Canadian Economy Archives

Elite CEOs pocket average annual wage in hours

The Canadian Centre for Policy Alternatives kicked off 2011 with a new study that shows compensation for Canada's top CEOs appears to be recession-proof. Prepared by by CCPA Research Associate Hugh Mackenzie, according to the CCPA web site "the study looks at 2009 compensation levels for Canada's best paid 100 CEOs and finds they pocketed an average of $6.6 million during the darkest period of the recession - a stark contrast from the total average Canadian income of $42,988."

The report continues that at the identified rate of remuneration, this small handful of elite CEOs pocketed the equivalent of the average Canadian wage by 2:30 pm on January 3 - the first working day of the year. You can read the full report via the CCPA web site. See:
http://www.policyalternatives.ca/publications/reports/recession-proof

Canada's richest getting richer?

An interesting post appeared recently on the web site of the Canadian Centre for Policy Alternatives indicating how Canada's rich keep getting richer. The CCPA released a major report by Senior Economist Armine Yalnizyan that indicates that Canada's richest 1% has enjoyed more of the gains from economic growth than ever before in recorded history.

The report identifies income trends over the past 90 years, revealing the richest 1% took 32% of all growth in incomes between 1997 and 2007.

For more information, see the CCPA article on its website.

CCPA: Canada's Long Road to Economic Recovery

The Canadian Centre for Policy Alternatives (CCPA) has released a report contending that Canada's economy is still mired in recession. According to the CCPA, Canada's economy is still a long way from recovery, despite months of "green shoot" speculation. Canada's Long Road to Economic Recovery , by Jim Stanford and David Macdonald, examines key economic indicators and concludes more public investment will be key to Canada's recovery.

For more information, see the CCPA web site at:
ttp://www.policyalternatives.ca

CCPA video on Canada's growing income gap

Over the past two years the CCPA has released numerous reports about the growing gap between the rich and the rest of us. Now the CCPA has launched a video that draws on these reports to tell the story of Canada's income gap.

For more information, see the CCPA web site at:
http://www.policyalternatives.ca

Jim Prentice, Canada’s Presumptive Finance Minister?

It is no secret in Ottawa that Industry Minister Jim Prentice wants to be Canada’s finance minister. Before the last Cabinet shuffle there was a quiet but steady effort to publicly highlight Mr. Prentice’s managerial talents and disparage Jim Flaherty’s reprimanding of high-taxed Ontario to change policies or risk becoming a have-not province. If Minister Prentice had his way he’d be running finance and Mr. Flaherty would be punted to a second-tier ministry, like industry. It didn’t matter that many mainstream economists agreed with Mr. Flaherty, Mr. Prentice was offering himself as a kindler, gentler Conservative.

Last week, the industry minister took another run at Mr. Flaherty by wading into budget territory. He told reporters the federal government has not determined how to allocate proceeds from the recent auction of wireless licences that resulted in an unexpected $4.25-billion windfall. Mr. Prentice said the cash might go to tax cuts, debt repayment or even spending programs. If Mr. Prentice is determined to audition for the finance minister’s job he might want to first reflect on the state of Ottawa’s finances. Because there should be no confusion in Conservative ranks about what to do with the revenue.

The finance department reported last Friday that Ottawa posted a deficit of $517-million in the first two months of the 2008 fiscal year. This news is worrisome even after a decade of Ottawa lowballing its surplus projections. It was no surprise that tax revenues dropped by 4.1% since the Conservatives cut the GST another point and lowered the tax rate on businesses. If Ottawa’s financial position is worsening it is the result of poor management and over-spending, not modest tax relief. The 2008 budget claimed Ottawa would limit spending growth to 3.4% this year. Yet, expenditures in April and May grew by 7%. If this continues, Ottawa will be on track to overshoot its budget target by an astounding 100%.

Do Mr. Prentice and his colleagues believe the federal government should increase spending further this year? And how important is reducing the federal government’s monster debt? Since 1997, the debt has been cut by $106-billion. That’s a good start. But each year $34-billion is still spent on interest charges to service Ottawa’s outstanding $457-billlion liability. That amounts to $93-million each day. There is clearly more work to do.

It is folly to suggest a one-time revenue gain – such as the $4.25-billion generated by the wireless auction – be used to increase spending. Whatever new program might be created will live long after the cash raised from the auction is spent. As Milton Friedman said, “Nothing is so permanent as a temporary government program.”

Whenever a government sells an asset – in this case wireless spectrum rights – the additional income should be used to reduce the country’s debt liability. Ottawa has the option of allocating the auction revenue at once or spreading it over a decade. The latter move would boost revenue by $425-million a year, however leaving this money on the table increases the likelihood that some of it will be spent instead of going against the debt.

Applying $4.25-billion to the debt will reduce interest payments by approximately $225-million every year. Under the Conservative government’s new tax-back guarantee law, all debt-interest savings are used to reduce personal income taxes. This is another good reason why the auction revenue should be used to retire the debt now. Debt relief today will result in lower taxes tomorrow.

Minister Prentice deserves tomatoes from taxpayers. He opened a discussion on increased spending where none is necessary and offered more evidence the federal government doesn’t tax to collect the revenue it needs but that politicians always find ways to spend whatever money is collected. Taxpayers can expect spending to spike unless the real Finance Minister, Jim Flaherty, is ready to overrule his Cabinet colleague, reduce debt and keep a lid on spending. If he does not, it won’t matter much to taxpayers which Jim is the finance minister after the next shuffle.

John Williamson is federal director of the Canadian Taxpayers Federation

END

Please note that after six good years with the Canadian Taxpayers Federation, I will be resigning as federal director on Sept. 12, 2008, to undertake graduate studies in economics.

John Williamson
Federal Director
Canadian Taxpayers Federation

Canada-U.S. Free Trade Agreement: 20 years later

As 2008 comes in, we witness the 20th anniversary of the signing of the Canada-U.S. Free Trade Agreement. To mark this miletstone, the Canadian Centre for Policy Alternatives (CCPA) Executive Director Bruce Campbell has written 20 Years Later: Has Free Trade Delivered on its Promise?, a study examining what's happened since and finds free trade's biggest boosters have grown wealthier but promises of better jobs and rising living standards fell short. According to the CCPA web site, "the study takes a sample of 41 Canadian Council of Chief Executives (CCCE) member companies – the leading supporter of free trade – and finds they shrank their workforce by 19.6% while their revenues grew by 127%."

The news release and the study can be downloaded from the CCPA web site at http://www.policyalternatives.ca

Canada's best paid 100 CEOs will have pocketed the national average wage of $38,998 by 10:33 am on January 2nd

Today the Canadian Centre for Policy Alternatives released The Great CEO Pay Race, by Hugh Mackenzie. According to the CCPA, the study finds that Canada's best paid 100 CEOs will have pocketed the national average wage of $38,998 by 10:33 am on January 2nd.

The news release for the study appears below and along with the CEO report (and an online tool to find out how quickly the top 100 CEOs earn your salary) all are available at www.growinggap.ca and www.policyalternatives.ca.

From the CCPA web site:

New Year’s party still going for top CEOs

TORONTO – By the time most Canadians roll up their sleeves to begin a new year of work, Canada’s best paid 100 CEOs will already be having a good year: They’ll pocket the national average wage of $38,998 by 10:33 am January 2nd.

And they will continue to earn the average Canadian wage every nine hours and 33 minutes for the rest of the year, according to a new report on CEO pay by the Canadian Centre for Policy Alternatives (CCPA).

“Most Canadians are heading back into work with a mound of Christmas bills and financial worries but for Canada’s best paid 100 CEOs it’s like Santa Claus delivers every nine hours,” says the report’s author, CCPA Research Associate Hugh Mackenzie.

“That’s what happens when you make an average of $8,528,304 – which is the average of what Canada’s 100 best paid CEOs made in 2006.”

On average, the best-paid 100 CEOs make more than 218 times as much as a Canadian working full-time for a full year at the average of weekly employment earnings.

“That represents a significant gap between the rich and the rest of us – especially the working poor who earn the minimum wage,” Mackenzie says.

By 1:04 p.m. New Years’ Day, the best paid 100 CEOs pocketed what will take a minimum wage worker all of 2008 to earn. Every four hours and four minutes, they will keep pocketing the annual income of a full-time full-year minimum wage worker.

“We have to ask ourselves, are those at the top of the income heap really worth so much? And are those at the bottom really worth so little?”

StatsCan Publication: The Canadian Economic Observer

The Canadian Economic Observer (CEO) can be ordered via the Statistics Canada web site.

"The Canadian Economic Observer (CEO) is a quick, concise and authoritative analysis of the Canadian economy. Available in print or internet versions, this monthly journal gives you the inside track on current economic trends and shows you the dynamics of change in today's economy from the inside out."

CEO topics include:
- current economic conditions, unemployment, jobs and consumer spending
- industry and trade developments
- financial markets and profits
- developments in provincial and international economies
- and much more

For more information see the Statistics Canada web site at:
http://www.statcan.ca/english/ads/11-010-XPB/index.htm