How to prevent a financial pandemic when the COVID-19 pandemic ends

by Victor G. Dodig – President and Chief Executive Officer, CIBC

As published in The Globe and Mail

At last, we are moving toward an inflection point in this pandemic as a growing number of Canadians receive vaccines. While we’ve always known that the path to recovery wouldn’t be a straight line, we should see pent-up consumer demand drive a rebound in the economy in the coming quarters, and help the country recover some of what’s been lost.

This is good news, and we should all revel in it. We’re all looking forward to seeing our extended family members again, especially grandparents, or being out with friends at a live event.

But we must also know that an economic rebound is just that. A return to normal levels of consumer spending will be welcomed but it can only sustain the economy for so long, and perhaps not as long as you’d expect. At the same time, renewed spending could push interest rates up from historic lows.

Just as we continue to take measures to prevent the consequences of the COVID-19 pandemic, we need to consider measures to prevent a financial pandemic down the road. That means using the momentum of a rebounding economy to implement smart and creative policies that add long-term, sustainable impetus to our economic growth long after the rebound inevitably fades.

What’s required for Canada to secure long-term growth opportunities in a postpandemic economy is a clearly articulated plan to capture long-term growth by building our nation’s financial capital, human capital and social capital.

There is an undeniable swell of innovation in fields such as technology, clean energy, health care and education that will only accelerate postpandemic. This is a generational economic opportunity for Canada. History tells us that innovative industries tend to cluster where they find the best foundation for growth. If we want that to be Canada, we have work to do.

Entering the pandemic, our global rankings around competitiveness, trade, foreign investment and quality of life were stagnant or declining. That sends a sobering message.

When it comes to financial capital, we need to deepen our capital pools so that we can better support growing enterprises. We need to make it easier for growth industries to start and stay in Canada by fostering a regulatory system that moves at the speed of the new economy, is prudent and sensible, and is aligned between the federal and provincial levels.

We need to demonstrate innovative thinking to help companies thrive here. For example, encouraging broader use of flow-through shares that allow growing companies to pass expenses through to shareholders, who can deduct those expenses from their income, is one opportunity. This has worked to spur our resource sectors, and we should expand it to more high-growth sectors that we can scale on our own turf.

Next, we have to increase our investments in human capital. This is our most important asset, by far. Through immigration, education and inclusion, we must ensure the skills of our work force match the needs of a transforming global economy.

Proposed higher immigration levels aimed at attracting skilled workers in growth sectors will help. But we must also do more to ensure that Canadians here today can share in and help propel our economic growth. We can do this by making Canada Education Savings Grants available for all age groups on contributions to their registered education savings plans. This gives working Canadians an incentive to invest in themselves and retrain in growth sectors.

Likewise, we should create a national childcare program that draws on the Quebec experience to increase opportunities for women and primary caregivers, who have been disproportionately affected by the pandemic.

Finally, we need to nurture our social capital, which will be a prerequisite for attracting financial and human capital in a postpandemic economy. National reputations will be tested against new criteria for economic inclusion, environmental responsibility and progressive governance. These will be foundational in attracting bright minds from around the world to call Canada home, and to investor confidence that investments made here are part of a sustainable long-term investment in growth.

We have a rare chance to reposition Canada as a forward-thinking hub for growth, innovation, investment and long-term economic prosperity. That means getting the best from all of our forms of capital – financial, human, and social. And it means starting now.