Friday, May 27, 2005

Why Canada Could Fail

The following will appear in The Edmonton Journal on Monday, 30th May (with edits):

Winston Churchill was always excited about visiting Canada. He found it a vast and rich land full of hope and possibility - a place where "there are no limits to the majestic future which lies before the mighty expanse of Canada with its virile, aspiring, cultured, and generous-hearted people". But now Canada is unfocused and unable to realize its potential. Worse, it looks like it is a nation that is drifting - directionless and unable to harness the energies of its enthusiastic people around a set of common goals for its future.

This article will speak to the six major challenges facing Canada and indicate the consequences of our failing to deal with them.

Issue 1: The Canadian Eco System

Canada's climate is changing. This will have a significant impact on agriculture, fishing, forestry, climate and land use. There will also be changes in the occurrence and severity of extreme events - ice storms and other freak weather conditions - which would have serious implications for the security and integrity of Canada’s natural resources, social systems, and infrastructure.

To make matters worse, Canada will face a set of serious issues in relation to water, energy and environmental contamination. The City of Calgary - one of the fastest growing areas in North America - has already allocated most of its water resources; conventional energy resources are being depleted and while we have an abundance of oil in the oil sands there are significant environmental costs in getting it to market. We also have significant contamination liabilities that we have accumulated since the second world war and appear reluctant to deal with them.

Modest goals, an unwillingness to tackle fundamental issues and lukewarm support for Kyoto are all symptoms of a weak Canadian response to a very serious set of problems. Doing the right thing by the environment is good for business and good for Canada. We should focus and act.

Issue 2: Immigration and Demographics

In 2001, Canada’s population was 31 million. The population is projected to reach 36.2 million by 2026. As the nation moves further into the present century Canada’s natural growth rate will be just under 0.6%.

Canada will rely on immigration to sustain its economic development. Indeed, the Conference Board of Canada indicated at the start of the present Century that, by 2025 “immigration will account for all population growth.”

In other countries which rely on immigration to sustain their economic well being, immigration is a major political issue - look at Australia, Holland and Britain. Canada needs to do much more to prepare itself for changing demographics and substantially increased immigration if it is to avoid race and immigration being divisive and potentially damaging issues, especially in Ontario, BC and Quebec.

Issue 3: Standard of Living

American workers on average produce more than $6,000 per person in goods and services than their Canadian counterparts. The reason for this, the Conference Board of Canada suggests, is that overall labour productivity in Canada is 18% less than the US.

The gap in productivity between Canada and the US is not new. Between 1989-1999 the standard of living of US workers grew at nearly twice the rate of their Canadian counterparts. In comparison to fellow OECD member countries, Canada has fallen from second place in productivity behind the US to thirteenth over the last decade. Inward investment in Canada has also fallen in this same period.

Many commentators have provided reasonable explanations for these developments, but they also miss the point. Unless we improve the competitiveness and efficiency of our industry and government, our standard of living will fall. As it falls, so talented and able people leave for the lure of better standards of living elsewhere, making productivity gains more difficult to achieve.

Canada has no single champion for innovation, productivity and competitiveness and there is a distinct lack of leadership around this issue, which will eventually affect us all.

Issue 4: Government Spending

Governments, whether local, Provincial or Federal, are currently in a spending mode. They are spending more of our money on things they claim that most of us want and at the same time using our money to pay down debt.

So far, the present Federal Government have not shown strong leadership in budget terms. According to the Fraser Institute, the last two Liberal budgets have been "a mish-mash of program announcements, a dearth of tax relief, and very little in the way of an overarching vision". The same can be said for almost all Provincial and Municipal budgets. More spending will eventually lead to more taxation.

Alberta, rich in revenues and debt free, is avoiding dealing with real issues, preferring instead to mask the situation with endowments, some modest support for post-secondary education and no real radicalism on key issues such as health, the environment and seniors. Cities simply demand more revenue to cope with the every growing urbanization of Canada.

One test for Canada will be how it manages the future of health care, given both the demographics of Canada and the politics of health. Canada needs a fundamental rethink of its attitude to wellness, prevention, standards of care and the resourcing of health services. Despite popular belief, the fundamental problem of health care is not money, it’s imagination.

Issue 5: Our Aboriginal Issues

The Lubicon Land claim has been in dispute now for over sixty years. Land and resources claims by aboriginal groups have halted some of the development proposed for Northern Alberta. There are many other such disputes still awaiting courageous decision making from all levels of Government. It is an embarrassment to Canadian's that such claims remain unresolved. This is just one issue.

The more serious issue is that the number of aboriginal people are growing in the northern and prairie regions of Canada. The aboriginal population is much younger than Canadian groups and will seek a stronger voice in Canadian society in the future. They will also seek stronger economic returns than they have received in the past - in terms of both revenue from the resources on their land and stronger recognition of their self Government rights. Given the presence of so many natural resources on aboriginal land, Canada and the Provinces need to enter into a new relationship with its native peoples if Canada is to have a strong future. While there have been some promising signs of development, the overall the picture seems little changed.

The next generation of aboriginal leaders may not be as patient as the present Indian, Métis and Inuit leaders. We shouldn’t wait to find out. We need to establish a strong, meaningful future for aboriginal people in all areas of Canada and resolve some of the long standing disputes which prevent us all from moving on.

Issue 6: The Structure of the Canadian Federation

The future of Quebec remains a significant issue for many. Recent events have highlighted the fragile "truce" between the forces of separation and the forces of confederation. But if Quebec is one issue, asymmetrical federalism is the other.

While reflecting the significant economic and cultural differences between Provinces is a good thing, doing so with no apparent over-arching rationale governing the decisions being made is another. We end up with patchwork day-care, patchwork health care and expensive human services. The Canadian quilt will quickly become misshaped and undervalued. As it does so, tensions in the federation will rise and disputes will grow.

With richer Provinces now at the tipping point for their future, both the Provinces and the Federation need to be strong. It is weak and weakening as each new unique arrangement is made between Ottawa and one of the Provinces.

This weakness is also seen on the international stage. Canada's response to the tragedy in Darfur, its slow response to the tsunami and its weakening military role in NATO and NORAD are all indications of a country not willing to be bold. Canada, once respected, is losing its position on the global stage.

The Core Issue

The problem is not that we don’t know what it is we need to do for each of these issues. It is that no one is laying out the problems clearly and effectively and no one is championing solutions that make sense. In short, Canada's fundamental problem is the lack of courageous, clear, effective and focused leadership around these six issues which will shape our future. We need to agree that these are the key issues and work together to resolve them. We need visionary and effective leadership if Canada is to emerge as the "linchpin nation" for this century.

Stephen Murgatroyd is a freelance writer and management consultant. (780) 993 7784 / (780) 481 1981

1 comment:

André said...

Hi Stephen. Enjoyable, thoughtful article with a compelling line. One or two observations and/comments arising out of your paper: Perhaps the time has come to include other more contemporary matrices in our measurement of productivity; determinants perhaps such as quality of life indices. I agree that innovation is important. However we should not necessarily limit conventional thinking around innovation to the designing new processes or products. Maybe we could find innovative ways of rethinking some of the economic and political models that have been steeped in orthodoxy for the past century. Wouldn’t it be refreshing to see some innovative thinking around the interactive roles of government, enterprise and social enterprise; one that is not locked into stereotyped conservative, central or leftist precepts? Given the state of the earth’s diminishing resources, must we continue to measure corporate success as a function of growth? Why have only a handful of companies expanded their financial audits to social audits? And finally, when do we realize that the efficacy of federalism is threatened to some extent by the size of the partners. Break it up and give a good chunk of the Senate seats to cities [they can determine how they want to send their senators] with an expanded role. Am I the only Canadian that feels that my province in most instances is pursuing a parochial and self serving position; one that does not inherently represent my interests as a Canadian? Thanks for the soap box and cheers