Ontario’s future Ontario’s Jobs and Prosperity Council calls for investing in the future, today
TheStar.com – opinion/editorials
December 19, 2012
Anyone paying attention to Ontario’s flailing economy knows that the middle class is being squeezed, low-paying temporary jobs are becoming the norm and a stable future for young people appears increasingly out of reach. General Motors’ cost-driven decision to shift production of the next version of its Camaro sports car from Oshawa to Michigan is just the latest example of the upheaval and uncertainty we face. The good times of strong and steady growth, have ended — at least for now.
It doesn’t have to remain that way. Ontario has been a powerhouse of industry in the recent past, and it still has enviable advantages including a skilled workforce, abundant resources and superb universities. But making the most of those advantages will take vision, teamwork and some daring, as a blue-ribbon panel of business heavyweights has just reminded us.
The Jobs and Prosperity Council which Premier Dalton McGuinty and Finance Minister Dwight Duncan launched in March has tabled a thoughtfulreport that challenges industry, government and academia to help Ontario succeed, in part by dramatically expanding trade with new global markets.
Council vice chair Kevin Lynch, who is also vice-chair of BMO Financial Group, cautions that Ontario will fall behind unless it manages to capitalize on the emerging middle classes in such fast-growing countries as China, India and Brazil. “We have to up our game, we have to change,” he says. The rest of the blue-ribbon panel headed by Royal Bank Canada president and CEO Gord Nixon agrees.
What’s needed, the report says, is a radical shift in thinking because countries with the biggest demand for goods are outside our traditional comfort zones of the United States and Europe, and have different cultures, rules and market conditions. Breaking in will require a more concerted, collaborative effort by business, government and the academic sector.
Governments, both federal and provincial, have helped over the past decade by cutting red tape and corporate taxes, creating space for business to thrive. While government can provide additional incentives to innovate, within current spending restraints, the focus must now shift to the leaders of industry, whose companies are hoarding massive cash reserves instead of reinvesting profits into the research, new software and high-tech machinery that’s needed to improve productivity.
That lack of innovative spirit is painfully evident. We continue to export 77 per cent of our goods to the U.S., compared to a paltry 1.4 per cent to China. Our research and development spending is just 1.2 per cent of gross domestic product, half the U.S. level. And our businesses are 25 per cent less productive.
All this must change. We need management that is forward-looking, more prepared to invest in innovation, more adaptive and more export-oriented.
The report sets out four challenges for the next decade: Ontario should aim to triple exports to China, India and Brazil, and double exports generally. Twice as many small and medium-sized enterprises should become exporters. The productivity gap with the U.S. should be reduced by half and eliminated altogether in manufacturing. And business should spend more on research and development.
With a provincial election expected next year, whoever becomes Ontario premier must take this non-partisan report on board, and encourage business to do the same. The prosperity panel has issued a powerful, thoughtful call for transformation. Let’s get on with it.
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