11-010-XIB
Canadian Economic Observer
November 2007

Canada

The federal government announced it was lowering personal income taxes retroactive to January 1, and lowered corporate income taxes and the GST by a percentage point on January 1, 2008.

The Alberta government announced a new royalty scheme for oil and gas.  The new formula for gas and for conventional oil will operate on a sliding scale determined by commodity prices and well productivity. The current base royalty of 1% for oilsands production will increase for every $1 increase in the world oil price beyond $55 a barrel to reach a net royalty of 9%.  Once a project has recovered its costs, the current royalty will also move from the existing 25% of profits to a maximum of 40% as oil prices rise.

The Canadian dollar hit a 50-year record high at month-end, approaching US $1.06.

Toronto-Dominion Bank acquired US-based Commerce Bancorp for US $8.5 billion.

A six-hour strike by United Auto Workers at Chrysler ended with a tentative agreement which includes the establishment of a UAW-managed trust to administer retiree health care.

An agreement was reached with 7,000 striking BC coastal forestry workers who walked out July 21. Kruger announced two-week shutdowns at two Quebec paper mills for November.  Tembec indefinitely closed two mills in Ontario, one for newsprint and one a sawmill.  Pope and Talbot idled three sawmills in BC for two weeks.

Noront announced a major find of copper and nickel at its Double Eagle property in Northern Ontario.  Devon Energy revealed that in 2005 it had found 240 million barrels of oil in the remote Beaufort Sea.

Canadian Bioenergy began construction of its $90 million biodiesel refinery near Fort Saskatchewan that will open in 2009 and process 500,000 tonnes of canola seed per year.

World

Chrysler idled five plants in mid-October in response to slow sales.

The Federal Reserve cut both its discount and federal funds rate by a quarter of a percentage point.