Annamie Paul, the new Green Party leader, and Stephen Poloz, the former Bank of Canada governor, aren’t obvious allies in the struggle to create a resilient economy. But both have identified the biggest pain point and, therefore, an area that deserves serious attention: the Balkanization of the federation.
It’s easy to sketch a path out of the COVID-19 crisis: vaccinate the majority of the population, keep as many households and businesses as whole as reasonably possible until that happens, and then overhaul the economy so growth outpaces the cost of servicing all the debt that piled up during the emergency.
If we manage the latter, we should be able to avoid big tax increases and/or spending cuts. A productive economy will generate more than enough revenue to pay our creditors.
Of course, that’s only the outline of the path to recovery. Execution will be far more difficult, especially since multiple layers of political considerations and bureaucracy will impede almost every decision. The federal government has the money, but the provinces control almost everything that could make a real difference, starting with the administration of the COVID-19 jabs.
But even the silver bullets that would increase Canada’s growth potential must be fired by the premiers. They will determine the pace at which the country adds childcare spaces, freeing up additional hours during which parents can generate wealth. They are in charge of the education systems that must train and retrain a workforce fit for the digital economy. They must find the resolve to erase inter-provincial trade barriers, an effort that would do more for the economy than the new North American trade agreement, which was a national obsession for the better part of two years.
History suggests there’s little reason for optimism.
“If I was 50, I would be out of here,” said Peter Saeglitz, a 79-year-old Ontario businessman, who bought his first property in the Kitchener-Waterloo area when he was 27. He’s watched Canada’s competitiveness deteriorate over the past couple of decades, as governments allowed regulations and taxes to pile up. “No one produces here anymore,” he said in an interview earlier this month. “I’m disillusioned by what I see.”
Paul, who in October won the contest to replace Elizabeth May as the country’s top Green, would have learned something about bureaucratic and political turf wars when she worked at Canada’s mission to the European Union.
Yet the EU, composed of 27 countries, each with its own seat at the United Nations, is in many ways a more functional federation than Canada, which tends to unite only around its national hockey teams, provided a smattering of players from Quebec and the Prairies survive the selection process.
The EU likes its rules, but executives can at least be confident that they will be able to do business anywhere in the union once all the approvals are in place. That’s not the case in Canada, where provinces insist on the right to protect local heroes from competition and allow various trade and professional associations to regulate the supply of services.
COVID-19 has caused some of the political rigidity to loosen. Ontario Premier Doug Ford, a sworn enemy of the carbon tax, Prime Minister Justin Trudeau’s signature environmental policy, has tried hard to get along with the federal government during the crisis.
Paul, who, it must be said, is still new to politics, sees an opening to get things done, provided those of us who elect these people keep the pressure on. The COVID-19 crisis has shown that politicians and bureaucracies can move in real time when they aren’t fixated by polling data (politicians) or worried about making a mistake that will cost them a promotion (bureaucrats). Traditional excuses for avoiding risk no longer apply.
“People are less tolerant of these jurisdictional excuses for inaction,” Pal, who has degrees in public affairs from Princeton University and law from the University of Ottawa,
this week on pollster David Herle’s podcast, the Herle Burly. “The federation was designed to make us stronger. It was never intended to be a barrier to urgent action. The fact that it has been used in that way is a really grave threat to the federation.”
Are those just grandiloquent declarations by an Ivy Leaguer who also told Herle that the Greens under her leadership would be more progressive than the New Democratic Party? Let’s hear from Poloz, the pragmatic-to-a-fault, business-friendly economist who former Conservative prime minister Stephen Harper chose to lead the Bank of Canada in 2013.
“We could be a leader in the trade space, but we really aren’t,” Poloz, who retired when his term at the central bank ended last year,
during an event hosted by Western University’s Ivey Business School on Jan. 13.
“We can’t even achieve free trade between the provinces … Why can’t we do these things? That’s why we had Confederation, to establish a free-trade zone because the U.S. was cutting us off from trade back then. Surely we can get the same sentiment around the table in the situation we’re in (now),” he added, noting that inter-provincial free trade could add $100 billion to gross domestic product. “Free money.”
We’re going to have to work hard enough already if we want to come out of the COVID-19 crisis stronger. Given that reality, what country would leave free money on the table?
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