Letter to Justin Trudeau, Prime Minister-Designate

Dear Prime Minister-designate,

On behalf of business leaders across the country, I write to congratulate you and the Liberal Party of Canada on your victory in this week’s national general election. After the longest federal campaign in more than 140 years, Canadians have voted decisively for new leadership and a reordering of policy priorities.

As you prepare to be sworn in as our nation’s 23rd Prime Minister, we know you face many demands. Against a backdrop of accelerating global change and disruption, Canadians are looking to you and your team for solutions to a broad range of social and economic challenges.

Satisfying these expectations will not be easy. It will require vision, sound judgment and an approach to governance that emphasizes consultation and consensus-building rather than partisanship and top-down authority.

During the campaign, you spoke of the need to strengthen democracy in Canada and turn back the tide of cynicism that threatens to engulf our political system. As someone who believes deeply in the value of public service and strong public institutions, I applaud your commitment to these ideals.

We live in a complex, rapidly evolving world. From climate change and global interdependence to sweeping demographic shifts, terrorism and technological change, the issues facing policymakers today are daunting in their scope and significance. If we are to meet these challenges adequately, we need citizens who are engaged in the political process. We need governments that are open, adaptable and innovative. And we need intelligent, thoughtful leadership that seeks to bring Canadians together in pursuit of common goals, rather than driving them apart.

On that note, I hope that you will allow me to share a few preliminary thoughts on behalf of the men and women who lead Canada’s largest and most globally engaged enterprises.

Representing every region and sector of the economy, our 150 member companies employ 1.4 million citizens, account for more than half the value of the Toronto Stock Exchange, contribute the largest share of federal corporate taxes, and are responsible for most of Canada’s exports, corporate philanthropy, and private-sector investments in research and development. Through supply chain partnerships, service contracts and mentoring programs, they support many hundreds of thousands of small businesses and entrepreneurs in communities of all sizes, in every part of the country.

Our member companies are also among Canada’s largest recruiters of young people – providing employment, training and work-integrated learning experiences that help recent graduates prepare for rewarding, successful careers.

Doing business in almost every corner of the world from a Canadian base, our members have a keen appreciation of this country’s advantages and unparalleled potential. They know, too, that we cannot take Canada’s future prosperity for granted. To thrive in the 21st century, we need smart public policy that equips Canadians to succeed and prosper in an increasingly competitive global economy. We need leadership that thinks seriously about the kind of Canada we want – not just today or next year, but a generation or more down the road.

In politics as in the private sector, the pressure to focus on short-term goals is sometimes overwhelming. But to stay ahead as a country, governments and elected officials must pay equal attention to the long-term challenges that threaten our economic well-being. In our view, the most serious of these include Canada’s aging population and labour force, sustained weak productivity performance, the ongoing shift of investment and economic dynamism toward emerging markets, and high public debt loads, particularly at the provincial level.

During the campaign, you put forward a proposal to reinvigorate the economy by investing in programs and projects that will create jobs and foster productivity growth, even at the expense of modest short-term deficits. In principle, we would support such a fiscal plan, provided that the federal government’s net debt as a share of GDP continues on its current downward path toward a goal of 25 per cent by 2021.

Above all, the key to any long-term strategy for Canadian economic success must be a laser-like focus on international competitiveness. In today’s global economy, there is no point pretending we can hide behind national borders. Our country’s future standard of living depends on our willingness to compete aggressively for business investment, for talent and for access to new markets for Canadian goods and services.

In our view, the principal ingredients of such a strategy include:

Investments in productivity-enhancing infrastructure. There is a strong case to be made for increased federal spending on infrastructure, but higher spending alone will not improve productivity. The emphasis needs to be on projects that will have a direct, measureable impact on growth and economic capacity. Efficient road, rail and air and energy networks, modernized ports, expanded public transit systems and other measures to ease urban congestion are examples of the sorts of initiatives that can underpin growth and improve Canada’s ability to compete for investment and jobs. At the same time, governments need to ensure a positive framework for private infrastructure investments in critical areas such as energy transportation and transmission. Energy products represent the largest sector of Canada’s export economy and getting our natural resources to tidewater must be a top priority. The private sector is ready to build safe and environmentally secure energy infrastructure, supported by regulatory approval processes that are timely, efficient and predictable.

Trade and investment liberalization. During the election campaign you emphasized the need to open markets for Canadian goods and services in order to grow Canadian businesses, create good-paying jobs, and provide choice and lower prices to Canadian consumers. Your government can significantly strengthen Canada’s trade prospects by ratifying the Canada-EU Comprehensive Economic and Trade Agreement, and by deploying the full range of Canada’s diplomatic resources to support ratification by the EU. Meanwhile, the recently concluded Trans-Pacific Partnership (TPP) agreement holds tremendous potential for Canada’s trade in the Asia Pacific region. It is unclear at this point whether the TPP will win approval from the U.S. Congress, but if the agreement is implemented Canada cannot afford to be left out.

Improved relations with key economic partners. Securing access to new export markets is essential, but so too is maintaining close relations with key existing trading partners such as the United States, Mexico and China. A key task of your government will be to focus the North American commercial and political partnership on a series of bilateral and trilateral initiatives to strengthen the region’s competitiveness. Trilaterally, the first order of business should be for Canada to host a North American Leaders Summit, something our country has not done since 2007. At the same time, we urge your government to reverse the 2009 decision that requires most travellers from Mexico to obtain a visa before visiting Canada. With regards to China – our country’s second-largest trading partner, and soon to be the world’s largest economy – we believe the time has come to seek a comprehensive bilateral economic agreement. Smart, principled engagement of China must be at the centre of Canadian foreign policy.

Positioning Canada as a magnet for global businesses. Governments around the world are eager to attract corporate headquarters and globally focused businesses to their jurisdictions, and for good reason. Large companies are significant taxpayers and sources of both investment and high-value employment. They are also important drivers of innovation and higher productivity, with the capability to achieve economies of scale that enable success in an increasingly competitive global marketplace. One of the key goals of Canadian economic policy should be to create an environment that fosters the building and retaining of strong Canadian-based enterprises, and that encourages smaller firms to grow and become significant exporters. At the same time, your government should move to eliminate restrictive immigration and tax policies that make it difficult for companies to attract and retain experienced head office talent.

A national skills strategy. Canada’s education and training systems have long been among the world’s best, but recent international assessments show that Canadian students are not keeping up with their peers in a number of developed and emerging countries. To ensure a high quality of life for all citizens, it is time for a new approach and an honest conversation among governments, employers and educators on ways to improve outcomes and enhance career opportunities for young Canadians. Of particular importance is the need to address the unrealized potential in Canada’s aboriginal population, one of the fastest-growing demographic groups in the country.

Tax reform and simplification. Canada needs a tax system for the 21st century, one that reduces compliance costs and increases transparency while promoting growth, investment, entrepreneurship and job creation. Higher marginal rates may bring in revenue in the short term, but ultimately they encourage tax avoidance and undermine Canada’s international competitiveness. The fundamental goal of tax reform should be to achieve the broadest base possible, with lower rates and fewer preferences. As fiscal circumstances permit, the federal government should reduce the burden on low- and middle-income households by increasing the share of income that is exempt from tax, and reviewing income-tested benefits. The corporate tax system is equally in need of simplification. Jack Mintz, one of Canada’s foremost tax experts, has pointed out that special breaks for small business actually discourage growth because firms lose tax relief as they become larger. A smarter approach would be to reward companies that expand, create jobs and increase Canada’s trade with the world.

It is our fervent hope that when Parliament resumes, all parties will work together to help build a healthier and more resilient Canadian economy. As a non-partisan organization that strives to offer a thoughtful, informed and Canada-wide voice on issues that are critical to the country’s economic future, we promise to do our part in contributing to that process.

Together with my colleagues in all regions of the country, I offer congratulations and best wishes. The members of the Canadian Council of Chief Executives look forward to working with you and your government in the interests of a stronger and better Canada.

Sincerely,

The Honourable John Manley