've been in this business 17 years, and this is the first time cheese has ever gone down," Abumeeiz said. "It's unheard of."

Abumeeiz said when he first started in the business, a kilogram of cheese cost $6.75. Today, he said it costs him $10. He spends $17,000 a month on mozzarella cheese.

Abumeeiz said he's "ecstatic about this news."

"Of course, it's going to affect the price" Abumeeiz said. "The more people that know about it, people are going to ask 'cheese prices went down — how come the pizza price is the same?' The customers are aware of what's going on around them. It's going to affect the bottom-line of the pizza price."

Mario Dalimonte, who owns Bullseye Pizza in LaSalle, Ont., praised the ruling.

'This is like gas going down to 80 cents a litre.'— Mario Dalimonte, Bullseye Pizza

"This is like gas going down to 80 cents a litre. It's better for everyone," he said.

Dalimonte said cheese is two-thirds the cost of a pizza. He said lowering the cost would allow him to hire more people and give staff more hours of work.

Restaurant and pizzeria owners have been calling for cheaper cheese for almost 15 years, ever since frozen pizza makers — including frozen-food giant McCain — won an exemption from Ottawa that allowed them to buy cheese at the cheaper world market price.

"There's been an inequity with frozen pizza versus fresh pizza with the exact same mozza cheese, and we've been pushing and pushing and pushing (for changes)," said Garth Whyte, president of the Canadian Restaurant and Foodservices Association. "This is a major first step on dealing with this issue, and will be significant savings to our members who sell pizza."

Chains use cheaper 'pizza kits'

While frozen pizza makers have been allowed to buy cheaper cheese, a number of restaurant chains recently began circumventing hefty cheese tariffs by importing their mozzarella by way of pizza topping kits.

The Canada Border Services Agency last year designated the boxed cheese-and-pepperoni combinations as a food preparation, rather than simply cheese, meaning they could be imported duty-free.

Bob Abumeeiz says cheese accounts for between 50 and 70 per cent of the cost of a pizza. (Melanie Ferrier/CBC News)

"This puts us all on a level playing field," Dalimonte said.

It remains to be seen whether dairy processors will pass the savings from the new '3d' classification on to restaurant owners. Canada's restaurant industry purchases $2.5 billion worth of dairy products annually.

Cheese accounts for between 50 and 70 per cent of the cost of a pizza.

High prices are part of the reason some pizzeria owners were turning to contraband cheese, smuggled into Canada from the U.S.

Last fall CBC News learned three men, including one current and one former police officer from the Niagara Falls area, were charged in connection with an international cheese-smuggling network.

The men are accused of smuggling caseloads of cheap cheese from the U.S. to sell to Canadian pizzerias and restaurants.

'Farmers have hoisted the white flag.'— James McIlroy, trade consultant

"It looks as though the farmers have hoisted the white flag," said James McIlroy, an international trade consultant based in Toronto, who called the mozzarella move the thin edge of a wedge that will only drive down prices for other milk products.

"This is going to go on and on," said McIlroy. "There's going to be more and more foreign processed products coming into Canada, using foreign dairy products, which are going to cause problems for our processed cheese industry."

Canada-U.S. price gap

Agriculture Minister Gerry Ritz called the move "good news for Canadian dairy farmers, processors and our restaurant industry."

But there will likely always be a price gap between Canadian products and those coming in from bigger markets, particularly the United States, Ritz said.

"At the end of the day I can get a hotel room in the same chain cheaper in the U.S., I can get a steak dinner (for less), it just goes on and on and on," said Ritz. "It comes down to economies of scale."

Ritz applauded the new mozzarella milk class as a good public relations move for Canada's dairy farmers and expressed hope that it would result in more consumption of Canadian-made cheese.

How many times a month do you or your family order pizza?

With files from The Canadian Press

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Lululemon sued over corporate bonuses ahead of recall

A U.S. pension fund is suing Lululemon Athletica Inc. over its decision to increase potential bonuses for executives prior to announcing problems with a batch of pants that were too see-through.

The lawsuit, which did not cite the damages sought, was filed Friday at the Court of Chancery in Delaware by the Hallandale Beach Police Officers and Firefighters' Personnel Retirement Fund.

Lululemon was incorporated in Delaware.

The fund says it wants to examine any corporate books or records to investigate whether the maker of trendy workout gear breached their duties to protect the interests of their shareholders.

It also stated that it will consider "bringing any further action that may be necessary under Delaware law," following the inspection.

A spokeswoman for the Lululemon, which sells athletic apparel popular with yoga enthusiasts, refused to comment on the case when reached Friday.

Claim alleges 'severe quality control issues'

But in the eight-page claim, the fund alleged Lululemon has suffered "several quality control issues" this year, with the most recent recall of its black Luon pants estimated to cost the company approximately $60 million.

The allegations have not been proven in court.

Lululemon began pulling the pants off shelves on March 18. The pants represented 17 per cent of the company's woman's pants inventory. Since then, it has said that the fabric used in the pants did not meet their standards. Its chief product officer has also left the company.

The court documents allege that about a week before the pants were pulled from store shelves, Lululemon's board of directors approved to increase the maximum amount allowed for paid bonuses by 33 per cent.

Lawyer Gustavo Bruckner, who is representing the pension fund, would not comment on the lawsuit when contacted in New York.

Shares in Lululemon fell 41 cents or 0.53 per cent, to $76.96 Friday on the Toronto Stock Exchange.

The company operates 211 stores in North America and Australia.

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Cheap American flights threaten Canadian airport business

The promise of cheaper flights is driving many Canadians across the border to U.S. airports — costing millions of dollars in lost revenue in Canada — but the federal government says it won't subsidize air travel.

The trend of more Canadians flying out of the United States is disconcerting to Canada's aviation industry, which is calling on the federal government to do something to lure back those travellers.

"What we really need to do is get airports, airlines and government in the room together to develop a new national air travel strategy," said Daniel-Robert Gooch of the Canadian Airports Council.

He and other people in the aviation industry were in Winnipeg this week for the Western Canadian Aviation Forum, a conference paying close attention to the problem of air travellers taking their business elsewhere.

"It's a growing problem," said Senator Dennis Dawson, chairman of the Senate transport and communications committee.

Developing into habit

"It has been a problem for a few years, but every year it grows by about 15, 20 per cent, so that means it is revenue lost for Canada. When you have over five million Canadians flying out of American airports, it's more people than are flying out of the fifth biggest airport in Canada," he said.

'Why would a Canadian taxpayer want to subsidize a trip to the Caribbean?'—Minister of State for Transport Steven Fletcher

"These people are developing a habit of going to American airports, [and] all of these airports are growing to the detriment of your local airport. The reality is there have been estimates of thousands of jobs lost [in Canada]."

Manitoba is one of the provinces seeing the exodus of travellers. Close to half the cars in the parking lot at the Grand Forks International Airport have Manitoba license plates these days.

Victor Matos, Melodie Ralph and their family saved more than $1,000 by flying to Orlando through the North Dakota city instead of leaving from Winnipeg.

"We have a lot of friends that do it, and do it regularly, like once [or] twice a month, going to Florida and other sun destinations right out of here," Matos told CBC News at the Grand Forks airport.

Geography blamed

Ralph said if they found a cheaper alternative in Winnipeg, they'd take it. But so far, there isn't one because of "all those extra surcharges and taxes and fees that are added on," she said.

"We like to travel; we love to travel," Ralph said.

"We are going to find the most economical way to do that. If that means driving an hour and half to Grand Forks to save a thousand dollars, that's what that means."

The reason for the vast price differences in the U.S. and Canada has much to do with geography, said Dawson.

"We are a smaller market dispersed on a bigger country. That is not something easy to deal with but in addition to that, the government has imposed rents on airports," he said.

"The government is making money out of security taxes for CATSA [Canadian Air Transport Security Authority]. They shouldn't be making money out of security taxes. All of those are costs the government can control."

Additionally, unlike in Canada, the U.S. government picks up security costs rather than pass them down. It also does not charge rent to airports for the lands they sit on.

Air industry officials say the fees charged on this side of the border make Canadian airports uncompetitive and are driving passengers south at a loss of $2.3 billion a year.

"We have to look at the fees and taxes that are levied on travellers in Canada," said Gooch.

Lower rates, fees, says senator

A new federal strategy is needed so Canada can better compete with American airlines and airports, Dawson said, and that starts with addressing the rents airports pay, as well as other fees and charges added onto airline tickets.

"They can lower the rates of rents. They should. They should abolish them completely but, at best, let's ask them to lower them," he said.

"These fees are one of the biggest impediments that can easily be controlled. We can't make our country smaller, and we can't get 10 million people more.

"If we lower those, we'll encourage people to fly out of Canada."

But Steven Fletcher, Canada's minister of state for transport, said he doesn't think taxpayers' money should go towards subsidizing people's flights.

"Why would a Canadian taxpayer want to subsidize a trip to the Caribbean? Because that's essentially what is being argued," Fletcher said on Friday, after he met with aviation industry stakeholders.

"That's not what happens in Canada. That's what happens in the United States. But in Canada … you use it and you pay for it, and no tax dollars go into it."

Canada's air industry is based on the "user-pay principle," meaning taxpayers do not subsidize air travel in Canada, and those who fly pay for the system.

"Our government will continue to keep taxes and fees as low as possible, while ensuring the ongoing sustainability of our airports," a government spokesperson told CBC News in an email.

The spokesperson added that Ottawa recently made it mandatory for airlines to advertise all-inclusive airfares that include taxes, fees and surcharges.

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