Canada needs a 21st century economy


PHOTO PATRICK DOYLE, CANADIAN PRESS ARCHIVES

Among OECD countries, Canada is on track to achieve the lowest GDP per capita growth by 2060.

Felipe Mercuri

Felipe Mercuri
The press

Questionnaire. The Organization for Economic Co-operation and Development (OECD) has 38 countries. Of the lot, which one is heading for the weakest GDP growth per capita in 2060?

Posted at 5:00 am

No, it’s not Costa Rica, Latvia, Japan or Greece. It’s Canada.

The brutal observation is described in black and white in the federal budget released last week. It would be a mistake to stand idly by in the hope that the crystal ball is wrong.

Especially because other indicators, very real and current, are worrisome.

This is the case with our productivity, which has been lagging behind for decades. In one hour of work, a Canadian generates wealth of US $ 58. At the same time, an American creates $ 77 and an Irish creates $ 110.

These figures should not only alarm economists. What is at stake is the ability to pay for our health care, our education, and our social programs, and with labor shortages, it becomes even more necessary to do more with less.

Why do we produce less wealth than elsewhere? This is largely because our companies are less efficient and less innovative. Its spending on research and development ranks last in the G7 countries and is almost three times lower than average. And while they are growing in other places, they are declining here.

The latest federal budget has great merit in acknowledging the problem. But the proposed solutions, unfortunately, do not live up to this immense challenge.

How can a state convince private companies to innovate? If there was a simple recipe, it would have been applied.

Industrial superclusters. Digital Adoption Assistance Program. Support from the Business Development Bank and Export Development Canada. The federal government already has a myriad of measures.

Which ones work and deserve to be improved? Which one should be dropped? Traces of such an exercise are sought in vain.

The government preferred to bet on what its critics call a “sedimentary strategy”: adding layers.

This is how a Canada Growth Fund and a Canada Innovation and Investment Agency are added to the toolbox. On paper, it looks good. In fact, there are few details on what exactly these new programs will do and how they will differ from what already exists.

However, unfortunately the Trudeau government has not been distinguished by its ability to properly manage such structures. The Auditor General has shown that the $ 188 billion infrastructure program is so poorly controlled by the government that it is impossible to know whether it is achieving its goals.

Another file that spins in circles is the R&D tax credit program, which absorbs approximately $ 3 billion in public funds each year. This program does not seem to live up to its promise, and former finance minister Jim Flaherty promised to reform it … in 2012.

However, the latest budget once again promises to “undertake a review of the program.”

The strategy on critical minerals, which are essential for electric vehicles, is clearer and more focused. In any case, the will of the last budget to commit Canada to a “low carbon economy” seems more necessary than ever.

If the federal government ends up approving an oil project like Bay du Nord, for example, it is mainly because the Newfoundland economy is too dependent on hydrocarbons and there is nothing else to create wealth. The same thing happens in the prairies.

Therefore, the Trudeau government is right in saying that Canada must have a true 21st century economy.i century. The hardest part is finding and acting.

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