Mortgage debt increased by 11%¹ to $201,000 last year and more than half (52%) of Canadian mortgage holders lack the financial flexibility to quickly adjust to unexpected costs, per a new Manulife Bank of Canada survey. This despite 78% of Canadians having made debt freedom a top priority.

The problem is most acute among Millennials, who saw their mortgage debt rise more than any other generation. Millennials are also most likely to have difficulty making a mortgage payment in the event of an emergency or if the primary earner in the household were to become unemployed.

"The truth about debt in Canada is that many homeowners are not prepared to adjust to rising interest rates, unforeseen expenses or interruption in their income," says Rick Lunny, President and Chief Executive Office, Manulife Bank of Canada. "However, building flexibility into how they structure their debt can help ease the burden."

Overall, nearly one quarter (24%) of Canadian homeowners reported they have been caught short in paying bills in the last 12 months. The survey also revealed that 70% of mortgage holders are not able to manage a ten% increase in their payments. Half (51%) have $5,000 or less set aside to deal with a financial emergency while one fifth have nothing.

¹ The percentage change in average mortgage debt controlled for regional, age and income differences between the samples. However, different research providers were used for each wave of the study which may impact trended results.

Millennials not alone

Despite generally having more equity in their homes, many Baby Boomers face the same challenges as Millennial homeowners. Some 41% of Baby Boomers said that home equity accounted for more than 60% of their household wealth and for one in five (21%) it makes up more than 80%.

This indicates Boomers may need to rely on the sale of their primary residence to fund retirement, since much of their household wealth is wrapped up in home equity. However, more than three quarters (77%) of Baby Boomer respondents want to remain in their current homes when they retire.

"Many Boomers approaching retirement share the same lack of financial flexibility as Millennials," said Lunny. "They want to remain in their current homes, but their home makes up a big part of their net worth. Instead of downsizing, or even selling and renting, homeowners in this situation could consider using a flexible mortgage to access their home equity to supplement their retirement income."

Helped into the housing market

Almost half (45%) of Millennial homeowners reported that they received a financial gift or loan from their family when purchasing their first home. By comparison, just 37% of Generation X and 31% of Baby Boomers received help from family members when they purchased their first home. Conversely,  almost two in five (39%) Boomers, many of whom are the parents of Millennials, still have mortgage debt.

The generational increase in new homeowners requiring family support comes despite a long-term trend toward two-income households. The number of Canadian families with two employed parents has doubled in the last 40 years, but housing costs are growing faster than incomes².

"With higher home prices and larger mortgages, it's more important than ever to find the mortgage that's right for you," says Lunny.  "A flexible mortgage that offers the ability to change or skip payments, or even withdraw money if your circumstances change, can help you ride out financial difficulties more easily."

Manulife Bank recommends that Canadians have access to enough money to cover three to six months of expenses.

² Statistics Canada. May 30^th 2016

Quebec homeowners most at risk

In addition, the Manulife Bank survey found that:

• Mortgage holders in Quebec (76%) would have the most difficulty with an increase of 10% to their mortgage payment and are more likely to be impacted should they have a fiscal emergency, as almost 30% have no emergency funds.
• British Columbia had the highest instance of homeowners getting help from family members when they purchased their first home, with almost half (45%) saying they either borrowed or were given money.
• Compared with other regions, homeowners in Manitoba and Saskatchewan (73%) prefer most to own and live in their current home when they retire.

Debt management should begin at an early age

More than two in five (44%) learned "a little" or nothing about debt management from their parents—and were also most likely to have been caught short financially in the past 12 months (28%).

"Kids who learn about money and debt management are more likely to become financially healthy adults," says Lunny. "One of the best lessons we can teach our children is the importance of saving for a rainy day. Being prepared for unexpected expenses is good for our financial health, good for our mental health and gives us the freedom and confidence to deal with the unexpected expenses and opportunities that come our way."

(Source: Manulife Bank)

While self-employment has risen noticeably slower than paid-employment since the beginning of the decade, Canadian small- and medium-sized enterprises (SMEs) have been creating a more significant share of jobs since 2010, finds a new report by CIBC Capital Markets.

Between 2010 and 2016, 42% of new jobs were created by businesses with less than 100 employees, up from 30% between 2000 and 2010.

"Beyond the threshold of five employees, there is a clear positive correlation between size and growth, with larger firms within the SME spectrum seeing progressively stronger growth recently," says Benjamin Tal, Deputy Chief Economist, CIBC, who co-authored the report, Canadian SMEs: Strength Beneath the Surface, with Senior Economist Royce Mendes.

"What's more, the share of larger SMEs has risen to a level not seen in almost a decade," Mr. Tal says, noting the trend is particularly strong west of Quebec. "Each province from Ontario to B.C. has exhibited a growth rate of more than nine% in the number of companies with employees."

In 2016, more than 350,000 businesses were created and just under 300,000 exited, with the entry rate (the ratio of business creation to total businesses) on the decline since 2004 while the exit rate has been more stable, despite the impact of the fall in oil prices a couple of years ago.

"Small business optimism has been grinding higher since bottoming out early last year and appears headed back to levels seen prior to the oil price shock," Mr. Tal says. "With the Canadian economy in recovery mode, the environment for small businesses remains constructive."

And while the World Bank ranks Canada as one of the best places to start a new business due to access to capital and a favourable tax regime, the report highlights several gaps, including access to financing for certain business.

"From companies with high growth rates to those with young owners, some SMEs do face more acute issues finding financing," Mr. Tal says.

The report also highlights that women remain an untapped resource in the SME space.

"Female participation in the workforce has made significant progress over the past few decades, but entrepreneurship remains an area that could see improvement," Mr. Tal says. "Female majority ownership in the SME space represents less than 20% of all businesses, and recent progress has been slow in coming."

Another gap is youth entrepreneurship. Canadians between the ages of 25 and 39 comprise more than 25% of the population, yet represent less than 15% of small business owners and less than 10% of medium-sized business owners.

Canadians aged 50 to 64 years, by comparison, also represent about 25% of the population but this group represents 47% of small business owners and 51% of medium business owners.

"One reason for this discrepancy could be related to their access to financing. Remember that companies with younger owners face much more difficulty when trying to externally fund their business," Mr. Tal says. "It will be important to watch this segment of the population as Canada tries to compete with other countries in the tech landscape, which is more tilted toward younger business owners than other industries."

Canadian SMEs have also been slow to expand revenue sources outside of Canada and North America.

"SME revenue continues to be geographically concentrated in North America, creating risk," Mr. Tal says. "Currently only 10% of SMEs are involved in any sort of exporting at all, and roughly 90% of those companies are sending their wares to the U.S. In the current political environment, it has become a risky proposition to focus solely on the U.S. market."

The report notes that there is room to increase the ratio of Canadian goods and services being exported to Asia and Latin America.

"The age of digital connection has made it much easier to send Canada's high-end service exports all over the world, something many SMEs could benefit from," Mr. Tal says.

(Source: CIBC)

Canada’s Budget 2017 has given voice to a number of matters, but among the chaos of themes and numbers, it can be hard to keep track of the big picture. Here Joy Thomas, MBA, FCPA, FCMA, C. Dir. President and CEO of the Chartered Professional Accountants of Canada, talks to Finance Monthly about the uncertainty surrounding this year’s budget aims and tailors an overview for our readers.

Budget 2017 aims Canada toward economic renewal but does not offer a firm timetable for bringing an end to annual deficits.

The current budget plan would see the deficit peak at $28.5 billion in fiscal 2017-2018 and drop to $18.8 billion in fiscal 2021-2022.

But the deficit reduction plan stops there. Setting a target date for a return to balanced budgets would have helped guide the government in its financial planning going forward. Knowing the ultimate destination would help promote business confidence, ensure funding for essential programs, and ease the impact on future generations.

Sustaining Prosperity

Of course, sustaining a prosperous economy needs more than strong fiscal management. The budget outlines several measures to help Canadians, their families and their businesses flourish. There are investments in training, innovation and infrastructure and a recognition of the importance of lifelong learning and youth employment.

Additional support is offered to help Canada’s workforce remain competitive amid automation and technological change. CPA Canada supports the government’s focus to address how Canadians deal with the effects of these broad economic forces. Canada’s future prosperity will be directly linked to the competitiveness of its workforce.

Fighting Tax Evasion

On the tax compliance side, the budget builds on earlier announced efforts to combat tax evasion and to improve compliance. An additional $523.9 million is being invested over five years to support the Canada Revenue Agency’s crackdown on tax cheats. The CRA will use the funds to increase its verification work, improve investigations targeting criminal tax evaders, and beef up its business intelligence infrastructure and risk assessment systems.

The CRA also will hire more auditors and specialists to focus on the underground economy, a widespread problem that cost the Canadian economy some $45.6 billion in 2013, according to Statistics Canada. CPA Canada works to help the government address under-the-table dealings through our representation on the Minister of National Revenue’s Underground Economy Advisory Committee.

Altogether these measures are expected to raise an extra $2.5 billion in tax revenues over five years, for an estimated return on investment of five to one.

The government reiterated its commitment to work with international partners to ensure a coherent and consistent response to fight tax evasion. CPA Canada is dedicated to supporting the government in this effort. The government’s commitment to strengthening compliance reinforces Canada’s determination to protect the public interest.

The budget also notes that the federal government will work with the provinces to implement strong standards for corporate and beneficial ownership transparency to provide safeguards against money laundering, terrorist financing, tax evasion and tax avoidance.

Tax System Review is Long Overdue

Several budget measures resulted from a review announced in 2016 of federal tax expenditures, which the new fiscal blueprint suggests will continue. For efficiency and simplicity, this budget streamlines some personal tax credits and cuts a handful of others. Tax incentives for scientific research and experimental development will be reviewed as part of a broader review of government support for innovation.

Tax preferences for private corporations will be studied further, with a white paper promised in the coming months. The government is concerned that strategies involving private corporations are being used to inappropriately reduce the personal taxes of high-income earners. These strategies include using private companies to split income among family members and to convert investment income to lower-taxed capital gains.

At the same time, the government plans to examine whether aspects of the current taxation of private corporations adversely affect genuine business transactions involving family members. Presumably this includes tax measures that impede transfers of family businesses from one generation to the next. This will be especially important in the coming years given the high number of businesses changing hands as the Baby Boomers retire.

These limited assessments are a positive step forward but a more comprehensive review is what Canada truly needs. An extensive review can identify areas that would help in redesigning the tax system so it not only enhances efficiencies for Canadians and the business community but also plays a role in cultivating long-term, sustainable economic and social growth. This represents the Canadian ideal of good business – an equitable system that focuses on both business and social development in creating a stronger Canada.

Adapting to Climate Change

Budget 2017 includes a range of measures addressing climate change adaptation, from managing health risks to increasing resources for First Nations and Inuit communities to assessing risks to federal transportation infrastructure. Among these measures, the budget devotes $2 billion for a Disaster Mitigation and Adaptation Fund that will support the infrastructure Canada needs to deal with the changing climate’s impacts.

What’s missing, however, is a National Adaptation Plan that would coordinate these and other public and private sector initiatives. CPA Canada has urged the government to develop such a plan in consultation with Canadian businesses.

It’s Time for Action

With the current economic uncertainty south of the border, some suggest the government should take a “wait-and-see” approach. I disagree. We cannot afford to have the federal government become paralyzed in its decision making. Successful Canadian businesses must always navigate change. So too must the Canadian government, with a continued focus on strategies and measures that ensure Canada remains competitive and is able to attract and retain top talent.

GDP growth in Canada's banking industry will be limited to 2.4% this year amid a slowdown in consumer and business credit growth, according to The Conference Board of Canada's first outlook for the Canadian banking services industry. Still, the industry is expected to perform better than the overall Canadian economy and profit margins will remain healthy over the forecast period.

"Despite a sluggish Canadian economy, the banking industry managed a strong performance in 2016 largely due to the robust growth in the housing sector and equity markets," said Kristelle Audet, Senior Economist, The Conference Board of Canada. "However, with growth in consumer and business credit expected to weaken going forward, the industry will expand at a slower rate than what we have seen in recent years, although it will still outperform the overall Canadian economy".

Highlights

• Canada's banking services industry's growth will be limited to 2.4% in 2017 due to weaker growth in both consumer and business credit.
• With high household indebtedness and low interest rates limiting growth in the consumer credit segment, banks have been keen to tap into business lending in recent years. However, this segment is now also running out of steam.
• Despite slower growth, the industry will keep its costs under control, allowing pre-tax profits to surpass $80 billion in 2017.

The robust performance of the industry in recent years was largely driven by non-interest income sources due to historically low interest rates. Interest income, which accounts for over 40% of the industry's revenues, has remained essentially flat in recent years. In order to generate revenue growth, the industry had to look for other sources, including insurance and investment management services, as well as banking fees.

The banking industry has also been keen to tap into the business loan segment in recent years. Chartered bank loans issued to the private sector have posted their longest expansion on record—24 consecutive quarters of growth since the 2009 recession. However, the double-digit increases seen through 2016 will not be sustained moving forward, with a slowdown in private sector lending growth expected this year.

Also, with the housing market forecast to cool as a result of new taxes and tightened mortgage-lending rules combined with interest rates likely to rise at modest pace starting in 2018, growth in mortgage and non-mortgage debt will continue to ease. In fact, this year, for the first time in 25 years, growth in disposable income should outpace growth in consumer debt.

Growth in the industry will thus be limited by more moderate growth in both consumer and business credit. Given the more challenging business environment, the industry is undertaking significant efforts to keep costs growth under control, which will allow it to maintain a healthy profit margin throughout the forecast. However, there are still risks to this outlook. A correction in either the housing or equity markets would have a significant impact on the industry's performance.

Despite historically low interest rates, the industry's profit margin has improved significantly in recent years and is expected to average around 31% over the next five years. Meanwhile, pre-tax profits will continue to climb, reaching over $80 billion this year.

(Source: Conference Board of Canada)

Canada's economic progress has been driven by its historical preference for openness to people, capital and trade, Bank of Canada Governor Stephen S. Poloz has said.

In a speech marking both the 150th anniversary of Confederation and the 50th anniversary of Durham College, Governor Poloz looked at Canada's economic history and showed how all periods of substantial progress have been characterized by openness in these three areas. "The bottom line of our history is that openness and economic progress go hand in hand," Governor Poloz said.

While support for openness has ebbed and flowed over the years depending on circumstances, Canada's economic roots have meant that a preference for openness has tended to re-emerge, the Governor said. For example, the colonies that united at Confederation benefited from open trading with the United States before 1867. When they lost free access to the US market, Confederation became the strategy they employed to help the economy develop.

Canada's ascent also depended on people who understood the need for infrastructure to get resources to market, and how to attract the investment to finance these projects. "The people who developed what has become the world's soundest banking system were vital to Canada's development," the Governor said. Open markets, foreign investment and immigration remain absolutely critical for Canada today, Governor Poloz said.

Fears of openness are heightened during times of economic stress, the Governor added. However, experience has shown that such fears are misplaced.

"Our history shows that it takes a world to raise a nation, and nation building works best in an environment of openness for trade, people and investment," Governor Poloz said. "Our openness has helped us build a nation that I believe is the best place to live in the world. Imagine what we can build over the next 150 years."

(Source: Bank of Canada)

Following last week’s announcement of the Canadian Budget 2017, Trevor Parry, M.A., LL.B, LL.M (Tax), President of the TRP Strategy Group, provides Finance Monthly with specialist insight into the impact of the announcement and potential outlooks for the next budget.

Despite active rumours that dramatic changes were coming in the 2017 Canadian federal budget, the document as tabled in the House of Commons on March 22^nd contained virtually none of the controversial elements budget-watchers had feared—such as an increase to the capital gains inclusion rate or changes to the taxation of employee stock options.

Instead, Finance Minister Bill Morneau brought forward a status quo document that reads more like a budget update than a true or full budget; while nevertheless clearly and directly signaling the Trudeau government’s appetite to eat away at particular tax benefits “as soon as the time is right.” In the wake of the budget announcement, rumours are now circulating that like his (Conservative) predecessor Jim Flaherty in 2011—which saw federal budgets in March and then again in June, although separated by an election—a second federal budget may be tabled in a single calendar year, with pundits suggesting fall (October?) for a possible additional 2017 budget.

Status quo with adjustments at the margins

The 2017 budget tabled on March 22^nd and entitled “Building a Strong Middle Class” is organized around five main themes*:

1. Skills, Innovation and Middle Class Jobs

The Government is proposing to invest an additional $4 billion over the next five years in such areas as developing “superclusters” (dense areas of business activity) to spur innovation; the creation of a strategic innovation fund; funding and promotion of clean technologies; and growing Canada’s advantage in artificial intelligence.

2. Investing to Create Jobs and Strong Communities

The government has announced plans to accelerate implementation of the Canada Infrastructure Bank; modernize Canada’s transportation system; work with the Provinces and Territories to invest in green infrastructure; support families through early learning and child care; improve indigenous communities; and build a new National Housing Strategy. While these programs account for almost $21 billion in expenditures over five years, they will be funded by reallocating current budget dollars.

3. A Strong Canada at Home and in the World

Included under this “theme” is new investment in home care and mental health; creating healthier First Nations and Inuit communities; providing greater support for veterans and their families; and enhancing the security and safety of Canadians. It is of interest that some of the additional funding for these initiatives will come from the reallocation of almost $1 billion that had previously been set aside for defence funding of large scale capital projects.

4. Tax Fairness for the Middle Class

This theme focuses on ensuring that the tax system is fair in both design and implementation. This is to be accomplished by closing tax loopholes; cracking down on tax evasion and combatting tax avoidance with an additional investment of $500 million over the next 5 years; eliminating ineffective and inefficient tax measures; and providing greater consistency in the tax treatment of similar types of income. Specific initiatives are outlined in greater detail below, with the government estimating these programs will increase tax revenues by almost $5 billion over five years.

5. Equal Opportunity

In the 2016 Fall Economic Statement the Government committed to completing and publishing a gender-based analysis of budgetary measures starting with Budget 2017. Included in Budget 2017 is a discussion on how specific proposals will have a positive impact by addressing gender inequality.

“Tax fairness for the middle class” means coming tax punishment for high income-earners

So why such a milquetoast effort from Morneau’s sophomore effort? Speculators conclude that Trudeau et al. are waiting and watching on actions south of the border before making any bold strokes here at home. What this means for the Canadian high income-earner, business owner or entrepreneur is a continuing requirement to remain vigilant and engage in defensive tax planning for the upcoming months.

What could be on the chopping block for the next budget round (whenever it comes)? Everything from income sprinkling from a testamentary trust to holding passive investments within a corporation to tightening the rules that allow family members to share income (a common strategy used by family-owned businesses). Thus when the Liberals decide to move back above the treetops to mount their full assault as they have telegraphed in their actions to date—and as reinforced by the threats contained in the March 2017 budget announcing “further study” of various issues—Canadians would do well be prepared with effective countermeasures.

(*with files from “CALU”, the Conference for Advanced Life Underwriting.)

March is Fraud Prevention Month and Insurance Bureau of Canada (IBC) is highlighting that everyone can play a role in limiting the personal and financial costs of auto insurance fraud.

"Auto insurance fraud is a serious crime that costs Canadians billions of dollars each year," said Garry Robertson, National Director, Investigative Services, IBC. "It's an illegal, organized big business, largely unknown to consumers, that siphons resources away from our health care system, ties up our emergency services and courts, and drives up insurance costs."

The property and casualty (P&C) insurance industry is increasingly sophisticated in its ability to detect and prevent insurance fraud. This includes fraud perpetrated by organized crime rings that stage collisions and involves the collusion of service providers such as medical facilities, auto body shops, and tow truck operators. IBC and P&C insurers work closely with CANATICS, an organization that uses state-of-the-art analytics technology to help insurers identify possible fraudulent activity committed by these dangerous crime rings.

IBC and P&C insurers also work across Canada with law enforcement agencies, all levels of government, insurance broker organizations and other stakeholders to raise awareness and coordinate efforts to fight this crime.

"Insurers and their partners are already playing a significant role in reducing instances of auto insurance fraud. However, it is important that consumers know what to look for and to avoid becoming victims," added Robertson.

Consumers can help protect themselves against fraud by following these tips:

Do your homework when purchasing a used vehicle:

• Select a reputable dealer and look into the vehicle's history. If the deal seems too good to be true, it probably is.
• Inspect the vehicle you're considering buying to make sure it wasn't in a flood. Check for water stains and mildew. Also look for sand or silt under the carpets, floor mats and headliner cloth, and behind the dashboard. Look for rust on the screws on the console and in other areas where water doesn't normally reach.
• Check IBC's VIN Verify Service. This service helps you make sure the vehicle hasn't been fraudulently given a new vehicle identification number (VIN) to hide that it was previously branded as non-repairable.
• Have a certified mechanic inspect the vehicle before you buy it.

Avoid staged collisions:

• Never tailgate; instead, allow ample distance between your vehicle and the vehicle ahead of you. Look well beyond the front of your car while driving.
• If you suspect that you have been a victim of a staged collision, call the police from the accident scene and use IBC's tip reporting program. Notify your insurance representative immediately.

Take extra care if you are involved in a collision:

• Document all that you can. Write down the other vehicle's licence plate number, collect driver's licence and insurance information, photograph the damage, note the other driver's behaviour and watch for warning signs of a scam. Fill out the IBC collision report form.
• Use a reputable tow truck service. Be sure the tow truck has a licensing number. Carefully read anything you are asked to sign. Ask that your vehicle be towed to a secure location of your choosing.
• In the event of a collision, call your insurance representative as soon as possible.

If you think you have witnessed or been the victim of an insurance crime, call IBC's confidential TIPS Line (open 24 hours a day, seven days a week) at 1-877-IBC-TIPS, or submit an anonymous tip to IBC online.

IBC Initiatives to Identify and Deter Fraud

• IBC TIPS Line and online tip form: IBC provides a webpage and toll-free phone number to allow consumers to anonymously report insurance fraud.
• Provincial Auto Theft Network (PATNET): This award-winning IBC program brings together law enforcement agencies and the insurance industry to reduce auto theft and insurance fraud.
• VIN Verify Service: This free IBC service allows consumers to check a database containing information from participating IBC member insurance companies to determine whether a vehicle has been reported as being seriously damaged in a flood.

(Source: Insurance Bureau of Canada)

It's that time of year again. Revenue agencies are expecting you to mail in your annual income by April 30^th 2017.

Along with this, it is encouraged to submit any costs or expenses that may lower your annual income. Those could include: childcare expenses, new home ownership, medical expenses, charitable donations, and more. The CRA (Canada Revenue Agency) website now hosts many new updates, including ways to maximize your tax benefits, credits and deductions.

Being up to date on your taxes is something you will want to get educated on. Its value and importance is something we should all take the necessary time to become literate in.

After all of this is done, calculations provided by CRAs tax forms will determine whether or not you will be getting money back (income tax receivable), or if you will owe money (income tax payable).

For those of you who are lucky enough to receive a refund, consider your financial goals. This money could be used to better your financial situation, such as:

1. Paying down debt – If you are prepared for a financial emergency, then the general rule of thumb is to pay down your debt. There is a freedom in being debt free. Some suggest paying off the smallest debt first so you can feel the satisfaction of having one debt entirely paid off. However, both approaches have their merits.
2. Paying down the mortgage – One of the biggest benefits of paying off your mortgage is having long-term financial security. Without the heavy burden of a mortgage to pay every month, you will be able to enjoy financial security for a long time. Once the mortgage is paid off, you will have extra breathing room in your monthly budget, freeing up some more money to pay off other debts.
3. Invest in RRSPs – Putting some cash into an RRSP will serve as your retirement income later in life. Investing in RRSP's will also reduce your tax payable amount on last year's income.
4. Put it into a TFSA – You also have the option of putting your refund into a Tax-Free Savings Account. A TFSA is almost like a savings account, but it is registered with the federal government. The key benefit of a TFSA account is that you do not have to pay taxes on earnings.

One of the most common reasons why many Canadians get into debt trouble is that they make uninformed financial decisions that can sometimes have a very negative result. By using your tax refunds wisely, you will be making a smart choice that benefits you long term.

(Source: Money Mentors)

Next up we reached out to a professional that we have had the privilege of interviewing before - Jeffrey Puritt from TELUS International, the global arm of the multibillion dollar Canadian telecommunications company, TELUS Corporation. TELUS International is a global contact center and IT outsourcing company with more than 25,000 inspired employees serving clients in over 35 languages from delivery centers across North America, Central America, Europe and Asia. Here Jeffrey shares with us his insights on outsourcing, while also providing valuable advice for industry stakeholders.

Since joining TELUS International in 2005, Jeffrey and his team have delivered remarkable results, earning the company a more than US$1 billion valuation, adding more than 5,000 team members in each of the past two years, and engaging some of the world’s most iconic brands as clients, supporting over 200 million customer interactions annually via voice, email, chat and social media across high-tech, gaming, retail, e-commerce, travel and hospitality, health care, finance, and telecom.

Jeffrey was recently named “Executive of the Year”, receiving an esteemed International Stevie Award for his vision and leadership in redefining the global outsourcing industry. He is especially proud of TELUS International’s global philanthropy and volunteer efforts, which are making a meaningful difference in the communities where they operate.

Beyond cost-savings, how is outsourcing driving value for companies?

Outsourcing has traditionally been an industry predicated upon leveraging wage arbitrage to deliver services more cheaply; essentially, ‘Your mess for less.’ While the relentless push to operate more efficiently remains the main driving force, outsourcing has now also become a strategic marketplace tool, and is recognized as one of a handful of business approaches that can fundamentally transform a company and increase its competitiveness exponentially. Truly successful outsourcing begins with an understanding of your business’s identity and core competencies. If you understand your unique competitive advantage, you’re better positioned to consider what work you’re doing that could be outsourced. The next step is establishing a strategic outsourcing relationship to undertake this work in order to create the white space and free up your in-house resources to do things they previously could not, such as drive improved response times, speed up product development and foster innovation.

How has TELUS International maintained their status year-over-year as a global leader in employee engagement (81%) with attrition scores 50% below the industry average?

In an ever-increasing competitive market for talent, companies must go above and beyond to first of all attract the right people and then to retain and engage them. In addition to the more traditional employee benefits, such as state-of-the-art facilities and onsite daycares that we provide, TELUS International is a company with heart; as we say, #ItsDifferentHere. Our unique and differentiated culture is the enabler of our DNA, and I liken our approach to leadership to a quote by Antoine de Saint-Exupéry, author of Le Petit Prince: “If you want to build a ship, don't drum up the people to gather wood, divide the work and give orders. Instead, teach them to yearn for the vast and endless sea.” This quote speaks to how we share our vision for growth and success and inspire our team members to join the collective journey to be part of something bigger than their individual roles.

What’s your golden nugget of advice for other BPO providers?

Very simply, focus on who sits in the seat in your contact centers because the customer experience will never exceed the employee experience. At TELUS International, we call our frontline agents ‘heroes’: they are the face of our company with our clients’ customers, and they are truly the hearts and hands behind our commitment to giving back in our communities. An engaged team member is an inspired one – so our focus is to surround ours with what’s important to them, such as inspiring workplaces where they can unwind, exercise and connect with their colleagues, learning and development opportunities to advance their careers and family-friendly initiatives that include healthcare benefits for our team members’ parents and siblings, on-site daycares and flexible schedules.

As a thought leader in this segment, what does the future hold for outsourcing?

Today’s digitally-savvy consumers want the most advanced technology delivered with a human touch and not surprisingly, it’s also influencing how consumers expect to interact with their favorite brands and how customer service must evolve. Whether through their own channels or by investing in contact centers with skilled agents that have embraced this trend, it will be critical for companies to effectively leverage and combine the best of both the high-tech and ‘high-touch’ worlds in order to delight and keep their customers. We have found success by partnering closely with our clients to develop omnichannel experiences, using more “friendly” customer service metrics, making text and speech analytics actionable and incorporating a focus on both small and big data. At the end of the day, consumers want to feel understood, acknowledged and connected to the brands and companies they choose. Whether you can achieve this through human interaction or technology with a human touch, the strongest affiliations always come when you can create a strong culture that drives truly meaningful connections.
What are your thoughts on the recent anti-outsourcing sentiment in the US leading up to the election?

At TELUS International we’re committed to and are very proud of creating meaningful employment opportunities in emerging economies, however, we recognize that sensitivity regarding domestic job displacement still exists. I believe this entire view is predicated on the hypothesis that a job created in another country equals a job lost here - a zero sum game. While I’m cognizant of this concern, I challenge that paradigm based on our experience with TELUS, our parent company and client in Canada, where legacy jobs (particularly those in contact centers), that have moved offshore to the Philippines, El Salvador and Romania have been replaced with higher-value employment opportunities onshore. These are jobs that TELUS was able to create and underwrite by leveraging the significant savings and value created by outsourcing. I believe the re-investment of this type of savings being used to grow operations, create training and learning and development opportunities to transition employees to higher-skilled roles, is in fact a potential primary driver of the global economy.

‘Food for Thought’

What inspires you to press further into your work?

I’m inspired knowing that the work we are doing is making a positive impact in the regions where we operate. By providing meaningful employment opportunities, we are helping to end cycles of poverty by contributing to the creation of a middle class where our team members live, work and raise their families. I am also inspired by my fellow TELUS International team members’ excitement about upcoming opportunities for our company and their commitment to achieve even greater success in the months and years ahead.

What have you learned from your mistakes?

I’ve learned that mistakes and failures are inevitable in life and in business, but how you leverage the tuition from these experiences, to not repeat the same mistakes and to be innovative and agile in finding an alternate way forward, is a key indicator of future success. I also believe that as humans, we are inherently programmed to learn more from our own mistakes than the experiences of others. For example, touching a hot stove is a better teacher than simply being told it’s hot. So, over the years I’ve learned I may have to ‘touch some stoves’ – but also how to only get ‘burned’ once!

What do you feel you couldn’t live without?

First and foremost, I couldn’t live without my family. I consider it a true privilege to love and care for them, to celebrate their achievements and to be there to comfort them when they fall. On the flip side, I might say that I couldn’t live without my smartphone because of all the time I spend traveling internationally to meet with our team and clients. I may also add a bottle of white Burgundy or red Super Tuscan wine and a couple of my favorite movies such as A Streetcar Named Desire and Monty Python and the Holy Grail to my list of must-haves.

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The UK is set to be one of biggest winners from the EU-Canada CETA free trade deal. With 10,570 companies already exporting a wide variety of goods from baby wipes to aircraft parts to Canada and supporting over 240,000 jobs, the UK economy is in the best position to benefit from the removal of import duties, lifting of barriers and potential trade growth, according to data from a new web tool on CETA published by the European Commission.

And it is not only big business that is taking advantage of the free transatlantic trade as 79% of the EU exporters to Canada are small and medium-sized enterprises.

In exports to the second biggest North American economy, the UK is ahead of both Germany and France which have 10,464 and 9,732 companies respectively selling goods and services to Canada and significantly fewer jobs benefitting from that trade – 141,000 for Germany and 77,000 for France. Whilst there are more Italian companies (13,147) trading with Canada, they only employ about 63,000 people in total.

"CETA in your town", the new interactive map and tool developed by the European Commission, gives a snapshot of EU-Canada trade relations by drawing on a subset of the many companies in cities and towns all over the EU that export to Canada, with examples of products they export.

The trade with Canada is spread fairly evenly across the UK and across business sectors, the map shows. The leading Welsh town for exports to Canada, for example, is Swansea with three companies exporting foam masking tape, ores, slag and ash, bottle closures. Belfast has six companies selling carpets, pharmaceuticals and animal feed to Canada. Glasgow's exports include steel fittings, theatrical goods and alcoholic beverages supplied by some 10 companies with a further ten businesses in Bristol selling a range of items such as aircraft parts, cereals and baby wipes.

The Comprehensive Trade and Economic Agreement (CETA) between the EU and Canada is expected to save exporters over £425 million (€500 million) a year in import duties. It was signed by the President of the European Commission Jean-Claude Juncker, the President of the European Council Donald Tusk, the Prime Minister of Slovakia Robert Fico, and the Canadian Prime Minister Justin Trudeau on 30 October 2016, but the deal still has to go through two main stages of democratic oversight. First, the European Parliament must give its consent to CETA for it to apply provisionally. The second stage involves parliaments in EU countries and only once they approve the agreement will CETA come fully into force.

(Source: EU Commission)

Global market forces and accelerating technological advances are expected to exert significant pressure on Canadian organizations over the next decade, as business models and strategies transform to meet emerging customer needs. The Conference Board of Canada's fourth Human Resources Trends and Metrics survey finds that Canadian HR leaders are increasingly concerned about their organization's capacity to respond to the pace of change.

"Globalization, new technologies, demographic shifts and a slack labour market are just some of the labour force changes affecting employers and employees alike," said Shannon Jackson, Associate Director, Human Resources Transformation Research. "Ten years of benchmarking HR practices demonstrates that organizations are significantly revamping their people practices to keep up with the pace."

Highlights:

• 26% of HR leaders placed the impact of technological change as a top organizational challenge, up from only 4 per cent in 2005.
• Leadership capacity continues to concern Canadian employers as the retirement wave hits its peak just as organizations transition to a digital economy.
• Finding mission-critical skills remains a challenge for almost 60% of organizations surveyed.
• Efforts focused on employee engagement seem to be paying off with critical employee segments; retention of employees with critical skills is strong with an annual voluntary attrition rate of less than 2%.
• About half of the organizations are making efforts to bring in youth as we see an increase in internships and co-op placements of about 10 per cent since our last survey.

Leveraging technology has enabled the revamp of people practices in the past 10 years. Digital and web-based tools are replacing standard approaches to common HR services like recruiting. For instance, our survey shows LinkedIn has become the dominant method used by employers to find candidates making it the "new standard". Platforms like Twitter and Snap Chat are emerging as viable recruiting avenues and highlight how critical staying on top of data and trend analysis becomes for HR.

Digitally-driven technologies are also expected to lead to productivity improvements, but at the same time they will reduce the number of manual tasks and positions. The category of workers who will benefit the most from the adoption of new technologies will be the professional, scientific, and technical services. However, low- to mid-skill positions outside of the service industries will likely be the ones most impacted by technological advances.

Not surprisingly, the changing nature of work is a growing workforce challenge in 2016.

More than one quarter of survey participants placed the changing nature of work a top challenge in 2016, compared to only 4 per cent in 2005. In order to address the challenge, HR leaders report their top priorities are developing managers and leaders, strategic workforce planning, and deepening the succession planning pool beyond the executive level. Most organizations viewed these as priorities for the next three to five years.

"Simply replacing the skills and capacity of retirees with similar talent will not be the answer for many organizations," added Jackson. "HR teams are trying to balance meeting current talent requirements and quickly ramping up a future workforce, while the requirements for that future remain unclear."

The Conference Board of Canada conducted the survey into Human Resource Trends and Metrics between April and June 2016. 150 Canadian human resources leaders participated in the survey.

(Source: Conference Board of Canada)

While the outlook is for firmer and more geographically balanced growth in 2017, the Canadian economy faces major downside risks from the incoming Trump administration's trade policies and Republican-backed corporate tax reforms, finds a new report by CIBC Capital Markets.

These risks will impede the Bank of Canada's ability to tighten monetary policy, the report says.

"We would need a huge and unlikely upside surprise to push the Bank of Canada into a rate hike this year," says Avery Shenfeld, Chief Economist, CIBC. "Particularly since, the Trump administration's trade-policy-by-Twitter and a Republican-backed corporate tax reform plan biased against import content both represent a major downside risk if Canada gets caught in the crossfire."

In that more negative scenario, Mr. Shenfeld expects the Canadian dollar to come under pressure. "The shock to US-bound exports would engender a much steeper slide in the Canadian dollar, well beyond 1.39 Canadian dollars per US dollar we expect to see on monetary policy differentials," he says.

CIBC forecasts Canada's real GDP growth at 1.8 % in 2017 and 2.0 % in 2018. "A modest rebound in energy sector capital spending and ongoing oil output gains will add a full percentage point to growth, a lot of that showing up in Alberta's climb out of recession," says Mr. Shenfeld.

The growth in the energy sector will offset the reduced contribution from housing and consumption as an indebted household sector faces higher inflation and a tighter in mortgage borrowing conditions, the report says.

As for equity markets, Canadian stocks are unlikely to have the same edge relative to U.S. stocks as they did in 2016. "It's not what you know, but what you can't know at this juncture, that gives food for thought for investment strategies," says Mr. Shenfeld. "But, this could still be a wild ride for investors. There are some significant skews to the risks around the bland base case."

Energy and gold prices look to be range-bound, with the former constrained by inventories and rebounding US drilling, while industrial metals lack the sustained demand needed to build on the prior year's gains."

US stocks have already priced in a lot of good news, mostly on the cost side, and Mr. Shenfeld says that if Trump delivers on lower corporate taxes and a lighter regulatory burden, high-single digit earnings growth looks achievable.

The report forecasts 2.3% growth for the US economy in 2017 and 2.1% in 2018, noting that uncertainty is "extremely high" surrounding Trump policies.

"Trump enters the Oval Office with a promise to Make America Great Again, but the trouble is that America is pretty good already," Mr. Shenfeld says. "We've lifted our US growth forecast slightly for 2017, reflecting economic momentum already in place more than any new policy developments. Wage and jobless data suggest that slack is diminishing, with the US on target for full employment by next year.

"We're also not sure that large scale fiscal stimulus is really on the way, at least not on a sustained basis. Tea Party conservatives are likely to insist on spending cuts to "pay" for tax reductions, and the infrastructure plan is extremely modest in scale."

If such offsets aren't forthcoming, the result won't be faster growth, but simply a steeper climb in Fed hikes to keep inflation at bay, the report says. A situation with a greater fiscal ease in the US, would prompt increases in borrowing requirements, inflation and Fed hikes that will lift bond yields at a sharper pace.

"For corporate Canada, the instinct would be to judge a becalmed outlook as reason to eschew active hedging for now. But the potential for a Trump in the night bump suggests looking for opportunities to hedge against a pullback in commodities, a weaker Canadian dollar, and a rise in long term rates," Mr. Shenfeld says.

(Source: CIBC)