Countdown to tomorrow
Finance Minister Jim Flaherty is worried about balancing the federal budget by 2015, and rightly so, that’s his job. But whose job is it to focus on fixing the economy for the future? Who has a vision of the country as a whole place, one where the economy is not so focused on natural resources as our only saviour? No one, as far as I can see. No politician, no business leader, no economist.
Here’s the thing. Canada’s problem at the moment is that much of our oil production is of the wrong variety. Our oil is heavy, requires more refining to turn into useful products, and therefore commands a lower price. That lower price results in lower revenues for governments, which means program cuts, and increased debt.
The answer, of course, is to reduce our reliance on natural resources. That message was first delivered in 1985 by the Macdonald Royal Commission. In its brief to the Commission, the Mining Association of Canada warned that new mines under development in Canada contained lower grades of ore than those of competitors in South America and the developing world. The mining industry responded by buying properties abroad and exploring around the globe. The rest of us just sat back and watched.
We’ve watched as manufacturing fell from 20 per cent of the economy to almost 10 per cent taking hundreds of thousands of jobs along with it. We’ve watched while foreign firms bought up entire sectors – steel, nickel, beer, and others – by making commitments they did not keep. We’ve watched as financial services consolidated in Canada and spread to the United States, exporting more jobs. We’ve watched as innovation and productivity gains fell behind our competitors.
No less than a cultural revolution is required. Graduates from universities and community colleges need to start their own businesses; student loan forgiveness could drive that change. Seasonal workers need to rely less on employment insurance and move to where the jobs are; five years of of government largesse should be the maximum for any individual. Innovative technology companies need help finding funding; investment vehicles such as flow-through shares could easily be used in sectors other than resources. And let’s stop giving away public money for job creation that is difficult to confirm; tax incentives for productivity gains would be easier to measure.
The ripple effect of these and other long-term concepts would have positive consequences for every Canadian. If all we’re going to do is balance the books, this country will turn into a Dickensian counting house, out of date and out of business.