OTTAWA—As Prime Minister Justin Trudeau and the new federal cabinet reverse several of the highly-controversial policies of the previous political regime, and the government as a whole prepares to begin tackling some of the most-pressing issues affecting Canadians, the Conference Board of Canada is warning the new government that robust economic growth and increasing government revenues “can no longer be taken for granted.”
“Economic growth has been steady but mediocre over most of the last five years and is not expected to accelerate much in the future,” Daniel Muzyka, president and CEO of The Conference Board of Canada and co-author of a new report that highlights how Canada can reach its economic potential, said.
“Canada’s population and workforce are aging, and baby boomers are retiring in growing numbers. Canada’s track record on productivity growth—one way to offset the impact of aging demographics—is dismal. Not all Canadians have adequate savings for retirement, and an aging population will put inexorable pressure on the health care system. Few of these issues were discussed or debated in detail during the election campaign, but a new government can hardly avoid having to address them,” he added.
Among the headwinds the new federal government must navigate are slow labour force growth, fiscal policy and budget issues, as well as “unrelenting” competitive economic challenges as a result of increased globalization.
“The new federal government has the opportunity to define the priority economic policies that would best respond to changing trends such as demographics and globalization with a view to strengthen Canada’s growth potential,” Muzyka said.
To address these challenges, the research institution highlighted a number of recommendations for the new majority in Ottawa:
- Aim for continued decline in the federal debt-to-GDP ratio when the economy is growing, to rebuild the capacity to add fiscal stimulus during recessions.
- Offset some of the negative impact of aging demographics on growth with structural changes to the design of the tax system.
- Create an independent, arm’s-length commission to examine options for structural fiscal reform that promotes stronger, greener economic growth.
- Pursue a comprehensive pan-Canadian innovation strategy that promotes business investment and the commercialization of ideas.
- Encourage new and continued growth of larger new enterprises and help more successful SMEs compete globally.
- Continue to develop and implement innovative approaches to labour force development and the full integration of immigrants into Canadian society.
- Undertake domestic policy reform such as the elimination of internal trade barriers to the strengthen Canada’s competitiveness.
- Evaluate and then implement the various negotiated trade partnership opportunities, notably the TPP.
- Put a price on carbon and combine with strong regulations to nudge the Canadian economy toward cleaner technologies and greener growth.
- Take a leading role in negotiating international greenhouse gas targets.
- Increase investment in public infrastructure with a multi-year plan, better coordination with provinces and cities, and improved financial innovation.