jillumbach General Information, Media

Hydro rates goes up by 3%

By:  Business reporter, Published on Thu Oct 17 2013

Ontario consumers will face higher hydro bills starting Nov. 1 — with the sharpest percentage increase coming during off-peak hours.

Time of use electricity rates, which are now paid by most consumers and small businesses, are due to rise by 0.5 cents a kilowatt hour for all time periods, the Ontario Energy Board announced Thursday.

The increase affects only the energy portion of the bill; consumers pay additional charges for delivery and debt retirement, plus a fixed monthly amount.

Those who pay time-of-use rates will pay about 3 per cent more for electricity on their total bill — or $4 a month on a monthly hydro bill of 800 kilowatt hours, according to the energy board.

Consumers who buy power from energy retailers at a fixed price won’t be affected by the new prices, which will be in effect for six months.

The new price for peak power will be 12.9 cents a kilowatt hour; for mid-peak, 10.9 cents a kilowatt hour; and for off-peak, 7.2 cents a kilowatt hour.

In percentage terms, the off-peak power price jumps 7.5 per cent, while the peak price rises only 4 per cent, and mid-peak 4.8 per cent.

The board said the new prices are being driven by “more generation from sources including renewables, along with a higher market price for natural gas.”

Gas and renewables are set to play a bigger role in Ontario’s power market, as the last coal plants shut down. The province has decided not to build new nuclear reactors.

The new rates continue to shrink the gap between peak and off-peak prices.

Five years ago, the peak price was more than three times the off-peak price; today, it’s less than twice the off-peak price.

Peter Tabuns, energy critic for the New Democratic Party, said the new prices reduce the incentive for people to consume less during the peak.

“That seems to be contrary to everything they’ve been saying in the past,” he said in an interview.

“So everyone who’s switched to doing their laundry in the middle of the night is going to be paying more than they would have.

“The other thing that struck me is that the increase in the cost of electricity is an awful lot more than the rate of inflation,” he added, saying the government should do more to promote conservation.

Time of use pricing is meant to discourage short, sharp peaks in demand. To supply those peaks, the power system has to build expensive plants that operate only a few hours a day, and only during part of the year.

Conservative critic Lisa MacLeod linked the latest price increase with the cost of moving unpopular gas-fired plants out of Oakville and Mississauga, estimated by the provincial auditor-general to be $1.1 billion.

“The way this government’s mismanaged energy, someone’s got to pay for it and unfortunately they’re going to have the say: It’s the ratepayer,” she said. “There’s no way to recover this money from the Liberal Party of Ontario.”

Energy minister Bob Chiarelli avoided any direct comment when asked about the new prices.

“Since 2003, the Ontario government has made smart, strategic investments in both transmission and generation infrastructure to bring us into a healthy supply situation in order to power our homes, farms and businesses,” he said in a statement.

An official in his office said prices are tracking lower than those predicted by the Liberals’ long-term energy plan released in 2010.

Julie Girvan of the Consumers Council of Canada said in an interview she’d like to see more clarity from the energy board about the impact that time of use pricing has had on consumer behaviour and on hydro bills.

Energy board spokesman Alan Findlay said that the board has been gathering data about the impact, and will be releasing a report by the end of the year.

In setting rates, “the approach is to match the costs of supply with the appropriate time period they’re used,” he said.

The energy board says most consumers use 64 per cent of their power during off-peak hours. During the winter months, off-peak hours are all day on weekends and holidays, and on weekdays from 7 p.m. to 7 a.m.

Peak periods are weekdays from 7 to 11 a.m., and 5 to 7 p.m.

jillumbach Advocacy, Media

Ontario to review its Payday Loans Act in response to new technologies

September 12, 2013 Canadian Press

TORONTO – The provincial government says it will launch a review of the Payday Loans Act, adopted in 2008 to better protect customers.

The review is in response to technological changes in the payday loan industry.

They include the growth of online transactions, smartphone-enabled loan approvals and new forms of high-cost, short-term loans.

The review will also explore ways to track payday loans and ensure companies are compliant with existing regulations.

It will also study stronger protections for consumers against multiple loans and roll-over loans and review the maximum total cost of borrowing.

That cost is currently capped at a $21 fee for every $100 borrowed

There are more than 750 payday loan storefronts in Ontario where consumers take out an average payday loan of $300 and pay up to $63 in fees.

jillumbach Advocacy, Media

Could You Live Off a Minimum Wage Job?

National President, Unifor Founding Convention

Posted: 09/19/2013 11:41 am

Minimum wage jobs are not only for the after-school crowd of kids looking for spending money, but also an entry into the workforce for immigrants, recent graduates and many others who can only find part-time work and need to hold down two or three jobs to survive.

The most recent Statistics Canada job market figures say 70 per cent of the province’s 44,000 new jobs created in August are part-time and mostly filled by older workers. It’s also a safe bet they are mostly paid at minimum wage.

Across Canada, minimum wage ranges from $9 an hour in Alberta to $11 in Nunavut, while in most provinces it is set at $10. Unifor’s recent submission to Ontario’s Minimum Wage Panel Review should be required reading for all of them.

Consider that:
• Minimum wages in Ontario have been frozen for three-and-a-half years at $10.25 per hour, while consumer prices have increased by over 7 percent (measured by Statistics Canada’s all-items CPI for Ontario). The resulting decline in real incomes for low-wage workers is very unfair, and has undermined household finances and consumer spending in the province.

• Relative to average wages, and average hourly productivity, minimum wages in Ontario are significantly lower today than they were even in the 1970s.

• Even working full-time year-round, the existing minimum wage would leave a single worker in Ontario (with no dependents) well below low-income cut-off for a single resident (the low-income cut-off is a measure of relative poverty).

Clearly, the existing minimum wage in Ontario doesn’t give working people a chance to provide for themselves and their dependents at a decent standard of living.

The proposal now being considered by the Ontario government to raise the minimum wage to $14 an hour won’t lift the burden of poverty that weighs on low-end wage earners. But it will lighten the load somewhat.

Unifor supports the proposal as a first step of a broader strategy to ensure all workers can enjoy decent living standards.

Our position is that it should be combined, though, with other measures such as employer-specific policies, training and placement initiatives, and other policy tools aimed at lifting wages to what could genuinely be considered a “living wage.” Studies have estimated a living wage to be around $18 per hour for Ontario — an amount sufficient to allow a family of four, with two wage-earners, to pay for the basic necessities of family life.

Some economists argue that higher minimum wages will lead to higher unemployment, but a good body of evidence exists showing little connection between minimum wage levels and employment.

On the other hand, by boosting purchasing power and consumer spending, and helping lower-income families reduce their debt loads, a higher minimum wage could actually have a net positive impact on jobs and on quality of life for everyone.

Unlike the often-failed trickle-down theory of wealth accumulation, when minimum wages are raised, there is a demonstrable trickle-up benefit for the entire working community. In addition to the psychological and social benefits of being able to support oneself, stronger family incomes lead to increased demand for products and services, financially viable businesses, and a generally more vibrant community.

Of course the opposite is true when young people can’t afford to move out of their parents’ basement, families rely on food banks to feed their children, or stressed-out, single parents juggle part-time jobs to stay out of poverty.

The Ontario government can and should do better for its lowest paid workers. Giving them a chance at a decent standard of living raises the bar for everyone.

Jerry Dias is the national president of Unifor, Canada’s largest union in the private sector. Created on August 31, with the coming together of the former Canadian Auto Workers union and the Communications, Energy and Paperworkers Union, Unifor represents more than 300,000 members working in at least 20 sectors of the economy (including all stages of the economic value chain, from resources to manufacturing to transportation to private and public services).

jillumbach Media, Research

Charles Lammam & Hugh MacIntyre: Help young workers, don’t raise the minimum wage

Charles Lammam and Hugh MacIntyre, National Post | 13/08/26 | Last Updated:13/08/23 1:30 PM ET

Youth unemployment is still unacceptably high,” noted the Ontario government as it identified priorities in its 2013 budget. Oddly, however, the government is now contemplating a policy that would make it harder for young Ontarians to find jobs. With its newly minted advisory panel, the government is considering ways to automatically increase the minimum wage by tying its future value to changes in inflation or perhaps economic growth.

The panel’s lofty goal is to “come up with a system that will ensure both job creation and income security for all Ontarians.” Achieving it, however, is wishful thinking. Scores of economic studies have found that minimum wage increases result in fewer job opportunities, particularly for the young and low-skilled.

Before the panel gives its recommendations, it should ponder a new study published earlier this month by the National Bureau of Economic Research. Instead of the traditional approach of looking at employment levels, the authors looked at how minimum wage increases impact net job creation (jobs created minus jobs destroyed). After examining data in U.S. states from 1977 to 2011, they found that a 10% increase in the minimum wage led to about a one-quarter reduction in the rate of net job growth. Put another way: increasing the minimum wage reduced the rate of jobs being created, resulting in fewer employment opportunities than would have otherwise occurred.

Of course, one study alone is not convincing evidence of the destructive effect of minimum wage hikes. So consider a comprehensive review of the academic literature conducted in 2006 on minimum wages and employment. Led by Professor David Neumark, an expert in the area, the review looked at more than 100 studies covering 20 countries and found an overwhelming majority of studies reached the conclusion that minimum wage hikes negatively impact employment.

In Canada, more than a dozen studies have examined the impact of provincial minimum wage increases. Based on those findings, a 10% minimum wage hike decreases employment for young workers (ages 15-24) by an average of 3-6%. For young workers most affected — those earning between the current minimum wage and the proposed higher wage — the impact is more acute, with job losses of up to 20%.

To understand why increasing the minimum wage has such negative effects, it is important to recognize how compensation is determined in competitive markets. Compensation is based on the amount employees produce — their labour productivity. For example, if a fast-food employee can produce a maximum $8 worth of output each hour, then her employer would be willing to pay up to $8 per hour in total compensation. In other words, the employer aims to match per unit labour costs with the value of what their employees produce.

If the government imposes a minimum wage rate that results in compensation exceeding an employee’s maximum ability to produce, employers adjust their affairs accordingly. Employers not only respond by decreasing the number of jobs but also byreducing the hours employees work, cutting non-wage benefits like on-the-job training,giving priority to the most productive employees, and/or finding ways to operate with fewer workers and more automation.

There is also a growing body of evidence showing that minimum wage increases actually do little to help households in need.

A 2012 study by prominent Canadian minimum wage experts analyzed provincial data from 1997 to 2007 and found that raising the minimum wage had no statistically discernible impact on measures of relative poverty (including Statistics Canada’s Low Income Cut-Off). One important reason is the bulk of minimum wage workers do not actually belong to low-income households. In a 2009 study, researchers used Statistics Canada data to profile minimum wage earners in Ontario. They found that “over 80% of low-wage earners are not members of poor households” (they define poverty as earning income that is half the median wage). The researchers also found that “over 75% of poor households do not have a member who is a low wage earner.”

If the government is serious about tackling Ontario’s youth unemployment and fostering job creation, then it should steer clear of future minimum wage increases regardless of what formula the advisory panel recommends. The reality is that increasing the minimum wage will actually reduce job opportunities while doing nothing to alleviate poverty.

National Post

Charles Lammam and Hugh MacIntyre are analysts at the Fraser Institute.