Letter to the Right Honourable Stephen J. Harper, regarding the Speech from the Throne

Dear Prime Minister,

As you prepare for the return of Parliament and a Throne Speech that will outline your government’s agenda for the next two years, I would like to offer a few brief thoughts on behalf of our members – the men and women who lead 150 of Canada’s largest enterprises. These firms, while representing a fraction of one per cent of Canadian businesses, are responsible for a substantial share of the country’s private-sector employment, exports, investments in innovation and remittances to the federal, provincial and municipal governments.

Overall, Canada’s economy is in good shape. Flooding in Alberta and a construction strike in Quebec contributed to a slowdown in the second quarter, but the recovery now appears back on track. The Organisation for Economic Cooperation and Development expects that Canada will lead the G7 in GDP growth this year. At the same time, your recent pledge to achieve a debt-to-GDP ratio of 25 per cent by 2021 demonstrates once again Canadian leadership on fiscal sustainability. Canada’s business leaders fully support this goal and applaud your government’s commitment to sound management of public finances.

Both internationally and here at home, there are a number of specific actions that your government can and should take to build on Canada’s strengths and enhance our country’s economic prospects.

On the international front, your personal engagement and leadership are needed to protect and promote Canadian interests in three key areas:

The trade agenda. Our country is at a make-or-break point in negotiations on the proposed Comprehensive Economic and Trade Agreement with the European Union. Your recent interventions with European leaders were welcome, but we are concerned by reports that significant obstacles stand in the way of an agreement.  Unless both sides move quickly to make the necessary concessions, we fear that the CETA may slip out of reach and, with it, Canada’s opportunity to secure preferential access to one of the world’s largest markets. That, in turn, would seriously undermine our country’s ability to make progress in negotiations with emerging markets in the Asia Pacific region and elsewhere – not to mention raising the risk of trade diversion from Canada. The credibility of our country’s trade agenda, a cornerstone of your government’s strategy for jobs and growth, is at stake.

The North American partnership.  New Year’s Day 2014 will mark the 20^th anniversary of the implementation of the North American Free Trade Agreement. NAFTA has generated tremendous benefits for workers and families throughout Canada, the United States and Mexico, but the trilateral relationship needs to be strengthened and renewed. The Canada-U.S. Beyond the Border and Regulatory Cooperation initiatives that you helped launch two years ago hold much promise, although so far tangible benefits have been few and far between. Meanwhile, we see an historic opportunity to work with Canada’s partners in the United States and Mexico in forging a true North American energy advantage. This will not only provide consumers with secure access to affordable and reliable energy supplies, but can play a major role in fueling the revival of North American manufacturing.  An essential step is the development of a comprehensive strategy to expand and enhance cross-border energy infrastructure, including the Keystone XL pipeline. Your continued direct engagement with President Obama is critical to moving this agenda forward in a constructive way that meets both countries’ objectives.

Canada-China relations.  During your trip to China in February 2012 you spoke of the need “to take the Canada-China strategic economic partnership to the next level.” Here again, it is important to keep up the momentum.  Under the new leadership of President Xi Jinping, China is pursuing structural reforms aimed at stimulating domestic demand and promoting long-term economic development. Such policies have the potential to open new opportunities for foreign investors and new markets for Canadian exporters across a range of sectors. We urge you to return to Beijing at the earliest opportunity to initiate a meaningful and effective dialogue with the new Chinese leadership that will advance Canada’s interests with the world’s second-largest economy.

The second set of priorities concerns the role of government in creating an open, secure and competitive business climate.  Your government’s record here is strong: you have cut taxes, reduced red tape, shown leadership on cybersecurity and maintained a stable and efficient financial system that is the envy of the world. Employers across the country have responded by stepping up their investments in productivity-enhancing machinery and equipment, and by creating more than one million net new jobs – mostly private sector and full-time – since the end of the recession in July 2009. Your government’s decision this week to freeze Employment Insurance premiums for the next three years further enhances the outlook for business growth and job creation.

Nevertheless, I would like to take this opportunity to flag the following areas of concern to Canada’s business community:

Labour market policy. In the 2013 federal budget, your government identified shortages of skilled labour and Canada’s aging population as significant constraints on growth. The proposed Canada Job Grant is a step in the right direction, although as currently conceived we expect that it will be of value primarily to small and medium-sized companies that lack sufficient internal training capacity. Regardless, much more needs to be done to address our country’s labour market challenges. In our view, the absence of a coherent national approach to education and skills development policy puts Canada at a significant disadvantage relative to other leading economies. The federal government has an important role to play in working with the provinces, educational institutions and the private sector to better align education and training with the skills our country needs to succeed and prosper in the 21^st century global economy. We strongly encourage your government to take up this mantle by collaborating with key partners and using the policy levers within your jurisdiction to strengthen Canada’s human capital advantage.

Competition policy. The recent controversy surrounding the future of Canada’s wireless telecommunications industry has underscored the importance of a consistent and competitively neutral approach to business regulation. It has also led many to question Canada’s longstanding foreign ownership restrictions in the telecommunications sector.  Regardless of the sector, we believe that government has a duty to ensure a predictable and level playing field for all competitors, foreign and domestic; anything less would distort economic decision-making and promote inefficiency.  Going forward, we strongly encourage you to be guided by the recommendations of the 2008 Competition Policy Review Panel, particularly as they pertain to Canada’s sectoral restrictions on foreign direct investment.

Protecting consumers.  On the subject of competition, we would be remiss if we failed to mention how Canada’s staunchly protectionist and anti-competitive supply management regimes for dairy and poultry producers penalize Canadian consumers, particularly low-income families.  Supply management inflates prices for milk, cheese, butter, eggs, chicken and other staple foods. It inhibits innovation, restricting Canadian producers from pursuing export opportunities. And it diminishes our country’s ability to negotiate trade agreements that would benefit millions of Canadian workers. We recognize the political challenges surrounding this issue, but the longer Canada waits to reform supply management, the greater the cost to consumers and Canadian competitiveness.

In conclusion, Prime Minister, your leadership is vital both in advancing Canada’s interests abroad and in establishing a domestic economic agenda that promotes jobs and growth. Canada’s business leaders look forward to continuing to work with you and your government in pursuit of these goals.

Sincerely,

The Honourable John Manley