For decades, Canada had a simple yet powerful pitch to investors: Put your money to work here and you’ll enjoy unfettered access to the vast U.S. market. Clearly, this country needs a new spiel, and fast.
The Trump tariffs – actual and threatened – have sent export-dependent Canadian companies scurrying to set up or grow operations south of the border. They have also made it harder for domestic businesses to raise capital, with investors freezing new deals and funding.
Even Barrick Gold, the Canadian mining giant, has recently mused about redomiciling in the U.S.
To keep businesses here, and to attract more, Canada must do more to market itself as an investment destination in its own right rather than primarily a gateway to the U.S. We can think of three ways to do that.
First, point out an obvious selling feature Canada already has: political stability.
Yes, it’s awkward to make this argument with a lame-duck government in Ottawa, parliament prorogued and a federal election possibly just a month away. But the current impasse won’t last long.
And what qualifies as the height of political drama in Canada sure looks boring compared to what’s happening in the U.S., where a temperamental President can wave away 60 years of free trade with executive orders and reshape the federal bureaucracy in a matter of weeks.
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The spectacle has so far left the U.S. stock market relatively unfazed, but there are signs it has rattled both corporate bigwigs and smaller shops across America. Dealmaking has gone quiet on Wall Street as well, and a gauge of small-business uncertainty recently registered the third-largest spike on record.
Companies making costly, long-term decisions need Canada’s “boring” politics.
As a second major selling point, our political system must – at all levels of government – develop the same steady-as-she-goes reputation when it comes to vetting anything from transportation projects to new energy infrastructure.
This doesn’t mean trampling over Indigenous rights and environmental protections. It means providing a predictable, if exacting, path to regulatory approvals in a reasonable timeframe. And ensuring those decisions stick.
Instead, the current process is like a high-stakes game of Snakes and Ladders – or rather, Snakes and More Snakes – with layers upon layers of government studies and seemingly endless opportunities for projects’ critics to raise new objections, causing applicants to slide back and spend more time and money on the bureaucratic game board.
Just recall the Energy East pipeline, which was supposed to link Alberta’s oil sands to New Brunswick. TransCanada, now TC Energy, eventually cancelled the project in late 2017 after spending three years and around $1-billion seeking the green light to build it.
It’s telling that, with the spectre of a trade war with the U.S. reviving support for a cross-country pipeline, no company has expressed interest in another attempt. Projected demand for oil is a factor, of course, but regulatory certainty matters.
Now, for a third selling point that would make Canada the whole package for businesses and investors: a pro-growth agenda that doesn’t settle for simply mirroring U.S. moves.
There’s a well-worn script for how major corporate tax or industrial policy reforms often happen in this country. It goes like this: When the U.S. adopts major changes that threaten Canada’s competitiveness, Ottawa scrambles to introduce a watered-down version of the same.
When the first administration of President Donald Trump announced massive tax cuts, Canada responded by allowing companies to claim some kinds of business investments – the cost of things such as new plants and equipment – against future tax bills at an accelerated pace.
Canada should crumple up that tired script and come up with its own material, already. To start, it should go all the way on promoting business investment by allowing firms to claim the full cost of their capital investments up front. A dollar spent on new machinery becomes a dollar that companies can deduct from their taxes today.
In politics, Canadians have sent Mr. Trump a clear message: this country isn’t, and will never be, an appendage of the U.S. That same determination is needed in competing for business investment.