Neither Angela nor her husband Harold (not their real names) were ready for an early retirement. At 61 and 58, respectively, both are successful business owners. They’re secure financially but before now, weren’t ready to commit to an exit plan. 

“She said, ‘If your husband is retiring, what about you?’” Angela recalled from their conversation this past spring. “It’s something I’ve never thought about before, because my initial response was, ‘You don’t retire from something you love.’”  

This is the first in a series of articles focused on how financial advisors are working with clients to create retirement plans tailored to their individual needs.   

• The expert: Thuy Lam, an advice-only certified financial planner with Objective Financial Partners in Markham, Ont. 
• The client: Angela, a 61-year-old woman and owner of both a non-profit business and a for-profit business in Ontario. 

Harold was the first to engage advisor Thuy Lam on the subject. She then turned her attention to Angela. 

Lam encouraged Angela to embrace retirement. The two ultimately landed on a five-year phased approach, giving Angela enough time to create a succession plan she feels comfortable with and to mentally prepare for the transition.  

“I’m working on putting pieces in place so we can continue to have the impact that we’ve been having,” Angela said. 

The changing nature of retirement

The average Canadian retirement age was 65.3 years old in 2024, according to Statistics Canada. That figure reflects an ongoing trend toward later retirement that started to take shape in the 2000s. A ban on mandatory retirement, increased longevity, the increasing cost of living and a desire for continued participation in the workforce are some of the forces behind this trend, which has seen many Canadians either opting for a phased retirement, coming out of retirement to work or structuring their plan to allow them to work later in life.   

Lam asked several probing questions to get Angela thinking about the right approach for her. 

For one, she asked how she planned to spend retirement alongside her soon-to-retire husband, encouraging her to reflect and rediscover her interests and passions in this next phase of life.   

“It’s about creating that space for clients to get them to a point where they’re psychologically, mentally ready,” Lam said. “And it makes for a successful retirement.”  

Angela said she sees them spending more time with their two grandchildren, at their cottage, travelling overseas, finding ways to give back to their community and riding around on her husband’s motorcycle, which has been sitting around collecting dust. 

Lam also asked Angela if she envisioned herself continuing in the same roles and in the same capacity in her businesses once she retired, or if she could see herself gradually taking steps back.  

It was clear that Angela “does see herself significantly reducing hours of when she’s involved, but she’s not ready to let go … entirely,” Lam said.   

Based on that revelation, they built a plan that would see Angela shift from working at 100% capacity to 60%, then 30% and then 10%. During this transition period, she plans to delegate more responsibilities to her staff and identify her desired successors. By the end of the five years, she hopes to work for the businesses strictly in an advisory capacity and to retain some equity in her for-profit business to partially fund her retirement.  

Angela called it “a mental preparation more so than a financial preparation.”  

This is common, Lam said, among business owners who have the financial means to retire but view their businesses as “their babies — they started it from scratch and they just love what they do and they feel responsible for the team and responsible for having that business plan in place.”  

The numbers  

Behind the scenes, Lam compiled a full financial picture of where Angela and her husband stand. This included their assets, liabilities, expenses, incomes, tax returns, group benefits and Canada Pension Plan contributions. 

“I find when people are transitioning into retirement, they’re not confident, because … they don’t even know how much they need to spend to fund that retirement life they envision,” she said.  

The first exercise for Lam was updating Angela and her husband’s current spending needs, including their base and variable expenses.  

Lam then created a separate set of capital projections to determine their cash flow needs based on their vision for retirement, which includes local and international travel.  

She also accounted for extraordinary expenses that would continue into the couple’s retirement, such as car replacement, home renovations, as well as goals with regards to estate planning or pre-gifting for their three adult children. 

“[I was] asking probing questions to get a better, more realistic assessment of what their spending needs would be during their active years in retirement, and then their not so active years, because that’s important,” Lam said.  

In terms of Angela’s decumulation strategy, Lam said she used financial planning software to model different drawdown scenarios, such as: “What if she brought down her RRSP early? What does that look in terms of overall taxes? What marginal tax rates can I keep her in since her husband has a defined benefit plan and there are income splitting opportunities there?” 

“It is actually a bit of a fine art to balance,” she explained. 

Ultimately, she recommended early RRSP withdrawals for both Angela and her husband, and applying to unlock the small balance Angela had in a locked-in retirement account.  

She said she intends to revisit the couple’s plans with them prior to Angela’s husband retiring from his position in 2026, and at regular intervals after that. 

For Angela, these conversations have helped her feel confident in the plan because she didn’t think it was feasible for her to retire, she said. This was especially reassuring because she’d heard stories about two friends who recently retired and “really struggled.” 

“One had to seek some therapeutic help, because it was such a shift [from] getting the regular income that they were used to getting,” she said. 

Beware of disconnects 

Some advisors may assume their clients really know and understand their spending needs, but Lam recommended either working with soon-to-retire clients to identify their expenses or encouraging their clients to calculate them because “there might be a disconnect.”  

“It’s a really good exercise,” she said. “I believe that it forms a strong foundation for the plan and more accurately reflects the client’s spending needs. And not only that, but I believe it kind of makes the numbers more meaningful for clients, when they can really connect how their spending dollars can fund their goals and their dreams.” 

At the same time, advisors need to recognize that retirement planning “really goes much deeper than the numbers,” Lam said.  

Many people pour hours of work into their career, and it forms the basis of their identity, so advisors need to help their clients reidentify and rediscover themselves once their career comes to an end or takes a back seat to other parts of life, she recommended.  

“It’s very emotional,” Lam said. “How we can continue to make a contribution, have a sense of story and reidentify ourselves, I think that’s a really important aspect. From there, the vision comes for what activities you’d be doing, where you’d be spending your time, and then that translates to time and numbers.” 

That’s been the most difficult aspect for Angela to wrap her head around, she said, because she spent more than a decade developing her two businesses and mentoring people along the way.  

Her advice for soon-to-be retirees is to find a financial mentor to help with the retirement planning process.  

“It’s been an eye-opener, having somebody professional who is on the journey with you helping you with that documentation, asking all the right questions and … able to present the facts,” she said. 

Reflecting on a book her husband is reading on retirement, which she also picked up recently, Angela shared another message: “Recognize that this is what you’ve … been working all these years for, and now it’s time to enjoy it and figure out how you will spend your time. How will you spend your time when you’re not accountable to anybody but you?” 

Amid stronger labour markets and ongoing inflation concerns, the Bank of Canada (BoC) is unlikely to cut rates next week, but the prospect of future rate cuts persists, according to National Bank Financial Inc. (NBF).

In a report previewing the upcoming rate decision, NBF said it’s now very unlikely that the BoC will cut rates next week. NBF had previously forecast a July cut, however, the latest economic data has altered that call.

“Those who had earlier been expecting a cut in July, us included, were dealt a blow this month when hiring was reported to have surged in June and underlying inflation failed to moderate,” it noted. “The closely watched Business Outlook Survey was hardly upbeat but still-soft sentiment is insufficient to compensate for firm core inflation and strong job growth.”

While the market is nearly unanimous in expecting that the central bank will leave rates unchanged, NBF said there’s now also “growing momentum around the idea that the easing cycle is over.”

NBF isn’t adopting this view and it doesn’t expect the central bank to signal that either.

“Instead, they’re likely to keep guidance unchanged, reiterating that they’re proceeding carefully and monitoring the same four indicators: export demand; tariff impacts on investment, employment and spending; inflation; and inflation expectations,” it said.

This approach leaves scope for possible cuts later this year, the report noted.

“There are signs that Canada’s economy will underwhelm in the months ahead as businesses and consumers tread cautiously,” NBF said.

“Trade impacts may not be as bad as feared but exports are unlikely to be a reliable source of growth. A trade ‘deal’ with the U.S. would be helpful to address uncertainty but an agreement will still involve material protectionism and is unlikely to return the economy to its pre-Trump growth path.”

Ultimately, inflation will be the primary driver of future rate decisions, NBF said.

“To us, the disinflationary pressures associated with marginal economic slack will outweigh tariff-related cost pressures which should keep all-items CPI contained and moderate core inflation.”

We had a pair of op-eds offered to us this week on the same subject — diversity, equity and inclusion (DEI). One came from the Shareholder Association for Research and Education, better known by its acronym SHARE. Canada’s 2SLGBTQI+ Chamber of Commerce (CGLCC) submitted the other one. Pride Month starts on Sunday, which may explain the uptick in correspondence.

“Better performance on diversity, equity and inclusion has been repeatedly linked to better corporate performance measures,” wrote Kevin Thomas, CEO of SHARE.

Thomas goes on to quote Society for Human Resource Management data linking the erasure of DEI initiatives with talent attraction and retention problems — 82% of employees said it makes them less engaged at work, 80% said they’re planning to look for a new job as a result and 70% said they wouldn’t apply to an anti-DEI employer.

“Diverse teams outperform. Inclusive businesses are more resilient,” wrote Darrell Schuurman, CEO & Founder of CGLCC. “We know that innovation thrives when we bring together people with different experiences, ideas and worldviews. … [W]e need to run toward DEI, not away from it.”

Canada’s investment industry is hardly antagonistic toward DEI from an employment perspective. Putting people with different backgrounds, perspectives and talents together — and profiting when that sum is greater than those parts — has long been considered a best practice.

Our financial advice industry is practically a United Nations in miniature, with professionals from all over the world serving their local communities.

But we’re growing less reliable as an ally on the asset management front. Despite our oft-repeated focus on long time horizons and good governance, DEI is falling out of favour as an investment criterion.

To understand this, it’s best to look at the larger issue of sustainability. We’ve made two mistakes.

First, the industry mishandled the marketing of sustainable investments. We drew a distinction between these new products and their traditional counterparts when we should have been promoting the application of good governance considerations in portfolio management more broadly.

Second, institutional investors blew it on net zero. They propped themselves up as activist investors prepared to change the world. So far, the results have been an embarrassment to both themselves and the movement.

It’s not so much that the pendulum swung too far, it’s that we thought it was a pendulum in the first place. Rather than engage with those calling for a more sustainable approach to asset management, we reacted to their advocacy. We’re making the same mistake now with populist politicians who are using their newfound power to push back hard on the progressives.

Canada’s investment management industry should start acting like the thought leader it is. We have a deeply informed perspective on how money can be put to good use by multiple aligned interests. Let’s restart the discussion.

Around the world, a wind is blowing in favour of deregulation, as The Economist magazine recently pointed out. Canada is no exception. In the securities industry, voices are already being raised in support of this cause. While recognizing the importance of a periodic review of the regulatory framework, it is crucial not to lose sight of the goals of regulation, or the raison d’être of the regimes introduced over the years.

Let us start with the goals. Securities regulation pursues three main goals, namely to ensure: 1) the protection of investors; 2) market efficiency to promote an optimal allocation of financial resources; 3) financial stability. These goals are supported by a set of provincial legislative and regulatory regimes harmonized across Canada through the coordination of the Canadian Securities Administrators (CSA).

Securities regulation is often criticized for imposing a burden that limits access to public capital markets, and for being ill-calibrated, generating excessive costs for listed companies and initial public offerings (IPOs). The decline in the number of IPOs and the exponential growth of the exempt market are said to be signs of this problem. The conventional wisdom would be to reduce regulation, notably by easing disclosure requirements or stock exchange listing conditions.

While there is a decline in the number of listed companies, it would be simplistic to attribute this phenomenon to regulation. Factors such as interest rates, the abundance of private equity financing, the evolution of business models towards intangible assets, taxation and the rise of indexed funds all play a role in this trend which can be seen in other jurisdictions, including the United States and the United Kingdom.

Above all, it is essential not to lose sight of the goal of securities regulation, which is to reduce informational asymmetries between companies and investors. By requiring disclosure of material information, regulation facilitates the valuation of companies, thereby ensuring investor protection while contributing to the efficient allocation of capital. Admittedly, these obligations entail costs for companies, but without them, investors would apply a discount on companies’ valuation, thereby increasing their cost of capital. Moreover, the accounting scandals of the early 2000s should make us cautious about relaxing the rules that underpin the reliability and integrity of financial reporting. Beyond the financial sphere, transparency generates benefits for other stakeholders, governments and the public, by informing them about the impact of companies on the economy and society. All this is not to say that the status quo is to be preferred, but rather that reflections should not be based on the premise that regulation is the source of the decline in the number of listed companies in Canada.

Another frequently voiced criticism is the inadequacy of regulation in the face of innovation. From cryptoassets to artificial intelligence (AI), innovations are said to come up against regulatory obstacles. According to this logic, regulation is ill-adapted, hinders competition and affects the supply of innovative financial products and services to investors. The idea, therefore, would be to further liberalize the regulatory framework to encourage innovation and competition.

Undoubtedly, regulators need to adapt their rules to keep pace with innovation. However, promoting innovation should not take precedence over the fundamental goals of regulation.

Take cryptoassets, for example. Their opacity, the complexity of the products and platforms, the high level of speculation and gamification are all characteristics that raise significant risks for investors. And let’s not forget the risks of fraud, such as those observed with the collapse of the FTX and Quadriga crypto exchanges. The concentration of the cryptoasset market, its fluctuating liquidity and high volatility represent threats to financial stability and investor confidence that need to be taken seriously.

AI also raises issues of investor protection. These include algorithmic bias, model opacity and complexity, and lack of accountability. Other aspects of AI represent risks to financial stability. For instance, if many institutions use the same AI models and data, it could lead to similar decisions in transactions, loans, and pricing, making the system more connected and risky. The 2008 financial crisis should serve as a lesson in this respect.

Rightly so, Canadian regulators are putting in place a framework for cryptoassets, aimed at mitigating risks to investors. They are seeking to clarify the application of regulation to AI, while soliciting input on the need to revise or adapt current supervisory and regulatory approaches. Similarly, the CSA Financial Innovation Hub reflects regulators’ desire to support the capacity of innovative, investor-friendly business models.

Let us be clear. The current regulatory regime is far from perfect. There are still many areas of improvement to be addressed. However, in reviewing the regulatory framework, it is essential that Canadian regulators stay the course by working together to align their actions with the goals of the regulatory regime, and by relying on evidence rather than speculation.

Stéphane Rousseau is a professor of law and president the Observatory on Quebec Securities Law at Université de Montréal. With professors Jason Alcorn at Université de Moncton; Cinthia Duclos at Université Laval; Cristie Ford at University of British Columbia; Patrick Mignault at Université de Sherbrooke; Poonam Puri at York University; and Robert Yalden at Queen’s University.

Canadian households enjoyed a 1.4% rise in net worth during the final quarter of 2024, according to data released today by Statistics Canada. Asset values, minus liabilities, climbed $236.3 billion.

The country went four for four last year, with increases in each quarter. By year-end, balance sheets were up $1.2 trillion relative to the end of 2023. The figure landed just shy of $17.5 trillion.

Financial assets held by Canadian households rose 2% to $10.8 trillion at the end of 2024. That’s the fifth consecutive end-of-quarter record. By comparison, Canada’s main stock index, the S&P/TSX composite delivered a 3% return in Q4. A weakening loonie added value to those holding investments outside the country.

Financial liabilities rose 1.2% or $35.8 billion in the fourth quarter.

Non-financial assets ended the year at $9.8 trillion, mostly as a result of rising real estate values. There was a 0.6% gain in the fourth quarter, following a slide the previous quarter.

Investment activity solid

Net investment in mutual fund shares hit $107.6 billion last year. That’s the highest number reported by Statistics Canada since 2021. The fourth quarter was particularly strong — mutual fund inflows reached $52.6 billion, more than twice the $24.1 billion recorded in during Q3.

The household saving rate slipped from a three-year high of 7.3% in the third quarter to 6.1% in the year’s final quarter. Spending increased 2.1% in the fourth quarter, against a 1.1% rise in disposable income.

After sliding 1.1% over the second and third quarters, the value of residential real estate holdings rebounded 0.6% in the fourth quarter to $8.4 trillion. The number of home resales in Q4 jumped 9.5% on a seasonally adjusted basis, relative to Q3. Total resale values ended the year 8.5% higher than 2023, primarily as a result of an uptick in closings.

Household credit market borrowing — again, seasonally adjusted — rose to $40 billion in the fourth quarter. Credit market debt, including consumer credit, mortgage and non-mortgage loans, was up 1.3% in the fourth quarter, reaching more than $3 trillion for the first time.

The household debt service ratio — total obligated payments of principal plus interest on credit market debt presented as a proportion of disposable income — ended 2024 at 14.4%. That’s down from 15.1% at the end of 2023. It was the largest annual decline reported by Statistics Canada since 2020.

This story was updated on Feb. 20.

The government’s fiscal watchdog says a guaranteed basic income program at the federal level could cut poverty rates in Canada by up to 40%.

In a new report, Parliamentary Budget Officer Yves Giroux says that a Canadian family in the lowest earning group could expect to receive an average of $6,100 in annual disposable income through such a program.

Higher earners could see their income levels drop because of changes in the tax system to implement the basic income support.

The report says that while the cost of sending out cheques to qualifying Canadians could reach $107 billion in 2025, the vast majority of that would be offset by cuts or changes to tax credits aimed at low-income Canadians.

It also would see the basic personal amount lowered, which is the amount of income individuals can claim free of tax.

The PBO said the net cost to the federal government would be between $3.6 billion and $5 billion, depending on the exact model used.

The PBO analysis says the number of hours worked by guaranteed income recipients could drop slightly — up to 1.4%.

Giroux told The Canadian Press that the analysis did not look at knock-on impacts from lowering the poverty rate, such as a possible reduction in pressure on health care or social services.

“When you get in the realm of people’s behaviour and exactly what they do when they’re provided with additional money, there are positives, but there may be a negative impact that we haven’t thought about. So it’s very difficult to determine the second-order effects,” he said.

The PBO’s analysis is based on Ontario’s 2017 basic income pilot project, which uses as its foundation the “nuclear family” — any unit consisting of an individual and a possible spouse or common-law partner, plus their children under 18 years old.

Giroux said this definition has flaws, since one dwelling can house multiple nuclear families if older generations or adult children are living there. That can lead to “strange situations” where otherwise wealthy families end up receiving a cheque for basic income, he said.

Wednesday’s report also includes an analysis of what basic income would look like based on an “economic family” — a unit that encompasses all relations by blood, marriage or adoption living in the same dwelling.

Under that definition, the cost of administering the program would be cut by more than half to $53 billion in 2025, before taking into account any changes to the tax system or to social supports.

The impact on poverty rates also would be greater, with a 40 per cent reduction for the economic family definition, compared to 34% under the nuclear family model.

That’s down from the estimate in a 2021 study, which forecast a 49% drop in poverty rates.

Wednesday’s report said that reduced impact is due to the wages of lower-earning Canadians not keeping pace with the surging cost of living.

Under the economic family definition, Manitoba would see the highest reduction in poverty rates — 53% in 2025 — followed by Quebec at just over 50%. British Columbia would see the smallest decrease at 26.2%.

A basic income pilot for older adults on income assistance launched last year in Newfoundland and Labrador has seen only 110 people enrolled — less than a third of those eligible.

Advocates for guaranteed income programs say the punishing nature of traditional welfare programs is likely a barrier, as it often leaves clients reluctant to make changes because they’re afraid of losing benefits.

The federal NDP pushed for a guaranteed livable basic income with a private member’s bill that failed to pass through the House of Commons last fall. A similar bill was still in limbo in the Senate when Parliament was prorogued in January.

Liberal party leadership candidate Karina Gould pledged last week that she would begin the process of establishing a basic personal income within a year if she wins the top job.

Gould spokesperson Emily Jackson said in an email to The Canadian Press that the candidate would focus on simplifying existing supports, reducing bureaucracy and reforming employment insurance.

“The PBO report makes it clear that a universal basic income could significantly reduce poverty, but getting it right means ensuring it works within Canada’s broader social safety net,” Jackson said.

Courts could use artificial intelligence (AI) to speed up probate and uncontested divorce applications, lawyers say. The software can be trained on publicly available cases to learn how to flag problematic applications to a judge. But that will be difficult to achieve until probate processes are fully digitized.

About 90% of the probate cases Michael von Keitz sees are uncontested, said the senior associate lawyer at O’Sullivan Estate Lawyers LLP in Toronto.

If all the required documents and evidence are submitted and a judge doesn’t flag it as problematic, regular and small probate applications are usually processed within 15 and five business days respectively, the Ontario Ministry of the Attorney General said in an email. But that hasn’t been typical of lawyers’ experience.

“It’s inconvenient for executors to wait for two to three months, depending on which courthouse you’re at, to get this probate certificate,” said Christopher Crisman-Cox, an estate and trust litigation lawyer at Miller Thomson LLP in Waterloo. And it can sometimes take much longer in large cities like Toronto.

Applying for a probate certificate is a routine process of filling in beneficiary information, estate value and attaching the will, Crisman-Cox said. An AI could train on publicly available court records to review probate applications and flag problematic ones to a judge for additional scrutiny.

Since the AI will only be processing information as opposed to generating information, and the output will be subject to judicial review, hallucinations won’t be a main concern, von Keitz said.

But provincial courthouses haven’t fully digitized the probate application process yet. “If you’re dealing with physical documents, it’s much harder to have the AI assist,” Crisman-Cox said.

The best way forward in Ontario is to allow electronic wills, von Keitz said. Currently, B.C. is the only jurisdiction in Canada that allows electronic wills. A digital document will be more portable; it can be seamlessly remitted to a court digitally.

“Physical documents can be lost. They can be placed into piles that aren’t seen for months,” said von Keitz.

Ontario committed $166 million over seven years to digitize its court system in 2021. The program will replace paper-based processes with an online platform including electronic filing, the Ontario Ministry of the Attorney General said.

However, the digitization project’s first phase, which will go live in July, and the court case search tool which launched in 2020, both exclude probate cases, according to the ministry’s 2023-24 court services division annual report.

“At this time, Ontario does not have any plans to propose legislative amendments with respect to digital wills,” the ministry said. “However, ministry officials responsible for wills and estates policy and legislation continue to monitor developments in other jurisdictions.”

Instead, probate forms were simplified, more staff were hired to process probate applications and an analytical tool was implemented to identify improvement opportunities, the annual report said.

Similarly, electronic death certificates and electronic payments to the court that can be held in escrow would also increase efficiency, von Keitz said. “I feel that it’s another efficiency that would be relatively straightforward to implement.”

Digitizing documents and training a new AI model is labour intensive. With many Ontario courts understaffed, it’s unlikely they can spare the staff to implement the software under current conditions, von Keitz said. He hopes the government can devote resources to modernize this judicial function.

The Bank of Canada says it expects to end its quantitative tightening process in the first half of this year and start purchasing assets again as it moves past the extraordinary measures it took during the pandemic.

In a speech in Toronto on Thursday, deputy governor Toni Gravelle said when that happens, the central bank will return to “business as usual” for how it manages its balance sheet, rather than operating in stimulus mode.

The Bank of Canada began quantitative tightening – a shrinking of its balance sheet – in April of 2022, as the country emerged from the pandemic and the bank no longer needed as big reserves to keep financial markets functioning.

Since then, the central bank has allowed bond holdings to roll off its balance sheet, without replacing them.

“When QT ends, we will be back to business as usual for how we manage the balance sheet,” Gravelle said in prepared remarks for a speech to VersaFi, the organization formerly known as Women in Capital Markets.

“This will look a lot like how we managed it before the pandemic. Essentially, we’ll be purchasing assets mainly to offset the growth of currency in circulation.”

Gravelle said the bank’s reserves currently sit at $130 billion, down from $395 billion during the pandemic.

They expect to reach their target range of $50 to $70 billion to end quantitative tightening in the third quarter of this year – a revised target from the $20 to $60 billion range it forecast last year.

The forecast is based on a “very large” federal government bond coming to maturity on Sept. 1.

“To achieve a smoother glide path for settlement balances as they fall ahead of that large maturity, we will need a transition process where asset purchases help to offset the sharp and sudden drop,” Gravelle said.

“That means we will need to restart our normal-course asset purchases gradually, and well before September.”

Gravelle said that while its quantitative tightening is almost done, the composition of the bank’s asset holdings won’t be back to normal for some time.

Right now, the Bank of Canada’s portfolio is almost entirely made up of federal government bonds.

“Going forward, we will hold not only (Government of Canada) bonds but also (Government of Canada) treasury bills and term (repurchase agreements), just as we did before the pandemic,” Gravelle said.

“I want to emphasize that we will not be buying assets on an active basis to stimulate the economy like we did during the pandemic.”

Gravelle also laid out rough timeline for how the bank will rebuild its assets.

He said the central bank will begin by term repurchase agreements of one-to-three months, before gradually ramping up.

Next, treasury bill purchases will come in fourth quarter of 2025, “initially with relatively small amounts through each biweekly Government of Canada debt auction,” Gravelle said.

He said federal bond purchases won’t happen until toward the end of 2026, but vowed to announce the timing of their plan well in advance – as part of a renewed commitment to transparency.

“When we start buying federal government bonds again in the normal course of business, we will do so in the secondary market, via reverse auctions,” Gravelle said, adding it was the bank’s practice before COVID.

“We want to limit the market impact of our purchase operations. Our bond purchase operations, for example, will be price-sensitive, and we won’t necessarily buy everything that dealers offer to us.”

Canada Mortgage and Housing Corp. says the total number of housing starts in 2024 rose 2% compared with 2023, helped by increased starts in Alberta, Quebec and the Atlantic provinces.

The national housing agency says housing starts totalled 245,120 last year, up from 240,267 a year earlier.

CMHC says housing starts in Canada’s six largest census metropolitan areas saw a combined drop of 3% in 2024 as starts in Vancouver, Toronto, and Ottawa moved lower. Calgary, Edmonton, and Montreal saw an increase in starts last year.

The results for the full year came as CMHC says the seasonally adjusted annual rate for housing starts fell to 231,468 units in December compared with 267,140 units in November.

The drop came as the annual pace of urban starts in December fell 14% to 214,000 units. The pace of starts of multi-unit urban homes such as apartments, condominiums and townhouses dropped 15% to 168,515, while the rate of urban single-detached home starts fell 10% to 45,485.

The seasonally adjusted annual rate of rural starts was 17,468 units in December.

Just 18% of Canadian small and mid-sized businesses plan to boost capital spending in the next two years, despite the recent decline in lending rates. That’s from a new report by the Canadian Federation of Independent Businesses (CFIB). Four in 10 plan to hold spending steady. One-third (32%) said they’ll invest less in comparison to the past two years.

“If we want to keep up with the U.S. and other G7 countries, we need businesses investing more,” said Bradlee Whidden, a senior policy analyst for Western Canada with CFIB and co-author of the report, in an interview. According to an analysis of Statistics Canada data, CFIB said business investment in machinery and equipment (M&E) declined by 16% over the last 10 years.

The report listed three main drivers: economic conditions, government policy and company viability. Among respondents to the CFIB survey, 71%, 63% and 55%, respectively, identified those as factors driving spending decision.

“Businesses want to invest,” Whidden said. “They want to grow their business. They want to be more productive.”

Still, these numbers have been declining for years. M&E spending as a percentage of GDP fell from 5.5% in 2013 to 4.2% in 2023, according to the CFIB report.

Ontario companies increased M&E spending relative to the size of their provincial economy during the decade, but they were alone among the provinces in doing so. Saskatchewan’s spend declined by 5.5 percentage points to 7.1%; Alberta’s fell 5.1 points to 7%.

Mind the gap

Carolyn Rogers, a senior deputy governor at the Bank of Canada (BoC), told a Halifax audience last year that Canadian companies have made fewer business investments than their U.S. counterparts for decades.

“You can go back 50 years and find a persistent gap between the level of capital spending per worker by Canadian firms and the level spent by their U.S. counterparts,” she said. “However, the situation has become worse over roughly the past decade. While U.S. spending continues to increase, Canadian investment levels are lower than they were a decade ago.”

The only G7 country to fall further behind U.S. companies over that same period was Italy, Rogers said.

These weakening levels of business investment contribute to falling economic productivity rates.

Rogers noted that on an hourly basis, the Canadian economy delivered 88% of the value produced by the U.S. economy in 1984. Fast forward to 2022, and that figure had sunk to 71%.

Not surprisingly, the top reasons why more businesses don’t plan to spend more all have to do with expenses. Seven in 10 (69%) noted equipment costs, 56% pointed to the cost of doing business, 50% cited cash flow constraints and 47% said borrowing costs were impacting their decision.

“Declining interest rates will definitely help… but we’ve seen other actions by governments that are going to offset that,” Whidden said. “For example, three western Canadian provinces, B.C., Saskatchewan and Manitoba, actually tax business investments in machinery and equipment through their provincial sales taxes,” he noted. It’s not something that other provinces do.

The picture improves somewhat when you include larger companies. The BoC’s most recent quarterly Business Outlook Survey found that while business investment expectations are below the study’s historical average, more respondents plan to increase rather than decrease capital spending.

Given the uncertainty facing business leaders as a result of U.S. president-elect Donald Trump’s tariff threats and an upcoming federal election here at home, the numbers could be worse.

“I think that’s a fair comment,” said Cynthia Leach, assistant chief economist, thought leadership at RBC Economics, in an interview. “It’s a trying time for businesses.”

“Trade uncertainty will weigh on non-residential business investment,” she said. “But lower interest rates and improved conditions for the consumer, especially towards the end of the year, will support increased business investment going forward.”

Don’t blame business leaders, Whidden said. “Many of them have struggled to stay afloat as best they can in recent years,” he said. “They’re only doing as well as the global economic climate and government allow them to.”