Anne McLellan and Lisa Raitt: Canada needs to get its act together on growth

Special to Financial Post

Tue, January 17, 2023 at 11:33 a.m. EST·3 min read

Toronto's Financial District As Stock Market Bloodbath Kept At Bay In Canada With Gold Rally
Toronto’s Financial District As Stock Market Bloodbath Kept At Bay In Canada With Gold Rally

Canada’s economy has a lot going for it right now.

We are a human resource powerhouse and our openness to immigration also makes us one of the fastest-growing populations among advanced economies. Our natural resource wealth is acting as a buffer against the worst of global supply chain disruptions and higher commodity prices. Canada is also fortunate to share a very long border with the world’s largest and most dynamic economy, even if the relationship can sometimes seem challenging.

Despite all these advantages, our economic performance has been middling, with growth averaging just 1.7 per cent annually over the past decade.

On a per capita basis, which we believe is a better measure of living standards, we are laggards. Canada’s real output per person has increased by just four per cent over the past decade, which is half Australia’s per-capita growth and one-third that of the United States.

The Coalition for a Better Future, which we co-chair, believes any growth agenda needs to be inclusive and environmentally sustainable in order to be viable. At the same time, growth is a necessary precondition for rising worker incomes, more social equity, a cleaner environment and a better quality of life.

To our coalition, which represents 142 member organizations and includes a diverse group of leaders from business, labour and civil society, our sluggish growth record is a threat to our long-term prosperity.

We know there are no easy answers. The productivity issues at the heart of the problem are multi-faceted and longstanding.

But one culprit is easy to identify: anemic private-sector investment. Statistics Canada data show the real stock of business capital per worker outside of housing is about what it was a decade ago, and well below records.

Business and all orders of governments need to take ownership of the problem.

For corporate Canada, that means relying more on capital spending and training as workers become harder to find.

For governments, it means a heightened emphasis on long-term thinking — beyond the next election — and on ensuring businesses have the tools needed to meaningfully take part in Canada’s efforts towards reconciliation with Indigenous Peoples.

This should include enabling and incentivizing business to deliver on big projects in key sectors such as critical minerals, clean energy and green manufacturing, starting with providing more help to navigate complex regulatory frameworks.

The coalition will have more to say in the weeks and months ahead about the challenges our economy faces and the steps needed to make Canada more resilient to global challenges. We are launching a nationwide tour of campuses — beginning next week at the University of New Brunswick — to promote our ideals for growth that are inclusive and sustainable. And we’re keeping score by tracking 21 internationally recognized metrics. We will release the second annual edition of scorecard numbers on March 7.

But our message will include a plea for decisive action, with a great sense of urgency.

Borrowing costs are rising at a time when the nation is only just starting to embark on a massive investment drive to accelerate its transition to a low carbon economy.

U.S. President Joe Biden’s landmark Inflation Reduction Act, while a welcome impetus to global climate transition efforts, is already siphoning Canadian capital south of the border.

Global political fault lines are shifting at an alarming rate, requiring tactful economic diplomacy and a re-evaluation of our place in the world economy.

The next federal budget is a critical opportunity for the Trudeau government to press ahead with pro-growth policies, before the next election cycle catches up with us again. The world isn’t waiting for us.

Anne McLellan and Lisa Raitt are co-chairs of the Coalition for a Better Future, a diverse group of Canadian leaders, organizations and employers working together to develop a bold new economic and social vision for the country.

Source: Yahoo!Finance