Ed Clark is business adviser to the Premier of Ontario.
Ontario has plenty of strengths. We have maintained our public-health and education systems. We have built an open, tolerant society able to attract and harmoniously absorb immigrants. We have built a world-competitive tax system.
Recently, the province has taken bold steps to address Ontario's infrastructure deficit, and it continues to invest heavily in supports to create centres for excellence in new technologies.
But when we look at the rest of the world, I worry that we are not changing fast enough.
Ontario's economy is ranked 13th in the world by the World Economic Forum – not bad. But there are 12 jurisdictions ahead of us, and others are moving up fast. And in some of the areas that will be key to our future, we are actually ranked far lower. How can we strengthen our existing economy? We should be focusing on some immediate shifts.
Start with manufacturing. The loonie is under 80 cents again, which is helpful. But we can't relax – we should seize the moment to prepare for the future.
We have to find ways to become a leader in "smart" or advanced manufacturing and innovation – as we are starting to do in auto parts, chemicals, clean tech, medical devices and aerospace.
We have an incredible work force, and our universities and colleges are among the world's finest. But our small businesses do less scaling up and less exporting than those elsewhere. We need to customize export-support programs to deal with their unique challenges.
Meanwhile, despite generous tax incentives, many businesses are failing to invest in and capitalize on the innovation revolution. And too many homegrown entrepreneurs are bailing out early rather than pushing their promising firms to the next level. Why?
And what about our regulatory burdens? As they grow, so does red tape. Government must try to become a source of competitive advantage. To this end, it's time to take an outcome-based approach based on three tests: What outcomes do we want? Must we regulate to achieve them? And is there a better way that imposes lower costs, or that allows more innovation and growth, while achieving those outcomes?
Improving what we have isn't enough. To create jobs and income, we must also pivot to a knowledge-based, service-export economy. A shift in mindset is required.
I mentioned Ontario's amazing academic and training institutions. We should challenge them. For instance, are we graduating students connected to the economy of the future? Are we doing enough to cultivate an entrepreneurial class? Should we have more co-op programs?
Along with our public education system, our universal public health is essential to ensuring both a fair society and a growing economy. What's more, we have incredible hospitals at the forefront of health research. But are they a source of competitive advantage? How can we better use them?
I say open them up, link them more closely to the private sector, turn them into exporters. Do it without risking their core mission of looking after the health needs of the citizens of Ontario.
Look at Boston. As a health hub and university centre for all of the United States, Boston provides the best care and education to the citizens of Massachusetts, while generating thousands of good jobs. What's stopping Toronto? Yes, we have to manage our public institutions' costs, but we have to find ways to unlock their potential.
Another shift: We need to compete in spaces where people are paid more, not less. We can't beat Mexico or even the United States for low-wage work. We should focus on areas where Ontarians are more affordable than others – advanced manufacturing, health, universities, consulting, high-end business service centres, research departments.
We must also put our huge innovation base to work.
Ottawa, Kitchener-Waterloo and Toronto put Ontario in the top league for innovation. But there are 300,000 Canadians in Silicon Valley, their educations largely paid for by Canadian taxpayers. We must create opportunities so they stay here, to our benefit.
Three issues stand out:
One, transport links between Kitchener-Waterloo and Toronto. They are deficient, to put it diplomatically.
Two, financing. In Canada, as you grow, you run out of money. We have not built the ecosystem that allows firms to finance a significant scale-up, so they sell out. How do we build that ecosystem?
Finally, we have to make our innovators better at selling, at penetrating markets. The key in the innovation economy is to quickly achieve market dominance. We sit beside the largest market in the world, but our small innovative firms don't take full advantage.
Ontario cannot be Silicon Valley. But as Silicon Valley finds its cost structure climbing, we can be the next-best alternative, a magnet for jobs and opportunity.
Another big shift is to stop thinking of exports as just goods. Why don't New York financial firms move key analytical and compliance functions to Toronto? What stops firms from locating research centres in Ontario? Why aren't we the best place for mining research? Why don't major accounting and consulting firms base more work here? Let's also look at immigration policy. Especially now, in a global economy, it must be a source of competitive advantage, not a barrier.
Finally, we need an attitude shift. Our major competitors back winners – companies, ideas, universities or hospitals. Our instinct is to help every player equally. But failing to reward outcomes dooms you to run behind.
In coming months, we will be reaching out to the business community for a dialogue on these issues. We need concrete, specific ideas that are doable and can make a difference.
We also need business to look inward and ask: Given our dependence on a successful Ontario, don't we have an obligation to do something differently? And if so, what?
If we don't make these shifts, we risk not building a sustainable economy for our children, an economy where the average citizen becomes better off. This is not a test of our ingenuity or ability; it's a test of our will.
This op-ed is adapted from a speech Mr. Clark delivered Thursday to the Toronto Region Board of Trade.