Last Updated on January 24, 2019
The recent 70 per cent plunge in the price of oil is being felt across Canada. One who is assessing the implications is Bank of Canada governor Stephen Poloz who says, that every Canadian has “less spending power” because of the falling loonie. The weakening currency has led to sharp inflation in the price of imported goods, including a year-on-year increase of 3.7 per cent in the cost of food.
Canada’s governing liberals now have a strong mandate to help rebuild the floundering economy largely caused by the oil shock and a falling Canadian dollar. Infrastructure spending is only a single weapon in the government’s arsenal. According to economists, government investment in infrastructure could be a viable strategy to help drive the economy by creating fiscal stimulus packages. Wisely spent, infrastructure expenditures can act as a catalyst, straightening kinks and widening bottlenecks, stimulating more economic benefit than just fiscal expansion.
Economists also believe the current low interest rate environment will allow Canada to borrow more freely.
However, the government must also try to create other types of catalysts that will pose lower risks to help rebuild the economy.
One such idea is to reinvigorate the public service. Canada’s civil service elite recognized as a large pool of highly smart individuals whose primary interest is the welfare of Canada and Canadians, needs to be returned to its former level of greatness.
The new government must also consider that lowering taxes only has a temporary effect. Tax savings that could be sent abroad for the purchase of unproductive assets or to purchase stock buybacks would be better directly spent via injections to grow the economy.
The government must embrace the power of organized labour yet not assume it always acts in the public interest. Until the mid-1970s strong unions backed by government legislation helped to prevent wage inequality. However unions are often more interested in the welfare of their existing members rather than the good of the entire country.
China is already supplementing its enormous workforce with the use of robots where feasible and the Canadian government should consider efforts to encourage companies willing to invest in plant and labour-saving machinery. Without cheap labour, Canada simply cannot compete in a global economy.
Parliamentarians must also celebrate Canadian arts and culture in all its diversity. Culture makes us rich, figuratively and literally.
Last, the new government must endorse our science community. Canada must be seen as a country that encourages scientists and even if the government cannot promise endless funding.
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