It is a rite of passage for a new federal government to call on some of the best business minds the country has produced for advice on how to turn Canada, a country suffering from a chronic case of innovation envy, into a Hoser Tiger once and for all.
As such, the first report from Prime Minister Justin Trudeau's Advisory Council on Economic Growth is in keeping with a long tradition of early-mandate brainstorming.
Whether the exercise succumbs like most of the past ones to the political exigencies and institutional inertia faced by the governing class remains to be seen.
But odds are that's what left of the "bold" recommendations from superstar consultant Dominic Barton's advisory panel won't look so audacious when and if they ever get translated into actual policy measures.
Still, that doesn't nullify the usefulness of the exercise. Canada faces an urgent need to find a new basis for economic growth that doesn't involve relying exclusively on the increasingly distant prospect of becoming an energy superpower. Since the oil sector began sputtering two years ago, our economy has been essentially firing on the single cylinder of real estate frenzy.
New measures aimed at cooling an overheated housing market will be a drag on economic growth, if they don't smother it altogether. Meanwhile, non-energy exports, which the Bank of Canada had been expecting to accelerate as the loonie declined, have yet to lift off. The continuing export shortfall, the central bank said on Wednesday, may be structural rather than cyclical, owing to "lost export capacity and competitiveness challenges."
It is against this backdrop that Mr. Barton, the Canadian-bred global managing director of McKinsey & Co., officially presented his panel's first set of recommendations to Finance Minister Bill Morneau on Thursday. And none jumps out more than the panel's call for Canada to increase immigration levels by 50 per cent to reach 450,000 annual newcomers a year by 2021.
The panel is hardly the first to identify a slowing expansion (or even contraction in some provinces) of the labour market as a major cause of weak economic growth. Shrinking working-age populations are a global phenomenon, nowhere more so than in China. Provided China's middle class continues to expand, the prospects for Canadian energy and agri-food exports remain healthy, which explains why Mr. Barton is a fervent advocate of a Canada-China free-trade agreement. In the interim, he favours easing foreign investment rules to spur an influx of Chinese capital here.
An FTA with China could be a far easier sell than Mr. Barton's immigration target. Canada remains an exception among Western democracies in continuing to embrace newcomers. But Mr. Barton's target would test the limits of Canadian tolerance. It would also raise hackles in Quebec, where fears about the French-speaking province's declining influence within Canada are palpable as its share of the country's population creeps down toward the 20 per cent level.
To maintain its share of new immigrants, Quebec would need to accept 90,000 immigrants a year under the Barton plan – a non-starter. Parti Québécois Leader Jean-François Lisée has called for a reduction in the current 50,000 newcomers the province currently accepts each year. The current Liberal government of Premier Philippe Couillard this year tried to increase the level to 60,000, but backed off after a backlash.
The panel's call for the creation of an arm's-length federal infrastructure bank is sensible. But, to work, it would require politicians to surrender control over choosing projects. And to ensure that new infrastructure projects generate the reasonable and stable rates of return that private investors will demand, user fees will need to increase. That may be politically unpalatable.
Easing immigration barriers for highly skilled workers is not controversial. But neither is it a panacea for the apparent penury of talent faced by Canadian tech firms. The main obstacles firms face in luring foreign talent remain higher Canadian income taxes, a weaker currency and the abundance of opportunity elsewhere.
The Barton panel will really get down to business when, in coming months, it delivers its recommendations on improving Canada's innovation performance. They promise to be bolder than those made to the previous government in 2011's so-called Jenkins report, which led to an overhaul of federal support for private research and development. Those changes met resistance from business, so anything bolder – such as scrapping the Scientific Research and Experimental Development tax credit altogether – would likely face widespread opposition.
To fix Canada's innovation deficit, maybe Ottawa needs to call in a psychologist, not a consultant.