“Change happens when the quo ceases to have any status” – anonymous
When it comes to the Canadian economy this old (and somewhat enigmatic) saying has probably never been more appropriate than it is today.
For the first time in recent memory, we are witnessing a widespread consensus – among political, business and academic leaders – that the country’s policy focus has to take a dramatic pivot if our economy is to continue to prosper and grow. And the direction of that pivot became crystal clear in Finance Minister Bill Moreau’s Economic Update last week.
This new consensus starts from the premise that, left to its own devices, the economy is headed into a long-term period of flat or anemic growth. (Deeper thinkers take this one step further and acknowledge that much of the anxiety and polarization we see in society today is rooted in a belief that opportunity for many is shrinking and what opportunity may be available is being unequally shared – thus the mantra about the need for “inclusive growth” and the focus on “the middle class”).
The next link in this logic chain is that if we continue to do the same things we have in the past – even if we do them better – this trajectory of drift will only continue and perhaps even worsen.
The conclusion therefore is that the status quo is untenable and we have to start doing some things differently – that we can no longer rely on our resources and the vagaries of global commodity prices to drive prosperity, and that our traditional approach towards manufacturing is unsustainable against the shift to greater automation and competition from low-cost labour markets like China, Mexico or Vietnam.
This is the reasoning behind the federal government’s willingness to abandon the decades-long orthodoxy of balanced budgets in favour of stimulus spending and its Innovation Agenda in particular. The pivot – in the words of our Prime Minister – is away from a focus on Canada’s resources to Canada’s resourcefulness. The Toronto Star made the case even more pointedly when it noted … “The government is increasingly turning focus to the tech sector as a way to attract investment and jobs that could propel the economy out of a slow growth economy.”
Needless to say, this presents both a big opportunity and a big challenge for the Communitech community.
And lest you think this is all hollow political rhetoric, aimed at gaining favour and little else, you need look no further than the Fall Economic Update released on Nov. 1.
Rather than simply revise previous projections for growth, deficits and the like, Minister Morneau issued something that more resembled a mini-budget. In it, he introduced the creation of a $35-billion Infrastructure Bank with plans to increase that amount four-fold by partnering with pension funds and private sector financiers, an Invest in Canada Hub to promote Canada as a home for global investment and, to signal further that Canada is “open for business,” he raised the threshold for foreign investment reviews.
Also, responding directly to the decade-long lament of the technology community, the government promised new measures that will allow qualified companies to obtain foreign talent visas in as little as two weeks, compared to a former regime that could take up to a year – a move that Shopify’s Alexandra Clark referred to as “game changer.”
The Update follows and reflects recommendations put forward by the government’s Advisory Council on Economic Growth. Chaired by Dominic Barton, Global Practice Head of McKinsey (and a great friend of Waterloo Region), this “expert panel” is scheduled to issue a series of similar recommendations leading up to the March Budget in 2017.
Therefore, not only are the initiatives put forward in the Economic Update significant in their own right and mark a seminal shift in economic policy, they also represent only the start of what will be an ongoing series of announcements that will amplify the government’s commitment to this direction.
For technology companies located in Waterloo Region, this could mean a couple more “game changers” coming your way very soon.
In Position is a monthly column focusing on communications, public relations and government relations for tech companies. It is produced for Communitech News by the Earnscliffe Strategy Group in Toronto.