Enough about weed — f ix the economy

The federal government has understandably had its hands full in recent months. The legalization of cannabis was one major public policy file that was consuming a lot of energy, the NAFTA renegotiation another. Now that these issues are largely behind us, the government is able to tackle other pressing issues. And not a moment too soon.

Sen. Doug Black, of Alberta, persuasively argued in the Financial Post this week why a top priority now must be repairing Canada’s seriously damaged global competitiveness. Goodnews stories about cannabis jobs springing up in oncemoribund small towns and the sincere relief at a new NAFTA deal should not obscure a far more serious economic story. As the senator notes, “investors are fleeing the country. Major energy projects are dead or dying. It’s not just money leaving Canada … businesses and individuals are heading south in favour of a warmer investment climate.”

This isn’t just his personal opinion. Black is the chair of the Senate committee on banking, trade and commerce, which just spent eight months studying Canada’s investment appeal, particularly as compared to our friends and largest competitor to the south. The conclusions are grim. Canada’s taxes, both corporate and personal, are a major disincentive to start or grow a business in Canada, the committee found. As recently as a few years ago, Canada was one of the most alluring jurisdictions in the world in terms of corporate taxes but other developed economies have deliberately moved to compete aggressively with us. Our government has not responded. On the contrary: Hikes delivered by revenuegrasping provincial governments have actually pushed combined provincial-federal corporate tax rates even higher than they were a few years ago.

A total overhaul of our uncompetitive tax regime, similar to what Washington just deftly pulled off, is clearly in order, and not just the minor tweaks — an expensing rule here, a boutique tax credit there — that the federal Liberals have so far suggested they will limit themselves to.

But our uncompetitive tax system is just one of the more conspicuous parts of a much wider crisis. Regulatory issues are also a problem. Canada, a federation of provinces and territories, is an expensive place to do business as companies struggle to comply with reams of red tape in every specific jurisdiction. The barriers between provinces, the committee also notes, preserve antiquated barriers to trade and commerce even among Canadian companies.

The constant debacle of our efforts to build a pipeline for our energy exports, it hardly need be said, also figures prominently in the report. And the report covers many other issues; uncompetitive, economy-sacrificing (and we’d add, predominantly symbolic and pointless) carbon taxes rightly come in for particular scorn. But the overall picture is unmistakable. Canadians spent generations building this nation’s great wealth and wonderful standard of living, but our governments have taken to foolishly resting on their laurels. Our politicians forget that Canadians must compete, hard, every day, against the best in the world. Allowing them to is essential not just to provide opportunities for future generations but also just to preserve the standard of living and level of services that we already enjoy.

The Senate’s report makes for sobering reading, but it could not come at a better time. The global economy has never been more competitive. Those countries that can and do compete stand to grow more prosperous. But the world does not owe Canada a natural place in that order. The primary duty of any government is to provide for the common security and prosperity of the people. Everything else it aims to do hinges on getting those two critical, related fundamentals right. A country that lacks security or prosperity cannot focus on much beyond those shortfalls.

Canada has had a very long run of prosperity, but clearly too many of us have become complacent about our good fortune. Most of humanity does not enjoy the standard of living we do and is working hard to catch up. Let this report be a wake-up call that, unlike those countries that have kept their eyes on their goals, we are now in serious danger of taking what we have achieved for granted and forgetting that none of it is guaranteed to last. This is not meant to be alarmist or even pessimistic: Our country is blessed with many natural advantages, and Canadians have undeniable talents; we can certainly make the necessary adjustments to ensure we maintain our prosperity.

The Senate report lays out some common-sense recommendations to this effect. First and foremost, it calls for the appointment of a royal commission on taxation — there has not been one since 1962! — and suggests that it should report back in three years on how best to maximize our efficiency. While we wait for the more long-term, structural changes that would result, the committee urges the government to take quick measures in the meantime to restore our corporate tax advantage and to break down the regulatory barriers that are holding back interprovincial trade and our energy exports.

This is all good advice. But the main challenge is political will. None of these reports — from the Senate or a royal commission — will be worth the paper they’re printed on if the government of the day isn’t convinced that it must act and possesses the will to do so. We have yet to see any persuasive evidence that this government, or for that matter, any federal leader, is so prepared. That’s the real danger Canada faces.

TOO MANY OF US HAVE BECOME COMPLACENT ABOUT OUR OWN FORTUNE.