Diana Carney

Five challenges we can’t ignore

November 24, 2011

BY: Diana Carney and Eugene Lang, Canada 2020.

Ottawa – Today, Canada faces challenges and opportunities that are quite unprecedented in our recent history. Our ability to overcome these challenges – and seize the opportunities – will determine the future trajectory of Canada’s economy and society.

At this unique time we need federal leadership. We believe that the federal government can be a force for significant and positive change. It has a vitally important role to play in developing and implementing strategic policies, focussing governments and other institutions on the big challenges, and mobilizing consensus for action. This does not mean big government. It means intelligent, innovative, analytical and strategic government.

Canada 2020 contends that there are five fundamental, inter-related challenges confronting the country that require strategic political leadership and policy action from the federal government. In all these areas it is time for a more aggressive, focussed and creative federal policy response.

1. Increasing innovation and productivity: Productivity growth and innovation are the sine qua non for economic prosperity. Canada’s lack of productivity growth has been a worrying feature of the economy for decades. Since 1984, relative productivity in Canada’s business sector has fallen from more than 90% of the U.S. level to 76% in 2007. There are no signs of things improving: quite the opposite in fact.

2. Rising to meet the Asia challenge: The global centre of economic power is inexorably shifting from the West to the East. Yet Canada appears to be on a slow boat to China – and Asia more generally. We must leverage our unique strengths and advantages so that our businesses can take advantage of unprecedented market opportunities and that we become an indispensible part of the new Asian century.

3. Squaring the carbon circle: Canada has among the highest levels of greenhouse gas (GHG) emissions per capita in the world. This is due in part to our unique geography and harsh climate, but also to a weak culture of conservation and inadequate policy and regulatory regimes. Not only do we have a moral responsibility to make progress on limiting GHG emissions (if for no other reason than to set an example for the big emitting countries), but we are also at serious risk of missing opportunities in the low-carbon economy of the future and of becoming increasingly marginalized, economically, if we fail to act (witness the recent problems with Keystone XL).

4. Reducing income disparities and polarization: Income inequality has been a creeping problem in Canada and other advanced economies for many years. Now we are witnessing income polarization, which threatens social cohesion. The Occupy Wall Street protests, and their analogue here, are one early sign of the social discontent that can arise from income polarization and a growing perception that the economy is not working for most people.

5. Securing our health system for the future: Universal, high-quality healthcare has been a defining feature of Canada and Canadian citizenship for 40 years. Yet the consensus among experts is that if we stick with the current funding/administrative models, Medicare, as we know it, is not financially sustainable. As we approach the end of the Health Accord in three years’ time, innovative, strategic policy approaches on healthcare financing are urgently required. We also need the federal government to provide leadership on the organizational and accountability issues that underpin our health system.

All these areas have received attention in the past, but seldom in a truly strategic way. Perhaps the tipping point has not yet been reached in any given area. Perhaps governments and politicians lack the ideas to address these issues. Perhaps there is too much scepticism that the federal government can really make a difference. Perhaps we have reached the limits of innovative public policy and governance. Or perhaps we are just avoiding the issues in the hopes that they will resolve themselves in an acceptable way through incremental policy action.

Whatever the cause, it is time for Canada to break out of this mindset. Many elements of Canadian society – the business community, NGOs, governments at all levels, educational institutions, and Canadian citizens generally – must work to address the challenges, though our contention is that federal leadership is critical.

Ottawa Citizen, Thursday November 24, 2011

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