Canadian governments once pursued sound economic policy over petty politicking, but they’ve forgotten about it for the last 15 years under Stephen Harper and Justin Trudeau.MARK BLINCH/Reuters
William A. Macdonald is a corporate lawyer turned consultant with a long history of public service and social engagement.
“Where to from here?” It is the single most important question asked by everybody today, no matter what kind of country they live in. It is also the well-chosen title of former Canadian finance minister Bill Morneau’s postretirement book on his years in politics in the Justin Trudeau government. Pondering the future makes for an apt title because Mr. Morneau finds the Trudeau government’s record to be a serious failure on the productivity and fiscal fronts. As do I.
Moreover, rising disunity and populism in Canada have been the primary result of almost 20 years of low productivity growth and in fact close to zero over the last few years under not just Mr. Trudeau but also his Conservative predecessor, Stephen Harper.
The postwar Liberal Party once pursued politics based on social and economic advance going hand-in-hand, and the related idea that good policies were good politics. It was a big policy and political success for the post-Second World War Liberals, but one which they abandoned when they took office in 2015 under Mr. Trudeau.
Prioritizing ideology, Mr. Harper and Mr. Trudeau are the first two prime ministers in Canada’s history who did not believe that good policies were good politics. The result is that more than 15 years later there’s no real productivity growth – which has underpinned a similar period of rising populism. Moreover, since Mr. Harper won his first federal election in 2006, productivity has been down in most years.
Mr. Harper’s economic policies were ideologically based from the beginning. Later Mr. Trudeau’s government, from its beginning as well, abandoned the foundation of the Liberals’ postwar political and policy successes – that social and economic advance go hand-in-hand.
The result today is growing domestic political divisions – especially in Alberta and Quebec, alongside populism fuelled by weak economic growth. The lack of productivity growth during Mr. Trudeau’s time in government is the biggest electoral danger he and his government face and the biggest challenge for Canada. That’s because the “bigger pie” Mr. Morneau believes in – which is needed if everyone wants a bigger slice of the economy – is best achieved by expanding our economy through greater productivity.
The Trudeau government continues to fail on two huge fronts – productivity growth and “living within its means” in terms of government spending. These are Canada’s two big sins from its recent past. But this country’s challenges are not only those. It faces equally big new ones in its future from a growing number of challenges it has not yet addressed.
Canada has now had two governments in a row that were (for the first time) run by the Prime Minister’s Office – Mr. Harper and Mr. Trudeau – rather than by the cabinet ministers, which all significant pre-Harper governments were. In those governments, the prime minister mostly left it for their ministers to do their jobs and replaced them should they fail to deliver well enough. Under such governments, Mr. Morneau, an able and ambitious leader hamstrung by politics, would have been able to have the policies on productivity he thought were needed.
The Liberals need to get back to a government with ministers in charge of their political portfolios. Mr. Harper’s government was driven by ideology, Mr. Trudeau’s by social advance alone, rather than alongside economic advance. Neither produced good policies or good politics.
Getting back to good policy, driven by good politics, is all the more important now because Canada’s politics will soon be dominated by many more policy and political challenges as a growing number of unresolved challenges pile up.
The world has never been more intertwined. Canada’s challenges involve not just domestic but also international challenges. The Russian invasion of Ukraine, the pandemic and climate change affect pretty well every significant country in the world.
No country made a greater proportionate contribution to the post-Second World War challenges than Canada. It will thus have no choice but to use its strengths again on all fronts. This will mean higher costs at home and changing relationships with many countries – especially with the United States.
As a result Canada will need stronger shared goals with the United States on almost every front. But this will not be easy with today’s U.S., even under the best of circumstances. This is possibly the single most important challenge Canada will face in the next 10 to 20 years.
On the Canadian domestic front, its challenges stand to become even greater. Housing will be affected by huge increased immigration. Canada wants more immigration but does not have the housing to make the consequential housing prices affordable for everyday people. Canada should probably appoint a royal commission on housing. The context for its work will have to start with the intensifying global refugee scene. We will have to find a way to build a lot more affordable, likely smaller, units and simultaneously keep our immigrant demand for new units from increasing very much (not very easy to pull off).
A royal commission always moves slowly. But it is hard to see any other way to force a full discussion of the multiple housing challenges Canada now faces.
Another related challenge Canada is now facing is its aging population, which will mean housing demands that include long-term care facilities and health care demands.
The economic challenges ahead for Canada are diverse and multiple. They will affect rural, suburban, small communities, big cities, provincial governments (big and small), and the federal government. Canada’s current polarizing politics make it hard to find the politics that can achieve good policies.
Canada’s political bottom line over the next two to three years before the next federal election is that it does not yet have the specific political party or leader it needs. Among the various parties, Canada has not had a balanced approach to good policy on both the economic and social fronts since just before and after the turn of the century (the Mulroney/Chrétien governments). It has consistently seen the country’s debt rise and productivity decreases that will not prove sustainable.
Canadians always finally realize when they are up against something very big – they may not be fast, but they usually get it in the end. The domestic challenges Canada face are the greatest since its founding and the coast-to-coast railway line. The international challenges of today are likely even bigger than anything the world has faced since the Middle Ages and Renaissance period.
Editor’s note: (April 20, 2023): An earlier version of this article said Canada has seen almost 20 years of no productivity growth, when it has seen low productivity growth over that time with close to zero in the last few years. This version has been corrected.