Short- and long-term plans
Ideas that could kick-start economy,
As Canada’s economic woes deepen, the new federal government under Prime Minister Justin Trudeau is facing increasing pressure to act fast to inject some growth through its infrastructure spending plans.
Some economists are urging the government to dig deeper and spend more to shore up consumer confidence in the face of a rapid decline in the price of crude oil and the Canadian dollar.
“A clear signal from the finance minister that the government is open to a much larger fiscal stimulus package than previously discussed” would go a long way to restoring consumer confidence, Avery Shenfeld, chief economist at CIBC World Markets Inc., wrote on Friday.
The government faces some tough choices in its first federal budget, expected in late March. How can it deliver quick fixes while also fulfilling its promise to address the fundamental shift away from oil as the driver of economic growth?
Federal Finance Minister Bill Morneau, on a prebudget consultation tour across Canada this week, got a lot of advice. In Toronto on Wednesday, he heard from private equity firms, climate change advocates, research institutes and dozens of other organizations on what it will take to turn the ship around.
Here’s a sampling of their ideas: Short term Go green
Keep the Liberal Party’s campaign promises on climate change. Follow the city of Toronto’s example and use infrastructure spending to retrofit buildings to make them more energy efficient. Promote electric vehicles and sustainable agriculture, forestry and land-use practises, said David Miller, president and chief executive officer of the World Wildlife Federation-Canada and a former Toronto mayor. “There’s so much potential low-hanging fruit.”
Introduce carbon pricing. Withdraw an estimated $1.4 billion in federal oil and gas subsidies, and work with the provinces to develop a carbon pricing plan. Morneau said the question of how to deal with carbon pricing “is a thorny issue,” as some provinces are ahead of the game. As promised during the election campaign, a federal/provincial/territorial meeting on the subject will be held within 90 days of last year’s Paris climate talks. Be business-friendly
Delay the introduction of a tax on stock options above $100,000 a year. Stock options have been criticized for leading to excessive corporate compensation at large firms. But it could kill Canada’s start-up firms, which use stock options to compensate talent for lower salaries in the early years.
Cut red tape. The Canadian Food Inspection Agency takes at least 200 days to approve a new product for export, said Garth Whyte, president and chief executive officer of Fertilizer Canada, whose members ship to 80 countries around the world. “Why would you innovate in Canada? It’s a huge problem,” Whyte said. Invest in Canada
Invest in hospitals, said Bill Tholl, president and chief executive officer of HealthCareCAN, an association of hospi- tals and health-care facilities, whose members have a $14- to $16-billion backlog of deferred maintenance.
Invest in First Nations communities to improve housing, drinking water, schools, basic broadband and roads, said Peter Dinsdale, president and chief executive officer of the Assembly of First Nations.
Invest in post-secondary schools, said Denise Amyot, president and chief executive officer of Colleges and Institutes Canada, noting its members have $6-billion worth of “shovel-ready” projects to address a waiting list of 10,000 students. Long term Be innovative
Invest wisely. Use the government’s infrastructure dollars to invest in innovation and globalization, research and training, said Wendy Cukier, vice-president of research and innovation at Ryerson University.
Foster a culture of innovation and entrepreneurship. Government needs to do more to make companies of all kinds more innovative “or they will die,” said John Ruffolo, chief executive officer of OMERS Venture, warned. “Strike the
fear of God into them.” Make government smarter
Modernize the federal bureaucracy. “We have to shift our thinking away from regulation as a way of policing behaviour and controlling costs to using that process to accelerate the development of innovation,” said Ilse Treurnicht, chief executive officer of MARS Discovery District, a Toronto-based centre for innovation.
Use government procurement policies to help small companies grow. Many new companies can’t get past the startup stage because they can’t find enough Canadian customers to establish a track record of sales. Government policies are biased in favour of existing products and services, Treurnicht said. That needs to change. Don’t pick the market
Avoid picking winners and losers. If government invests in a company, make sure it’s getting a return on that investment.
“One thing we say to the companies in our portfolio is, ‘If you always want to feed at the trough we’re not going to invest in you,’ ” Ruffolo added.