Dear Justin (may I still call you that?):
You earned some ridicule earlier this summer when you promised to “grow the economy from the heart outwards.” You talked about investing in the middle class.
Well, if you want to get to the heart of our economy in a practical sense, and make a meaningful difference for middle-class families, I’ve got some ideas on where to start.
Take a look at non-VECTOM cities
Look at the small and medium-sized communities outside of our big VECTOM cities (that stands for Vancouver, Edmonton, Calgary Toronto, Ottawa and Montreal, by the way).
These non-VECTOM communities were once the heart of Canada’s economic engine. It isn’t just the auto sector in Southern Ontario, but communities from coast to coast to coast that have lost anchor employers in a host of manufacturing verticals.
Younger and older residents in these small towns and cities are leaving to find their fortunes elsewhere. That’s gutting the local tax base for many municipalities and leaving other local businesses with a diminished customer base.
The country’s heart is at serious risk of myocardial infarction.
What is the result, and what can be done?
Let’s start with real estate
The manufacturing exodus has left a multitude of small and medium-sized communities with a lot of underperforming commercial, industrial and residential real estate as the middle class has shrunk.
This real estate may represent an opportunity to expand employment opportunities and spread economic growth beyond the relatively small handful of larger communities that recently have done well.
The provincial and federal levels of government have the power to create regulatory environments more responsive to changing needs and, if necessary, create incentives that encourage companies to move in and set up shop in the industrial properties left idle by others.
A sensible industrial policy
And I’ll say it again – Canada needs an industrial policy that doesn’t put all our eggs in the baskets of financial services, the volatile energy sector or the elusive knowledge economy.
Unlike the industrial policies of the past that expected career bureaucrats to pick winners and bolster losers in specific industry verticals, we need a concerted effort to repatriate viable manufacturing jobs in any number of industries that have been lost overseas.
We need fact-based decision-making, which may take a bit of time to get right and require a Royal Commission. Whatever is needed, you are the key – the person in the position to get the thinkers and decision-makers together. Your call to action, to say the least, has been noticed this week.
Your cabinet must look at this sort of comprehensive industrial policy in tandem with infrastructure renewal, to see where likely and probable policies can be implemented that may lead to private sector investment in places that haven’t seen much or any for some time.
Not much in the way of new jobs
We have lots of towns that have existing infrastructure but not much in the way of new jobs.
Last year at this time, when the drop in global oil prices was just starting to take hold, I wrote about how high-paying jobs were pumping new life into the economy of Miramichi N.B. Tradespeople and skilled workers were commuting by air to feed the insatiable labour demands of the oil sands boom in Fort McMurray.
Much of their disposable income wasn’t being spent in Alberta, but back home in New Brunswick.
I cautioned then that booms have two speeds, stop and go. Prosperity imported from another part of the country is temporary. It does nothing to address the underlying issues that dog a local economy.
The full negative impact is only deferred. I haven’t been to Miramichi in a while, but I’ll hazard a guess that boom has lost some of its thunder.
And an overhaul of transportation infrastructure
The emphasis has to be on giving struggling local economies their own legs to stand on, instead of using something else as a crutch. Infrastructure renewal is key to growth in many places.
A couple of years ago, I wrote about how about 30 per cent of municipal infrastructure is at risk due to wear and tear. The situation hasn’t gotten any better.
According to a report from Transport Canada a few years back, 94 per cent of all air passengers and cargo use only 26 of 726 airports, 84 per cent of all rail traffic uses only 33 per cent of the railway lines, and 80 per cent of all marine traffic passes through only 30 of 300 public ports.
Surely, we can make better use of what we have to stimulate economic activity where it is needed most and give municipalities the resources they need for renewal.
But it’s going to take well-researched and fact-based policies that encourage efficient use of what we already have in place. All forms of transportation need to be considered for reinvestment to encourage sustainable private sector economic activity.
So there you have it, Prime Minister Trudeau, the heart of Canada’s economy, what’s ailing it and how to treat it.
All the very best to you and your colleagues.
To discuss this or any other valuation topic in the context of your property, please contact me at [email protected]. I am also interested in your feedback and suggestions for future articles.