Kevin Lynch is former vice-chair of BMO and former clerk of the Privy Council. Paul Deegan is CEO of Deegan Public Strategies and former deputy executive director of the National Economic Council of the White House.
Like a hurricane, the COVID-19 pandemic roared through the Canadian economy, leaving misery and destruction in its wake. Canadians are now turning to governments for help in the recovery efforts. The Speech from the Throne will be a focal point for Canadians' expectations. While there will be promises of expensive ornaments on the tree, the litmus test for business owners and workers is whether it puts forward a credible and ambitious post-pandemic economic recovery plan.
A recovery plan will entail deficits and debt to finance investments in our long-term growth. This will push our trillion dollars of net debt even higher. But debt comes at both a cost and a risk. The cost is manageable while interest rates are at abnormally low levels, but the risk is that international financial markets begin to lose faith in our ability to manage our fiscal affairs, both federally and provincially. To avoid this and its caustic effects on growth and confidence, the government should articulate a fiscal anchor in the Throne Speech and commit to a long-term fiscal plan in the budget.
Rebuilding Canadian growth will require a clear path to improve our competitiveness and to create a Canadian advantage. What could an ambitious post-pandemic economic recovery plan include?
We should commit to becoming a global leader in the digital transformation. Government can play an important role in accelerating 5G network deployment, in urban and rural areas, through smarter spectrum policy that emphasizes the rapid release of large amounts of spectrum, on a cost-efficient basis. Smarter spectrum policy is driving the success of 5G leaders such as South Korea. Accenture estimates that widespread adoption of 5G in Canada by 2026 would add 250,000 jobs and bolster GDP by $40-billion annually.
We must build the infrastructure to ensure we remain competitive as a trading nation. We need to ensure that we have the infrastructure to move goods and digital services efficiently. The Infrastructure Bank should be a catalyst to enhance our information, multimodal transportation, and energy infrastructure by mobilizing private sector funds, but it will have to up its game to achieve its potential.
It needs to be easier to be an entrepreneur. Canada dropped from fourth position on the World Bank Ease of Doing Business rankings in 2006 to a dismal 23rd this year. It takes about 250 days to get a construction permit, compared to just 80 days in the United States. Interprovincial barriers hurt small businesses, keeping them local and less competitive. Federal review and approval of trade enabling infrastructure such as pipelines and terminals should not take five years, when competitors are moving faster. Speed matters and uncertainty kills projects.
Let’s rethink how to reduce carbon dioxide emissions in the oil sands through technology, not regulation. The government could support the deployment of Generation IV Small Modular Nuclear Reactors to meet the steam and heat requirements of Alberta’s heavy oil industry, which are currently met by natural gas and coal. This would dramatically limit greenhouse gas emissions from oil sands operations, allowing expansion, and would help to diversify the province’s economy.
Canada must become a magnet for talent. Immigration drives economic growth, and we need more immigrants to help address the demographic challenges of an aging population, especially in the Atlantic provinces. We could also establish a world-class scholarship, open to both Canadians and non-Canadians, so that our best and brightest remain in Canada and global talent chooses Canada over the U.S. and U.K.
It’s crucial that we move from innovation laggard to leader. To increase productivity and competitiveness, we have to be a leader in key indicators such as R&D spending, patents, and high technology intensive exports. We should set the goal of making Canada a global leader in digital transformation and a top three global player in artificial intelligence and data analytics. We need to make leading edge technology adoption the norm rather than the exception in Canadian business. And we should help workers displaced by the pandemic to upgrade their skills for the digital-driven economy.
Lastly, we must support Canadian firms through procurement, particularly innovative start-ups. Procurement is an important part of the federal government’s policy arsenal, yet it is rarely used strategically to grow our homegrown tech sector. It favours incumbents, who are often foreign behemoths. With the federal government’s $600-billion procurement budget, there is enormous scope to help Canadian companies progress from start-ups to Canadian-based global champions.
Governments cannot solve all problems, but they can create the conditions to make the private sector more successful. We are at one of those pivotal moments. This is a time for stimulus – not austerity – but stimulus that is well-designed, leverages the private sector, and is focused on growing the economy.
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