$1.3B medical marijuana free market coming to Canada

Medical marijuana by the numbers

• Current number of users approved by Health Canada: 37,359.
• Number of patients with personal licences to grow marijuana for themselves: 25,600.
• Number of growers licensed to produce marijuana for a maximum of two patients each: 4,200.
• Current number of entrepreneur applications to grow medical marijuana under new rules: 156.

The Conservative government is launching a $1.3-billion free market in medical marijuana on Tuesday, eventually providing an expected 450,000 Canadians with quality weed.

Health Canada is phasing out an older system on Monday that mostly relied on small-scale, homegrown medical marijuana of varying quality, often diverted illegally to the black market.

In its place, large indoor marijuana farms certified by the RCMP and health inspectors will produce, package and distribute a range of standardized weed, all of it sold for whatever price the market will bear. The first sales are expected in the next few weeks, delivered directly by secure courier.

"We're fairly confident that we'll have a healthy commercial industry in time," Sophie Galarneau, a senior official with the department, said in an interview.

"It's a whole other ball game."

The sanctioned birth of large-scale, free-market marijuana production comes as the Conservatives pillory Liberal Leader Justin Trudeau's campaign to legalize recreational marijuana.

Health Canada is placing no limits on the number of these new capital-intensive facilities, which will have mandatory vaults and security systems. Private-dwelling production will be banned. Imports from places such as the Netherlands will be allowed.

Already 156 firms have applied for lucrative producer and distributor status since June, with the first two receiving licences just last week.

'Enormous' potential profit

The old system fostered only a cottage industry, with 4,200 growers licensed to produce for a maximum of two patients each. The Mounties have complained repeatedly these grow-ops were often a front for criminal organizations.

The next six months are a transition period, as Health Canada phases out the old system by March 31, while encouraging medical marijuana users to register under the replacement regime and to start buying from the new factory-farms.

There are currently 37,400 medical marijuana users recognized by the department, but officials project that number will swell more than 10-fold, to as many as 450,000 people, by 2024.

The profit potential is enormous. A gram of dried marijuana bud on the street sells for about $10 and Health Canada projects the legal stuff will average about $7.60 next year, as producers set prices without interference from government.

Chuck Rifici of Tweed Inc. has applied for a licence to produce medical weed in an abandoned Hershey chocolate factory in hard-scrabble Smiths Falls, Ont.

Rifici, who is also a senior adviser to Trudeau, was cited in a Conservative cabinet minister's news release Friday that said the Liberals plan to "push pot," with no reference to Health Canada's own encouragement of marijuana entrepreneurs.

Rifici says he's trying to help a struggling community by providing jobs while giving suffering patients a quality product.

"There's a real need," he said in an interview. "You see what this medicine does to them."

Revenue to hit $1.3 billion

Tweed Inc. proposes to produce at least 20 strains to start, and will reserve 10 per cent of production for compassionate, low-cost prescriptions for impoverished patients, he says.

Patients often use several grams a day to alleviate a wide range of symptoms, including cancer-related pain and nausea. They'll no longer be allowed to grow it for themselves under the new rules.

Revenues for the burgeoning new industry are expected to hit $1.3 billion a year by 2024, according to federal projections. And operators would be favourably positioned were marijuana ever legalized for recreational use, as it has been in two American states.

Eric Nash of Island Harvest in Duncan, B.C., has applied for one of the new licences, banking on his experience as a licensed grower since 2002 in the current system.

"The opportunity in the industry is significant," he said in an interview.

"We'll see a lot of moving and shaking within the industry, with companies positioning. And I think we'll see some mergers and acquisitions, strategic alliances formed."

"It'll definitely yield benefits to the consumers and certainly for the economy and society in general."

Competition to keep prices in check

Veterans Affairs Canada currently pays for medical marijuana for some patients, even though the product lacks official drug status. Some provinces are also being pressed to cover costs, as many users are too sick to work and rely on welfare.

Health Canada currently sells medical marijuana, produced on contract by Prairie Plant Systems, for $5 a gram, and acknowledges the new system will be more expensive for patients.

But Galarneau says competition will help keep prices in check.

"We expect that over time, prices will be driven down by the free market," she said. "The lower price range will likely be around $3 a gram. ... It's hard to predict."

Saskatoon-based Prairie Plant Systems, and its subsidiary CanniMed Ltd., were granted the first two licences under the system and are already advertising their new products on the web.

Prospective patients, including those under the current system, must get a medical professional to prescribe medical marijuana using a government-approved form.

Health Canada only reluctantly established its medical marijuana program, driven by court decisions from 2001 forward that supported the rights of suffering patients, even as medical science has been slow to verify efficacy.

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U.S. government shutdown: What to expect if it happens

The U.S. government could close its doors Tuesday if Congress can't reach a deal on a temporary spending budget bill, and that would jeopardize the paycheques of more than 800,000 Americans, as well as the country's economic recovery.

It's political bickering between Democrats and Republicans in both the Senate and the House of Representatives, along with Republican in-fighting, that has brought the country to the brink of a shutdown yet again.

Once more, the U.S. Congress is deadlocked on a temporary spending bill that needs to pass in order to keep funding the federal government's operations, its employees and the services they provide.

Congress hasn't passed any of the annual bills that fund various government agencies, so it has had to rely on stopgap measures that are known as continuing resolutions. The government needs to pass another one as soon as possible to keep the cash flowing beyond Sept. 30.

The battle started with a House vote to pass the short-term funding bill with a provision that would have eliminated the federal dollars needed to put President Barack Obama's health care overhaul into place. (Associated Press)

A government shutdown won't mean the entire country will grind to a halt, but it will have an impact on the daily lives of Americans.

The rules governing a shutdown say federal workers must be classified as essential or non-essential, so that key government functions can carry on in the event of a fiscal crisis.

Air traffic control, the military, prisons, border security, mail delivery, anything related to national security and public safety, social security cheques, emergency medical care, and food safety inspection are examples of things that would be unaffected.

So what would happen? 

Passports, other services could be on hold

Some 800,000 government workers could be told to stay home and go without pay. However, they might get paid retroactively once the shutdown ends. 

Those missing paycheques would have an impact on individual bank accounts, but depending on how long the shutdown lasts, the loss of income could also affect the broader economy. The affected public servants would essentially be unemployed, pumping less cash into an economy that very much needs it.

The economy would also take a hit because it costs money to prepare for a shutdown, to carry it out, and start the government back up again. The last two shutdowns, which took place weeks apart in late 1995 and early 1996, cost taxpayers $1.4 billion, according to estimates from the Office of Management and Budget.

The shutdown would also mean an interruption in services. Visa and passport applications, for example, wouldn't be processed.

Parks and museums could be shuttered

And the tourism industry would take a hit. Anyone planning a weekend getaway to one of the country's 400 national parks would have to come up with something else to do, for example, since those parks would be closed. Tourists in Washington, D.C., in particular would have fewer options because most of the city's famous museums would be shuttered.

Closing tourist attractions would also mean less revenue for the government from things like national park user fees.

A shutdown would also mean that small business loans would not be processed, government-backed insurance for home loans would not move forward, and some tax refunds would pile up.

Residents of D.C. would likely feel the effects the most. The capital city's local government depends on the federal government for permission to spend money. A shutdown could mean city services such as garbage collection, street cleaning, motor vehicle offices, and libraries would be on hold or closed.

The city's mayor, Vincent Gray, is trying to get around the problem by declaring all of the local government "essential."

Debt-ceiling crisis also looming

The potential government shutdown isn't the only fiscal crisis looming for the U.S. The other is the debt ceiling, which is far more concerning. 

Under U.S. law, the government must stay below a certain debt limit and Congress must pass legislation to allow the government to exceed that limit. If it doesn't, the government can't pay its bills and would have to default on its legal obligations.

That would have "catastrophic" consequences on the economy, according the the U.S. Treasury, which expects the government to reach the debt ceiling — currently sitting at around $16 trillion — by mid-October.

The U.S. federal government has never defaulted before so no one knows exactly how severe its effects could be, but there's little doubt it would cause severe economic damage.

Congress has until Oct. 17 to figure out a plan for the debt ceiling, and until midnight Monday to deal with the budget spending bill. The clocks in Washington are ticking loudly.

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GDP recovers from June decline, rising 0.6% in July

Canada's real gross domestic product showed a strong rebound in July, rising 0.6 per cent after a 0.5 per cent decline in June, Statistics Canada reported Monday.

Production of goods rose 1.2 per cent, with construction, manufacturing, mining and oil and gas extraction all increasing.

Utilities and the agriculture and forestry sector declined but service industries were on the rise in July.

"Notable gains were recorded in wholesale and retail trade, the finance and insurance sector, and the arts and entertainment sector," Statistics Canada said. 

The construction sector began to show signs of recovery in July after suffering  a 2.1 per cent decline in June on account of the labour dispute in Quebec. The sector rose 1.9 per cent, with non-residential building construction increasing by an impressive 9.2 per cent.

A strong housing market pushed the output of real estate agents and brokers up  0.8 per cent.

Manufacturing output showed an increase of 1.1 per cent after a drop of almost that much in June.

Expansion in the potash and coal mining sector also led to strong results in mining and quarrying, which was up 3.5 per cent. A rise in drilling and rigging meant activities that support the mining and oil and gas extraction showed an overall increase of 4.7 per cent in July

Oil and gas extraction itself saw a slight uptick of 0.2 per cent as extraction of crude petroleum increased but natural gas output was on the decline.

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SNC-Lavalin to sell AltaLink

SNC-Lavalin has put up a "For Sale" sign on AltaLink, which owns more than half of Alberta's electricity transmission grid and is a wholly owned subsidiary of the Montreal-based company.

The company provided few specific details of its plan in Monday's announcement, which is part of a broader strategy of reducing its investments in infrastructure assets.

It says all options for AltaLink will be considered, including a private sale, strategic alternatives or turning to the public market.

AltaLink operates about 12,000 kilometres of transmission lines and 280 substations in the province, serving about 85 per cent of the population.

It also received regulatory approval in December for a $1.5-billion transmission line extension to run 350 kilometres from Genessee, west of Edmonton, southward to Langdon, east of Calgary.

"Through the company's expertise in transmission and distribution project development, AltaLink has become a unique asset that has achieved the strategic objectives necessary to offer value to new investors, whether public shareholders or financial or strategic partners," SNC president and CEO Robert Card said.

He also said that the AltaLink's ongoing expansion plan will continue.

AltaLink is part of SNC-Lavalin's concessions portfolio, which also includes the Highway 407 toll road near Toronto, a Montreal hospital and the Montreal symphony hall.

Earlier this year, the company signed a deal to sell 66 per cent of its minority interest in Astoria Project Partners II LLC, which owns and operates the gas-fired Astoria II power plant in New York City.

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Ikea to sell residential solar panels in Britain

Swedish flat-pack furniture giant IKEA will start selling residential solar panels at its stores in Britain, the first step in its plan to bring renewable energy to the mainstream market worldwide.

The company started selling solar panels made by China's Hanergy in its store in Southampton on Monday. It will sell them in the rest of Britain in coming months, it said.

A standard, all-black 3.36 kilowatt system for a semi-detached home will cost 5,700 British pounds ($9,497) and will include an in-store consultation and design service as well as installation, maintenance and energy monitoring service.

"In the past few years the prices on solar panels have dropped, so it's a really good price now," IKEA's chief sustainability officer Steve Howard told The Associated Press. "It's the right time to go for the consumers."

The solar panel investment will be paid off in about seven years for an average home owner in Britain, Howard said.

"That is a great deal. If you are going to be in your house that long, your energy will be free after seven years," he said.

Howard said IKEA aims to launch the products in other countries eventually. It picked Britain as its test market because it has the right combination of mid-level electricity prices and government-sponsored financial incentives that make investing in solar energy attractive to consumers.

"This is a market by market decision," he said.

The U.K. government offers private solar panel owners the opportunity to sell back electricity to the grid on days when they have surplus production and has a financing plan for solar power investments, which means residents can buy a system for no upfront cost and pay it off gradually.

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U.S. debt showdown: 7 questions answered

You've heard this song before: The brinkmanship on Capitol Hill has been ratcheting higher as Washington's fiscal deadlines loom, with the worst-case scenario a severe recession in Canada's biggest trading partner. Here's what you need to know about the latest standoff between Democrats and Republicans.

What's the deadline this time?

There are two. First, Oct. 1 is a new budget year in the U.S. and requires Congress to pass a spending bill to allow agencies to stay open. Second, a mid-month deadline ­— estimated at Oct. 17 — requires Congress to increase the government's $16.7-trillion debt ceiling to avoid a first-ever default on its payments.

What's the debt ceiling again?

It's a legal limit on how much debt the U.S. government can accumulate. Congress created the debt limit in 1917 and it's unique to the United States. Most countries let their debts rise automatically when government spending outpaces tax revenue. U.S. presidents have a long history of seeking higher debt limits.

What's holding things up?

Republicans are pushing to use the stop-gap spending bill and the increase in the debt ceiling as leverage against Obama's three-year-old Affordable Care Act, often dubbed Obamacare. Republicans, prodded by their conservative Tea Party wing, want to use the temporary spending bill to strip funding from the health-care program. House Republicans also want to attach other provisions to the debt ceiling, including approval of the Keystone XL pipeline from Canada and provisions blocking pollution regulations.

Didn't this already happen?

Yes. In 2011, Republicans extracted $2.1 trillion in spending cuts over a decade for a similar increase in the borrowing cap. Shutdown-averting stopgap spending bills traditionally have been steered clear of these kinds of battles for fear of a politically damaging shutdown. But with the new health-care law poised to enrol millions of people into Obamacare starting Oct. 1, there's a new urgency among opponents to pull out all the stops to try to derail it.

What's different this time?

This time, Obama says he's not budging. A confrontational Obama is betting Republicans blink to avoid a government shutdown or default. The president and his aides maintain there will be no bargaining.

What's at stake?

For Republicans, the risk is that they'll be perceived by American voters as the unreasonable party.

For Democrats, the White House is convinced any concessions would place the president in the position of having to bargain again and again when the next debt ceiling looms. "First they want an arm. Then they want a leg," Obama adviser David Axelrod said.

For Americans, a partial government shutdown would keep hundreds of thousands of federal workers off the job and close national parks. If the U.S. defaults, the government would not be able to pay interest obligations, pension benefits, payments to thousands of contractors, and salaries for the military.

For the rest of the world, a default in the U.S. would have inevitable influence worldwide. Mark Zandi, chief economist of Moody's Analytics, talked to CBC senior business correspondent Amanda Lang about the potential fallout in the U.S.: "Financial markets will be roiled, stock prices will decline, it would be a severe recession and there literally is no policy response to it ... It'll be bedlam. It'll be a mess."

If they get through this, when might the next U.S. government standoff be?

Soon. The stopgap spending bill would keep the government running until Nov. 15. 

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What's in rail tankers and why can't we know?

Nearly three months after the  Lac-Mégantic disaster, rail safety remains at the top of the national agenda with a meeting of federal and provincial transport ministers this week focusing on the question of what is in tanker cars and why provinces and municipalities can't get that information.​

After the conclusion of the meeting in Winnipeg, Manitoba's transportation minister said the legacy of the Lac-Mégantic disaster in July must be safer rail system across Canada.

Steve Ashton said there is an urgent need to look comprehensively at rail safety at a time when more oil is being shipped by rail and the Lac Mégantic disaster is fresh in the public mind.

"We all agreed we must have legacy out of that event and the 47 people that died and make sure that never ever happens again," he said in an interview with CBC's The Current.

The provincial ministers pressed federal minister Lisa Raitt to allow provinces and municipalities to access information about what is being shipped.

"A number of things are coming out of what happened in Lac-Mégantic​ – the suitability of some of the rail cars used to transport hazardous material, the situation for short lines in terms of rail safety standards," Ashton said.

"Even in terms of liability, how the short line in Lac-Mégantic had a liability of $25 million – nothing compared to the devastating impact and the huge cost on the community."

Raitt left the meeting without talking to reporters and refused to commit to any changes. A Transportation Safety Board report into the disaster is expected to make further recommendations.

Even as the ministers were gathered in Winnipeg, 17 Canadian National rail cars — some carrying flammable petroleum, ethanol and chemicals — came off the tracks near the village of Landis, west of Saskatoon.

That accident was an echo of two earlier this year in Calgary, where a frustrated Mayor Naheed Nenshi castigated rail companies and federal authorities for not allowing the city to know what is in rail cars, even as fire and emergency departments were trying to deal with the cleanup.

Rail cars after the explosion that destroyed the Quebec town. (Canadian Press)

​

"I don't understand why the railroad has so much trouble understanding what it is they are shipping and or telling people what it is they are shipping," Nenshi said.

"Once again it was city staff who has no regulatory authority on this -risking their lives to solve the problem. And we can't solve the problem if we aren't given accurate information at the beginning."

The Federation of Canadian Municipalities backed up Nenshi's call for timely information, pointing out that muncipalities are on the frontline in rail accidents, but currently have no right to information.

Keith Stewart, a climate and energy campaign coordinator for Greenpeace, says there is resistance by the shippers about releasing that information.

"One of the reasons they don't want to give that information out is because we are seeing a huge increase in the amount of oil and other petrochemical products moving by rail in this country and I think they're hoping no one's going to notice that or pay too much attention," he told The Current.

He said rail companies may be unaware of what is on their trains as the tanker cars are owned by shipping  or petroleum companies.

The U.S. began a probe of the mislabelling of tanker cars  this spring and that investigation was given impetus by the Lac-Mégantic disaster.  There have been reports the crude shipped on the MMA railway was more explosive than was suggested by its labelling.

The TSB been warning since 1994 about the kind of tanker cars used to transport crude oil, Stewart said.

"It was saying we know these things are not safe. They tend to rupture easily in a derailment and yet transport of hazardous goods continues in them," he said.

However, the federal government has not changed the rules to demand stronger, safer rail cars despite repeated recommendations from the TSB.

David Jeans, president of citizen advocacy group  Transport Action Canada, says there has not been such a focus on rail safety in Canada since the 1979 Mississauga, Ont., derailment. He said Canadians believe it is an urgent issue.

Jeans said the problem of municipalities not being given information should be addressed right away in any new federal rules -- as modern technology makes it possible for rail companies to know what is on their trains.

"The railways do track everything that's on their trains, have extensive computer systems that know right down to the car what's being transported on each train and so they should be able to respond to the needs of the provincial and municipal governments and the fire departments quickly whenever an accident happens. I think something needs to be done to speed up that process.

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Saskatoon, Regina expected to lead growth, Conference Board says

Saskatoon is expected to lead the country in growth this year, the Conference Board of Canada says.

Cities in Western Canada are expected to lead the country's metropolitan areas in economic growth this year, a report by the Conference Board of Canada says.

Saskatoon, Regina, Edmonton, Calgary and Vancouver make up the top five in the board's latest outlook for 13 Canadian metropolitan areas while Ottawa-Gatineau and Victoria are at the bottom of the list as government spending cuts take their toll.

Growth in Saskatoon is forecast to reach 5.2 per cent this year, up from 4.1 per cent in 2012, while Regina's economy is expected to grow five per cent, repeating its performance last year.

"Despite some setbacks, Saskatchewan's economy is expected to perform well in the near term, with real GDP forecast to expand 3.5 per cent this year — more than twice the national average," board's fall metropolitan outlook said.

Calgary is expected to grow by 3.3 per cent, Edmonton by 4.2 per cent and Vancouver by 2.2 per cent.

That compared with growth of 4.3 per cent, 5.9 per cent and 2.6 per cent for the three cities respectively in 2012.

"Despite some risks, Alberta's economy will get a boost from the rebuilding effort after the floods and the infrastructure investment needed to accommodate increases in oil sands production," the report said.

Meanwhile, Vancouver's economy is being affected by slower growth in manufacturing and construction.

Overall the Conference Board said the Canadian economy is expected to grow by 1.7 per cent this year, however it suggested that the improving U.S. economy would give a boost to 2014.

"Through much of the first half of this year, economic indicators provided few encouraging signs. But recently, prospects seem to be changing for the better," the Ottawa-based economics think-tank said.

The five Western Canadian cities stand in contrast with the other eight areas studied, which are expected to growth by less than two per cent this year.

In Toronto, which is expected to be hampered by weaker manufacturing and services sectors, growth will be limited to 1.6 per cent in 2013.

Halifax is forecast to post growth of 1.7 per cent, while Winnipeg is expected to grow by 1.4 per cent.

Montreal, Quebec City and Hamilton are each expected to grow about 1.3 per cent this year.

Ottawa-Gatineau is expected to expand by 0.8 per cent in 2013 due to spending cuts by the federal government.

Victoria is expected to grow by 0.1 per cent.

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Rogers strikes roaming agreement with AT&T for U.S.

Rogers has announced an LTE roaming agreement with U.S. carrier AT&T for its mobile phone customers.

The news comes the same day as the CRTC's deadline for telecom companies to submit their roaming fee rates for customers who travel to the U.S. and any network sharing agreements between Canadian and American carriers.

The Canadian Radio-television and Telecommunications Commission has said it wants to review rates from the industry to "assess its competitiveness" on the country's wireless industry and what choices are available to consumers.

Rogers says its $7.99 daily roaming rate in the U.S., which was set independently of the roaming agreement with AT&T, is the first for LTE 4G phones. It offers 50MB of data per day.

Bell recently cut its U.S. travel bundle and Telus has said its rates have consistently been lower than its competitors.

The CRTC's new wireless code, which will apply to new contracts for cellphones and other mobile devices starting on Dec. 2, requires additional roaming charges be capped at $100 unless the customer has agreed to pay more for use.

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Oil companies seek to drill in deep Beaufort Sea

Imperial Oil Canada, Exxon Mobil and BP have jointly filed an application to drill at least one well in the Beaufort Sea 125 kilometres northwest of Tuktoyaktuk, N.W.T.

The project description Imperial Oil has submitted says they are planning to drill one or more wells in unspecified locations on two exploration licences and they will drill between three and six kilometres into the sea floor. 

The almost 500-page-long project description doesn't say how much it would cost to drill in the deep Beaufort but the partners won the rights to explore the area by pledging to spend a total of $1.7 billion.

"We're looking for . . . people call them elephants in the rest of the world, I'm calling it a whale because it's in the Beaufort Sea," said Sherry Becker with Imperial Oil Canada.

Communities in the region are still suffering from the collapse of Imperial's plan to build a gas pipeline down the Mackenzie Valley.

Their economies are tied to the booms and busts of oil and gas exploration. Many still remember the last offshore boom, in the '70s and '80s.

"When that activity was happening, this community was growing, and it sure lowered costs to government," said Floyd Roland, mayor of Inuvik. "In the sense of, right now with the economy so low, there's more people who line up at the income support office, there's more people whose rents have gone down based on their income at the housing office."

Those wells were drilled in water depths of less than 70 metres. The area now being eyed runs to depths of 1,500 metres and has never been drilled before.

"Part of our challenge in moving this project forward is assessing, evaluating and mitigating, dealing with the challenges of drilling a well in this part of the Canadian Beaufort," said Pius Rolheiser with Imperial Oil Canada.

Chief among those challenges is ice. Imperial estimates ice conditions are manageable for only four months of the year, but that can vary dramatically from year to year.

The joint venture is hoping to get regulatory approvals within three years.

"Because we may have to construct vessels, we may have to alter existing vessels so they're ready for the Beaufort Sea," said Sherry Becker with Imperial Oil.

"That will take three to four years, and that takes us from early 2016 to 2020, when our licence expires, so we have to start drilling in that year."

That means the soonest the drilling can happen is in about six and a half years but it's by no means certain that this project is going to move ahead even if it is approved by regulators.

Imperial and its partners shelved the Mackenzie Gas Project after spending hundreds of millions of dollars getting approvals.

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U.S. debt showdown: 7 questions answered

You've heard this song before: The brinkmanship on Capitol Hill has been ratcheting higher as Washington's fiscal deadlines loom, with the worst-case scenario a severe recession in Canada's biggest trading partner. Here's what you need to know about the latest standoff between Democrats and Republicans.

What's the deadline this time?

There are two. First, Oct. 1 is a new budget year in the U.S. and requires Congress to pass a spending bill to allow agencies to stay open. Second, a mid-month deadline ­— estimated at Oct. 17 — requires Congress to increase the government's $16.7-trillion debt ceiling to avoid a first-ever default on its payments.

What's the debt ceiling again?

It's a legal limit on how much debt the U.S. government can accumulate. Congress created the debt limit in 1917 and it's unique to the United States. Most countries let their debts rise automatically when government spending outpaces tax revenue. U.S. presidents have a long history of seeking higher debt limits.

What's holding things up?

Republicans are pushing to use the stop-gap spending bill and the increase in the debt ceiling as leverage against Obama's three-year-old Affordable Care Act, often dubbed Obamacare. Republicans, prodded by their conservative Tea Party wing, want to use the temporary spending bill to strip funding from the health-care program. House Republicans also want to attach other provisions to the debt ceiling, including approval of the Keystone XL pipeline from Canada and provisions blocking pollution regulations.

Didn't this already happen?

Yes. In 2011, Republicans extracted $2.1 trillion in spending cuts over a decade for a similar increase in the borrowing cap. Shutdown-averting stopgap spending bills traditionally have been steered clear of these kinds of battles for fear of a politically damaging shutdown. But with the new health-care law poised to enrol millions of people into Obamacare starting Oct. 1, there's a new urgency among opponents to pull out all the stops to try to derail it.

What's different this time?

This time, Obama says he's not budging. A confrontational Obama is betting Republicans blink to avoid a government shutdown or default. The president and his aides maintain there will be no bargaining.

What's at stake?

For Republicans, the risk is that they'll be perceived by American voters as the unreasonable party.

For Democrats, the White House is convinced any concessions would place the president in the position of having to bargain again and again when the next debt ceiling looms. "First they want an arm. Then they want a leg," Obama adviser David Axelrod said.

For Americans, a partial government shutdown would keep hundreds of thousands of federal workers off the job and close national parks. If the U.S. defaults, the government would not be able to pay interest obligations, pension benefits, payments to thousands of contractors, and salaries for the military.

For the rest of the world, a default in the U.S. would have inevitable influence worldwide. Mark Zandi, chief economist of Moody's Analytics, talked to CBC senior business correspondent Amanda Lang about the potential fallout in the U.S.: "Financial markets will be roiled, stock prices will decline, it would be a severe recession and there literally is no policy response to it ... It'll be bedlam. It'll be a mess."

If they get through this, when might the next U.S. government standoff be?

Soon. The stopgap spending bill would keep the government running until Nov. 15. 

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What's in rail tankers and why can't we know?

Nearly three months after the  Lac-Mégantic disaster, rail safety remains at the top of the national agenda with a meeting of federal and provincial transport ministers this week focusing on the question of what is in tanker cars and why provinces and municipalities can't get that information.​

After the conclusion of the meeting in Winnipeg, Manitoba's transportation minister said the legacy of the Lac-Mégantic disaster in July must be safer rail system across Canada.

Steve Ashton said there is an urgent need to look comprehensively at rail safety at a time when more oil is being shipped by rail and the Lac Mégantic disaster is fresh in the public mind.

"We all agreed we must have legacy out of that event and the 47 people that died and make sure that never ever happens again," he said in an interview with CBC's The Current.

The provincial ministers pressed federal minister Lisa Raitt to allow provinces and municipalities to access information about what is being shipped.

"A number of things are coming out of what happened in Lac-Mégantic​ – the suitability of some of the rail cars used to transport hazardous material, the situation for short lines in terms of rail safety standards," Ashton said.

"Even in terms of liability, how the short line in Lac-Mégantic had a liability of $25 million – nothing compared to the devastating impact and the huge cost on the community."

Raitt left the meeting without talking to reporters and refused to commit to any changes. A Transportation Safety Board report into the disaster is expected to make further recommendations.

Even as the ministers were gathered in Winnipeg, 17 Canadian National rail cars — some carrying flammable petroleum, ethanol and chemicals — came off the tracks near the village of Landis, west of Saskatoon.

That accident was an echo of two earlier this year in Calgary, where a frustrated Mayor Naheed Nenshi castigated rail companies and federal authorities for not allowing the city to know what is in rail cars, even as fire and emergency departments were trying to deal with the cleanup.

Rail cars after the explosion that destroyed the Quebec town. (Canadian Press)

​

"I don't understand why the railroad has so much trouble understanding what it is they are shipping and or telling people what it is they are shipping," Nenshi said.

"Once again it was city staff who has no regulatory authority on this -risking their lives to solve the problem. And we can't solve the problem if we aren't given accurate information at the beginning."

The Federation of Canadian Municipalities backed up Nenshi's call for timely information, pointing out that muncipalities are on the frontline in rail accidents, but currently have no right to information.

Keith Stewart, a climate and energy campaign coordinator for Greenpeace, says there is resistance by the shippers about releasing that information.

"One of the reasons they don't want to give that information out is because we are seeing a huge increase in the amount of oil and other petrochemical products moving by rail in this country and I think they're hoping no one's going to notice that or pay too much attention," he told The Current.

He said rail companies may be unaware of what is on their trains as the tanker cars are owned by shipping  or petroleum companies.

The U.S. began a probe of the mislabelling of tanker cars  this spring and that investigation was given impetus by the Lac-Mégantic disaster.  There have been reports the crude shipped on the MMA railway was more explosive than was suggested by its labelling.

The TSB been warning since 1994 about the kind of tanker cars used to transport crude oil, Stewart said.

"It was saying we know these things are not safe. They tend to rupture easily in a derailment and yet transport of hazardous goods continues in them," he said.

However, the federal government has not changed the rules to demand stronger, safer rail cars despite repeated recommendations from the TSB.

David Jeans, president of citizen advocacy group  Transport Action Canada, says there has not been such a focus on rail safety in Canada since the 1979 Mississauga, Ont., derailment. He said Canadians believe it is an urgent issue.

Jeans said the problem of municipalities not being given information should be addressed right away in any new federal rules -- as modern technology makes it possible for rail companies to know what is on their trains.

"The railways do track everything that's on their trains, have extensive computer systems that know right down to the car what's being transported on each train and so they should be able to respond to the needs of the provincial and municipal governments and the fire departments quickly whenever an accident happens. I think something needs to be done to speed up that process.

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Saskatoon, Regina expected to lead growth, Conference Board says

Saskatoon is expected to lead the country in growth this year, the Conference Board of Canada says.

Cities in Western Canada are expected to lead the country's metropolitan areas in economic growth this year, a report by the Conference Board of Canada says.

Saskatoon, Regina, Edmonton, Calgary and Vancouver make up the top five in the board's latest outlook for 13 Canadian metropolitan areas while Ottawa-Gatineau and Victoria are at the bottom of the list as government spending cuts take their toll.

Growth in Saskatoon is forecast to reach 5.2 per cent this year, up from 4.1 per cent in 2012, while Regina's economy is expected to grow five per cent, repeating its performance last year.

"Despite some setbacks, Saskatchewan's economy is expected to perform well in the near term, with real GDP forecast to expand 3.5 per cent this year — more than twice the national average," board's fall metropolitan outlook said.

Calgary is expected to grow by 3.3 per cent, Edmonton by 4.2 per cent and Vancouver by 2.2 per cent.

That compared with growth of 4.3 per cent, 5.9 per cent and 2.6 per cent for the three cities respectively in 2012.

"Despite some risks, Alberta's economy will get a boost from the rebuilding effort after the floods and the infrastructure investment needed to accommodate increases in oil sands production," the report said.

Meanwhile, Vancouver's economy is being affected by slower growth in manufacturing and construction.

Overall the Conference Board said the Canadian economy is expected to grow by 1.7 per cent this year, however it suggested that the improving U.S. economy would give a boost to 2014.

"Through much of the first half of this year, economic indicators provided few encouraging signs. But recently, prospects seem to be changing for the better," the Ottawa-based economics think-tank said.

The five Western Canadian cities stand in contrast with the other eight areas studied, which are expected to growth by less than two per cent this year.

In Toronto, which is expected to be hampered by weaker manufacturing and services sectors, growth will be limited to 1.6 per cent in 2013.

Halifax is forecast to post growth of 1.7 per cent, while Winnipeg is expected to grow by 1.4 per cent.

Montreal, Quebec City and Hamilton are each expected to grow about 1.3 per cent this year.

Ottawa-Gatineau is expected to expand by 0.8 per cent in 2013 due to spending cuts by the federal government.

Victoria is expected to grow by 0.1 per cent.

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FAA to consider easing limits on in-flight electronic devices

With the blessing of an influential advisory panel, federal regulators are closer to letting airline passengers use their smartphones, tablets, e-readers and other electronic gadgets during takeoffs and landings.

The 28-member FAA advisory committee voted to recommend the change during a closed-door meeting Thursday, said industry officials familiar with the deliberations. They spoke on condition of anonymity because the government asked them not to talk publicly about their deliberations.

The recommendation will be sent Monday to the Federal Aviation Administration, which has final say on whether to ease current restrictions on the use of personal electronic devices on planes.

If the panel's advice is followed, passengers would have greater opportunity to use most devices below an altitude of 10,000 feet, although some devices would have to be switched to airplane mode. Downloading data, surfing the Web and talking on the phone would remain prohibited.

'You will not be able to play `Words With Friends,' you will not be able to shop, you will not be able to surf websites or send email'- Henry Harteveldt, industry analyst

"You will not be able to play `Words With Friends,' you will not be able to shop, you will not be able to surf websites or send email," said Henry Harteveldt, an airline and travel industry analyst with Hudson Crossing who was reacting to word of the recommended change.

"You will be able to read or work on what's stored on the device," he said. "You want to edit that PowerPoint? Great. You want to watch `Breaking Bad' and you have it downloaded to your smartphone or your tablet? You can continue to do that."

Passengers are currently required to turn off phones and other electronic devices while planes are below 10,000 feet to prevent interference with sensitive cockpit equipment. Takeoffs and landings are the most critical phases of flight. But newer aircraft are better equipped to prevent electronic interference, and critics long have complained that the safety concerns behind the regulations are groundless.

"We've been fighting for our customers on this issue for years — testing an airplane packed full of Kindles, working with the FAA and serving as the device manufacturer on this committee," Amazon spokesman Drew Herdener said in a statement. "This is a big win for customers, and frankly, it's about time."

"These devices are not dangerous. Your Kindle isn't dangerous. Your iPad that is on airplane mode is perfectly safe," Sen. Claire McCaskill, D-Mo., who has been pressing the FAA to lift the restrictions, said in an interview.

Not everyone agrees. There have been many reports from pilots over the years of electronic interference that appeared to have been caused by passenger use of devices. Technical panels that have looked into the issue in the past concluded evidence that the devices were safe wasn't sufficient to merit lifting restrictions.

But Delta Airlines said in a letter to the FAA last year that out of 2.3 million flights over two years, the airline received 27 reports from pilots and maintenance crews of possible device interference. None of the reports could be confirmed, the letter said.

It's up to FAA officials whether to follow the committee's recommendations. The agency created the committee, put several of its employees on the panel and was closely involved in the deliberations, so it's expected that all or most of the recommendations will be implemented. How long that will take is unclear.

Airline passengers could see restrictions lifted as soon as early 2014 if the agency chooses a faster implementation track, or the process could drag on for a year or more if airlines have to apply, carrier by carrier, to have their planes approved as safe for use of the devices, industry officials said.

McCaskill said that if FAA officials don't "act swiftly" to implement the recommendations, she'll introduce legislation to force their hand.

The FAA doesn't have the authority to lift restrictions on cellphone calls. The Federal Communications Commission, which regulates the cellphone industry, has opposed allowing passengers on fast-moving planes to make phone calls, citing potential interference with cellular networks as phones in the sky skip from cell tower to cell tower faster than networks can keep up.

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Rogers strikes roaming agreement with AT&T for U.S.

Rogers has announced an LTE roaming agreement with U.S. carrier AT&T for its mobile phone customers.

The news comes the same day as the CRTC's deadline for telecom companies to submit their roaming fee rates for customers who travel to the U.S. and any network sharing agreements between Canadian and American carriers.

The Canadian Radio-television and Telecommunications Commission has said it wants to review rates from the industry to "assess its competitiveness" on the country's wireless industry and what choices are available to consumers.

Rogers says its $7.99 daily roaming rate in the U.S., which was set independently of the roaming agreement with AT&T, is the first for LTE 4G phones. It offers 50MB of data per day.

Bell recently cut its U.S. travel bundle and Telus has said its rates have consistently been lower than its competitors.

The CRTC's new wireless code, which will apply to new contracts for cellphones and other mobile devices starting on Dec. 2, requires additional roaming charges be capped at $100 unless the customer has agreed to pay more for use.

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Tokyo Electric Power Co. wants to restart 2 nuclear reactors

Tokyo Electric Power Co. requested on Friday that safety inspections be carried out to allow it to restart two nuclear reactors, despite concerns over how it has handled the catastrophe at the Fukushima plant.

All of Japan's 50 nuclear reactors are offline while regulators consider restarts under safety rules revised after the March 2011 earthquake and tsunami caused meltdowns at the Fukushima Dai-ichi plant on the northeast coast of Japan.

Restarts will require approvals from the Nuclear Regulation Authority and local governments.

The request to restart two reactors at Kashiwazaki-Kariwa, in Niigata prefecture on the Japan Sea coast, brings to 14 the number of reactors that utilities want assessed.

Located 200 kilometres northwest of Tokyo, the plant is the world's largest atomic power plant, and its seven reactors have a combined output capacity of 8.2 million kilowatts. TEPCO is seeking restarts of reactor Nos. 6 and 7, advanced boiling water reactors that are the newest at the plant.

The plant suffered a long list of radioactive leaks and malfunctions during a magnitude 6.8 quake on July 16, 2007, but underwent repairs and tests after that.

Costs rising at shuttered plants

TEPCO and other utilities are eager to restart at least some of the country's 50 operable reactors to help defray rising costs both from maintaining the nuclear plants and also from increased imports of gas and oil for conventional power plants needed to offset lost generating capacity.

The request comes as a parliamentary panel questions TEPCO's president, Naomi Hirose, on Friday over the company's handling of the accident, as radiation leaks and other troubles persist.

Opposition lawmakers of the lower house grilled Hirose over a decision by TEPCO to delay use of measures now being considered to prevent radiation-tainted water from escaping into groundwater and the sea.

"You knew of this radioactive water problem more than two years ago," Masato Imai of the Democratic Party of Japan, which was in power at the time of the accident, told Hirose.

"It appears your risk awareness was way too low," he said. "Why did you not act then?"

While apologizing repeatedly for the leaks and other mishaps at the plant, Hirose said that the heaps of rubble and other waste from the tsunami and explosions at the plant, and high levels of radiation, prevented some work from being done. Worries over cost and feasibility also have slowed progress on stabilizing the situation at the plant, he said.

Water still accumulating at Fukushima Dai-ichi

Meanwhile, the water continues to accumulate as TEPCO struggles to keep the damaged reactors cool and prevent further meltdowns.

"The water is unable to escape, but it is still accumulating. It is a very difficult situation," Hirose said.

"It's really a 'whack-a-mole' situation," he said, pledging to "do what needs doing" and avoid delays and failures in the future.

Post-Fukushima worries over disaster preparedness prompted the government to revise safety requirements for all nuclear plants. Information from TEPCO about its application for the Niigata plants includes details about its ability to withstand earthquakes, tsunami, tornadoes and volcanic eruptions.

Before the 2011 disaster, the Fukushima plant was deemed earthquake and tsunami-safe, but the wall of water that hit the coast crippled emergency generators used to run cooling systems, allowing several reactors to overheat and melt down. 

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How do you make car companies innovate? Regulate them

It's a given of modern free market analysis: The best help a government can offer business is to keep its hands off.

Minimal regulation, low interest rates, low taxes are the only exceptions. Maybe occasional transfers of your money into the hands of large corporations to "incentivize" them. 

If the recent mismanagement of everyone's money by deregulated banks didn't make you suspicious of the argument, a new tidbit out this week clinches it. 

Remember how all the carmakers complained about the CAFE Standards? Those were the rules set in California, but adopted by the U.S. and Canadian governments, requiring cars to use less fuel. The rules set firm targets, demanding that fleets hit 4.3 litres per hundred kilometres by 2025. (That's about 65 miles per Canadian gallon and 54 per U.S. gallon for those who never learned to convert.)

"Impossible!" said the carmakers. "It places an unfair burden on passenger cars," said Volkswagen executive Tony Cervone in 2011.

Well, now the credible business adviser Boston Consulting has issued a report showing that not only have the car companies accepted the challenge, but that the rules have driven a renaissance in automotive R&D. Even the most staid car companies are bringing out hybrid vehicles and toying with all-electrics. According to the report, about half of the most innovative companies in the world are now automakers.

True, the tech giants Apple, Google and Samsung top the list, but with nine of the top 20 positions, carmakers outnumber those in the technology company category overall.

This supports an argument I have made before, which is that while markets are brilliant at solving problems, they are not always the best at choosing the right problem to solve.

Miners, for instance, do tremendous work getting gold out of the ground, moving tonnes of rock and ore for a few ounces of the yellow metal and processing it using complex chemistry and technology. But unless it's a requirement, spending on environmental clean-up is seen as a waste of money, even if it will poison future generations. 

The advantage of government regulation is that it creates a challenge that companies must face and solve. It releases the power of the market, as successful innovators succeed and the laggards fall behind.

Not all regulation is equally successful. Companies facing regulation invariably declare that the rules will make it impossible to do business, that government interference will kill jobs.

Certainly red tape can give power to arbitrary bureaucrats, adding absurd costs and creating delays. In a world with differing national standards, companies can move their businesses to the places with the most lax and thus cheapest rules.

The great success of the car fuel economy regulation was that it did not try to micromanage. It was simple and explicit. It did not try to measure intangibles like the carbon cost of manufacturing. It set a specific target at a single point in the industrial process — consumer fuel efficiency — and made the rules the same for everyone, no matter where the car was manufactured.

And most important, it had two clear simultaneous goals. It lessened U.S. demand for imported oil, and it reduced carbon released into the atmosphere. The cost to the taxpayer was small.

Now that we and our governments have seen that this is a tool that works, it is time to use it more broadly. The place to start? How about with the biggest criticism of the new CAFE standard by that VW executive, who complained that the rules hurt cars in favour of trucks, which face much more lenient efficiency rules.

"The largest trucks carry almost no burden for the 2017-2020 timeframe, and are granted numerous ways to mathematically meet targets in the outlying years without significant real-world gains," said Tony Cervone.

"The proposal encourages manufacturers and customers to shift toward larger, less efficient vehicles, defeating the goal of reduced greenhouse gas emissions."

It is time to crack down and make trucks and SUVs a lot more efficient. Let's use regulation to stimulate innovation and release the enormous power of capitalism.

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BlackBerry loses $965M in 2nd quarter

Smartphone maker BlackBerry lost $965 million US in its second quarter on its continuing operations and had revenues of $1.6 billion US, both in line with its earlier warnings to investors.

Revenues were down 45 per cent from the same period last year, the Waterloo, Ont.-based company said Friday.

BlackBerry said it booked sales of 3.7 million smartphones in the quarter, a drop of 74 per cent from the 14.5 million it sold in its best quarter ever, almost three years ago. 

BlackBerry's new raft of handsets released earlier this year, including the Q10, above, did not sell as well as the financially troubled company had hoped they would. On Friday, the company reported a large loss for its most recent quarter. (Geoff Robins/Canadian Press)

"We are very disappointed with our operational and financial results this quarter and have announced a series of major changes to address the competitive hardware environment and our cost structure," chief executive Thorsten Heins said.

BlackBerry had already telegraphed that its second-quarter results would include a loss of between $950 million to $995 million on $1.6 billion in sales, far short of analysts' expectations of about $3 billion.

The results include a pre-tax inventory charge of $934 million and restructuring charges of about $72 million, the company said.

BlackBerry said in a statement earlier this week that it decided to cancel its usual post-earnings conference call "in light of the letter of intent agreement between BlackBerry and FairfaxFinancial Holdings Ltd."

On Monday, Fairfax proposed a tentative agreement to take the company private with a consortium of unnamed financiers for $9 per share.

The letter of intent values BlackBerry at $4.7 billion but allows Fairfax to walk away from the offer if it is dissatisfied with a number of conditions.

BlackBerry's stock was up slightly in morning trading Friday, rising about 1.5 per cent to $8.07 US on the Nasdaq and to $8.31 Cdn on the Toronto Stock Exchange..

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Toyota Canada recalls 56,000 Sienna minivans

Toyota Canada said Friday that it is voluntarily recalling  56,211 Sienna minivans from model years 2004-2005 and 2007-2009 because the gear shift lever could slip and be moved out of the park position without depressing the brake pedal and cause the vehicle to roll away.

Normally, a slider and stopper that are part of the shift interlock system prevent the shift lever from moving out of "P" position unless the ignition is on and the brake pedal is depressed.

"Due to either a manufacturing variation in the dimensions of the stopper or the existence of a burr on the slider, there is a possibility that the stopper could be damaged and the shift lever could be moved out of 'P' position without depressing the brake pedal," the company said in a news release.

Vehicle owners will be contacted and told to return their minivans to a dealership to get the faulty component replaced. They can also call 1-888-869-6828 to obtain more information.

The company is also recalling 615,000 Sienna minivans from the same model years in the U.S.

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U.S. consumer spending ticks up as incomes rise

 U.S. consumers increased their spending slightly last month as their income grew at the fastest pace in six months. The figures point to only modest economic growth in the July-September quarter.

Consumers' spending on goods and services rose 0.3 per cent in August, the U.S. Commerce Department said Friday. That's up from a 0.2 per cent gain in July, which was slightly more than the 0.1 per cent reported last month.

Income rose 0.4 per cent in August, the best gain since February and up from a 0.2 per cent July increase. Private wages and salaries rose 0.5 per cent while the government wages and salaries rose 0.2 per cent.

The government figures would have been higher if not for forced federal furloughs that reduced wages and salaries by $7.3 billion.

Consumer spending key to economic growth

Consumer spending drives 70 per cent of economic activity. Many analysts say the increases are not enough to accelerate economic growth in the third quarter from the 2.5 per cent annual rate in the April-June quarter.

"With more money coming in, consumers spent a little, just a little, more freely," said Jennifer Lee, senior economist at BMO Capital Markets.

Paul Ashworth predicts the economy is growing at an annual rate of two per cent to 2.5 per cent in the July-September quarter. Still, the pickup in August could signal stronger growth in the final three months of the year.

Other economists are less hopeful. Peter Newland, an economist at Barclays, said that the modest increase did not change Barclay's forecast for growth at a 1.7 per cent rate.

Americans saved some of the extra money they earned last month. The personal savings rate edged up to 4.6 per cent of after-tax income, a slight improvement from 4.5 per cent in July.

Inflation still low

Consumers are benefiting from mild inflation. An inflation gauge tied to consumer spending increased 1.2 per cent over the past 12 months, well below the Federal Reserve's two per cent target. Some Fed officials have argued that the central bank should not start reducing its support for the economy until inflation has risen closer to the Fed's target.

A recent spike in interest rates and mixed signals from the job market were key reasons the Fed decided held off last week on reducing its $85-billion US a month in bond purchases. The Fed also scaled back its economic growth estimate for this year and next.

There are some signs that consumers may be better positioned to step up spending soon.

The number of people seeking unemployment benefits has sunk to its lowest point in six years because few companies are laying anyone off anymore. That has led some economists to predict that employers added 200,000 jobs or more jobs in September — the most since February.

And gas prices are falling again. The average national price for a gallon (3.8 litres) of regular gas on Thursday was $3.43. That's 11 cents cheaper than a month ago and the lowest since January.

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Revenue Canada corruption feared over $400K cheque to Nicolo Rizzuto

The Canada Revenue Agency issued a rebate cheque for nearly $400,000 to a top Quebec Mafia figure even though he owed the tax department $1.5 million at the time, heightening concerns of possible infiltration of the agency by organized crime.

Details about the payment to former Sicilian mob boss Nicolo Rizzuto were unearthed during a three-year investigation by journalists at Radio-Canada, CBC's French-language sister network, into allegations of corruption at the tax agency's Montreal office, which the RCMP have been probing since 2008.

The $381,737.46 cheque was made out to "Nick Rizzuto" and addressed to his house on Antoine Berthelet Avenue in north-end Montreal, a street known as "Mafia row" because it was home to several major players in the city's Sicilian mob.

The cheque is labelled "income tax refund" and is dated Sept. 13, 2007. Rizzuto was in jail then, having been arrested the year prior and charged with extortion, bookmaking and drug smuggling as part of the biggest police crackdown on the Italian Mafia in Canadian history.

Court records show that at the time, he also owed the tax department $1.55 million, which the Canada Revenue Agency tried to collect by getting a tax lien on his home.

Surveillance footage from a massive police anti-mafia operation in the early 2000s shows mob boss Nicolo Rizzuto stuffing cash he received from a construction entrepreneur into his socks. (Charbonneau Commission)

The veteran CRA auditor who first discovered the anomaly said he can't understand how a big rebate cheque to someone who had such a huge tax bill — and who was a known Mafia figure — could have gotten past internal controls without inside help.

"That name there was all over the headlines after the arrests. I mean, look, we're not talking about Joe Blow here," Jean-Pierre Paquette, who retired from the revenue agency in 2009, told the Radio-Canada investigative program Enquête.

"There are checks in place. There are approvals that are required during the whole process," he added. "It's left me rather perplexed about the validity of that kind of rebate or that kind of move by the agency."

Got a news tip?

If you have more information on this topic, or other news tips you'd like CBC to investigate, please e-mail us.

Paquette, who spent 35 years with the CRA's anti-organized-crime unit, said after he learned about the cheque, he went to Rizzuto's home to persuade the family to return it. Rizzuto's daughter handed it back to him in the kitchen.

Noël Carisse, assistant director of media relations at CRA, said:  "It would be highly irresponsible to suggest that there was anything inappropriate, illicit or nefarious in CRA's dealings with this specific taxpayer. Any suggestion that CRA did not devote the proper resources or attention to this situation is unequivocally false."

Rizzuto, whose son is former Montreal Mafia godfather Vito Rizzuto, pleaded guilty to gangsterism charges in 2008 and was sentenced to time served. Two years later, he was charged with tax evasion for failing to declare income on $5.2 million in Swiss accounts and again pleaded guilty, paying $209,000 in fines.

He was shot dead at his home by a sniper in November 2010 at the age of 86.

Corruption alleged inside CRA

The cheque to Rizzuto is the latest in a series of troubling revelations about the Canada Revenue Agency's Montreal tax office, which the RCMP began investigating for possible corruption in 2008 at the agency's own request.

Evidence has emerged that some revenue agency officials in Montreal might have received tens of thousands of dollars in cash and other benefits, including a trip to a Montreal Canadiens game, from people and businesses they were auditing.

Watch

CBC News will broadcast more details today from the Enquête investigation into allegations of corruption within the Canada Revenue Agency.

There are also allegations some CRA agents tried to extort restaurateurs whose taxes they were assessing.

One of the businessmen alleged to have bribed auditors, Francesco Bruno, is a construction executive with ties to the Rizzutos.

So far, the CRA has fired nine employees. Six of them have been charged by the RCMP with crimes ranging from breach of trust to tax fraud to extortion.

The RCMP says the total amount of taxes avoided through the corrupt schemes could total in the tens of millions of dollars.

A mysterious $381,737 tax-rebate cheque issued by the Canada Revenue Agency to Quebec crime boss Nicolo Rizzuto is stoking concerns about possible corruption at the agency. (CBC)

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BlackBerry cancels quarterly results conference call

BlackBerry has decided to cancel a conference call and webcast that had been scheduled for Friday after the release of its second-quarter financial results, which the company has already telegraphed will be dismal.

The announcement by the struggling smartphone maker came after the close of markets Wednesday when BlackBerry's already beaten down shares fell another six per cent as investors weighed the likelihood of a highly conditional takeover offer from Fairfax Financial, one of BlackBerry's largest shareholders.

In a statement, the Waterloo, Ont.,-based concern said only that it decided to cancel the conference call "in light of the letter of intent agreement between BlackBerry and Fairfax Financial Holdings Ltd."

Last week, the company, which reports in U.S. dollars, said it would likely post a loss of between $950 million US and $995 million US for its fiscal second quarter. It also projected $1.6 billion in sales, far short of analysts' expectations of about $3 billion.

A plan to cut about 40 per cent of its global workforce, about 4,500 jobs, is also underway.

Unclear whether executives will comment

With few surprises expected in the financial report, attention was expected to turn Friday to comments from chief executive Thorsten Heins about the quarter and where the company could be headed in the coming months.

However, it was unclear Wednesday what commentary might accompany the earnings report or whether top executives might otherwise be available for comment.

"The company will publish further details regarding its second-quarter results in the management's discussion and analysis and consolidated financial statements, to be filed next week," the announcement said.

On Monday, Fairfax proposed a tentative agreement to take the company private with a consortium of unnamed financiers for $9 per share.

The letter of intent values BlackBerry at $4.7 billion but allows Fairfax to walk away from the offer if it is dissatisfied with a number of conditions.

Shares in the smartphone maker pulled back 52 cents to close at $8.26 on the Toronto Stock Exchange on Wednesday, extending a downwards shift that gained momentum earlier this week. The last time BlackBerry shares closed lower was on Oct. 31, when they ended at $7.88.

In New York, the company's stock lost more than six per cent on Wednesday, sliding to $8.

Investors losing confidence in Fairfax deal

The share pullback suggests that BlackBerry investors are losing confidence that a solid Fairfax deal will materialize.

However, the head of Fairfax Financial Holdings Ltd. said Wednesday he has every intention of completing the acquisition.

Fairfax chief executive Prem Watsa told The Associated Press his firm is not in the business of making an offer and then walking away or redoing the deal.

"We've got a track record of 28 years of completing what we've done. We've never renegotiated," Watsa said.

"We thought long and hard before we offered $9 a share, and we're not in the business of offering a number and at the last minute changing the figure. Over 28 years, our reputation is stellar on that front. We just don't do that."

A report in the Globe and Mail said that Fairfax was seeking more than $1 billion from other investors to help fund a takeover of BlackBerry, but that the Toronto-based investment firm still has a long way to go before it gains the support it needs.

The Globe, citing unidentified sources, said that as of Tuesday only one pension fund was seriously considering joining the Fairfax-led consortium — the Ontario Teachers Pension Plan, one of Canada's largest institutional investors.

The pension plan has declined to comment on any reports that link it to deals before they're announced.

'Take the money and run'

The Globe report says Fairfax is pitching a deal that would be financed with $3 billion of bank loans, $1 billion of equity from institutions and Fairfax's current 10 per cent stake in BlackBerry, worth about $470 million.

That tentative bid could become more attractive as BlackBerry continues to lose value on stock markets. Since the announcement, when shares of the company briefly spiked, its stock has fallen nearly 11 per cent.

Some analysts expected the Fairfax offer to drive BlackBerry's share price higher — or at least keep it steady — on the expectation that either other bidders could emerge or the Fairfax deal would move forward. So far those hopes have been dashed.

"Shareholders should be very happy," wrote National Bank analyst Kris Thompson in a recent note.

"It's still a long shot that new owners can turn the company around, so shareholders should take the money and run."

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Rogers, Sprint to offer wireless system in vehicles

Rogers Communications Inc.and U.S. wireless carrier Sprint Corp. say they will offer Canadians a high-speed internet access in their vehicles through a new service announced today.

The cost of the project, pricing for the services and dates for the rollout weren't included in a joint statement issued by the companies, which have two of North America's largest telecommunications networks.

A Rogers spokesperson confirmed to CBC News that the new service will be available within the next year.

They said the service will be available from auto manufacturers that deploy Sprint's Velocity system in Canada and it will leverage Rogers' wireless networks to connected vehicles on the road.

New vehicles will be manufactured with a Machine to Machine (M2M) SIM card for built-in wireless network connectivity, the spokesperson said.

Vehicles with Sprint Velocity — which has already been deployed in the United States — will have access to news, sports scores, weather alerts, driving directions and vehicle diagnostics via an in-dash touch screen, they say.

Sprint Velocity also provides connectivity for mobile devices in the car including smartphones and tablets.

Rogers says Canadians "want to be connected from anywhere, at any time."

And with over 20 million vehicles on the road in Canada, said Rogers vice-president Mansell Nelson, "there is a strong growth opportunity for Rogers in the connected auto segment."

The connected car market is expected to be a booming business, with research suggesting nearly 100 million connected cars will be on the road by 2016.

Late Wednesday, Rogers announced plans to raise $1.5 billion US to fund its business activities. It didn't identify specific uses for the money, which will be raised through the sale of 10- and 30-year, interest-bearing notes.

The notes won't be offered in Canada or to any resident of Canada.

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Statoil's newly discovered N.L. oilfield among the biggest in years

A Norwegian energy firm is estimating that an untapped oilfield off Canada's east coast contains between 300 and 600 million barrels of recoverable oil, making it one of the biggest discoveries in recent years.

"We believe this has the potential to open a new region offshore," Bard Glad Pedersen, director of communications for Statoil, said in a telephone interview Thursday.

"We will be working with our partners and authorities to enable a positive development for the companies and the region."

Calgary-based Husky Energy, another major producer in Newfoundland's current offshore oilfields, is Statoil's partner in the area, with a 35 per cent working interest in three discoveries.

"Together, these discoveries confirm significant opportunity in the Flemish Pass Basin and could be developed in tandem," Husky said in a statement Thursday.

"Husky and Statoil will continue to evaluate the potential for commercial development of the discovered resources. The companies will conduct further drilling in the area to evaluate other opportunities."

Statoil made the discovery in August in the Bay du Nord area while drilling in depths of about 1,100 metres of water about 500 kilometres northeast of St. John's, N.L.

Pedersen said the exploration well in the Flemish Pass Basin in the North Atlantic is the 12th-largest oil discovery in the world in the past four years.

However, the company is also cautioning that more work is required before it can say a project is going ahead.

"With only a few wells drilled in a large licenced area, totalling about 8,500 square kilometres, more work is required," said Tim Dodson, executive vice-president of Statoil Exploration.

"This will involve new seismic as well as additional exploration and appraisal drilling to confirm these estimates before the partnership can decide on an optimal development solution in this frontier basin."

The Bay du Nord discovery is Statoil's third discovery in the Flemish Pass Basin.

The Mizzen discovery is estimated to hold a total of 100-200 million barrels of recoverable oil and the Harpoon discovery, announced in June, is still under evaluation, and volumes have not yet been confirmed.

The Harpoon discovery is about 10 kilometres away from Bay du Nord.

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H&M's profit up 22% on strong sales at new stores

Fashion retailer Hennes & Mauritz AB says its third-quarter profit swelled by nearly a quarter thanks to strong sales, particularly in China and Japan, and the popularity of its summer collections.

The Swedish company said Thursday that its net profit in the June to August period was 4.4 billion kronor ($690 million US), 22 per cent higher than the 3.6 billion kronor it made the year before, and it expects earnings to continue to grow. Revenue was 32 billion kronor, up from 28.8 billion kronor a year earlier

H&M's share price was up more than six per cent at 280.30 kronor in early trading on the Stockholm Stock Exchange.

CEO Karl-Johan Persson was upbeat about the outlook, describing the August launch of an online store in the U.S. as being "very well received by customers."

He said the company's "offering stands up well in the world's largest online market" and that H&M also had successful openings this year of new stores in Lithuania, Serbia, Chile and Estonia.

During the first three weeks of this month, sales increased eight per cent in local currencies compared with the same period in 2012, the company said. It noted, however, that differences in calendar dates with last year would shave two percentage points off the month's sales growth.

H&M opened 215 new stores worldwide during the past nine months and said it was on target to increase the number of new retail outlets by 10-15 per cent annually, with "continued high profitability."

Founded in 1947, H&M has 2,964 stores worldwide, up from 2,629 a year earlier, including franchises and stores under its other brand names. H&M said it would also continue expanding the groups' other brands — COS, Monki, Weekday, Cheap Monday and Other Stories.

It employs around 100,000 people globally.

H&M was one of several clothing retailers that earlier this year signed onto a plan that would see them fund repairs and safety improvements to the Bangladeshi garment factories that supply their clothes. The pact was prompted by a building collapse at a garment factory that killed more than 1,100 people and focused worldwide attention on hazardous conditions in Bangladesh's garment industry.

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As wireless spectrum battle heats up, Ottawa takes the first swipe: Don Pittis

There is a jousting match going on in the Canadian cellphone market and Canadians must choose their champion.

At one end of the field of battle, the phone companies — Bell, Telus and Rogers — raise their banners to defend Canadian jobs and Canadian industry from foreign mega-corporations.

At the other end is the federal government, your knight in shining armour, hoping to protect you against overcharging by the oppressive Big Three.

You might have thought the news on Monday — that foreign companies are staying out of the bidding for the latest batch of cellphone frequencies — would have cooled tempers somewhat.

Not so. The same day that Industry Canada published the list of companies in the running for the new telecom spectrum – a list that did not include the bogeyman U.S. giant Verizon or any other outside bidder – the feds went on an attack in papers across the country.

"The fact is Canadians pay some of the highest wireless rates in the developed world," blare ads in the transit tabloid Metro in some of Canada's biggest cities. "And our largest wireless companies hold 85% of the airwaves."

Fightin' words

Along with the fightin' words, the ads direct readers to a comprehensive website, Canada.ca/morechoices, offering details of what's at stake. From the government's point of view, of course. Once you get past the propaganda, the information in the Spectrum Auction FAQ is full of useful titbits. 

After the government released its information campaign, OpenMedia, a group that says it represents ordinary Canadians, stepped up to give the phone companies a whack. 

Ever since the Big Three telecoms - Bell, Rogers and Telus - accused the federal government of giving other companies an unfair advantage in purchasing blocks of wireless spectrum, the government has been saying that Canadians pay too much for wireless services. (Industry Canada)

 "Canadians have been speaking out about the Big Three's misleading PR campaign, and now that we know Verizon is not taking part in the auction, we know for sure the campaign was over-the-top and dishonest," says Steve Anderson, OpenMedia's executive director, in a press release.

The idea that foreign companies are entirely out of the picture is suspect. 

While Verizon is not in the bidding, the FAQ points out that a "limit on the prime spectrum blocks will be imposed on Canada's large wireless service providers... and will effectively reserve... one block of prime spectrum for new entrants or regional providers." 

There are many companies in that list of bidders that could scoop up the spectrum the Big Three are not allowed to touch. Once the bidding is complete, anyone — that is, anyone other than the "Big Three" — can buy the spectrum from the winners and be back in the game. 

One-sided debate

If that is so, why is the debate so one-sided now? Where are the big telecom companies that made their objections so obvious in their recent full-page ads in newspapers and spots on radio? It is hard to see that their views would have changed.

For a clue, check out the FAQ again. 

"Bidders that have applied to take part in the auction... are not allowed to publicly discuss bidding strategies, how they intend to bid, what the market might look like after the auction."

If they do, there is a penalty.

"Bidders that publicly discuss the sensitive information mentioned above could be disqualified from taking part in the auction, as well as possibly lose their deposit."

This time, the big telecom companies have been unhorsed, and the round goes to the government. But stay tuned, the fight is far from over.

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BlackBerry takeover offer buys company time

A takeover is necessary to give battered BlackBerry the time it needs to get itself back in order, company watchers say.

On Monday, BlackBerry said a consortium led by Fairfax Financial Holdings Ltd. had signed a letter of intent to buy the company for $9 US a share in a deal valued at $4.7 billion US. 

The news came just days after BlackBerry announced it would take a non-cash loss in the second quarter of $930 million to $960 million, mainly due to its large inventory of unsold devices. The company said at the time that it sold only 3.7 million smartphones in the second quarter, and was cutting 4,500 jobs.

BlackBerry employees prepare the launch event for the company's new smartphones in London in January 2013. The company recently announced it was cutting 4,500 jobs. (Lefteris Pitarakis/Associated Press)

​If the Fairfax bid is succesful BlackBerry, which went public in 1997, would disappear from stock markets. But it would gain time to fix its business away from the public scrutiny that comes with quarterly results and coverage by analysts, and the media.

"Taking it private [is] the only way to save anything," said Iain Grant of technology research and strategy firm SeaBoard Group.

"Otherwise just continue circling the drain — every quarter losses continue, confidence evaporates, no magic [equals] no value," Grant said in an email to CBC News.

Peter Misek, managing director at investment bank Jefferies in New York City, said the letter of intent "is a bit of a relief."

​"It kind of sets the bar below BlackBerry, stabilizes the business and allows them potentially to keep going," he told CBC's Lang & O'Leary Exchange.

Fairfax Financial, which is led by Prem Watsa, already owns about 10 per cent of BlackBerry. Watsa served on the BlackBerry board from January 2012 until August 2013, when he stepped down citing a potential conflict of interest.

Ian Sprott, assistant professor at the Sprott School of Business, said he is leaning toward viewing this as a new beginning for BlackBerry.

"Prem Watsa and Fairfax are really sharp operators," Spott said on Power and Politics with Evan Solomon

"If anybody can do it, I think they can," he added.

It's not immediately clear what Fairfax might have in mind for the Waterloo, Ont.-based firm, including what parts of the business might be kept and what might be discarded.

Independent technology analyst Carmi Levy said the Fairfax consortium "stands a better chance than most of keeping the bulk of the BlackBerry's assets together instead of selling them off for parts."

"As the largest BlackBerry shareholder … Fairfax was buying more shares when everyone else was heading for the exits: a clear sign that the holding company values and appreciates the company it wants to acquire," Levy said. "Fairfax has traditionally not been a buy-and-break-up holding company, anyway, instead choosing to identify and invest in value."

Misek said BlackBerry should focus on its services business.

"Job number one is shut down as much of the handset business as possible. Refocus, retool on services. Make sure you're the number one mobile device management provider, cloud provider for Android and iPhone and mobile devices globally," he said.

Levy called the company's handset division an "albatross around the rest of the company's neck."

BlackBerry's software, services, global secure network and related encryption technology, and its intellectual property stockpile are "highly desirable assets that could be worth more than the sum of their parts as long as they are retained as a cohesive unit," he said.

"It may be difficult to see the value of BlackBerry's remaining superstar-level assets simply because we've been conditioned by years of negative headlines," he told CBC News.

"But those headlines focused on one consumer-facing aspect of the business. The other profitable units toiled away in anonymity while investors focused on the fading consumer handset operation."

BlackBerry's fortunes over the years have been well-documented.

​Started in 1984, Research in Motion, as the company was formerly called, launched its first BlackBerry device in 1999. 

By 2007, the same year Apple unveiled its iPhone, Research in Motion had 10 million customers, and a $67-billion market capitalization — the highest on the Toronto Stock Exchange.

RIM's share price topped out in 2008 at $149.90, but has been decimated since then.

Misek says 2009 was the point when things went wrong for BlackBerry.

"The iPhone had been out for two years. BlackBerry had come up with its response and felt that its existing operations system was OK, that consumers did not want to surf internet on their mobile devices, that they did not want all these apps because the BlackBerry OS could not handle that." 

"That was a grave mistake," he said.

At $9 US a share, the Fairfax-led group could buy BlackBerry at a significant discount even to last week's share price. On Sept. 20, after BlackBerry issued its earnings warning, its share tumbled 16 per cent to $9.08.

On Monday, BlackBerry shares were unchanged.

The Fairfax consortium has six weeks to carry out its due diligence, during which time BlackBerry can solicit or negotiate other bids.

Reaction on stock market to the takeover bid was tepid, perhaps suggesting the market doesn't expect another bid to emerge. Some analysts have suggested Monday's bid is the only way shareholders are going to get a solution to their problems.

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Fingerprint scanning a balance of security and convenience: Dan Misener

Bruce Schneier nailed it.

Before Apple announced the iPhone 5S and TouchID, its fingerprint authentication feature, Schneier predicted that such a system could be easily fooled.

"Almost certainly," he wrote in a Wired opinion piece, "I'm sure that someone with a good enough copy of your fingerprint and some rudimentary materials engineering capability — or maybe just a good enough printer — can authenticate his way into your iPhone."

A few days later, as if on cue, members of the European hacker collective Chaos Computer Club claimed to have done just that, posting a video documenting their hack.

The steps they took are detailed on their site, but essentially, the hackers took a high-resolution image of a fingerprint, printed out a high-resolution mirror image and poured a layer of latex over top. Once it dried, the resulting fake fingerprint was capable of unlocking a phone.

The hack is a high-resolution update of a well-known and often-documented technique that's been used to fool fingerprint sensors for years.

Immediately after the release of Apple's new iPhone 5s on Sept. 10, hackers set about breaking its fingerprint scanner. (Marcio Jose Sanchez/Associated Press)

Svetlana Yanushkevich isn't surprised by the hack. Yanushkevich is with the Biometric Technologies Laboratory at the University of Calgary, and has followed the story along with her students.

"Every time you get a new technology, somebody will try to prove that it's not good enough," she says. "It's possible to fool a voice recognition system. It's possible to fool a face recognition system, because you can present a very good photograph of the person to the camera. There always will be someone who wants to prove it wrong."

Better than nothing

So, if the new iPhone's fingerprint security is hackable, why use it?

Because it's considerably more secure than a four-digit passcode. And it's way more secure than what most people do to secure their smartphones, which is nothing. Apple claims that "more than 50 percent of smartphone users don't use a passcode."

So, if the goal is to get more smartphone users to do something rather than nothing about the security of their electronics, fingerprint sensors can help.

For me, this story is a good reminder of the trade-off between security and convenience. With any authentication technology, you give up one to get the other. The trick is finding the right balance.

Yanushkevich told me that biometrics like fingerprints, voiceprints and retina scans contain much more information than a four-digit phone passcode or a traditional password. Depending on the implementation, they can be significantly more secure. But, she says, these features are most effective in combination.

"You can combine passcode and fingerprint to have several levels of security," she explains. "This is something that we call in research work 'fusion.' Fusion will always increase the confidence levels that help you make your decision about acceptance or rejection."

Combining biometrics and passcodes may be more secure, but again, there's a tradeoff between convenience and security. In a world where more than half of smartphone users don't even use a passcode, there seems to be a strong preference for convenience.

What's next

Today, Apple's TouchID fingerprint scanner is only available on the brand new, top-of-the-line iPhone. I suspect that over time, this feature will trickle down to their other products. I'll be amazed if many other smartphone manufacturers don't start adding fingerprint sensors to their mass-market phones.

I asked Yanushkevich what she thinks is next.

"We can expect that the face biometric or iris biometric will be used on the mobile devices. That's our prediction."

Eyeballs. Great. I can't wait to start worrying about a thief copying my eyeball to gain access to my phone.

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Sears Canada replaces CEO with chief operating officer

Sears Canada has named a former management consultant and U.S. Marine as its new president and chief executive, replacing the man who has been leading a multi-year project to revive the national retailer.

Calvin McDonald will be replaced as president and CEO by Douglas Campbell, who has been Sear Canada's chief operating officer since November.

A Sears Canada spokesman says Campbell played a leading role in the recent success of the company's major appliances business and had consulting experience with other retailers before joining the company in early 2011.

The company said McDonald — who has spearheaded a number of major initiatives to reposition the company in a hotly competitive marketplace — resigned to pursue an opportunity with a "leading international company."

Rumours of CEO's dispute with Sears Holdings

Sears Canada spokesman Vince Power said McDonald hasn't informed the company where he's going but he disputed a report that McDonald was leaving because of a disagreement with majority shareholder Sears Holdings Corp.

The Globe and Mail, citing a unidentified source, said the disagreement was tied to "the pace at which capital was being deployed to keep the momentum of the transformation going."

But Power said he's unaware of any dispute along the lines reported by the newspaper and insisted the reason for McDonald's departure is the new job opportunity.

Neither McDonald nor Campbell were immediately available for interview.

In the company's statement, McDonald said: "It has been an honour to lead an iconic Canadian retailer, and I look forward to your continued success."

The company's new CEO graduated from the U.S. Naval Academy with a degree in economics before serving as a commissioned officer in the U.S. Marine Corps. He later received a Masters of business administration from the Wharton School and worked with Boston Consulting Group before joining Sears Canada.

"Doug's disciplined approach has been instrumental in managing costs and driving efficiencies," said William Crowley, chairman of the Sears Canada board of directors.

"We look forward to his leadership as we continue to improve profitability across the business. We believe that the future remains bright for a more focused and competitive Sears Canada."

Sales, revenue down in Q2

Campbell said in the statement that he looks forward to working with the Sears Canada management team "to continue to engage our customers and our 25,000 associates to better serve families and communities across Canada."

Last month, Sears reported that its second-quarter revenue was down 9.6 per cent from the same time last year. Revenue for the 13 weeks ended Aug. 3 was $960.1 million, down from $1.06 billion a year earlier.

Part of the revenue decline was a reduced number of locations, but same-store sales were also down 2.5 per cent.

Sears would have lost $11-million, or 11 cents per share, in the quarter except for an agreement to vacate two Toronto-area stores by March. With unusual gain, Sears Canada's net income was $152.8 million, or $1.50 per share. 

The company has announced several rounds of layoffs this past year and said it will close three of its Toronto mall outlets.

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