The organic way that Kitchener-Waterloo has grown around the University of Waterloo and Research In Motion Ltd. helps explain why most everyone agrees that quick fixes will prove quixotic. But even the longer-term ones will prove beyond Ontario’s reach if it’s not able to get beyond custodianship and stewardship, and start looking toward innovation and entrepreneurialism; to growth rather than preservation.
There are ways for business, government and the broader public sector to work together on those fronts – from venture capital, to a greater use of diasporas to connect with emerging markets such as China and India, to greater specialization among universities (of the sort that was so pivotal to Kitchener-Waterloo’s success). But it will require leadership – a willingness to confront the economic disease that is driving Mr. Drummond’s calls for cost cutting, rather than just treat the symptoms.
One component of Mr. Drummond’s report that caught Mr. McGuinty’s eye, according to a source, was the chapter that calls for government to “rethink and reset its business support programs.”
Among the recommendations is to start from scratch on the $3.6-billion it provides businesses in direct subsidies and tax expenditures, scrapping the ones that don’t show results.
It would be a bold sign of a willingness to do things differently. But what the new way of doing them would be is a conversation that’s only just starting.
SECTORS OF STRENGTH
Canada’s financial services sector is a world leader whose reputation was burnished by the sector’s strong performance during the global financial crisis of 2008. But there is still plenty of room to boost its contribution to Ontario’s GDP.
“There is the ability to continue to promote that, and promote the importing of jobs from around the world to Ontario,” said Jim Leech, head of the Ontario Teachers’ Pension Plan.
The opportunity to do so is rising as banks and insurers in Europe and the U.S. retreat, making employees and business available. “There are companies out there that are looking at moving operations, they are not happy in London and New York and other locations,” said Janet Ecker, former Ontario finance minister and president of the Toronto Financial Services Alliance.
Don Drummond, as co-chair of the Toronto Financial Services Working Group, signed off on a report in 2009 that set a goal of making Toronto one of the two leading financial clusters in North America, and one of the top 10 global hubs for the sector. (Roughly one-third of Canada’s financial services employees are concentrated in the Toronto area.)
The report, by Boston Consulting Group, identified opportunities to create 25,000 to 40,000 new jobs and add $4.5-billion to annual GDP within five years. Those included establishing Canada as a leading centre for mining, metals and energy financing – an area that already accounts for about 7,000 jobs including investment bankers, analysts, trader and lenders – and for retirement financing.
One of the next steps to support the financial services industry is identifying what infrastructure and other supports it could use, Ms. Ecker said. “For example, Porter Airlines is wonderful infrastructure support for the financial services cluster in downtown Toronto, because you’re an hour or an hour and a half to all of the other major American financial cities, including New York and Chicago,” Ms. Ecker said. “All of that feeds into developing and maintaining a cluster.”
Technology is one of North America’s most lucrative sectors, and for the past decade Research In Motion’s international appeal helped brand Ontario as a major tech hub. The BlackBerry maker’s magnificent growth helped foster a vibrant tech community in the Kitchener-Waterloo area, about an hour northwest of Toronto, and the University of Waterloo became known for churning out highly-sought-after computer science grads.
That ecosystem is now at risk as RIM restructures. For years, tech grads had reason to stay in Ontario, but if the community withers, more could flock to Silicon Valley.
To support the sector, the provincial government helped fund innovation hubs such as the MaRS Discovery District in Toronto. The idea: Put computer programmers, genetic researchers and business minds under one roof and they’ll create magic.