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75th Annual Summer Conference, August 10–13, 2006

Anne Golden

I must confess that when I was first invited to join this panel, I was daunted by the prospect of addressing such a philosophically and religiously weighty theme as progress. Having more recently learned the details of the conference agenda, however, I’m relieved to know that the topic of progress has already been well-explored in its more profound depths over the past two days. Hence I can afford to be less elevated and more concrete in my approach to the topic – and not be thought shallow for doing so.

As to this panel’s topic of “making progress happen” in Canada, I must confess to being deeply torn by different views of what sort of progress we should be aiming for. At The Conference Board of Canada, I work with 200 smart people, including 40 economists, and they mostly believe that Canada’s progress – which we define as sustainable prosperity – depends on improving our productivity and global competitiveness.

According to this view, having the policy choices to fund the social programs and community assets that matter to us depends on having booming businesses that create high-paying jobs and pour money into tax coffers. That’s why growing our economy must be the top priority.

I can’t dispute the fundamental soundness of this argument, but I’m often uncomfortable with it in spirit and wonder about what it’s overlooking. My past career in social services makes me acutely aware how we seem to be always deferring national conversations about the distribution of Canada’s wealth and the situation of the less well-off. So I’m somewhat uneasy standing before you today and declaring that wealth creation should have priority over wealth distribution on the public policy agenda.

Yet despite these qualms, the work we’re doing at the Conference Board makes it clear that any form of progress Canada achieves over the next decades will be bound up with how successful we are at tackling three major economic challenges. I’ll say more about these challenges in a minute – but first there’s a depressing reality that has to be mentioned.

We’re not used to aiming very high in our public policy expectations – as I like to say, time and again, we seem to be a country that aims for the bronze. Lucky for us, we’re incredibly blessed with natural resources, with location, and with human talent, and have done pretty well at muddling through in the national fashion, reaping the gains of these endowments.

But as we coast along complacently, we’re missing huge opportunities to do even better for our citizens, particularly the least well-off among us.

A country as wealthy and gifted as ours shouldn’t settle for having provincial governments that say they have to cut funding for special-needs kids in elementary schools; or recent immigrants who end up leaving Canada because they can’t get their professional credentials recognized in our job market and they’re spending half their incomes for inadequate housing in our big cities.

At the Conference Board, we’ve been making this point for the past 10 years, doing what I think of sometimes as our “Chicken Little act”. Every year, in our Performance and Potential report, we proclaim that the sky is falling in terms of Canada’s national economic prospects and their implications for our future prosperity. We’re still doing relatively well in the global rankings of national achievement, but we’re slipping relative to other developed countries, which are getting their national policy acts together in ways that Canada is failing to do.

Let me tell you about the results of our 2005 benchmarking report, which compares Canada’s performance with top OECD counties in six broad categories: Economy, Innovation, Environment, Education and Skills, Health, and Society. Using 110 separate indicators, we assemble and compare data on 24 counties, highlighting the top 12 in each category that outperform the rest.

Reading the scorecard is a bit of a ‘ying-yang’ experience. On the good news side, happily Canada is a top-12 performer in all six categories. Indeed, across the six categories tracked over the past four years, Canada has won 23 out of 24 possible ‘medals’ for top-half placement – an achievement matched only by Sweden, Finland and Switzerland. In fact, Canada is the only G7 country to deliver this level of consistent and balanced performance in providing citizens with the basic components of well-being.

However, if you’re starting to feel a wee bit smug about these results – don’t. This past year Canada lost ground in four categories: Economy, Innovation, Health, and Society.

In the Economy category, we just barely place in the top 12. From our 3rd place finish in 2003, we have lost a lot of ground, mainly due to relatively weak productivity growth. Last year, US productivity grew by 3.6 per cent, triple our 1.1 per cent rate – a result that contributes to an annual average income gap of more than $8,000 per capita. Furthermore, Canada is not keeping pace in the growing competition for global trade and investment. And we’ve slipped from 4th to 5th place on Innovation, which is a cornerstone of Canada’s future competitiveness.

In the category of Health and Society, our public record does not live up to our international brand. In Health, we’re at 10th place, down two rungs from last year. Even though we’re spending more on health care, we’re not keeping pace with the outcomes of other countries.

Our 11th spot in Society reflects lacklustre performance on such indicators as poverty, especially child poverty (our rate is 6 times that of Denmark) and on homicides and assaults.

Finally, even in the two categories which we’ve improved, there are cautionary flags. We’ve moved up from 9th to 8th place in the Environment category, but the macro nature of the indicators camouflages local issues. In Education and Skills, our students rank very high in mathematics and reading skills when they leave high school, but these skills decline within the adult population due to our weakness in continuing education and training.

So what does this all amount to? If you’re a glass-half-full sort of person, you can look at the last 10 years’ worth of Performance and Potential benchmarking and find some areas where we’ve improved against leading countries, and many others where we’re still high up in the pack.

Overall, we occupy a space somewhere between the United States and Europe: like the U.S., we do relatively well in the Economy, Innovation, and Education and Skills categories; like the Europeans, we are among the top 12 in Health and Society with a mixed record in Environment. (The U.S., with whom we most frequently compare ourselves, didn’t place at all in the top 12 in these three categories over the past four years!)

Our overall finding is that Canada’s performance is slipping – we are stalling or losing ground in areas critical to our ability to compete globally. If any single message comes out of the reflection on ten years of Conference Board benchmarking, that’s the one that resonates most strongly for me.

When we lament these realities, it’s not because we value wealth for wealth’s sake or because we’re obsessed with winning a global ratings contest. Many Canadians seem to think that the status quo in our country is OK, and that it doesn’t matter if Canada slips a bit in global rankings. But it’s not OK; the slippage really matters. Whatever it is that you care most about in this country – whether safeguarding the environment, revitalizing our cities, fighting poverty, making diversity work, or fixing healthcare – it’s going to be advanced in the decades ahead only if we have the resources and options that come with growing national wealth. Resisting complacency about our country’s economic future is a moral imperative. Any conversation about national progress needs to take account of this perspective.

So what are we supposed to do to get Canada the economic resources it needs to tackle these issues? The policy challenges are many, but three stand out as particularly important.

First, we need to ensure Canada’s long-term competitiveness in a world that is being transformed by the rise of “integrative trade” and by the growing power of emerging economies such as China and India. Second, we need to deal with the implications of an aging Canadian population for our workforce and fiscal foundations. And third, at a moment of high global demand for our natural resources, we must develop a resource management strategy that maximizes both economic benefits and environmental sustainability.

The first challenge – ensuring our competitiveness in a rapidly changing global economy – is fundamental for a trading nation such as Canada. Today, the world’s most competitive firms are now investing heavily in global supply chains, seeking the best quality and best-priced components for their products, whatever the source.

To be competitive as a player in the new global economy, Canada must pursue a combined global trade and domestic competitiveness agenda. It should include measures that:

  • Boost innovation and productivity
  • Encourage outbound and inbound FDI
  • Foster the competitiveness of the North American economy; and
  • Promote the development of Canada’s major cities, which is where our population and economic activity are increasingly located.

All of these are mind-bogglingly broad themes, all of which the Conference Board is researching in great detail in our three-year Canada Project, which has been funded by the private sector and governments, including the Social Sciences and Humanities Research Council. You can read all about our findings in the Compendium Report to be released in the fall.

Now let me turn to the second major challenge: preparing Canada for the impact of the demographic imbalance caused by low fertility and increased life expectancy. These demographic trends, combined with the increase in early retirement, is already causing labour shortfalls (especially in Alberta), putting pension plans and our health care system under more pressure and undermining our economic potential.

Other countries and jurisdictions facing similar challenges have sought to compensate by using public policy to promote higher birth rates, but such efforts have proven ineffective. Higher levels of immigration would help, but Canada is already facing difficulties integrating new immigrants at existing levels. Across the developed world, there has been a marked shift towards labour-market programs focused on increasing the supply of older workers, and stimulating the demand for older workers by lowering the costs of employing them.

Canada should adopt similar policies to keep older workers in the workforce longer (a topic of intimate interest to me). It should also use our human capital better by solving the credentialing problem keeping skilled immigrants out of the workforce, and by doing better at bringing our fast-growing Aboriginal population into the workforce.

A third major challenge facing Canada is to manage our natural resources for both economic success and environmental responsibility. In this period of growing international demand for natural resources, we have a window of opportunity to develop a national natural resources strategy which maximizes current economic benefits, while ensuring the long-term sustainability of our resources and environment.

With respect to our oil and gas industry, Canada must progress by getting serious about a national climate change policy – one of deeds not just words. In the forestry sector, the problem of outdated and inefficient mills must be tackled by reducing governmental interference in the industry’s attempts to increase efficiency by, for instance, shutting down mills that are too old or too small. As for our fresh water resources, we need to concentrate on better management of them in order to support existing and future domestic needs and resist pressure for ill-considered diversions of our water to the U.S.

These are by no means all of the policy steps we must take to address Canada’s lagging productivity and competitiveness, but they’re some of the most important. It may not seem a very sexy form of progress to urge – but it is the precondition for whatever other goals we want this country to pursue.

We need long-range national strategies to boost Canada’s competitiveness in the world, to prepare for the demographic revolution at home, and to manage our natural resources for success and sustainability.

Ten provincial “me first” strategies won’t be enough to make this happen. We need national leadership and genuine inter-governmental collaboration to address these pan-Canadian issues. But can we develop genuinely national strategies in a federation such as ours? Regional parochialism is the “elephant in the room” at every federal-provincial meeting on the national policy agenda; so making the federation work better is indispensable for tackling the pan-Canadian policy challenges I’ve described.

Let me offer two thoughts to conclude. First, one way to prod the elephant to start moving is for the non-governmental sectors – the private and non-profit organizations – to come together to drive the policy agenda, as the Toronto City Summit Alliance or the “Imagine Calgary” campaign, or indeed the Conference Board’s Canada Project are trying to do.

And second, we must embrace excellence and stop being satisfied with being good enough. Good enough won’t take us where we want to go.

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