How to deal with the economic crisis
NationalPost.com – Full Comment, Canadian politics – Bob Rae: How to deal with the economic crisis
Posted: November 22, 2008, Bob Rae
Political parties have a critical role to play in helping Canadians get through tough economic times. Today, Canadians are rightly preoccupied with jobs, retirement savings and pensions, housing prices and with making ends meet. They expect intelligent action from their government.
The challenges are numerous. There are concerns that capital and credit markets have seized up, arresting growth in its tracks. A perfect storm has hit Canada’s manufacturing industries — sharply falling demand from the United States coupled with fierce competition from increasingly productive Asian economies. Our gyrating currency affects what we buy and what we sell.
Almost 20 years ago, as the premier of Ontario during its worst recession since the Great Depression, I gained essential experience in governing when the economy recedes. Today, under similar circumstances, I would do some things very differently. So here, for the record, are some lessons learned from a life of public service.
• First, it is essential to understand the speed with which a falling economy can cause the revenues of a government to evaporate. Just four weeks ago, Stephen Harper assured Canadians that our economy was fundamentally strong. Today, he openly speaks to a potential deficit.
• Second, times of crisis teach us the importance of being practical, and show us the folly of ideologies and theories. It was a great British Conservative, Edmund Burke, who reminded us that “there is nothing more dangerous than to govern in the name of a theory.” Mr. Harper is finally taking note. It’s about time.
• Third, prosperity is earned, it matters and it can never be taken for granted.
• Fourth, fiscal discipline matters and is linked to prosperity.
• Fifth, governments must ensure everyone benefits from the opportunities prosperity creates.
• Sixth, you can’t go it alone. It doesn’t matter how independently secure you might think you are — global recessions are humbling to the mighty. So it’s essential to get all sorts of people to the table. You need other governments, industry, labour and community leaders, so as to build consensus for tough action.
To begin to solve our current challenges, we need to apply those lessons learned, and take the right steps.
Our first step must be to support the key industries that drive the Canadian economy. In the car industry, for example, the federal government has to negotiate assistance packages. We must, or we risk losing much more than we already have. In return, Ottawa must insist on a profound commitment from the industry to make it sustainable, green and competitive going forward.
Step two is for the federal government, the provinces and our communities to substantively invest in infrastructure. Crumbling infrastructure adversely affects business productivity and our quality of life. A major infrastructure build will help maintain jobs and demand in the economy, while making us more productive.
Step three is to help working families manage through this time. We need to make sure that employment insurance is there for Canadians when they need it. Similarly, we should change the Canada Student Loan program to ensure that all students have access to low-interest support. We need to work harder with the provinces and business on opportunities for aboriginal training and aboriginal business, and on programs to ensure the speedy integration of new Canadians into our society with their skills recognized.
These three steps must all be carried out within a framework of fiscal responsibility and prudence.
Beyond today, we have to address the deeper concern that Canadians have about the future. To do this, we need to completely rethink our tax system. We need to make it more efficient, simpler and more geared toward productivity, savings, entrepreneurship and wealth creation. If we have real tax reform, we can have personal income-tax cuts that are fair and progressive, that reward savings and boost productivity.
Our corporate taxes must also be competitive. The economies that thrive are the ones that include competitive tax rates, and an environment that encourages venture capital to create prosperity. Energy efficiency, and a greener economy and society have to remain critical objectives.
We also need to recognize the rise of a permanent and powerful economic centre of gravity in Western Canada. The oil and gas industry has been driving the Canadian economy in recent years. It is vibrant, entrepreneurial and innovative. We are lucky to have it. The challenge for this sector and for governments is to make the resource sustainable and as environmentally friendly as possible.
The crisis affecting Canada is global, and Canada must be a leader in finding solutions. We should play a role in redesigning the international economic architecture to help prevent such a crisis from happening again.
A new era of prosperity will not come about on its own. It will take focus and resolve. Canada will once again have to find its voice, a voice that transcends borders and barriers and speaks to a common interest far stronger than what divides us. That voice must express this point at home and abroad, that things will get better, that opportunities can come again.
• Bob Rae is MP for Toronto Centre, and a candidate to lead the Liberal Party of Canada.