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jeffrey simpson

Canada is now a slow-growth country in a slow-growth political culture.

The population is aging. Commodity prices are low. Oil and natural gas prices are hitting rock-bottom. The Canadian dollar has plummeted. Most governments are in deficit, or heading into deficit (read Ottawa). Innovation and the commercialization of research lag that of other countries. Productivity, the country's long-term bugbear, remains sluggish.

Canada came through the 2008-09 financial meltdown in better shape than other countries, largely because its banks were well managed, capitalized and regulated. When the price of oil and other commodities rose, so did the Canadian economy, the dollar and the country's exaggerated self of economic well-being.

Better still, the central bank kept interest rates very low, which set off a borrowing binge so that people could live more easily beyond their means, the stock market rose, and the housing market boomed in a few cities.

Now, all the green traffic signals have turned to yellow or red. Yet this slow-growth economy, which might persist for a long time, is wrapped in a political culture that seems to favour slow or no growth, or seems to think that government infrastructure programs, useful in themselves, will solve the long-run problems.

Everywhere, projects are blocked or delayed, because environmentalists, aboriginal people, non-governmental organizations or even provincial governments oppose them.

Porter Airlines wanted a longer runway at Toronto's Billy Bishop airport to use Bombardier (made-in-Canada) aircraft to fly longer distances. The new Liberal government killed the idea as one of its first decisions. The government also nixed the Enbridge pipeline to take bitumen oil to the Pacific by saying it would ban tanker traffic.

The B.C. government has now intervened to oppose the Trans Mountain pipeline adjacent to its existing pipeline. The plan had the support of most aboriginal groups along the line, but not folks in the Lower Mainland. Attuned to their opposition, the provincial government has now opposed the project.

Up the B.C. coast, liquefied natural gas projects are delayed or will be killed because markets have dried up in Asia and some aboriginal groups are hostile. The Site-C dam project is still being opposed by some environmentalists and aboriginal groups.

In Quebec, exploration and exploitation of the province's natural gas and oil deposits are held up. In New Brunswick, a province flat on its fiscal back, the government trembled before groups opposed to seismic testing to see about exploitable natural gas.

With B.C.'s opposition to Trans Mountain, three of the country's four major pipelines for bitumen are politically or legally dead, leaving only the Energy East proposal from Alberta to the East Coast. Here, again, the governments of Quebec and Ontario are lukewarm, and the usual assortment of environmentalists and aboriginal people is implacably opposed.

Many of these blocked or delayed projects with large-scale economic spinoffs are natural resource projects, which the federal government says might be saved with more "robust" oversight. The government is kidding itself in this belief, since the opponents don't care what the regulatory process is. They oppose development pure, simple and always.

Far beyond natural resource constipation, the contradiction arises between slow growth and the huge desire of citizens for more government services, without higher taxes. Of special concern is Canada's persistent low productivity, to which no easy answer exists, except that a slow-growth mentality doesn't help.

The estimable and indefatigable economist Don Drummond, working with Evan Capeluck, recently explained the challenge in a paper for the Centre for the Study of Living Standards, which looked at productivity trends in all provinces. Projecting these trends forward, they said most provinces and territories will not be able to balance revenue growth with new spending demands (especially for health care) without higher taxes or spending cuts.

Put another way, unless long-term growth can be improved – a trend that will require productivity improvements – Canada is heading for a poorer future with fewer programs and/or higher taxes.

Far from recognizing this discouraging probability and resolving to do something about it, Canadian governments are consumed by process at the expense of outcomes. They are harried by slow- or anti-growth advocates, citizens who fear change, interest groups that fight to preserve negotiated gains, courts that work with glacial speed and/or render judgments divorced from economic considerations.

You might think that, given so many factors working against the growth this country needs to meet public demands, governments would be focused on the challenge of growth. Such focus, however, is not much part of Canada's public discourse.