Opinion: Ottawa urged to play greater economic role

They decide which stores will have to shut down, who can stay open and under what conditions, who gets wage support, who gets loans, who gets bailed out, who is left to survive on their own.

The hands of governments are everywhere in the economy during the pandemic. And it’s becoming obvious that they’re not going away – even when we start to recover.

With vaccines slowly being distributed across the country and the prospects of freedom inching closer, federal planning for the recovery has started in earnest, with an important budget on the horizon and widespread consultations in the works.

While federal involvement in the economy will look a lot different in the recovery stage than it does in the midst of the brutal second wave, it will be omnipresent all the same.

And for the most part, that seems to be just fine with many business leaders. In fact, they’re inviting it.

“It is time for government, with an industrial policy, to support the overall direction” of the Canadian private sector, says Monique Leroux, the former CEO of Desjardins Group and now chair of the Industry Strategy Council, a group of top business leaders asked by the federal government to advise it on how to handle the economic side of the pandemic.

The council has been talking throughout the pandemic to businesses large and small in all corners of the country, advising senior government officials and cabinet ministers in real time how to tweak business supports, how to help labour, and how to safely restart the economy even as the coronavirus rages.

Now, it has set out a longer-term strategy to pull Canada out of its funk and make sure the path to recovery shakes us out of the complacency of the past.

But unlike the inclination from the private sector of previous eras to shove government out of the way and let unfettered capitalism thrive, they want to see government as a full-fledged partner.

“The concept is to bring a strong portfolio of public investments and private investment in a kind of renewed partnership between government, Canadian companies and pension funds and financial institutions in Canada to fully position our leadership in the world, (in areas) where we think Canada as a middle-sized country could make a difference,” Leroux said in an interview. “That’s the rationale.”

This doesn’t come out of the blue.

The United States and the United Kingdom are doing it, Germany and Israel are doing it, China and South Korea too.

The protectionist tendencies of U.S. President Donald Trump prompted a doubling down on government involvement in economic direction in countries around the world.

And then came the pandemic, showing countries in no uncertain terms that governments needed to be activist and even aggressive to ensure they have adequate medical supplies and vaccines.

But Leroux’s network told her that Ottawa’s involvement can’t just end with vaccines. Instead, it needs to become more strategic – and government insiders across the board have heard the appeal.

At first, the government’s involvement will come in the form of stimulus – up to $100 billion that Finance Minister Chrystia Freeland has already set aside to repair the damage caused by the pandemic. Training, infrastructure and other time-limited spending will form the bulk of the stimulus package – standard fare in the wake of recessions.

But the government has signalled on many fronts that it won’t stop there. Freeland has indicated she will actively push Canada’s digital prowess.

Leroux’s council also wants to see federal support for leveraging data and intellectual property, ramping up the agri-food sector and promoting advanced manufacturing. We’ve heard similar recommendations from the likes of the Business Council of Canada and the economic advisory council to former finance minister Bill Morneau, led by Dominic Barton, now-ambassador to China.

There’s every indication that the government is all ears.

But what if the government chooses wrong? Fans of a modern industrial strategy say they’re not advocating for government to pick winners. Rather, they say Ottawa spends billions every year on all sorts of incentives and subsidies for businesses. Instead of spending willy-nilly, they should have a strategy that pushes companies to be more competitive in the areas we are already good at.

It’s high risk. If governments, the financial sector and companies alike make the wrong bet, we will have wasted many billions of public and private money on mediocrity rather than excellence. But if they bet right, we’ll have jobs and profits for the next generation.

It looks like it’s a bet they’re all increasingly willing to take.

Heather Scoffield is a National Affairs writer.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Prime Minister Justin Trudeau and US Vice-President Joe Biden walk down the Hall of Honour on Parliament Hill in Ottawa on Friday, December 9, 2016. If Joe Biden’s decision to kill off Keystone XL is supposed to sound the death knell for Canada-U.S. relations, you wouldn’t know it from the newly minted president’s call sheet. THE CANADIAN PRESS/ Patrick Doyle
In wake of decision to kill Keystone XL, Biden’s first foreign-leader call? Trudeau

Biden rescinded former president Donald Trump’s approval of the US$8-billion cross-border pipeline expansion

Protesting farmers and their families gather around a bonfire to mark the harvest festival, which is called Lohri, on a blocked highway in protest against new farm laws on the outskirts of New Delhi, India, Wednesday, Jan. 13, 2021. Changes in India’s farm laws could potentially open up one of the world’s most populous markets and are being closely watched by Canada’s agricultural and economic sectors, say experts. THE CANADIAN PRESS/AP-Altaf Qadri
Changes in Indian farm laws could benefit Canada, experts say

Independent committee of experts to negotiate with opponents of legislation

A sign on a shop window indicates the store is closed in Ottawa, Monday March 23, 2020. The Canadian Federation of Independent Business is raising its estimate for the number of businesses that are considering the possibility of closing permanently. THE CANADIAN PRESS/Adrian Wyld
CFIB raises estimate of small businesses at risk of closing permanently

One in six Canadian small business owners seriously contemplating shutting down

Alberta Premier Rachel Notley shakes hands with Joel Ward, former Red Deer College President and CEO, as Notley announces that the college is now on the path to grant degrees. (File photo by Advocate staff)
Future of Red Deer University increasingly uncertain

MLA’s college update says RDC more like SAIT and NAIT than a university

An Italian police officer stands by a copy of the “Salvator Mundi” (Savior of the World) by Leonardo da Vinci, in Naples, Italy, Wednesday, Jan. 20, 2021. Italian police have recovered a copy of Leonardo da Vinci’s 16th century “Salvator Mundi” painting of Jesus Christ that was stolen from a Naples church without the priests even realizing it was gone. The discovery was made over the weekend when Naples police working on a bigger operation found the painting hidden in an apartment. Police chief Alfredo Fabbrocini said the owner offered a “less than credible” explanation that he had “casually” bought it at a small market. (Italian Police via AP)
Italian police find stolen copy of Leonardo ‘Salvator Mundi’

500-year-old copy of Leonardo da Vinci painting

Kamala Harris is sworn in as vice president by Supreme Court Justice Sonia Sotomayor as her husband Doug Emhoff holds the Bible during the 59th Presidential Inauguration at the U.S. Capitol in Washington, Wednesday, Jan. 20, 2021. (AP Photo/Patrick Semansky, Pool)
Inauguration fashion: Purple, pearls, American designers

Joe Biden wore navy blue suit and overcoat by Ralph Lauren

Adam Hadwin, of Canada, chips to the second green during the first round of the Masters golf tournament in Augusta, Ga., Thursday, Nov. 12, 2020. THE CANADIAN PRESS/AP-Matt Slocum
Adam Hadwin hopes to hit reset button in 2021 starting with American Express

Adam Hadwin hopes to hit reset button in 2021 starting with American Express

Japan's Yuto Totsuka competes during the men's World Cup freestyle halfpipe snowboard event in Calgary, Alta., Friday, Feb. 15, 2019.THE CANADIAN PRESS/Jeff McIntosh
Calgary runs out of runway to host world freestyle, snowboard championships

Calgary runs out of runway to host world freestyle, snowboard championships

Toronto FC midfielder Jonathan Osorio (21) celebrates his goal during extra time MLS playoff soccer action against the D.C. United, in Toronto on Saturday, Oct. 19, 2019. Osorio says a lot has changed with the Canadian national team since he first came to camp in 2013. THE CANADIAN PRESS/Frank Gunn
Jonathan Osorio upbeat about what lies ahead for Canadian men’s soccer team

Jonathan Osorio upbeat about what lies ahead for Canadian men’s soccer team

Calgary Flames' Johnny Gaudreau, centre, celebrates his goal with teammates during second period NHL hockey action against the Vancouver Canucks in Calgary, Monday, Jan. 18, 2021. Just three games into a condensed season, the Calgary Flames are already on a break. THE CANADIAN PRESS/Jeff McIntosh
After a strong start, Calgary Flames get early breather in short NHL season

After a strong start, Calgary Flames get early breather in short NHL season

Edmonton Oilers centre Leon Draisaitl (29) hits Toronto Maple Leafs left wing Zach Hyman (11) during first period NHL hockey action in Toronto on Wednesday, January 20, 2021. THE CANADIAN PRESS/Nathan Denette
Oilers’ Draisaitl scores winner as showdown with Maple Leafs fails to live up to hype

Oilers’ Draisaitl scores winner as showdown with Maple Leafs fails to live up to hype

Conservative MP Derek Sloan arrives to a meeting in Ottawa on September 22, 2020. THE CANADIAN PRESS/Sean Kilpatrick
MP Derek Sloan ejected from Conservative caucus for “destructive behaviour”: O’Toole

MP Derek Sloan ejected from Conservative caucus for “destructive behaviour”: O’Toole

Most Read