It is great to be here this afternoon. I want to thank each of you for coming.
This is the first time I believe the leader of the New Democratic Party of Canada has addressed your association and I’m glad to see that the original title of this event, “Out to lunch with Jack Layton on the economy” was changed.
Economists are often associated with dismal conclusions and predictions – “in the long run we’re all dead!” and so on.
So I’m in the right place for some of my observations this afternoon – but be forewarned, there will be enthusiastic optimism served up as well!
Today I am going to share with you my vision for how we can achieve fairness, affordability and prosperity in a modern 21st century economy.
An economy that is sustainable and green and therefore an economy that is more efficient and productive.
One that invests in growth.
And one that generates more wealth, while creating more equality.
As a social democrat, I believe the economy ultimately must be judged on how well it serves the needs and aspirations of the people it serves.
In the spirit of my predecessor Tommy Douglas who balanced the books in Saskatchewan 17 years in a row – I believe in balanced budgets, each and every year.
I believe that, in a market economy, the federal government has an obligation to make sure that the social and physical infrastructures are in place to ensure individual goals and collective needs are met.
And with surplus budgets and glowing reports on the economy’s performance, you‘d think that everyone was cashing-in because everything was going great.
National unemployment numbers are down, GDP is growing, commodity prices are high, interest rates are low and steady growth is forecast.
But of course, stats don’t tell the whole story. As economists, you know that.
We should ask: “Is the economy booming everywhere in Canada?” “Are average Canadians cashing-in?”
The plain answer is no.
Despite the rosy picture painted by the Conservatives and Liberals, there are disturbing trends in today’s economy.
First, we are losing a lot of good jobs in key sectors.
Yesterday, we learned of layoffs and restructuring at Chrysler. Some work will be shifted offshore. Chrysler stock went up. Thousands of Canadian autoworkers went home after work depressed, facing anxious families at the kitchen table with questions they couldn’t answer.
Days before, it was Nortel. Finally showing positive bottom lines – layoffs were announced. Wall Street and Bay Street smiled. Back home, working families faced an uncertain future.
Across Canada, a quarter of a million manufacturing jobs have been lost since 2002. More than one in ten jobs in the manufacturing sector have been lost to layoffs, plant closures and the non-replacement of retiring workers.
One in three of those jobs lost were held by women. Among the hardest hit: Ontario and Quebec.
This is bad news for working Canadians because manufacturing jobs pay almost 30% more than the national average.
The forestry and lumber sector has also suffered major job losses in recent years.
Since 2003 there have 10,000 layoffs in Ontario and Quebec, 2,000 job losses in Atlantic Canada and well over 3,500 in BC alone.
Last weekend I was again in Thunder Bay where the anxiety among the forestry workers and their families is at an all time high.
For an industry, first beset by illegal U.S. duties, then a flawed softwood lumber agreement, and now attacked by the pine-beetle infestation, the future looks challenging to say the least.
Let me turn to wages and incomes – a second disturbing trend. On the one hand we see stagnant wages for average workers and on the other hand we see folks at the high end doing better and better.
A report came out just around New Years that showed that the CEOs of the top 100 Canadian corporations would make in the first few hours of the year what the average Canadian wage earner would take all year to earn.
Since 1999, the richest 20% have received over 70% of the wealth growth in Canada. So, it’s not all bad!
But women earn 71 cents for every dollar their male counterparts make.
Third concern is the devastation that the current unsustainable economy is having on the environment.
For too long, too many have waged a phony war – “is it the environment or the economy? Choose!”
I believe and have argued for years – that it isn’t either or; rather the two are intricately linked.
This notion was given a significant boost with the high profile report released recently by Sir Nicholas Stern, a former chief economist of the World Bank, who warned “business as usual will derail growth.”
He warned that global warming could cost global economies 20 per cent of their GDP due to floods, storms and natural catastrophes.
Contrast this, he urges, with taking action now to avert calamity – steps that will only cost 1 per cent of GDP. For many in the UK and around the world the Stern Report was a much needed wake-up call.
And it was with that hope that we invited Stern to appear before the all-party committee the NDP called for to re-write the so-called ‘Clean Air Act’.
Fourth is the skills shortage in this country – which next to climate change stands as the greatest threat to prosperity.
66% of Canadian employers are already experiencing symptoms of the skills shortage. As of 2012, the number of people leaving the labour force will exceed new entrants.
By 2015 almost half the workforce will be between the ages of 45 to 64. This needs to change.
And finally, economic diversification is going in the wrong direction.
Our economy has actually become less diversified in recent years.
There has been a greater reliance on the resource sector, especially oil and gas, resulting in exports of natural resource based-products growing from 40% to 50% of total Canadian exports over the past 3 years.
So what then does all this mean, these troubling trends in the economy?
At the end of the day, what does it mean for the people the economy is supposed to serve? The working-middle-class families that make this country run.
How are those folks feeling?
Well I can tell you. They’re feeling anxious.
They are nervous about their kid’s futures…their own retirement…making mortgage payments or rent. Finding their ageing baby-boomer parents the care they need…looking after kids or figuring out how they’ll make sure they get training, college or university education.
Drug costs are rising.
Waiting times for their health care loom large.
Millions can’t find a doctor.
Their concerns are well founded. Home mortgage defaults are up and waiting lists for affordable home care and long term care are growing.
Same with childcare spaces. Childcare workers can’t afford to send their own children to the childcare centres where they work.
Something is very wrong with this picture.
The sandwich generation is getting squeezed.
At a time when the corporate giants and CEOs are enjoying windfall incomes, working and middle-class families are working harder and harder just to make ends meet.
The six largest oil companies in Canada posted profits last year of $21 billion, while the six largest banks made $19 billion.
In a recent survey conducted for the Canadian Centre for Policy Alternatives, nearly half of all respondents said that they are one or two pay-cheques away from being poor and nearly two-thirds said that they are not benefiting from the economic growth that is being generated in this country.
I call this the “prosperity gap”.
So how did we get here? How did we create such disparity? Two reasons.
First: through downloading, funding cuts and trade deals, the Liberals and the Conservatives have drastically reduced the capacity for the federal government to play a positive and helpful role in ensuring the fundamentals are in place so that economic and social systems can adjust, innovate and change at the same time as ensure a cushion for the blows of the unchecked market.
Secondly: with the limited capacity they do have, successive governments in Canada have had no vision and no plan to get right, those things that we as a society expect from our federal government.
To use a hockey metaphor, the Liberals and Conservatives have voluntarily pulled the goalie and defensemen and they’ve stopped making sure that the three remaining players have their sticks on the ice.
This is why, despite occasional promises, Canada has no plan for the auto or manufacturing sector, no long term R&D or skills training strategy and no blueprint to seize the massive opportunities of the 21st century green economy.
That is why the World Economic Forum has Canada falling from 11th to 16th in global competitiveness.
That is why Canada ranks 27th out of 28 OECD countries on the environment.
And that is why Canada has fallen from first to sixth on the UN Human Development Index.
In Roy Romanow’s recent article, ‘A House Half Built’, he implores that Canada return to bold nation-building and cautions of a need to stop the dismantling of Canada’s social infrastructure. He rightly notes: “…a progressive society is shouldered on the foundations of a progressive tax system and progressive social policies.”
This from a man who took the province of Saskatchewan from an economic basket case on the brink of bankruptcy after years of Conservative mismanagement, and put it on the road to “have-province” status where it proudly sits today.
The federal government needs to get back in the business of nation-building.
And that includes building an economy for a successful nation.
It’s time for Canadians to dream big, not only for their families but for the country. The prevailing orthodoxy has been shrink-wrapping and suffocating economic activity and leaving too many ordinary people behind.
If we draw from our longer history, we have never left it to markets alone to build this great country.
We didn’t create post-war economic growth and prosperity with small-minded thinking and a tax-cut for every ill.
We built it by investing strategically.
Markets themselves didn’t build the railway in the 19th century, and they won’t build the social and physical infrastructure for the 21st.
The unchecked market didn’t bring in universal Medicare and it won’t bring in universal childcare. Yet these programs do and will help us be more competitive while building social resiliency.
To get back in the business of nation-building, we must leverage the competitive advantages we have and seize the opportunities to create new ones.
This requires leadership.
Governments can’t and shouldn’t run everything. But they do have the responsibility to point the way forward and lay the groundwork for the economy of tomorrow. To bring back the hockey metaphor, governments have to have their stick on the ice.
Success also requires focus. We need to be clear-headed about what our economy does well and where it is failing. We need to zero-in on the improvements that are needed.
So where should we focus?
I propose four foundations:
- Building a bridge to the green economy.
- Leveraging private sector investment.
- Creating fairness in a trading world.
- Strategically investing in social, knowledge and economic infrastructure.
1. Green Economy
I know that economists understand the limitless possibilities of a green economy. So do labour and business leaders.
I’ve been talking about Green-collar jobs for years – I even had a hand in creating some.
Last week’s report by the Intergovernmental Panel on Climate Change tells us all that we need to know about the climate crisis.
The science is unequivocal – the impacts in Canada and for the planet will be devastating.
We need to legislate targets for reductions in Canada’s greenhouse gas emissions so that Canada honours its international obligations and does its part.
We also need to ensure that the instruments are in place to meet them. This starts with a market-based cap and trade system that provides an incentive for companies to pollute less or pay more.
In fact, it creates a new market. Markets work well to shift funds to the most efficient investments. This is especially true with energy, linked to environment. By monetizing the up-to-now-unpriced external consequences and costs of pollution, we can ensure investment shifts to efficient, less polluting places.
We need this to happen fast, much faster than a government department could be created and countless voluntary programs could be designed.
Capping pollution and providing carbon exchange markets can create the rapid change we need. We know this works. We’ve done it in Canada and the US and took on acid rain successfully.
We need a green car strategy that combines world-class fuel efficiency standards with job-generating incentives for building and selling more fuel-efficient cars in Canada.
If we don’t build the green cars that consumers will be driving tomorrow, China will. And those jobs and that investment will follow.
We need to end tax advantages to polluting industries. Let me ask you – “why did the Liberals extend the Accelerated Capital Cost Allowance for oil sands development?”
Such perverse incentives have got to go.
Instead, we should provide incentives to accomplish our desired outcomes –extending tax advantages for greener industry – like the clean-tech sector which is involved in alternative energy, recycling, and the production of new materials.
We need an ambitious national energy retrofit program for homes and residential, commercial, industrial and government buildings.
Why doesn’t the federal government take the lead and embark on the nation-building task of retrofitting 7 per cent of all homes and buildings in Canada each year.
I call the plan “Better Homes and Buildings”. I’d add “Gardens” but that takes us into pesticides and that’s a different topic!
We should do it each and every year until virtually every home and building is energy efficient. We can start with those that need the help the most – low-income Canadians.
It’ll create jobs in every corner of the country and provide countless opportunities to train much-needed apprentices. And it’ll save money and energy in every household and business in Canada.
But how will they pay for it? they’ll ask. With the savings from the energy bills, I’ll answer.
I know this works because I have seen it first hand. I was part of the team that put together the Better Building Partnership in Toronto – the largest retrofit project in Canadian history.
You won’t have to move to Alberta to get a job in the energy industry. You can haul out a caulking gun, a hammer and some insulation and work on helping people burn less and pay less in your own communities, everywhere in Canada.
The renewable energy sector stands to be a great generator of jobs. Did you know that Germany directly employees 40,000 people in its wind energy industry? That’s about the size of the aerospace industry in Quebec.
There’s a lot of steel in those wind machines – so Hamilton and Algoma can participate in the renewable revolution too. The wind energy sector in Germany now consumes more steel than any other industry except automotive!
A greener economy also requires greener transportation networks. The Conference Board of Canada in its report earlier this week recognized what this as one of four cornerstones of a green and prosperous economy. It’s what they call the connective physical infrastructure linking people, goods and ideas.
Not only do we need to create opportunities for people to leave their cars behind by building better public transit, we also need to provide an option to increasing pollution by large trucks on our roads – by creating the infrastructure for cargo shipping by rail.
Those same renewed rails could move a lot more people too.
Without question the green economy and the jobs that it promises are opportunities that we can’t afford to miss.
2. Private Sector Investment
The second foundation: we need to do a better job at leveraging private sector investment.
Canadian business has a poor record of investing in research and development, plants and equipment and skills training – and we are losing competitive ground as a result.
A KPMG study concluded that Canada has one of the lowest-cost business environments among G7 countries, but at the same time we have slipped in our international competitiveness.
How can that be?
Canadian spending on plant and equipment per employee is between 30 per cent and 40 per cent of what it is in the US. Across the board corporate tax cuts introduced by the Liberals and Conservatives have failed as an incentive to invest.
We can’t afford to fall further behind other countries in making these key investments.
But how do we encourage companies to make effective capital, R&D and workplace training investments?
Let’s improve the Research & Development tax credit program so that it is targeted to investments which do the most to improve competitiveness and create Canadians jobs. Instead of the Accelerated Capital Cost Allowance for the tar sands – let’s consider that kind of tax advantage for capital investments that are directly tied to upgraded capacity or the implementation of environmental technology.
Encouraging companies to invest in skills training and apprenticeships is also essential. Quebec has developed a training incentive program that offers both a carrot and a stick to employers in order to encourage training. We should be looking at identifying best practices and facilitating national application.
3. Fairness in a Trading World
The third foundation is to seek greater fairness in our trading world.
Canada is a trading nation. We rely on stable and ever-growing markets to buy our goods. We rely on infrastructure to get our products to those markets and we rely on trade arrangements to outline the rules of engagement.
Yet, our governments blast ahead with trade deals and accept unfair practices that hurt Canada’s manufacturing base.
Perhaps the most glaring example is found in our automobile sector and our textile industry – both facing unfair trading environments right now.
Our auto manufacturers cannot get Canadian made products into Japan, Korea or China, yet these countries are selling more and more of their products here.
This is untenable and hurting Canadians.
All we ask is to be able to access such markets with our products as they are accessing our markets with theirs. Is that too much to ask? Still, our government barrels ahead with the Korea – Canada Trade Agreement with no insistence on fairness.
When it comes to textiles, other countries seem to understand that floods of low cost goods from countries whose economies are booming, like China, can rapidly shut down a domestic industry. They have reasonable ratios in place to ensure some balance and fairness. Yet Canada, perhaps desperate to sell our raw materials to these countries, takes no steps to insist on balance and fairness in textile import ratios. The result: jobs down the drain and communities in crisis.
Fairness in trade is essential and must be reasserted in Canadian international economic policy.
Ultimately, the provision of greater equality and a higher standard of living to all workers around the world fits well with Canadian values.
Ensuring that working people have the right to organize, to establish health and safety protection, to experience human rights in full measure contemplated by United Nations Declarations, to speak and act freely to build the social infrastructure such as we have here, to have access to wages that come step by step closer to our own – all these are the objectives we share and it is here that fair trade will ultimately be found. Canada should be a champion for such change – as a key foundation of our foreign and economic policy.
Trade should be seen as a tool to stem the rising tide of global poverty and Canada should be an international leader.
4. Strategic Investments
The fourth area Canada needs to focus on is the infrastructure that underpins our social and economic fundamentals.
I’m not just talking about the railways and the seaways that helped build this country. I’m also talking about the social infrastructure – our public health system, our pension system, our education system – that provide us with a comparative economic advantage.
But, let’s start with the bricks and mortar.
I think that we sometimes fail to absorb the lessons of the past. Strategic infrastructure investments have been indispensable to the relative prosperity that Canadians have enjoyed.
The railway knitted the country together and provided the means to build communities and to bring our quality goods to market. It was and is a strategic gateway to our markets.
Are we doing enough forward-thinking about the infrastructure needed to diversify and build our markets of the future?
Does the Pacific Gateway – of ports, rail-links and air hubs – have the investment it needs so that it is wide-open to the economic giants in the Asia-Pacific?
What about the Halifax Gateway or strategic corridors like in Windsor?
What about the Port of Churchill and the proposal to open a gateway to Murmansk?
Are we prepared to muster the political will to make these things happen?
Transmitting clean, renewable electricity will be the key to nation-building of the 21st century just as the need to transport goods and people was the key to nation-building in the 19th.
It’s time we undertook the great project of an east-west power grid that will make it possible to get clean energy from wind-farms in southern Saskatchewan to power the neon lights at Yonge and Dundas in downtown Toronto. Or clean Manitoba power to fuel the mills of Northern Ontario.
By selling Manitoba’s clean energy to Ontario, greenhouse gas emissions could be reduced by as much as 15 million tons annually.
An east-west power grid makes sense not only because it makes Canadians less dependent on American energy, but because it reduces pollution.
Connecting Manitoba hydro power to coal plants in Thunder Bay would be equivalent to taking 500 thousand cars a day off the road in Toronto.
Talk about a “made-in-Canada” solution to climate change.
The Federation of Canadian Municipalities recently pegged the physical infrastructure deficit at a staggering $60 billion. And we see the effects of neglect with the collapse of the bridge in Laval, Quebec and a chunk of the Gardiner Expressway crashing to the ground in downtown Toronto.
We have no national transit strategy and haven’t for the past two decades.
No plan to curb suburban sprawl, no national housing strategy and our rail infrastructure is underutilized and under funded.
These kinds of strategic investments line up well with the thrust of the Conference Board of Canada’s recent major report on the challenges faced by Canada’s major cities.
That report sets out four basic and reinforcing “cornerstones” of successful cities:
- a strong knowledge economy;
- connective physical infrastructure linking people, goods and ideas;
- ecologically sustainable and efficient industrial systems;
- and socially cohesive communities.
You won’t get there with the status quo. We need to make strategic investments.
What about our social infrastructure?
The public health care system and the education system that our governments put in place in the post-war period have been undeniable economic assets. They have meant that employers know that they can count on a ready supply of healthy and well-educated workers. We know that industry has often cited these things as reasons for setting up in Canada.
Again, we have to take lessons from the past and have the foresight to build for the future.
Foresight means recognizing that if Medicare is an advantage today, national pharmacare can be an added advantage for tomorrow.
Foresight means recognizing the massive skills shortage that is looming and doing something about it. We know the expected attrition rates. It’s time to put in place strategies such as:
- skills and apprenticeship training;
- measures to make work a better option for women – like universal child care and flex-time to address the work-life imbalance;
- proper foreign credential recognition and improved settlement services for new Canadians;
- and action to address the low workforce participation of Aboriginal Canadians.
I would like to end off today with a concrete example of the differences in vision and execution of the role of the federal government.
In late-spring 2005, the NDP re-wrote Paul Martin’s federal budget.
Instead of allocating $4.6 billion dollars in across-the-board corporate tax cuts, we allocated it to priorities such as education, training, affordable housing construction and transit.
Through the formula the transit authorities across the country were allocated new money. The Toronto Transit Commission was allocated millions in new funding.
The TTC board used that money to purchase new subway cars that would help people in the GTA get to work without having to use their cars.
Less cars on the road. Less traffic. Less pollution.
The contract was awarded to a Bombardier plant whose future was uncertain. But because of the TTC business, the plant is not only open but is capable of bidding on more contracts. Today hundreds of working families in Thunder Bay have good paying manufacturing jobs.
They are spending their paycheques in their communities.
They are paying taxes and the federal government is recouping that investment.
Now you ask the working people of Thunder Bay or the transit riders of Toronto whether an across the board corporate tax cut or our strategic investment was a smarter way to foster fairness, affordability and prosperity?
This is just one example of how strategic investment can stimulate the economy and make a positive difference in people lives.
It’s just the tip of the iceberg of what we could achieve if we had the courage to nation-build again.
It’s time for Canadians to dream big, not only for their families, but for their country.
Just think of it, we could build a green and prosperous Canada, where no one is left behind.
Thank you very much.