Budget 2024

April 16 budget must prioritize growth 

As published in The Globe and Mail

French poet and literary critic Paul Valéry famously said that the future is not what it used to be. For anyone in their early 50s – which is the age of Canada’s Prime Minister and the average age of members of Parliament – this moment of uncertainty is anything but the future we expected.

Indeed, the promise of the post-Cold War era never materialized. Instead, the past 30 years have been marked by numerous consequential events, including wars, global terrorism, short-lived recessions and a major financial crisis. The past few years have been characterized by considerable middle-class anxiety, increased polarization and populism in our politics. Meanwhile our economy has been marked by secular stagnation and low productivity, with most households feeling they are never getting ahead.

But one could argue the current gravity of the policy challenges we face today represents an inflection point in history. To quote former U.S. Treasury secretary Larry Summers in a recent interview, it is a time for a “new seriousness.”

Consider COVID-19. None of us could have ever imagined living through a global pandemic of such scale and length. But here we are. We have been led to believe our health care deficiencies are a function of a lack of resources. However, Canada is among the largest health spenders among OECD countries. Total spending here was estimated last fall to reach a new level in 2021 at $308-billion. It is time to get serious on health care reform.

Then there’s the recent Russian invasion of Ukraine, which challenged the post-Second World War liberal order that we more or less took for granted. To be sure, the intensifying China-U.S. rivalry – and the new era of geo-economics – has significant consequences. But it didn’t directly challenge our security the way this invasion has. As we watch Ukrainians bravely defend themselves with their own might, it is time to get serious about our own foreign and defence policies.

One problem that has been known to be a grave threat for some time is climate change. The scientific consensus is clear: We are running out of time. But it turns out the world still needs reliable energy, and the current supply isn’t there to meet the growing demand. How we execute this low-carbon transition will be immensely challenging. It is time to get serious on the energy transition and innovation.

High inflation is also not new, but rarely have we seen such intense pressure for central banks to engineer a perilous “soft landing” after a unique and unpredictable economic crisis. The stakes are high: if interest rates are hiked too fast, it will most certainly create a recession. If they aren’t, inflation may become so anchored it will be even harder to bring it down over time. Given our collective indebtedness, this one matters a great deal. As the federal government – which didn’t help by overstimulating the economy – prepares for a budget expected next month, it is time to get serious on fiscal policy and public finances.

American economist Robert Gordon is well known for his dire projections on productivity and economic growth. We can debate what are the best prescriptions to grow our economy over the long run, but we also need to be clear on the ramifications of inaction. Living standards of future generations will decline if we don’t grow the pie. As other countries move forward with their own ambitious strategies, it is time Canada gets serious about long-term growth.

Populist politics isn’t an unprecedented phenomenon either, but politicians peddling conspiracies and applauding unruly upheavals to overthrow elected governments in well-established democracies is not a trivial development. Whatever the root causes, the consequences on all of us are real. It is time to get serious about our democracy.

In so many ways, a high degree of uncertainty is our new reality. Some of our traditional policy anchors – just think about the liberal international trading order, our health system and our fiscal framework – are now much more vulnerable to future shocks. But being fatalistic about it will not help us climb these big sinuous policy mountains.

In such circumstances, it has never been more important to believe in human agency – the power of our actions and the will to move forward on a progress agenda matter a great deal. Progress is a choice.

Don’t let anyone convince you this will be easy. There are no quick fixes to these policy challenges. It becomes the function of democratic politics to chart a path forward. This may not be the future our current generation of leaders prepared for, but we have what is needed to be successful. It is time for a new seriousness.