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Demand for resources, and not just oil, is swooning as China’s economy slows. Manufacturing, expected to bounce back in response, is instead going sideways. Pulling things out of the ground and hammering steel have been pillars of Canada’s economy for at least a generation. But those sectors are either increasingly vulnerable to swings in global demand or finding themselves in structural decline.
Ahead of The Globe’s leader’s debate on Sept. 17, we spoke to economists and public policy gurus to come up with 15 smart ideas – some weighty, some wishful – that wring as much as possible out of the old economy and help a new economy flourish.
1. Federal government could fund apprenticeships for the tech sector.
London, Ont., is no Palo Alto. But in the seemingly unending worldwide quest to become the next Silicon Valley, the rustbelt city is looking surprisingly frisky.
Mike Moffatt – an assistant professor of business, economics, and public policy at the University of Western Ontario’s Ivey Business School spends a lot of time talking to people in London’s nascent tech sector. One of their gripes is a shortage of skilled workers: In March, there were reportedly about 1,000 job openings across London’s more than 300 tech companies.
Mr. Moffatt thinks government-sponsored tech apprenticeships could be part of the solution. Typically associated with the trades, apprenticeships would let brainy but inexperienced university students get hands-on experience making apps or solving coding glitches, while helping to plug the startups’ skills deficit.
2. Federal government could invest in sexy infrastructure like transit to make cities more livable for techies.
The tech skills shortage can’t only be chalked up to lack of training at universities. Canadian schools are churning out plenty of brilliant engineers and developers – many of whom promptly decamp to California’s Bay Area.
Stopping the brain drain is no mean task: San Francisco has great weather, ocean views, and a rich cultural fabric, not to mention all the best tech companies. But some, like Mr. Moffatt, think Canadian cities can fight back by investing in urban infrastructure, particularly transit.
Toronto’s recently unveiled renovation of the Queens Quay waterfront strip was pitched in just these terms: our cities are constantly trying to woo the kinds of clever workers who could find a job anywhere. Better put our best foot forward.
3. Reduce gridlock to make it easier for manufacturers like Cadbury in downtown Toronto to get their products to market.
To paraphrase Mark Twain: reports of Canadian manufacturing’s death have been greatly exaggerated. While it accounts for 1.7 million jobs and about 10 per cent of Canada’s GDP, the sector may be in chronic decline, but it’s still an important part of the economy.
Mr. Moffatt thinks we need to do more to help manufacturers get their products to market. That means reducing gridlock.
GTA factories, like Toronto’s Cadbury chocolate plant or Oshawa’s GM plant, suffer from particularly acute traffic woes. Road tolls, new highways, and better transit could all help unclog the commercial arteries of Canada’s biggest city.
4. Reduce border wait times.
Our border with the U.S., Canada’s biggest trading partner by far, has gotten “thicker” since Sept. 11, 2001, as security measures increase wait times, and make them less predictable.
That’s bad for exporters. “It’s something that manufacturers talk about constantly,” Mr. Moffatt said. “You never quite know how long it’s going to take to get a shipment across the border.”
Convincing the Americans to weaken border protections is a tall order, but diplomatic nagging could save Canadian businesses gobs of money.
5. Notice the world getting slicker? That’s because businesses are learning to take design seriously. If the success of Apple can teach the business world anything, it is surely that beauty matters.
BlackBerry may have gleaned that lesson too late, but other Canadian firms need not. Kevin Milligan, an associate professor at UBC’s Vancouver School of Economics (and occasional Liberal adviser), said that schools might teach the kinds of creative visual skills that inspire young techies to design the next iPhone.
After all, one of the world’s design seers is Canadian: Tyler Brûlé, founder of the magazines Monocle and Wallpaper, is the son of a CFL player.
6. Morels! They may not be an economic cure-all, but they taste great in an omelette. Morels, a coveted kind of mushroom, grow on forest floors and flourish the year after a big fire. With wildfires expected to become more common in the Canadian West, the morel harvests could be rich. The fungus sells for about $61a kilo when dried.
The very source of their profusion can make them hard to harvest: last year, an estimated $40-million worth of morels sprouted up in the wake of a bad forest fire in northern California, but the public was banned from gathering them because the flame-ravaged trees risked crushing mushroom hunters.
But the risk doesn’t dissuade everyone. Hundreds of morel fiends flocked to the Yukon in pursuit of a bumper crop in the territory last summer.
7. Offshore wind.
It’s close to the antithesis of oil sands extraction, which may be why Canada lags so far behind Europe on putting turbines offshore. Cheaper electricity prices have also put the brakes on wind power expansion here.
But there are signs that this energy segment has promise. The British-based firm GlobalData expects the industry to grow by an average of 30 per cent a year until 2020.
Meanwhile, Beothuk Energy Inc., a St. John’s-based company, has plans for a $400-million wind farm off the western coast of Newfoundland. As the world moves away from carbon-based energy, others might be wise to follow Beothuk out to sea.
8. Goose drones.
Drones can kill terrorists and deliver hardcover books, but a Canadian entrepreneur may have found a more useful métier for pilot-less aircraft: warding off Canada geese.
Steve Wambolt, an Ottawa-area photographer, has pioneered what he calls the Goosebuster, a six-rotor drone, 66 cm wide, that has successfully cleared the birds and their poop from Petrie Island, a park in the area.
Evoking American helicopters playing “Flight of the Valkyries” in Apocalypse Now, Wambolt’s drones are mounted with speakers blasting the calls of predator birds like eagles and hawks. He’s now trying to sell Ottawa City Council on the idea, though there’s been some resistance from those who are uncomfortable going to war with a Canadian icon.
9. A sovereign wealth fund for oil.
Norway has one; so does Angola. Rich and poor nations alike have clued in: sovereign wealth funds for natural resource wealth are a good idea. They temper the booms and busts of volatile commodity prices, they provide a measure of intergenerational equality, and they keep countries from succumbing to “Dutch disease,” where resource jackpots weaken the overall economy.
Some provinces have made meagre efforts towards creating such funds. Alberta’s, set up with promise in the mid-70s, has been neglected and raided for decades.
But in a February paper for the Macdonald-Laurier Institute, Greg Poelzer suggests something more radical: a federal sovereign wealth fund drawing on income tax from the mining sector, including the oil patch. The recent chaos wrought on the national economy by falling oil prices suggests he may be on to something.
10. Stem cell research.
Stem cell research was invented in 1960s Toronto. So, some researchers have asked, why not make Canada a “magnet” for such research today?
It’s a good question. The field is poised for growth. Stem cells can give rise to other cell types, helping to regenerate damaged body parts and organs. Researchers appear to be getting a handle on how to put this awesome knowledge to work.
The federal government has hinted that it sees the potential – in July, Ottawa bestowed scientists from the University of Toronto with a $114-million grant spread over seven years largely to conduct stem cell research.
But more can be done. In 2004, the state of California, with its Canada-sized population, committed $3-billion to the study of stem cells.
11. Invest in aerospace.
Canadian manufacturing is mostly associated in the public mind with cars, and with bad news. Which may be why Thomas Mulcair is trying to train sights on the country’s aerospace industry, this week pledging to hand it $160-million over four years.
It’s not that Canada’s 700 aerospace companies need help, especially. They rank third in the world in civil aircraft production. Annual revenues were at more than $25-billion in 2013. The industry directly employs about 70,000 workers.
But in contrast with the sclerotic automotive sector, aerospace is relatively high-tech and modern, devoting 20 per cent of its activity to research and development, according to a recent federal government report. That combination of old-school solidity and new-age innovation makes it an understandable target for doting politicians.
12. Tourism from China.
By the end of the year, China will probably become the second-biggest source of foreign visitors to Canada, leap-frogging Britain. A total of 107,351 Chinese visited Canada from January to April alone, up 20 per cent from last year.
But Canada is still taking a tiny slice of the Chinese tourist pie, which comprised 117 million trips abroad last year. That’s a lot of hotel rooms and CN Tower snow globes.
We could be doing more to promote ourselves in the Middle Kingdom. In May, the federal government committed to building on our tourism strengths, like the Calgary Stampede and Japanese visits to Prince Edward Island (they’re crazy for Anne of Green Gables). Perhaps we should redirect those efforts to an ad campaign in Beijing for the autumn leaves.
13. Better aboriginal education.
A well-educated population is the sine qua non of a successful modern economy. So it’s not only a humanitarian disaster, but an economic one, that Canada’s aboriginal population has such low educational attainment.
Fifty-eight per cent of First Nations people aged 20-24 living on reserves have dropped out of high school, according to the 2011 National Household Survey.
A big part of the problem, says Don Drummond, former chief economist for TD Bank, is underfunded aboriginal schools. His 2013 analysis of the issue showed the funding gap between federal aboriginal schools and public schools in Ontario was as much as $8,000 per student.
“That’s a brilliant idea, right?” he said acidly.
14. Video games.
By one estimate, Canada has the world’s biggest video gaming industry per capita. It employs 16,500 people, according to an industry group, with hubs from Burnaby, B.C., to Montreal. In hip Toronto bars, it’s possible to eavesdrop on gamer geeks plotting out the next Zelda, with talk of princesses and pots of gold.
How did we get here? Freebies, largely. Starting in Quebec, Canadian provinces have been luring video game firms with boutique tax breaks and special digital media funds. In 2014, the Ontario government doled out 23 grants worth $150,000 to gaming companies.
Cash handouts may not be the most efficient way to develop local industries, but it’s hard to argue with thousands of well-paid jobs in a growing sector.
15. Legalize marijuana.
When the sale of recreational marijuana became legal in Colorado on January 1, 2014, it unleashed an entrepreneurial free-for-all. Brownies, pain patches, medical strains called Gorilla Glue #4: weed products of every description were suddenly available for anyone 21 or older.
Naturally, the pot boom is big business. The Washington Post estimates that the industry was worth $700-million (U.S.) in 2014.
In Canada, with about six times the population of the Rocky Mountain state, it would be even bigger. Canadians love weed – we’re among the world’s biggest consumers of the drug. The Liberals favour legalization, though not primarily to spur the economy. They, and the other federal parties, should visit Colorado.
Editor's Note: An earlier version of this article incorrectly alluded to 19 ideas. This has been corrected.Report Typo/Error