Canada needs a 21st century economy

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

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 published last week. It would be wrong to sit idly by hoping that the crystal ball is wrong.

Especially since other indicators, very real and current, are worrying.

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

These figures should not alarm only economists. It is the ability to pay for our health care, our education and our social programs that is at stake. 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 innovate less. Their spending on research and development ranks last among G7 countries and is almost three times lower than the average. And while they increase elsewhere, they decrease here.

The last federal budget has the great merit of recognizing the problem. But the proposed solutions, unfortunately, are not 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 is already counting on a myriad of measures.

Which ones work and deserve to be improved? Which should be dropped? One searches in vain for traces of such an exercise.

The government preferred to opt for what its critics call the “sedimentary strategy”: adding layers.

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

However, the Trudeau government has unfortunately not distinguished itself by its ability to properly manage this type of structure. The Auditor General has shown that the infrastructure program, endowed with an envelope of $188 billion, is so poorly monitored by the government that it is impossible to know whether it is achieving its objectives.

Another file that is going around in circles is that of the research and development tax credit program, which swallows up approximately $3 billion in public funds each year. This program does not seem to keep its promises and former finance minister Jim Flaherty promised to reform it… in 2012.

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

The strategy on critical minerals, 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 Newfoundland’s economy is far too dependent on hydrocarbons and there is nothing else create wealth. It’s the same thing on the prairies.

The Trudeau government is therefore right to say that Canada must have a true 21st century economy.^and century. There remains the most difficult: to find how, and to take action.