Deep Dive
Shownotes Transcript
Welcome to Money Talks. Got lots on our plate today. I mean, I've got to talk the explosion in the markets with NVIDIA. This is actually an incredible story if you're not aware of it, or the degree to which people have been willing to bet on it. Certainly reminds me of some other, let's say, dangerous times in the market. Victor Dare will chat with me about that. I've got Ozzy Jurek. Hey, the BC government has reversed their stand on what's called the Land Act, where they were going to give co-managerial
powers to First Nations group. Well, the outcry must have been absolutely massive because they've said, no, we're going to shelve that for now. For now, we'll talk more about that. I've got Michael Levy up there talking about one aspect of the inflation story that's finally coming to light, and that is
Hey, should the Bank of Canada be lowering rates given if you remove shelter? We're well within their targets. As they say, lots coming your way, but especially noteworthy, we're going to be talking immigration. This is a story, or a subject rather, that usually is taboo. But it's clear that our immigration numbers, along with the temporary visa program,
really have put phenomenal strain, whether we're talking housing, maybe at other social infrastructure, like, well, we could talk traffic even, but like healthcare, those kinds of things. We're finally going to talk about that. We need a real conversation. I'm not even sure if that's permitted. We're going to do it anyways with Aaron Wodrick of the McDonnell Laurier Institute. He wrote an article called, is it time to finally have a grownup conversation about immigration? We're going to do just that. But first,
The housing crisis in major urban centers is a year-long, years-long goofy award. I mean, recently we've had a gaggle of politicians, partisans, chiming in on the lack of affordable housing and affordable rentals. And we got the latest stream of photo op announcements from the federal, provincial, municipal politicians. I mean, this week, what was it? Vancouver, Victoria, and Edmonton on the heel of announcements in Ontario, Quebec, and Nova Scotia.
And by the way, I got to put this out there. You got to notice that the federal government's $2 billion housing fund announcement for BC, and this is just an example, there wasn't one question about where the money was going to come from, i.e. all borrowed. And BC's committed funds, again, all borrowed. And any money from the cities is going to come from property taxes that have been rising more than the rate of inflation, way more.
But it's a reminder that when it comes to housing, there is no free lunch. We just pretend there is. I mean, the goal is to convince us that politicians are actually doing something. In light of the polls that show housing is a top concern, along with the fact that federal government is losing votes because of it. Well, the first part of the goofy is this. How long has it taken for government to figure out there's a housing problem?
Despite the growth in population, keep in mind, you know, in the last eight months since June 20th last year, Canada's already added in the neighborhood of 900,000 new people and 1 million plus last year. They have no clue still about the number of temporary visas that are getting issued, although they're trying to get a handle on that, as I said, a little late. But what's astounding is the fact that the feds didn't make the connection between
that this dramatic influx of newcomers meant we needed more housing. You know, when the head of the Canadian Mortgage and Housing Corporation, Romy Bowers, was asked at the Senate National Finance Committee just a few months ago, what was the plan to add the 3.5 million homes that the CMHC says is needed in addition to what's planned by the end of the decade? She replied, there is no plan. Well, that's pretty goofy.
The social disruption that will be caused by the failure to plan and prepare for continued massive influx of people in an already undersupplied market is going to be profound. I still don't think we've come to grips with that part of it. I mean, if you or your friends or grandchildren are having problems finding affordable rent, let alone affordable homes to buy, you know the stress, frustration, hardship. My point is that the failures of the three levels of government over the last 10 years in planning with this population surge
But while at the same time, they were using housing as a revenue cash cow, making it less affordable. Well, I think it's going to have the most profound negative social consequences that any of us have ever experienced. Now, many partisans will excuse the lack of foresight, lack of common sense, will outright BS in some cases.
But I'll tell you, they've got to work hard to ignore the fact, like in the last 18 months, the number of non-permanent residents grew from 1.37 million to 2.5 million, and there's no housing plan.
Political claims to address affordability is more than insulting. It's more than laughable, given that governments play such a significant role in increasing the cost of a new build. Ontario, 31% of the cost of a new home is related to government expenses. In Vancouver, government taxes, levies, cost of regulation, well, that's over 25% of the cost of a condo.
You know, there's other things, though. The constant anti-business rhetoric, threat of increased taxes. You've got high interest rates as a direct response to government-induced inflation. All discourage investment in real estate, as do caps on rent when expenses like property taxes are going up several times the rate of inflation. I mean, we've been talking about this for well over a decade. But it's interesting to see that the number of Canadians who believe the politicians who created the problem
are going to be able to fix it. Well, that's delusional. This week we had the BC Government Employees Union state in quotes, the private sector market cannot deliver housing at the levels of affordability that we need. That's the kind of statement we get without acknowledging the role that government taxes, restrictions, levies, regulations all play in pushing prices to build higher. As they say, property taxes up two to three times the rate of inflation.
Let me talk about misunderstanding the problem, but allow me to finish with a key aspect of affordability that's rarely mentioned. I don't think I've ever seen it actually.
And that is the amount of money that the three levels of government take in taxes. It could be income tax, gas tax, liquor tax, carbon tax, tariffs, property taxes passed along with, you know, in higher rents, for example, because of the raise in property taxes, tax on interest and other investment income, payroll taxes, sales taxes in every province other than Alberta. And it adds up.
And even middle income earners end up paying more than 50% of what they earn in taxes. My point, how can anyone possibly save enough for a down payment, let alone the pressure to make monthly mortgage payments? That's a side of this equation that has been completely ignored and should not be. Is housing affordable? Rents affordable? Well, I'll tell you, government take at the income level makes that far more difficult.
And that tax burden is rarely discussed, even by housing advocates, despite the fact that it plays a huge part in the affordability equation. As I say, great show planned for you. Hey, I just got to remind you, and I think we should have issued a warning about this, because I'm going to be talking about the polar plunge. Why? Because it's a week away. If you're listening on Saturday, it's next Saturday, March 1st. No, that's March 2nd. Pardon me. Next Saturday, March 2nd.
We're going to be plunging in the cold waters of English Bay. I've had about six people sign up with the Money Talks team. I'm thrilled to have that. It's going to feature Ozzie, of course, and former Premier Gordon Campbell, but Rod Levy's joining me, Dustin Noble, who is our technical producer here in Money Talks, and about six other people have said, yeah, we're going to join in, maybe raise some money with you. And we've had a good response donation-wise, but we're still well away from the targets we hit last year.
And that's why I say, hey, you know, it's straightforward. People with intellectual disabilities have got the short end of the stick when it comes to the focus of government. Think about this.
When you had the pandemic announcements on such a regular basis, I don't recall ever hearing a politician or a health officer speak about the specific problems and challenges for people with Down syndrome. Maybe they live in a group home with people with Down syndrome or autism. The list is a long one. The point is, as usual, ignored. Well, I don't ignore them.
The fact that they get a lower level of health care than the rest of us is not acceptable to me. I mean, people with an intellectual disability die an average around 20 years before the general population. Not acceptable. I'm asking for you. I'm asking you to help out. I need the help. We want to raise the money, and it's really simple. Just go to moneytalksplunge.com. Moneytalksplunge.com. There. I'll stop my pleadings.
But I'll warn you, I will mention it a couple more times on this show, and it is a great show, so stay with us.
Aaron Rudrick is the Director of Domestic Policy Program at the Macdonald-Laurier Institute, and he recently wrote an article entitled, It's Time for a Grown-Up Conversation on Immigration. Oh my gosh, did I say hallelujah to that. You know, up until recently, it seems that no one dared criticize our immigration policy. Even the increased number of illegal entrants, you know, across the Quebec border didn't garner a lot of attention, or at least people didn't want to speak out. Or the fact that New York was actually putting immigrants
their migrants into taxis and sending them to Roxham Road in Quebec. So, you know, it is time we had an honest conversation, a full conversation about it. Aaron, thanks so much for finding time for us. Great pleasure to be here, Mike.
You know, one of the things you wrote in your article is that the bottom line is, yes, of course we support immigration, but there's lots of areas that we've got to talk about the impact, whether it's we're talking about the impact, you know, on our economy, on our social programs. Obviously, I've been talking about the number of temporary visas issued and the impact on housing. So, I mean, this is a key subject. But up to this point, as I say, there's been a lot of reluctance, you know, to really have a full, honest conversation about it.
Yeah, and it may be a function of the fact that anyone who raises any concern about immigration is afraid of being called a racist, right? And there are all kinds of reasons to be concerned about immigration that have nothing to do with even the types of immigrants, although where people come from is a separate question. But just on arithmetic reasons, right? I mean, I think one of the reasons this has come to the fore in the political discussion in this country is, of course, the housing issue. This is the one I think it is the issue in the next
federal elections, certainly. And immigration is a large part of that question from a demand side. So I think it's a it's we're well past time that we have this conversation. You know, every policy has tradeoffs, Mike, and immigration is no different. And we need to have an open, honest discussion about that, because that's the only way we're going to get to a solution.
Yeah, and I think the starting point is that, look, you look at Canada's birth rate at 1.4, I think, child per women. I mean, that's well below the replacement rate. You know, we need to support our social programs, our economy and all of that stuff. We need immigration. But that's not an excuse not to talk about how it's administered, what numbers are appropriate, that kind of stuff. That seems to be missing from the broad, well, the policies, actually. Yeah.
Yeah, I mean, first take you take the issues like Roxham Road. I mean, I think one of the first principles is that whatever we decide for immigration, there has to be a lawful process, right? You can't skip the queue. You can't break the law to get into this country. Canadians are the ones that get to decide how many people we're going to take and what the
processes so i think even even legal immigrants themselves get very upset about illegal immigrants legal migration because they follow the rules they they follow the proper process and they it's just not fair uh to jump the queue um you know and then and then we get into the debate over um uh the temporary is temporary workers right um you know and student visas which is a
been the other sort of essentially loophole that's been exploited to an enormous degree recently. Again, these are people that would not qualify for migration through the regular stream. They're using the student visa essentially as a backdoor to permanent residency. Again, that's not what people sign up for. And policymakers need to acknowledge that. It's not intended to be a way to circumvent the normal migration process. If that's the way it's being used, then we need to do something about it.
It's interesting, of course, the temporary visa issue, as you say, it's now been exposed that some people are really abusing it out of Ontario. And I guess BC is next on that. It's fascinating to see that any thought of restricting that, of reining it in, has brought such a backlash from the
institutes themselves because they came to rely on that extra tuition. It is. It's a very interesting confluence of factors where everybody turned a blind eye to things and it was essentially this loophole was a way for everybody to get what they wanted and we just kind of would hope the problem would go away. Of course, we can't ignore it because it's
created other problems and things like housing. But I mean, if you, if you go upstream, the problem is a lot of these institutions, including colleges and universities, we're not allowed to raise tuition on domestic students. So guess what? They were allowed to raise them on foreign students, governments like that because they're not voters. So, you know, they don't face any backlash for paying higher fees. So then you start to get institutions to say, Hey, I can cash in on this, right? This is a pipeline of easy money. And,
And then you get these what they call strip mall outfits. And so it's just this whole confluence of perverse incentives that has created the situation. And now we're stuck trying to clean up the mess. Well, it's interesting. I was looking at some notes and looking at the number of temporary visas issued between 2004 and 2013 was about 366,000.
Fast forward to 2014, to the third quarter. Well, it's actually the fourth quarter of 2014, third quarter of 2023, 1.68%.
I mean, that's 1.3 million extra people have come in. That's temporary visa. I'm not talking immigration here at all. I mean, it's an astounding number. And then for me, the capper was, we know that nobody knew how many had come or were coming until after the fact. Well, there's no planning involved. I mean, I think this is one of the most...
And there's a lot of competition, one of the most botched policies I've ever seen. Yeah, and that may be giving them too much credit. I mean, there may have been a, you know, everyone has a vested interest in averting their eyes, right? Nobody wanted to know the answer to that question because that would lead to this outcome.
And let's be clear here, too. Some people have said, well, this is scapegoating international students. They're victims as much as Canadians are in this in a lot of cases. They're the ones that get they arrive here. They're promised all kinds of great things. They don't get it. So this isn't this isn't blaming them. I mean, they're victims as much as Canadians are. But at the end of the day, it is it is a numbers game. And especially when we come back to the housing issue.
When you dump in a mid-sized city, you dump an extra 10, 20, 30,000 people looking for somewhere to live. That's obviously going to have an impact on the prices of housing in that area.
The other side is the administration generally, you know, broadly, because I've looked at a couple of reports. What worries me is that they were letting in people we don't know who we're letting in. I mean, that's the problem across the border, too, in the States. They've let in millions of people. They don't know who they are. You know, it's clear that's going to be an issue. But I was looking at these kind of things. We got these reports, Canada borders reports.
services agency reviewed about 7,700 people flagged as a security concern. 43% were still let into the country. I mean, are you kidding me? Or Immigration, Refugee and Citizenship Canada issued 449,000 visitor visas without requiring applicants to actually demonstrate they were just in fact visiting. I mean, this is...
like the administration has been overwhelmingly incompetent in this too. Well, yes. And it's devastating to people's confidence in, in this system and the fact that there's a legal process. And that is critical. That is absolutely critical to having buy-in on immigration policy generally. And as you said, off the top, I'm not anti-immigration. I actually think immigration certainly been on balance, a huge benefit to this country. I support legal immigration. I support the contributions that immigrants have made. And that's
one of the reasons we have to have this conversation is because if we don't do this, we're going to lose buy-in from the public who have no trust in the government's ability to control who is coming into this country. And that is almost one of the first duties of any government, right, is to have the perimeter set up and saying, we welcome people here, but we get to choose who comes in and on what basis. And if we're starting to find people that are breaking those rules or using backdoors and loopholes to try and circumvent the process, the whole thing really just falls apart.
And I know it's a difficult subject and I don't want to present it as, I think it is straightforward to figure out how many people you can accommodate in your country at a time. So I don't think that's particularly complex. We got a report from the TD Bank, I think it was in August, that basically said all those benefits that we enjoy with having newcomers coming into this country are eroded when you don't have the social infrastructure, when you don't have the housing infrastructure, when we're already having a challenge with family doctors and
At the very least, you need a much better communication plan about what you're doing with those regards.
And for me, I need a better plan on who we're letting in the country. And I'm just speaking personally here that I have been appalled by the anti-Semitism in this country. Words absolutely do fail me. And, you know, what we've seen since October 7th. I mean, this stuff, I didn't even think was possible. The degree to which we're seeing, the size of what we're seeing, major infiltration of public sector unions, universities, you know, I
Other areas. Well, you know what? In my view, we've imported that. That level of hate has been imported, and that's part of that immigration debate. I'm not so sure what... I don't really know what the solution should be to that. I know in my opinion, again, please...
I'm not putting words in your mouth that has not benefited Canada whatsoever. All this other stuff we're saying, we feel it's been a major benefit. You know, the immigration has been a major benefit in so many areas in our country. That part, I say no. And we talk about not having an honest conversation, you know,
Yeah, I would say two things. So, I mean, first on the, you know, the loss of the benefit from the size of immigration. When immigration becomes a battle of scarcity between people who are already here and people who come, that's where you start to lose, right? When you're fighting over jobs, you're fighting over infrastructure, you're fighting over doctors, right?
You're fighting over housing. That's where it starts to become a lose-lose. When those things are in abundance for people who are already here, we want more people to come. We welcome more people. And so I think that's the key is if you find that, you know, Canadians who are already here find that everything is a battle with newcomers, that is a bad sign. You need to make sure you have abundance.
On the question of importing hate, I think you're absolutely right that October 7th has been, the wake of that has been a wake-up call for a lot of Canadians, the size and scale of anti-Semitism that's rife in this country. And listen, there are some people, I respect that people are going to have different political opinions, especially about things like foreign governments, but what we're seeing in a lot of these protests goes far beyond, you know, protests with the state of Israel, the Israeli government. I mean, they are targeting people
Jewish Canadian institutions, Jewish Canadian humans, because they're Jewish.
And that it should be of deep concern to all Canadians because you're right, this was not something that I think we would have seen 20 or 30 years ago. But then the authority issue is what do we do about it, right? How do we screen for that? How do you screen for something like anti-Semitism? It's not really something that you just a multiple choice question is going to identify all the risk, but it is something to be aware of. It is something that we have to factor in to the trade-offs when we're shaping our immigration policies.
Well, we're just looking at, you know, the minister worried that we haven't had enough immigration coming from Gaza right now. I mean, people coming in from Gaza. But then I look at polls that show phenomenal support in Gaza itself for Hamas. You know, I'm just not so sure. Well, no, I am. I'm betting that we're importing some trouble.
I don't need to coach that. I'm just saying, this is me. I have no way of quantifying that other than I look at the polls for support for Hamas in Gaza. And now we talk about importing a lot of people from Gaza, but they don't explain how you're going to vet them. Like, I think this is a government problem too. If we are going, I think this new reality is,
requires the government a much higher level of explanation of how you're protecting our interests as the population right now, wherever you came from. Absolutely. And again, that is a prerequisite to getting support and immigration policy is a belief that the government is looking out for Canada's national interest, right? Of course, we want to be a compassionate country and we want to help people. I mean, everybody wants that. But
Job number one has to be to make sure Canadians feel secure, that they have confidence in their government, that they're managing this stuff, that they actually can keep track of the numbers. And when we talk about things like numbers skyrocketing and nobody notices and no one can figure out how many people are here, that undermines confidence in the system. So I think it's very important that governments get it right, make sure that they can project confidence to the public.
I think that's missing right now. And I think that's a, that's a large part of the consternation Canadians feel. Yeah. As I was mentioning earlier, when we find out that the border services flags, 77, 7, 700 people basically, and 43% still come in, you know, or, you know, immigration refugee and citizenship Canada has got 449,000 visitors visa. And they couldn't, they didn't, they just say, no, to hell, they can all go in. They don't have to prove that they're just visitors. I mean,
that undermines my confidence. And I think your point's well taken. This is, you know, there'll be a lot of defenders of the government, no matter what happens. I mean, they're partisans and they protect their political party. Then give, and then talk to them because this is going to, I think your bigger point here is important. We have benefited greatly in the country from immigration in so many different ways. You're about to, well, they are, they're currently undermining support for it. You've got people like me saying, get it under control.
because it's out of control. I've got, I've got liberals, MPs saying that too. It's out of control. Yeah. But it's more than that. It's, we have a right to have our interests as Canadians and we have our right to have them protected. You know, government's first job should be to the people in our own country. And yes, let's welcome other people, but for God's sakes, tell me how you're vetting them.
Yeah, I think that sometimes it's lost. And, you know, there is a vein of thought in this country that's, you know, we're a post-national state and we have no identity. I don't think a lot of Canadians agree with that. I think that, you know, we have to put Canadians first. And again, the government's first responsibility has to be safety and security for Canadians. So whether that's our borders, whether that's crime in our cities, right, whether it's national defense, these are sort of fundamental responsibilities of a government, especially a federal government.
And so when the government is being seen as not living up to those responsibilities and giving more emphasis to like, oh, well, we need to be, we need to have an open door policy because there are suffering people. Well, of course, there are hundreds of millions of suffering people in the world, but we don't have room for them all. And so we need to make sure our policy, you know, gives Canadians confidence that our interests are being taken care of first. Then we can turn our attention to, you know, how welcoming, how many people do we want to bring into this country?
Yeah. And as you said right at the outset in your call, it's time to have a grown-up conversation about that. We're not good at those in this country, Mike. We don't like grown-up conversations. And as I say, I'll just reiterate, economically, we need newcomers coming in here to support our social programs. We need newcomers. Our birth rate is such that that's the future for us. So given that...
then we have to do it right. And in my opinion, we are such a long way from doing it right that they risk support. That's the key. That unfairly, people will get targeted. But we have to have an honest conversation. And I so much appreciate you've helped us do that and started that conversation at McDonnell Laurier. And I hope there's much, much more to come on this front. Me too. Thanks, Aaron. Thank you.
Time now for the quote of the week. It was just over two weeks ago that BC Premier David Eby caved in to Muslim-slash-anti-Israel-slash-anti-Semitic groups and removed Selina Robinson, Minister of Higher Education, from Cabinet. Not coincidentally, she was the only Jewish member in Cabinet. The reason given was the comment she made during an online discussion on the Israel-Hamas dispute.
But as Terry Glavin's written in the National Post's great article and more in-depth in his substack, The Real Story, that was simply not true. Mr. Glavin states, her comments during that panel were merely the pretext for a public execution that had been decided and planned months earlier. And to quote, shortly after October 30th, when she and Premier David Evey announced Holocaust education was to become mandatory in British Columbia schools.
Now, for more detail, I say go and see Terry's column in the National Post. Better still, subscribe to The Real Story, his substack, where he goes into great depth on the group's pushing to get rid of the only Jew in cabinet. But I want to focus on something else here, focus specifically on what she said. I'm saying that because I still haven't come across anyone who actually heard her full comment.
The news widely reported the offending comment that Palestine was just in quotes, a crappy piece of land with nothing on it, end of quote. The remark was called deeply offensive, racist, colonialist. Now, Ms. Robinson apologized unreservedly twice. She stated she was commenting instead on the lack of resources of the area. And she further promised to take anti-Islamophobia training, but that wasn't enough. Groups demanded her resignation and they got it.
But even after the resignation, her office was vandalized. Look, not surprising in such an emotionally charged environment with the war in Gaza, with the October 7th atrocities and the unprecedented hate-filled anti-Semitism on display in Canada. But the need for a dismissal from cabinet has been hotly debated. Did she have to be dismissed? I say personally, given her apologies and remorse, I actually think it was an act of cowardice by the BC Premier and caucus.
Now, you're going to have your own thoughts. I appreciate that. But I want to come back to this. I'm wondering, did you actually hear what she said? And then you can decide whether it's deeply racist, profoundly hurtful, that it merited the public flogging administered by NDP leaders, both Jagmeet Singh and David Eby. Would they, our Premier Eby states, did this comment increase the risk of Islamophobia and anti-Arab racism in BC? You decide. Here's the quote.
We have a whole generation of 18 to 34-year-olds that have no idea about the Holocaust. They don't even think it happened. They don't understand that Israel was offered to the Jews who were displaced, so they have no connection to how it started. They don't understand that it was a crappy piece of land with nothing on it. There were several hundred thousand people, but other than that, it didn't produce an economy. It couldn't grow things. It didn't have anything on it."
Well, as I say, each one of us can decide whether that's deeply racist and meriting dismissal from cabinet after a long career serving the province of British Columbia.
The number one story in personal finance and your cost of living in the economy is what are interest rates going to do? And that means we pay attention to inflation. We did that this week with StatsCan coming out with the January number, Mike, that had at least improved. I mean, that's what we keep saying. But there's an awful lot of people saying, you know what, we should be able to lower rates now.
Well, Mike, I don't think when you take a look at it, the broad view, they're not wrong. The fact is rates could come off. Look, the consumer price index rose 2.9% January. That's down from 3.4% annually in December. Analysts were only expecting 3.3%. So it was a significant move down. And you know what? We're now in the bank's target rate between 1%
Now, they want a 2% average, but we've come into the target rate. And markets, Mike, just to sum up this part of it, are suggesting a 50-50 chance of an April cut and really heavily stacked to rate cuts starting in June. But just one more point. Desjardins, who we were talking about last week, they're still looking for five rate cuts.
cuts this year. Five and a quarter is one and a quarter percent lower if they get those five cuts. Yeah, it's just funny because it's one of those ironic situations. The worse the economy gets, the more likely that you get the rate cut, you know, so it's hard to cheer for the rate cut when you know it means some trouble in the economy. But the other aspect, Mike, that came through is there is a lot of criticism about
to the degree to which real estate is impacting that 2.9% number, for example, in January. And if you remove the real estate component, the shelter component,
We're way lower. We're at something like 1.5%, and that should give license to the earlier decline in rates. Absolutely. The analysts are saying across the board, the central bank should not allow high shelter inflation to affect its interest rate policy. But TD, and we talked about them last week and maybe a couple of weeks ago, Mike, once again, this time we're taking the lead according to them.
Rising shelter prices are keeping inflation from reaching the central bank's 2% target and therefore keeping interest rates higher. And as we've discussed, the shelter inflation accounts for 30% of the consumer price index basket, 30%. And as you say, look, grocery prices,
They went up, it eased. Oil prices came down. The things that are important, the day-to-day things, are coming off, and that's why the CPI has come down. But shelter seems to be the big juggernaut right now. Yeah, and what I know that TD said, but other analysts are saying, hey, if you remove the shelter component –
that it, that inflation is only running at 1.5% in January. Well, as you said, that's well within the range of one to three and even the average of two. So yeah, I just found that interesting. It's that, uh,
Criticism of the Bank of Canada, I think, is getting much, much louder. They have allowed the dominance of the shelter component to be so important. I mean, you know, what was mortgage rates were up 27.8%, you know, as a cost versus last year. But mortgage rates are all about what the Bank of Canada is all about.
If they would allow rates to come down, obviously the prime rate comes down and then those markets that base whatever they're going to do on prime rate, and now we're talking about mortgages, TD says straight out, as long as the Bank of Canada continues to focus on inflation metrics, which are being held up by shelter inflations,
Canadians will suffer under the weight of high interest rates. It couldn't be any plainer than that. And they're sending that message, Mike, right to the Bank of Canada. I'm wondering if the Bank of Canada is listening because they're certainly not. They respond in a lot of ways, but they're not responding to this at all.
Yeah, we'll see. I mean, of course, the five-year bond rate, you know, has been too stubborn and that's your five-year mortgage rate, but we'll have to see how it plays out. But as I say, the sort of opposition to their approach is building. We'll see if it plays out in an earlier rate cut than the market was. Well, it's basically, as you said, Mike, they're
The majority is still looking at a June-July rate reduction. We'll see if it's earlier than that, and we'll see it with you. And, Mike, please pass on to your son, Rob, that Border Gold made a lovely, significant contribution to the polar plunge. And more significant, Rob's going to jump in with us. What? Yes, he's going with us. But please pass on my thanks to everyone at Border Gold for that. I certainly will, Mike, and have a great week.
Time now for the shocking stat of the week. The size and scope of the federal government has long been a significant point of contention between different political parties. Although a good case can be made, the choices have really been, is it big or even bigger? I mean, the current liberal NDP government favors more government intervention and a larger public service. And that brings me to this stat of the week.
A report released this week, I guess it was on Thursday, by the Parliamentary Budget Office states, the record spending, we've been spending the most ever on federal employee salaries and benefits, $67.4 billion. Now think about this part though. Spending on average on federal salaries and benefits has been growing at about 9% per year.
Since 2016, that's the first full year the Liberal government came to power, the size of the public sector has risen 68%.
from 340,461, I think it was, 340,461 to 428,000. Now, that's way above the population growth. We've had a significant jump in population, but that's still well above it. And by the way, that doesn't include the record number of consultants hired by the federal government.
I think what's interesting to note, though, is despite the reports of mismanagement, waste, lack of measurable goals that we've seen so regularly, we do have, well, progressives like the NDP and Liberals, public sector unions like CUPE and PSAC all claim that any reduction in the size of government would be a draconian cut.
I mean, that's what I find so fascinating. We can't have a realistic discussion about this. What size government do you think is appropriate? What are you willing to pay for? Well, sometimes not much because we borrow so much.
But, you know, it's just funny that so many members of the media play along with this. Any reduction in government spending is this horrible cut. Any reduction in the number of people working in government. I mean, they could do it by attrition, not cost anybody their job who wants to work. And yet again, we always have such strong pejoratives about the reduction in the size of government.
Well, they've been winning out when you look at a 68% jump in the number of people working for government, far outstripping the rate of population growth since 2016. Lots of things happening in the real estate side of things. That's why I like to go to Mr. OzBuzz.ca himself, my fellow cold water plunger, and he's much braver than I am by I say. Ozzy jerks with me. Ozzy, one week today, we're going to be plunging, baby. And I know you've been warming up because you've been using ice in your drink.
So that's a good start for you. But I want all your friends, and you do so many, you know, so many people through OzBuzz, the development community, real estate community. I hope they all support you, support Special Olympics. You know, and there is nothing. There's nothing.
This year, I can safely say that there is nothing like watching Ozzie and Lederhosen go for the cold dip. And by the way, he's always brave, unlike me, who's so timid. So, Ozzie, I'm looking forward to that. A week today, Saturday, look out, 1 p.m., English Bay. And I think I'll send you the pictures of the banquet I got planned because I think, you know, for all of us who plunge in the cold water, I've arranged a little special treats for us. So we'll all be there ready to go.
Yeah, I'll be there under protest, but I'll be there. Hey, Ozzy, a couple of things. One big story we've been talking about over the last couple of weeks is the legislation that the BCNDP was pushing through is the right word. It's not unfair. They wanted to get it through by May 16th. That would have a radical change to land use in the province of British Columbia. About 94% is crown land. They said they're going to make First Nations Group co-managers say,
And I get the impression it wasn't just us who pointed out how detrimental that would be to the economy to attracting capital investment because they backtracked this week.
Yeah, that was a surprise, but certainly a welcome surprise. First of all, I really got to congratulate the Fraser Institute for going into the details and what it would involve in terms of not just the actual fact that you're going to co-manage something where one party has a very personal interest, rightfully so, but for their own, and the other party that's supposed to be for everybody,
is no longer totally in charge. So never mind just that, but the idea that I now have a development is already taking too long and too many rules and regulations and too many costs. Now we're going to have another level of approval. Anyways, the government, to its credit, took a look at all the opposition and said, we're going to cancel it.
Well, also a pat on the back to Vaughan Palmer, who did Yeoman's work in the major media on this file, and Robin Younger on the law side, because he's a legal expert both in Indigenous and environmental law. He was our guest a couple of weeks ago, still listened to that interview. It's a great interview with him and his expertise, but you're right. The rallying must have been huge, though. I mean, we don't know. We didn't get the details yet.
But of course, when you have a throne speech on a Tuesday and you backtrack on a Wednesday and kill the act you talked about in the throne speech and have been talking about a little bit after Von Palmer brought it to the public's attention, that's quite an about face. And I agree with you. I bet there was an avalanche.
of opposition to this. I think it was that straightforward. When you introduce, it doesn't matter what government's in power, when you introduce a level of uncertainty to this degree, well, capital investment just simply goes elsewhere. There's other choices. That seems to be an absolute mystery to people who are partisans and think politics first.
It's like you shop and compare when you go from one big department store to another or a local store. You shop and compare. Well, so does investment capital. And I'll tell you, I think the verdict was overwhelming. They're going to shop elsewhere if this is the law.
Well, I can, you know, I might just, I fly on the wall in this issue, but my subscribers, I've never had the kind of response almost instantly. What? Really? Where? Where do I sign? How do I speak out? Do you know who my MLA is? You know, so there was an instant reaction, a very negative reaction.
Yeah, and those are the positive ones who use that language. Very good on your part. Anyways, it's good news that it's done, but I'm going to point out two other things. One is I'm not sure the negative consequences are done.
One is that just even the proposal of something like this has people, again, that would be part of the consideration. If I had a major project in mind in any area of the economy, I would certainly start hesitating. If the government is capable of that, what else are they capable of? And the other observation I'll make, because I don't want to put words in your mouth, was are you kidding? They had no one in government.
who understood this fundamental, you're creating uncertainty that will drive capital investment away. I find that frightening. They didn't have anyone stand up and go, hey, that's going to really be taken the wrong way, you know, or capital investments going out of the country. That level or lack of sophistication is breathtaking to me.
Yeah, and actually it's not totally dead yet. I mean, the minister did allow that for now. They shelved it, but they're now going to do some reassessment and re-involving everybody. So they didn't say it's dead. No. Yeah, well...
I'll tell you, they've created a problem then. Literally, your point's well taken. They've created a problem. Hey, let me shift gears here quickly. Because you mentioned this, how important the pre-sale market was when we're looking at where real estate's going. So give me your quick take on the pre-sale market because that's how developers raise money to go forward further with the banks.
Well, I said at the World Outlook Conference that we had a lot of properties that were launched, a lot of projects, and part of it is Chinese New Year, and it's a year of the wood dragon, and a lot of people are out. But the developers, in one particular case, felt they had almost a
thousand people sign up for information. That is not buyers, but they were signing up for information. Now, we get a lot of questions on the confusion as, why is this one only 5% down and that one is 15% down? Well, generally speaking, a developer needs 60 to 70% of sales before the bank even will look at them and give them the construction loan. For some reason, people think developers run around and have $100 million in their pocket. Well, they don't. They need that pre-sale.
Now, in order to fight the buyers right now, or rather attract them, they're fighting each other. They're taking their gloves off and they're out there making all sorts of offers.
For a new construction, a high-rise that takes five to seven years, the only one that I know of that is 10% was one that was just launched in Surrey. Most others are 15% to 20%. The ones that you see with 5% down is usually somebody that already sold 80% of all the units
maybe by last December, and now have to top up the last 20. And yes, for those, you get 5% down and maybe a 5% rebate on the GST or some price reductions, but then you usually have to close in six months. You know, they're getting close. It's not a five-year period of time that you have. Now, the number of the
The final thing is you are buying the developer. You've got to check out the developer if you're going to close. Just in the last months, we had a 55-story high-rise on the West End on Harrow Street canceled. We had another one on Robson Street, 177 units canceled. You're buying the developer, and you've got to make sure that you get good advice before you sign at the dotted line. Now, is it too broad a question to ask? If the development doesn't go through, is there sort of a clause that you get all your money back?
Yeah, the deposit is put in trust. It doesn't go to the developers. It's in trust usually with a different law firm. But the problem is if the judge in a debt foreclosure says we're going to give you some time to work it out, then the money is tied up until such time as the judge says, okay, you guys didn't work it out. So there could be some time involved.
There was a Richmond project that took almost two years for people to get their money back. And then the other side is, okay, let's say I've got a closure, you know, they predict a closure five years from now or seven years from now. Is my price of the unit locked in?
That's the sweetness. That's a sweet spot. People saying, look, it takes me five years at today's prices. And if I believe Aussie and I think that the inflation is going to come back in hard assets, seven years from now, we're going to be higher in prices. Oh, it's likely. And I also have a lot of time to wait for interest rates to be adjusted. So that's why people say I put down 10 percent or 15 percent and I can wait.
Yeah, it's not a bad option on the property. You know, as I say, you want to make sure what happens if the property doesn't go forward, as you said, and the reputation of the builder, etc. But to me, that sounds very attractive because, you know, on Money Talks, my main theme is this, is that the purchasing power of your currency is getting eroded, not necessarily every 15 minutes, although it feels like that some days. But, you know, that but if I'm going out seven years, yeah, I've got a high level
a high degree of confidence that whatever I've got, $10,000 seven years from now doesn't buy what $10,000 did today. We've got a great example, by the way. If you took a buck today, you can only buy 54 cents worth of goods from the year 2000.
Yeah, I know that's 23 years, but it gives you the idea of what I'm talking about. So, yeah, that's kind of interesting that if I could just find me something that'll let me lock in for about 10 years. I'll be dead in the 11th year, but let's find something for me, Ozzy. I can lock in for 10 because I'm...
I do have a high degree of confidence that my dollar won't be buying near as much. So if I lock in, hey, it might be a good deal then. Well, that's the beauty about actually the Canadian system. In mainland China, most of the problems are that the pre-sale, the moment you put down this pre-sale, he has to start paying the mortgage right through the construction period. And that's when all the problems happen. He's been paying for four years. The guy doesn't close. And that's why China is not just in trouble. It's in deadly trouble. Yeah.
Great stuff as always, Ozzy. Ozbuzz.ca. Now look...
I'm now sitting here the rest of the day. I'm just going to be envisioning myself getting in cold water. All people have to do, it's very simple, moneytalksplunge.com. Money Talks Plunge, you'll see Michael Campbell's Money Talks featuring Ozzy Jurek and former Premier Gordon Campbell. Ozzy, just so you know, we've got about six people who've signed up to join us, which I'm thrilled about, sincerely. I wish there was more. I was kind of surprised. I mean, we basically didn't have anybody from the World Outlook Conference sign up.
Say, hey, yeah, I'll get in that cold water with you. So this is your chance. Sign in. Just send a note to grant at mikesmoneytalks.ca. Say you'll plunge. Ozzie and I would love to see you, have you in there with us. And as I say, Ozzie, one of the highlights of my year is
It's the big man going in. Well, it's a photo op. I mean, look, if you're a Facebook, you want to get that photo with Mike falling in the water or me falling into the sand. We have history to go. But the big thing is even a $20 donation gets your tax certificate. And so will $20,000. Either one.
No, your point's well taken. As soon as you make a $20 donation, $25, whatever it is, hopefully you can afford, you get an automatic tax receipt. You know, right away you'll get it back in your inbox, which is a great point. Well, Ozzy, I look forward to that. We'll chat next week, but I know you're in training all week. I know you're both, you and I are praying for the best Chinook in history. I don't like our chances. We'll see you there.
Let's go live to the trading desk now. Hey, Victor Adair joins me, victoradair.ca. Victor, I got one word for you, NVIDIA. I mean, everybody was talking in anticipation of their earnings. We mentioned it last week. The earnings came out. I guess the market kind of liked them.
The market was really expecting a strong report, and they got that, and it was even stronger. But the reaction, as everybody I'm sure knows by now, NVIDIA just went through the roof.
I mean, NVIDIA increased. It was a trillion dollar stock last October. It's now a two trillion dollar stock. It went up about three hundred billion dollars, U.S. dollars, just on Thursday. And just to put that in perspective, by the way, that is worth more than twice as much as the Royal Bank of Canada market cap. And that was just the increase in one day.
And again, just a reminder that NVIDIA is a chip maker. It's probably, well, now it's obviously the market's telling us it's the leading aspect of the AI revolution, artificial intelligence. They took that as a signal, the market did, that, hey, that is alive and well with a lot more to run. I'm not surprised at any of that, but I am concerned about the valuation. I mean, you can like a stock. It's like you can like a car, but you don't want to pay anything.
X amount of money for it. And it's on a runaway. I mean, there's so many different measures, as you've just said, you know, just the gain alone after the market had that, you know, was digesting the earnings report was bigger than two Royal banks, you know, our biggest banking institution in this country. I mean, and there's so many different ways because it's just been so extreme.
Well, it's ignited a fire that's gone around the world. I mean, if you look, the S&P, the Dow, the Nasdaq, the Indian stock market, the Japanese stock market, the broad European stock market have all gone to
all-time highs this week and it's got absolutely everything to do with the the market in america going nuts over nvidia and there's other of course like uh hangers-on as it were or the new kid on the block in the in the tech space i'm sure they're from the look of it mike you know and i'm going to call it the casino here there's people buying stocks here they don't even know what the company does they're just buying the symbol because it's going crazy at the upside
Where we go from here? I mean, you and I have seen this movie before. Well, I mean, we have. We saw the big run-up in techs two other times. We saw the meme stocks go up and all of this. I think what's very noteworthy here, so all we're saying is as these prices go up, you're taking more risk.
But I think what's really noteworthy is the market has reacted here for the first time in a couple of years to interest rate news that is not positive. You know, the bond market's telling us that rates are actually staying where they are or even going up. The optimism about falling rates isn't with us anymore. And yet the stock market's going up. Up to this point, that's been the trigger for stock markets to go down. Not in this case. NVIDIA's eaten that alive too.
Yeah, we go back to, say, last summer, August, September, October, the stock market was trending lower. And the market had come around to believing the Fed when the Fed said, you know, we're really not going to be cutting rates anytime soon and we might raise rates. Then at around the end of October, the Fed signaled that they're done raising rates.
and sometime in the future they might start to cut rates. Well, look, as we talked so many times, the market took that as the green light special, and we had this incredible rally through November into December. It's like across the board in the American markets. And the market, by the way, at the end of December was pricing as much as seven interest rate cuts from the Fed in 2024, beginning as early as March.
Well, now they're pricing in three maybe this year, beginning in June. And Mike, there's actually a small chance in some of the measurements here that the Fed might raise rates. So but as you just said, the stock market doesn't care.
Yeah, that to me is what has sort of blown me away. And I want to come back to something you said, though, Vic, about how many markets around the world have hit all-time highs. And I want to come to Japan for a second. Just because simply, and by the way, on Money Talks, we had Martin Armstrong, 1986, he called the date, the day of the top.
in the Nikkei in 1989, also called, and in that program with us, he also called the fall of the Berlin Wall to the day. So that's one of the reasons that stuck in my mind. But here we are. What is that? 35 years later, we finally got back
back to that high that it hit in December 1989. Yeah, the Japanese market had raced higher from about 85 to 90. The Japanese yen doubled in the same period of time. Now, I remember that the Nikkei hit its high right at the end of December 1989, and it was down by, I'm thinking, at least half by October of the following year of 1990. So, yeah,
Yeah, and then took all these 35 years to get back to where it was at those highs. Well, here we are with the Japanese yen now at a 34-year low, down 50% from where it was in 2012. And tourists are going to Japan because it's so cheap over there to get a hotel or to get a good meal.
I'm glad you said that because I was thinking of this could be our travelogue section because currencies play such a huge part. I mean, I remember going back, you know, off the top of my head, this number is 2007. You know, we had a 62, 63 cent dollar. Well, the U.S. was getting that was out of reach for many of us, you know, but we've reversed that, as you say, with the yen.
the yen's on sale. And even if you're not planning to go to Japan, you know, next month, and that doesn't mean you can't get your yen in advance and take advantage of the low rates. And I'm not saying an all or none, but let's say you were going to convert $10,000, you know, for a full trip with family and all that. Well, then all you have to do is, you know, take maybe 2,500 in yen right now, another 2,500 a little bit later as we is, or you can listen to Victor, go to victoradair.ca and you'll try and pick,
you know, when we're near the bottom, at least on that. But I'm just saying it's like a travelogue. Japan's never been cheaper in, again, those same kind of decades long. So yeah, Japan on sale, maybe take advantage of it.
Mike, just remembering that period of time from 85 to 1990, it wasn't just so much that the price of the stock market went up because there's these interlocking relationships between different companies. They'd buy each other's shares. The real estate market in Japan went absolutely ballistic. I remember there was a report came out that the value of all of the real estate in Japan was worth four times as much as all of the real estate in Japan.
The United States. And there are people coming from Japan, you know, with money in their pockets and they buy buildings and buy golf courses. And just like they're buying companies. Sony bought Columbia Pictures or whatever it was like they were just they were just giddy with how much money there was. It was two million dollars to get into a golf club in Japan, that kind of thing. Well, that's right. It changed.
Yeah, it's changed, but it's reversed now because, you know, I remember when Warren Buffett rang the bell and there were others, but he's such a big name, rang the bell on investing in Japan, you know, so he's done exactly what you've described in the other direction though. Now the US dollars were so much more than the yen, the, you know, the Japanese corporations were on sale in the market. So they've jumped in and presto, you're finally back to the same level you were at
the high in December 1989. So if I can go full circle on this, and I don't mean to be a perma bear or anything like that, but right now, the real estate market in North America has never been higher. The stock market has never been higher. And there's folks out there that think we're just getting going, baby. And you know, I got to say, I'm inclined to be cautious here.
Well, I think that's prudent advice. This is when we always say review your portfolio, what risk you're taking. If you've just had some big winners, maybe your proportions in the side of the portfolio are off. Talk to your professional about that. These markets demand that we pay attention. And as I say, who wasn't when it was NVIDIA? Well, you can pay attention to Victor Adair too by going to victoradair.ca. So much going on, Vic. But I look forward to what you're going to throw up this weekend because there's so much to go on.
Okay, Mike, thanks. Always a pleasure to talk with you. Time now for this week's Goofy Award. You know, in a conference last week, Environment Minister Stephen Guilbeault stated, in quotes, our government has made the decision to stop investing in new road infrastructure, end of quote. Well, the blowback was immediate, which had the minister sort of backtracking. And he stated, of course, we will continue to be there for cities, provinces, and territories to maintain the existing network.
but there'll be no more envelopes from the federal government to enlarge the road network. He added that the analysis we have done is that the network is perfectly adequate to respond to the needs we have. Well, come on. Anyone sitting in traffic in a major urban center, I think it's safe to say would disagree. It's nowhere near adequate in those major urban centers in a country that welcomed over a million people last year.
We've welcomed 890,000 people just in the last eight months since June 20th when we crossed the 40 million mark. But somehow magically, the minister suggesting that won't further put strain on our road infrastructure? Come on, of course it will. In fact, a good case can be made that if we build out the needed housing to accommodate the population surge,
Well, without a well-thought-out transportation plan and expansion that would include new roads, we're in for a traffic nightmare of unprecedented proportions, which would have profound negative impact on the economy because of the inability to efficiently transport goods throughout the provinces and country. I wouldn't have thought that's so tough to understand.
But it's not all. In the last two years, come on, we've heard a great deal of talk about increasing mining for minerals necessary for the EV and renewable transition. So far, that's been nothing but talk. But if we go ahead with it, there's going to be an obvious need for a significant expansion of road infrastructure to support the mining and production of those needed materials. I mean, come on, that's hardly a newsflash.
And yet the Minister of the Environment, who's the one pushing EVs and renewable transition, can't figure out that we'd need more transportation infrastructure to support the necessary mining? Come on. It's not surprising, though, given Minister Guilbeault's activist background, that much of his agenda is outside the mainstream. After all, come on, he entered politics, or before he entered politics, his claim to fame was climbing up the CN Tower in a Greenpeace protest.
But he's exactly who the prime minister wanted as his environment minister to pursue the government and their supporters' number one priority, climate change. But I'm talking about the lack of awareness. And it goes across government, how one policy impacts another in the government's agenda. I mean, that's arguably the goofiest thing. I mean, in this case, how immigration, well, it impacts housing, the energy transition. All of it overlaps.
And you think a minister and others in the government would take that into consideration, but clearly they don't. And this isn't the only example. I mean, the big problem with lack of housing is the impact of the push for higher levels of immigration and temporary visas wasn't even considered. Come on, it's not tough to figure out. Well, obviously it was. But I'll tell you, if we are going to have that expansion of mining and the expansion of the population, we definitely need many more roads and a much improved infrastructure.
That's all the time I have this week. But a reminder, of course, I've been reminding all day, but in case you've just joined us, you know, when I come to things like, are you going to donate and support us with Special Olympics? And we're talking about children with Fragile X. It could be on the autism scale. It certainly can be Down syndrome.
And at times, this is the only sort of area that they have and feel a sense of community. I've said this for years. This is a group that is largely ignored by the community at large. It was ignored, by the way, during the pandemic. I never heard a single health officer talk about the challenges for people with individual disabilities. And you know what? Other than people over 80, it was the next most likely group to die thanks to COVID because they have other comorbidities.
But my point is we don't have to forget them. I haven't forgotten them. Thank goodness the Money Talks team hasn't forgotten them. And I hope you do join us. It's going to be fun, by the way. I dread it, of course. And it's true. I sincerely dread it. But all you have to do if you want to donate is just go to MoneyTalksPlunge.com. MoneyTalksPlunge.com. Simple. Hope you do. Tax deductible. Immediate receipt in your email box. Also, though, hey, we have about a half dozen people who are going to plunge with us.
And I hope you join us. I hope you're one of us. It was fun last year. And that's me saying it. So it was a lot more fun for other people. I hope you do. Just send us a note at grant at Mike's money talks.ca grant and Mike's money talks.ca. Tell us you want to plunge. We'll send you all the details. In the meantime, I appreciate the support of people who have contributed and are going to join us. And I hope you all have a terrific week.