Personal Finance Blog Interviews ING Direct Canada CEO, Peter Aceto

ING Direct Canada recently launched its free chequing account, called a THRiVE Chequing. ING Direct pioneered online banking across the globe and made high-interest savings account well-known in Canada. I have just posted an interview with the CEO of ING Direct Canada on my other website, Canada Personal Finance Blog – A Dawn Journal. 

Today, let me take you to my other site for this interview:

An Interview With The CEO Of ING Direct Canada – Peter Aceto

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Employment Insurance

When something bad happens, employment-wise speaking, there is often the worry of how you are going to pay your bills. Thankfully, in Canada, there is something called Employment Insurance, which is there to help you when you need help after losing your jobs.

Employment Insurance has not always been the name of the program. Until 1996, it was called Unemployment Insurance. However, it was changed to Employment Insurance because of the negative connotations associated with the word unemployment. Canadians who work within the country pay 1.73 percent of their earnings in return for benefits if they lose their job. There used to be a government contribution to the program but that was stopped in 1990.

Depending on how long you were at your previous job, the amount you receive for employment insurance and how long you get employment insurance will vary. Your employer will contribute 1.4 times the value of the premium you pay.

The amount of employment insurance paid out around Canada varies by the region. Roughly half of all employment insurance premiums are paid out to individuals in Ontario and the Western Provinces. However, employment insurance is very important in the Atlantic Provinces where there are many season workers who work in fishing, tourism and forestry. During the winter there is no work, so those who work in seasonal industries need something to help pay the bills until their work season begins again. To help with this, employment insurance has special rules for those who fish for a living.

Employment insurance will also pay for things like parental leave, maternity leave, and compassionate care leave and illness coverage.

Employment insurance first came about during the Great Depression in 1935. The odd thing was that the Supreme Court of Canada ended it because it was deemed unconstitutional. The constitution was amended so that employment insurance could fall under federal, and not provincial, leadership. The first system then came into being in 1940 and Canada was the last major western country to implement a system of employment insurance.

Changes to the system came about in 1971 under Prime Minister Pierre Trudeau when he made it easier to get. Under the new system, only needed to work for 10 weeks to get benefits for 42 weeks. At this time, the program was also opened up for sickness and maternity leave, which would run for 15 weeks.

However, from 1971 to 1990, the government slowly reduced its contributions until it was no longer contributing. The employment insurance system was then cut back on in 1990, 1993, 1994 and 1996 by the ruling governments, increasing the time someone had to work in a seasonal job until they could earn money. In 2001, the federal government increased parental leave from 10 to 35 weeks and gave workers employment insurance for compassionate care leave.

Currently, the system costs the country $22.7 billion per year.

No matter the cost, it is an important thing for individuals who need help after they have lost their job, suffered a death in the family, or are welcoming a new member to the family.

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Housing Bubble Possible In Canada

Experts have been warning about it for some time now, and it looks like they may have been right. Many were applauding how strong the housing market in places like Toronto and Vancouver was in 2009, with record growth in many areas, but it turns out that the growth may have come at a price. Many experts and economists are calling the current housing situation a perfect storm to create a housing bubble, which could cause the market to crash just as soon as it has risen up so quickly.

According to the Canadian Centre for Policy Alternatives, for the first time in 30 years, housing prices have risen faster than historic comfort levels in most of the major cities in Canada, including Toronto, Edmonton, Vancouver, Montreal, Ottawa and Calgary. This, according to experts, is a tell-tale sign that a housing bubble is coming and when it does, it could lead to a drop in price of as much as 40 percent in property values.

Housing bubbles are not common to Canada since Canada has different regulations and rules in place. Canada did not allow sub-prime lending to the degree seen in the United States, so Canada was spared the full brunt of the collapse as was seen south of the border. However, the report says that seeing a big rise in housing prices, so quickly, in so many cities, is a sign that there is an accident just waiting to happen.

Over the past year, housing prices have been at about $150,000 to $220,000 but they have suddenly jumped to over $300,000, which has many worried.

The biggest housing markets in Canada are not stable right now, especially after the increase in housing prices that was seen from 2002 to 2007.

In the past, housing prices tended to be about three to four times the provincial median income, but currently housing prices are as much as 11 times higher than the average median income. That is much more than most can afford, which leads to failed mortgage payments and individuals falling behind until they suffer foreclosure.

What cities are going to be hurt the most? According to the Centre for Policy Alternatives, Edmonton and Montreal will suffer the biggest hit in terms of percentage lost, losing 38 and 34 percent respectively. They are expected to lose this amount within three years.

Vancouver is going to suffer the worst fall in terms of dollars, losing $200,000 from the average home. That means homes worth $350,000 now could be worth $150,000 within only a couple years.

In the past, there have been three housing bubbles bursting. Two have happened in Vancouver, where the highest home prices are, and once in Toronto. This housing bubble burst could be the worst of all, with six different cities suffering a housing bubble.

For those who do not have a home and are looking to buy, it could be a buyer’s market very soon. For those who sell houses, the next few years are going to be tough ones indeed. For the economy of Canada, things may be getting worse before they get any better.

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