West is still best

 Opportunities abound for those seeking work, or just a change

 By: Joel Schlesinger

 If you're recently out of work, or simply looking for a new gig but Manitoba's slow and steady economic growth spits out too few jobs with too many applicants for your liking, you may want to consider the advice of a popular phrase of the past.

Yet it still remains apt today.

'Go west, young man... or woman... or greying baby boomer.'

This may hardly seem a revelation. Over several decades, Manitobans have moved to other provinces in search of fame, fortune and glory.

Yes, Manitoba has been successful in recent years at attracting immigrants from around the world, but it's been less so in keeping those born and bred here in-house -- though a good portion eventually come back, too.

Those who do look west today for work should find plenty of opportunity, says Koula Vasilopoulos, regional vice-president with Robert Half, a recruitment firm specializing in administrative, legal, IT and accounting positions.

"We're seeing industries growing, such as manufacturing, agriculture, resources, health care and construction," says the Calgary-based executive, originally from New Brunswick.

"We're not where we were in 2008 when there was an absolute shortage where we had to bring in people from other countries to staff positions, but I can definitely see the tempo picking up in Alberta and Saskatchewan -- particularly more than other provinces."

Still, growth has its cost. While the West flexes its economic muscles, the East withers -- a point federal NDP Leader Thomas Mulcair touched on last month when he remarked Canada's economy suffers from "Dutch disease."

Although his comment rubbed westerners the wrong way, there is some truth in his politicking.

Our manufacturing sector has undoubtedly been hurt by our rising dollar -- increasingly referred to as a petrocurrency. And this situation does bear some similarity to what the Netherlands experienced in the 1970s.

"Like many European nations, it was a manufacturing country in the '60s after the Second World War," says Tony Demarin, president of BCV Financial in Winnipeg. At one time, Europe was a cheap place to produce goods, because European nations' economies were emerging from the ravages of a world war.

But the Dutch discovered natural gas off their coast in the late 1950s.

"What that eventually did was it drove up the cost of doing business in that country from a currency perspective, because it brought in revenues from natural resources."

The Dutch guilder, its currency at the time, increased in value relative to the currencies of the nations that imported its goods. Dutch goods became more expensive and, correspondingly, less attractive.

For a long time, Canada too benefited from a low dollar relative to the U.S. currency, but our resource industry -- Alberta bitumen in particular -- has driven up the loonie's value.

Foreign investment is pouring into northern Alberta -- hundreds of billions of dollars.

"By definition, it requires oil companies to buy Canadian dollars to make those investments, and it pushes up the value of the currency," Demarin says. "At the same time, if commodity prices remain strong on a global basis, money flows into Canada and also pushes up the value of the currency."

It's supply-and-demand economics -- only involving currency instead of goods and services. The demand for the loonie puts pressure on the supply of money and pushes up its price relative to the euro, the yen and most importantly the U.S. dollar -- the world's reserve currency.

"Obviously, for Eastern Canada, which is generally the heart of our manufacturing industries, this causes pricing pressures," he says. "It's also the part of the country that doesn't have the same growth advantages economically as Western Canada."

Manufacturing is largely tied to U.S. consumers, who aren't snapping up goods as they once were, whereas Western Canada's economy is increasingly focused on China, which despite its blemishes, is still growing rapidly.

But while the "Dutch disease" analogy applies in some respects, Demarin says Canada is much more diverse economically than the Netherlands was, and most manufacturers here adjusted to the higher dollar years ago.

"If you can't make money without a weak currency, then you're going to have to relocate your business," he says. "Gildan Activewear moved its business to Honduras as an example."

For investors, Canada's resource sector's success is generally good news. Many large energy firms, for instance, are the stalwarts of many a Canadian's investment portfolio. Even our banks are beneficiaries of the petrocurrency, Demarin says. Their assets -- much of which is held in Canadian dollars -- increase in value, too. They also make a lot of money by financing resource growth, and you only need look at their strong recent earnings as proof.

As consumers, we also benefit.

Canada imports almost as much as we export, and most of the imports are manufactured goods and services.

"It reduces what we call import inflation," he says, adding it's also good for some businesses. "Companies that want to get more efficient need to buy equipment from primarily U.S. companies -- Microsoft and Cisco, for instance -- and can buy these items more cheaply."

But when it comes to the employment outlook, the West looks the best. Alberta and Saskatchewan will likely continue to lead the nation in labour-market growth, according to a recent Conference Board of Canada forecast.

As a result, Canadians in other provinces -- Manitoba included -- may be looking to make a geographical career move.

Those who do ponder such a move have important financial considerations to mull over besides salary, says Myron Knodel, director of tax and estate planning at Investors Group.

"The big one is housing," he says. Chances are if you're moving west, housing costs will increase.

"You may realize a loss on the sale here, so as a tax-planning point, if your future employer is willing, they could compensate you up to $15,000 and that would not be considered a taxable benefit to you."

Yet housing costs in Alberta and Saskatchewan are not as expensive as you might think. A recent RBC study found the cost of carrying a mortgage in Calgary, Edmonton, Saskatoon and Regina is about 30 per cent or less of household income. Winnipeg is in the mid-20s. Toronto is above 40 per cent, except for condos in the mid-20s. And Vancouver is the highest, with detached homes hitting 80 per cent and condo mortgage costs about 40 per cent of income.

These figures are based on pre-tax income, and taxes are lower in Alberta and Saskatchewan than here. For instance, Knodel says, Alberta's provincial income tax tops out at 10 per cent for the highest earners, and there's no PST.

Still, he says, non-financial factors often play as much of a role in the final decision.

"What impact will this have on the family?"

After all, life can be pretty sweet here: short commutes, cottage country, Jets-mania and that generally "friendly" Manitoba atmosphere.

"Those are things you can't put a dollar figure on, but you obviously can't ignore them either when considering a move," he says.

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Projected growth by province

A recent report by the Conference Board of Canada, an economic research group, predicts Alberta will lead Canada in growth in the coming year, but Manitoba will be no slouch either. Its economy is projected to grow 2.9 per cent in 2012 and 2013, led by mining and agriculture. That's the same as Saskatchewan, which grew by 4.8 per cent last year, but an expected pull-back in potash should cool things down. Alberta's economy is expected to grow at about 3.8 per cent and 3.7 per cent this year and next. B.C.'s economy is forecast to grow by 2.4 per cent this year and 3.4 per cent in 2013. In contrast, provinces east of Manitoba are expecting growth at less than two per cent in the next two years, with the exception of Ontario for this year, forecast at 2.3 per cent growth.

Tips for making the move

Investors Group's Myron Knodel says people moving to a new job in another province or even within Manitoba can take advantage of some potential tax-saving deductions:

-- If you're selling your home at a loss and are compensated for it by your new employer, up to $15,000 of that compensation isn't a taxable benefit. But if you aren't compensated, you can't claim the loss on the sale as a tax deduction.

-- You could be paying a higher price tag for a home. That means a higher mortgage, so it's important to create a rough budget on how that might affect cash flow.

-- Consider holding onto your current home, if possible, and renting it out to cover costs. "The costs related to that, including mortgage interest, would now be deductible against your rental income," he says. "And if you can carry two mortgages, sometimes that is a backstop people will put in place just in case the move isn't what they really want over the long term."

-- Keep in mind, if you move to a different province you'll be subject to different taxation rates. "Under our tax system, the province that you are registered in at Dec. 31 is the province that you will be subject to tax in for the entire year, assuming you are an employee and not a self-employed person." The catch is you need to establish residence before the end of the year. The tax savings can be substantial. For people earning at the top marginal rate in Manitoba and who then move to Alberta and earn the same amount, they could save more than seven per cent of their income in provincial taxes for income earned above $67,000. The highest marginal rate in Alberta for provincial tax is 10 per cent. It's 17.4 per cent in Manitoba.

-- If your new employer covers your moving expenses, those are not taxable benefits. If your new boss doesn't do that, many of those costs will be deductible expenses against your taxable income. They can be claimed for either the tax year you move or the following year. Among the deductible expenses are transportation and storage costs (such as packing, hauling, movers, in-transit storage and insurance) and travel expenses (vehicle expenses, meals and accommodation for you and your family). See CRA's Information about Moving Expenses handout for more detail.

Migration patterns

Statistics Canada data on interprovincial migration for 2009-2010, the most recent figures, reveal 2,893 Manitobans moved to Saskatchewan and 4,883 moved to Alberta. In contrast, 2,047 Saskatchewanians moved to Manitoba and 4,850 Albertans moved to Manitoba.

Republished from the Winnipeg Free Press print edition

 Original Article Here