Pensions investing in daycares, Netflix passwords and high grocery prices: Must-read business and investing stories

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Getting caught up on a week that got away? Here’s your weekly digest of The Globe’s most essential business and investing stories, with insights and analysis from the pros, stock tips, portfolio strategies and more.

Pensions are investing in daycares, hoping for big payouts

Private equity firms and pension funds are showing a growing interest in the daycare industry since the federal government announced a $30-billion child-care plan in its 2021 budget. It’s a trend that child-care experts say could cause problems unless strict cost-control measures are introduced, write Dave McGinn and Chris Hannay. There was already some institutional investment in the sector – most prominently by global giant Busy Bees, which is majority-owned by the Ontario Teachers’ Pension Plan – but operators say interest has continued to grow. In Toronto, a rapidly expanding daycare chain that bought an independent facility managed to drive away most of its employees and many families within weeks – just one example of the potential pitfalls. One Toronto daycare operator said she is personally aware of at least 15 other daycares in Ontario who have received unsolicited expressions of interest from buyers recently. She’s skeptical of the potential for big payoffs from owning daycare centres because government-mandated staff-to-children ratios mean labour costs will always be significant, which makes it hard to benefit from economies of scale.

Who’s to blame for high grocery prices?

As food inflation remains high, Canada’s largest grocer, Loblaw, is stepping up its public-relations strategy to convince people that it is not to blame for higher prices. But experts say consumers grappling with food affordability are in no mood to hear that message. As Susan Krashinsky Robertson reports, on the day that its 11-week price freeze on No Name products ended on Tuesday, Loblaw was on Twitter responding to people who criticized the company for profiting off inflation, explaining that price increases were the fault of suppliers who had themselves raised prices. But the defensive tone didn’t sit well with many, and is emblematic of a larger communications challenge facing Canada’s grocery retailers, who have reported significant increases in both sales and profits amid inflation. Meanwhile, snack food giant Frito-Lay has once again hiked prices at some grocery stores in the country.

Limited supply isn’t the reason for high housing demand

Are Canada’s high home prices simply the result of a supply and demand issue? A new report from Stephen Brown, an economist at Capital Economics, says no. While Canada has trailed countries like Australia, the United States and England in home construction over the past 20 years when population growth is taken into account, international home price changes bear little relation to homebuilding. Instead, the three periods in that time that saw the sharpest price surges in Canada (2002 to 2007, 2016 to 2018 and during the pandemic) were preceded by the largest increases in the number of housing units per capita. Jason Kirby takes a closer look in this week’s Decoder.

Housing units per capita and house prices

Left scale: Annual percentage change in housing units per capita

Right scale: Annual percentage change in house prices

30%

0.8%

0.6

20

0.4

0.2

10

0.0

0

-0.2

-0.4

-10

-0.6

‘93

‘98

‘03

‘08

‘13

‘18

‘22

THE GLOBE AND MAIL, SOURCE: CAPITAL ECONOMICS

CALCULATIONS BASED ON DATA FROM REFINITIV

AND OECD

Housing units per capita and house prices

Left scale: Annual percentage change in housing units per capita

Right scale: Annual percentage change in house prices

30%

0.8%

0.6

20

0.4

0.2

10

0.0

0

-0.2

-0.4

-10

-0.6

‘93

‘98

‘03

‘08

‘13

‘18

‘22

THE GLOBE AND MAIL, SOURCE: CAPITAL ECONOMICS

CALCULATIONS BASED ON DATA FROM REFINITIV AND OECD

Housing units per capita and house prices

Left scale: Annual percentage change in housing units per capita

Right scale: Annual percentage change in house prices

30%

0.8%

0.6

20

0.4

0.2

10

0.0

0

-0.2

-0.4

-10

-0.6

1993

1998

2003

2008

2013

2018

2022

THE GLOBE AND MAIL, SOURCE: CAPITAL ECONOMICS CALCULATIONS BASED ON DATA FROM REFINITIV AND OECD

Netflix tries to stop password sharing

Netflix is attempting to crack down on password sharing with newly released guidelines, Mathilde Augustin reports. The company, which has 230 million subscribers globally, said last year that more than 100 million households were sharing accounts. New anti-password sharing features will be enforced through IP addresses, device IDs and account activity. Users can also expect to verify devices being used outside of their households, meaning users accessing Netflix through shared passwords may be locked out unless the account holder is able to verify their login on a regular basis. These changes come as Netflix tries to maintain its share of an increasingly crowded market where competitors such as Amazon Prime Video and Disney+ seize growing shares of audiences.

Canada’s transportation regulator doesn’t track most air passenger claims

There’s more bad news for Canada’s airline industry. After a holiday season that saw many flights delayed or cancelled, luggage lost and vacations dashed, the Canadian Transportation Agency has admitted it does not keep track of the outcomes of the vast majority of the air passenger complaints it receives, leaving no indication of how many are resolved in favour of the customer – and what compensation, if any, was issued. As Erica Alini reports, the CTA told Parliament that it relies on informal means to resolve 97 per cent of the complaints it handles. The remaining 3 per cent of cases are decided through formal processes, mainly adjudication. The lack of information makes it impossible to know how often air passengers with legitimate complaints are having their rights upheld. This news comes on the heels of fresh scrutiny of to airlines’ long-standing but controversial practice of disposing of luggage deemed lost.

A benchmark for your finances

How do your savings and investments stack up against your peers? We want to know and we promise to keep your answers anonymous. The Globe’s personal finance team is building an online tool that shows people in various age groups how the amount they owe – on mortgages, credit lines, student loans and more – compares with others in their age group. We previously asked readers to tell us how much debt they carried, and how much they had invested. Now, we want to refine the investing data by asking readers to tell us about their investments and savings on an individual basis, and not per household. Our questionnaire is totally anonymous – it requires neither your name nor your e-mail address. Just tell us your age and the balance in your TFSA, RRSP, non-registered account (if applicable) and cash savings.

Ready to get your finances in shape?

MoneySmart Bootcamp is a 5-part newsletter course to improve your personal finance skills, including budgeting, borrowing and investing. Taking the course? Tag us on Twitter (@globeandmail) using the hashtag #MoneySmartBootcamp.

Sign up for MoneySmart Bootcamp: If you want to improve your financial fitness, The Globe’s MoneySmart Bootcamp newsletter course is for you. This new five-part course written by personal finance reporter Erica Alini will improve your personal finance skills, including budgeting, borrowing and investing. Subscribe to the MoneySmart Bootcamp and you’ll receive an e-mail a week to work a different financial muscle. Lessons will land in your inbox Wednesday afternoons.

Now that you’re all caught up, prepare for the week ahead with The Globe’s investing calendar.