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Justin Trudeau listens to the National Anthem prior to the Speech from the Throne on Sept. 23, 2020, in Ottawa.DAVE CHAN/AFP/Getty Images

Canada faces multiple daunting challenges – more than ever before. Two come from nature: the COVID-19 pandemic and climate change and their fallout. The Throne Speech addresses both, as well as issues such as Indigenous reconciliation, Alberta and national unity, and greater equality. But the speech glaringly does not address what to do about Canada’s third great postwar economic challenge.

Looking at “eras” and “moments in history” is a helpful way to look ahead. The first great postwar era occurred seven decades ago, with Canada’s inspiring economic recovery and expansion from 1945 to 1955. The second was the 1984-2004 Mulroney-Chrétien era that successfully delivered ever-increasing economic and financial discipline.

One central tenet of those great eras was a shared approach to fundamental challenges – the idea that social advance and economic advance go hand in hand. The trouble is that good eras are normally followed by bad ones. It is not yet clear how good or bad the current new era will be for the world or Canada. There is more than the economy to get right. But nothing will be lastingly right if Canada cannot do better in fostering a more globally competitive private sector to undergird everything else the country does.

Canada needs to do some hard thinking about where it now finds itself after the previous federal election. It will be hard to get other important challenges right if, after 15 years on the wrong economic track, Canada cannot get back on the right one. It will also need to belatedly start living within its means after 15 prepandemic years of piling up an extreme net-country debt of close to $700-billion.

The 1945-1955 recovery provides many essential lessons. The country had everyone on board to do what it needed: the right prime ministers (Mackenzie King and Louis St. Laurent got it); the right economic ministers (C.D. Howe, Doug Abbott and others); able public servants with inner conviction about what the postwar economy required (the “Ottawa men” of that era believed they were the only group who saw Canada whole and could keep it whole – a view I sometimes fought at the time, but I’d now like to have some of it back); and a supportive big business community.

The economic focus was on capital investment and resource development. And key policies supported those goals – notably the tax exemption for capital gains, which lasted until tax reform in 1972.

The second great postwar economic era was very different in nature. It came after the Pierre Trudeau years and the economic fallout from the first stage of the fight against Quebec separatism. The 1984-2004 Mulroney-Chrétien fiscal reforms were sweeping and tough, but they got Canada through the 2008–09 recession better than any other Group of Seven country – a huge advantage that Stephen Harper (mostly) and Justin Trudeau then squandered.

Today, Canada’s third great postwar economic moment is part of the biggest Western moment in history since the Renaissance. It is the first global moment in history and China’s first moment as part of the global order. Canada has always faced the same three big challenges since Confederation: national unity, the economy and the United States. It usually faces only one or two at the same time. Right now, however, it faces all three simultaneously, in addition to three more: two from nature – COVID-19 and climate change – and one from an increasingly urgent need to move down the path of reconciliation with the First Nations.

That is an enormous combination of challenges for Canada to face all at once. How we do – and the balance and pace we choose – will determine our future for a very long time. We are in a Sir John A. Macdonald moment, in the sense of having to take on a huge decade-or-two task to build what the future world demands of Canada. We won’t get everything right on all these challenges, but we must get the most important things right.

As in past great moments and eras, Canada in 2020 needs a new shared vision and new ideas and projects. We need everyone on board, just as we had after 1945. Right now, we have no one on board (except possibly Finance Minister Chrystia Freeland – she is not yet there if the Throne Speech is any guide – who is undoubtedly very able but still untested on economic policy management and on how well she gets the central importance of the private sector).

We need a Prime Minister surrounded by strong private-sector-oriented ministers and public officials, as well as a broad cross-section of top business leaders. We had such a wide-ranging consensus from 1945 until Mr. St. Laurent’s Liberal government was defeated in 1957. The world also had, but no longer has, the U.S.-led postwar shared vision, ideas and projects until the end of the 20th century.

My vision for Canada is to become the best place in the world for good people of every kind to live, earn a living and build wealth and businesses – a country where social and economic advance go hand in hand. Not everyone may agree, but, to me, Mr. Harper and Mr. Trudeau each lost some of the great postwar balance Canada achieved.

Mr. Harper was too focused on ideology and failed politically. The current Liberal government has lost much of its perceived overall competence and some of the needed policy alignment with the private sector. The Conservatives now have a new leader, but it remains to be seen whether Erin O’Toole can do better than Mr. Harper and former Tory leader Andrew Scheer on broadening the party’s electoral base.

Whichever party forms the next government, it will have to do much better with the private sector than any government since the end of the Mulroney-Chrétien era. Mr. Trudeau’s government so far has failed to find the right private-sector economic path to support its other goals. Its efforts, aside from its very real trade successes, have been too focused on the public sector to meet the severe economic challenges in a world in which Canada has never been more isolated.

Yet the current U.S. political and social turmoil, along with the Brexit-focused government in Britain and the increasing – and chosen – global isolation of the U.S., have put Canada in a strong “brain-gain” position worldwide.

The right fiscal policies would help. My key idea is not to repeat the tax-free capital gains of the 1945-55 era – as powerful as they were. It is to introduce a system of deferred tax on reinvested capital gains, as I explain in my recent book, Might Nature Be Canadian? Essays on Mutual Accommodation. Now is the perfect time for this initiative. Stock markets are near their records, so the immediate lost government revenue would not be large and could be recouped from future gains on successful new capital investments.

With large new pools of capital in place, the best people in the world would choose to come to Canada for socio-cultural and political reasons and for economic and financial ones – the best and strongest way forward in a multichallenged world.

Great leaders can see around one corner; the greatest can see around two corners. Before the Quebec separatist threat to Canadian unity emerged in the form of elected separatist members in Ottawa and Quebec, three leaders had already taken action in the 1960s: prime minister Lester Pearson, Ontario premier John Robarts and Quebec premier Daniel Johnson. Mr. Pearson brought into his cabinet three prominent and able Quebec francophone leaders (from the press, labour and academia) and launched the Royal Commission on Bilingualism and Biculturalism. Mr. Robarts and Mr. Johnson held a Confederation of Tomorrow conference.

Canada would likely benefit from a Trudeau, Ford, Legault, Horgan and Kenney conference on Canada’s Economy of Tomorrow. Canada came out of the 2008-09 financial crisis in by far the best economic and financial shape of any G7 country. But It then squandered that huge advantage. Even before the pandemic, consumer debt and net country borrowing climbed steeply. COVID-19 is now forcing an unprecedented rise in public-sector debt.

Such a conference would force the public to focus on the urgency of getting the Canadian economy back on a sustainable track. The country urgently needs political, civil service and business leaders who can see around two corners.

Canada is not at risk any time soon of creating too strong an economy that generates inflation. Its highest risk is excessive debt that brings on a currency crisis, as it did at the time of the Chrétien government’s second budget in 1995. Economic policy in a country with a public-sector debt that is too high has no choice but to encourage strong private-sector investment.

The Throne Speech is right that this is not time for austerity. But it largely fails to see that, as deficits and debt rise, the government has no choice but to get down to the serious building of a more competitive private-sector economy in a less globalized world to help manage that debt.

The Throne Speech the government delivered is essentially a blur of coping with the second pandemic surge financed by more debt-based spending (no real choice but to spend and borrow) and hopes for longer-term transformation in a changed world. This failure to make the right choices now will require a budget – the sooner the better – that understands that there are two job ones at the moment: COVID-19 and Canada’s private-sector economy of the next 10 years.

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