The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.
Everywhere in Canada, the news is about natural resources: forestry and mines in British Columbia; oil and coal in Alberta; potash in Saskatchewan; hydro in Manitoba; the “ring of fire” minerals in Ontario; hydro and Old Harry oil and shale gas in Quebec; offshore oil and hydro in Newfoundland.
Canadians are so damn lucky. We just dig and pump and cut and ship, and we never seem to run out. We just hope commodities prices remain high.
All those resources can be a fool’s game. Pumping and digging and cutting can keep the country comfortable, but they do little to address the country’s biggest challenge – a sagging competitive position. All those natural resources soak up capital; they usually don’t require much innovation or processing.
The Harper government, possessed of a majority government, seems to have its mind around elements of the long-term challenge. Whether it can persuade the country to confront them is another matter, in part because this government doesn’t like “visionary” politics, and in part because of its relentless partisanship, which waxes so many ears beyond its own supporters.
Canada has one of the worst productivity records in the industrialized world. Upon productivity improvements household incomes depend, not burgeoning household debt. When you ask why median household incomes stagnated for a long time in Canada, and why the lowest-income Canadians have gotten poorer, one reason (among many) is low productivity.
Part of the country’s long-term challenge is demographics. The population is aging (the first of the baby boomers hit 65 in 2011). Slowly, aging will influence everything for the next quarter-century. It will strain public finances in two ways. First, social programs for seniors will cost more. Second, there will be fewer people in the work force relative to those who are not.
If nothing changes, taxes will certainly have to rise on them just to deal with aging alone, unless those who remain in the work force are more productive. You don’t have to like the Harper government, or agree with its yet-unknown prescriptions, to understand that it has identified this inescapable issue. And you don’t have to like any particular government to know that a Canada Pension Plan worked out almost half a century ago (and Old Age Security somewhat later), when people lived shorter lives, has to be revisited. And that a health-care program devised at about the same time also needs an overhaul.
For the rest of this column, please go to the Globe and Mail website: http://www.theglobeandmail.com/news/opinions/jeffrey-simpson/exploiting-canadas-resources-can-be-a-fools-game/article2345076/