Whatever other priorities Bill Morneau’s fourth budget might have had, restoring market confidence in Canada as a good place to do business should have been in the top 10. That confidence is under siege on several fronts.
The country’s inability to think beyond regional lines is a core challenge. It continues to generate divisive inter-provincial squabbles and resource development inertia. Discouraging enough from within Canada’s borders, that national dithering is amplified many times in the wider world. Ottawa’s Bill C-69, the latest initiative promising to stifle development and investment, will provide another reason for investment dollars to migrate to countries that have more welcoming business climates.
As the Investment Industry Association of Canada pointed out in a pre-budget submission, foreign direct investment in Canada dropped 26% in 2017 to $33.8 billion, the lowest it’s been since 2010.
But external investment is not the only challenge the country faces.
Canada is burdened with a Byzantine taxation system that deters rather than encourages productivity and innovation. The country’s infrastructure in a vast land with a relatively small population is inadequate, and Canada has neither the business and human resources nor the political will to innovate in an era when innovation is quickly separating winners from losers in the global economy.
B.C.’s Metro Vancouver region is hobbled further with living and housing costs that make it increasingly difficult for companies – innovative or other – to attract and retain the talent they need to survive and grow.
Morneau’s 2019 budget predictably focuses more on federal Liberal re-election strategies than on doing what is right for the economic engine that drives the country’s standard of living. In doing so, it confirms the perception held elsewhere that Canada remains a big land governed by small thinkers.
Until that changes, the country will continue to be a subservient resource bank for the United States and a Vancouver will remain a small-town transpacific backwater.