Time Ripe to Show our Mettle – Article by Thomas d’Aquino in The Ottawa Citizen

February 25, 2006

Time ripe to show our mettle – The country’s in good shape, which makes this the moment to make fundamental changes for the better, article by Thomas d’Aquino in The Ottawa Citizen, Saturday, February 25, 2006

By most measures, Canada today appears to be in good shape. It is the only major developed country enjoying consistent surpluses both in its federal budgets and in its trade and current accounts. Over the past five years, we have led the Group of Seven industrialized nations in economic growth, driving unemployment to our lowest levels since the 1970s and producing impressive gains in family incomes, profits and tax revenues.

Unfortunately, good times also breed complacency. As a nation, we tend to take our prosperity for granted. Consider the issues that have dominated the federal political agenda for most of the past two years: health-care waiting times, child care, same-sex marriage and the proposed decriminalization of marijuana. Important issues, to be sure, but if our goal is to build a stronger and better Canada, should we not devote at least as much attention to the state of the economic engine that sustains our social programs and way of life?

That engine is beginning to sputter. Close to 200,000 manufacturing jobs have vanished since 2002, due in part to the rising Canadian dollar and higher energy costs. In the resource sector, there is growing competition for the limited supply of skilled workers — a shortage that threatens future investment and growth. Meanwhile, the rise of large developing economies such as China and India is exerting pressure on companies across the country. As the Conference Board of Canada pointed out recently, other countries are outperforming Canada even in areas that have been traditional sources of strength.

To preserve our leadership, our jobs and our quality of life, we must move beyond complacency and learn how to succeed in this new, highly competitive environment. As a country, we must develop a vision of what we want Canada to look like 10 years from now, and then execute a coherent strategy for turning this vision into reality.

To achieve such a vision will require action by leaders in our governments, in our businesses and in our communities.

Canada’s business community is prepared to do its part by focusing on what we know best: how to strengthen the economic base that expands our opportunities as a country. Earlier this week, in a paper we call "From Bronze to Gold: A Blueprint for Canadian Leadership in a Transforming World," we proposed 10 specific short-term measures that would contribute to higher productivity and economic growth. These proposals range from reducing the financial burden of raising children to speeding up the integration of new immigrants into the labour market.

In the coming months, we hope that members of Parliament from all parties will consider these recommendations and work together constructively to strengthen Canada’s economic potential. If the recent federal election showed anything, it is that Canadians are tired of the emphasis on short-term politics at the expense of long-term national strategy. Canadians want this minority Parliament to work.

If we truly wish to achieve our potential as a country, however, we have to go even further. That is why we are asking all Canadians to acknowledge the scope of the challenges we face as a country and to consider what it will take to build a true society of opportunity and make Canada a more creative and entrepreneurial society.

With the release of "From Bronze to Gold," Canada’s leading CEOs are hoping to kickstart this national dialogue by putting on the table five ambitious and innovative ideas to address fundamental issues that Canada faces today:

First, abolish taxes on creativity. To ensure that Canada is a haven for creative minds, we propose that Canada follow Ireland’s example by exempting inventors, artists and writers from income tax on earnings from intellectual property.

Second, offer a new deal to learners. Our paper suggests that colleges and universities should be free to compete on the basis of quality and fees, while governments focus support on two areas: reducing barriers to access and improving the rewards for graduates.

Third, hand the GST to the provinces. The current ad hoc approach to federal-provincial transfers is unstable and muddles accountability. One possible solution is to eliminate the GST and social transfers, and allow each province to decide how best to raise the money it needs for health care and other social services. Another option is to give the provinces a stable and growing revenue stream by assigning all of the money from the GST to social transfer payments and to make them directly accountable by letting them set the GST rate.

Fourth, support people rather than places. Federal policy should adopt the principle of supporting individual Canadians without regard to where they live. This would have a significant impact in three spheres: Employment Insurance, regional development, and First Nations.

Fifth, tax spending rather than earning. One way to encourage investment and future economic growth is to move the personal income tax structure toward a consumption base. This could be done by further expanding RRSP contribution limits, creating a supplementary tax-prepaid savings plan, and lowering the tax rate on investment income.

We recognize that each of these ideas represents a fundamental shift in public policy. We certainly do not expect every Canadian to agree with every suggestion we have put forward. But because we care about our country’s future, we are willing to take the risk of provoking open and honest debate about complex and controversial topics and to do our best to help our country reach consensus.

As we say in "From Bronze to Gold," the best time to contemplate fundamental change is when we can build on our strengths, not when we have our backs against the wall.

Thomas d’Aquino is chief executive and president of the Canadian Council of Chief Executives (www.ceocouncil.ca).

© The Ottawa Citizen 2006