What in the World?
Not to sound agist (that’s how any great conversations with that one uncle starts eh), but who uses the word “Tariff” these day, what happened to duties, or just taxes? Also we’d be at least 10 states, if not 13. If it was 10 all the stars would still fit on the flag.
Backstory:
If you’re reading this in the future, you might have no idea what I’m alluding to. Well it’s the year 2025, May has just started and I think I’ve heard the word Tariff more than I ever thought possible. Canada’s federal liberal party had possibly the worlds quickest U-Turn to an election victory after facing sure defeat, and the guy running the US is convinced Canada should be “the 51st state”, among about 500 other things. What a weird timeline. I think I’m going to come back to this in 10 or 20 years and be so confused. At least I hope that’s the case and all the worlds problems get solved, one can at least dream. But for now this is the world we live in and there are some pressing problems facing Canada and the new Prime Minister.
Mark Carney:
Arguably, one of the best moves of Trudeaus political career was knowing when to bow out. With the snap election being called by the new leader of the liberal party Mark Carney. Who really seemed to come out of nowhere, although looking at his resume he’s been quite involved in government prior to this. Against all odds, a seemingly defeated liberal party, he managed to come 3 seats short of a majority government. In this article, while there are so many things going on in the US and Canada, and as we’re all learning the links are extremely deep and trade policy is very important to not only the price of goods, but consumer confidence in spending money and keep jobs. While I’d love to chat about all of it, my main focus is going to be talking about what plans Mark Carney has for Canada and what things might look like if he is able to follow through on some of his party’s platform. A lot of the things he’s been touting on the campaign trail, I’ve addressed as problems in my prior posts related to trades education, cost of housing, and investment and innovation in Canada. I’ve also been focusing a bit more of my time on video format content on my YouTube channel youtube.com/oliverfoote. So let’s see what we can find shall we.
One Economy:
This is an idea that has come up ever since the start of the trade war. The idea of one Canadian economy. Many of the provinces are on board with this idea, and now that there is the political will to find a way to remove our own trade barriers (thanks Trump, I guess), I think it’s likely that this will get done between Carney and the premiers. There have been some numbers quoted that if we are able to do this it would return around the same amount of economic activity to Canada as a 25% tariff from the US would cost Canada. I believe that pretty much everyone is in agreement that more labour mobility, easier flow of goods, and accepting credentials across provinces is just a sensible thing to do. This could help provinces that need workers, and provinces that have an oversupply of workers balance out their supply dynamics a bit. We’ve already been seeing an outflow of people from provinces like Ontario to provinces like Alberta and the Maritimes. This in theory is a win-win, takes pressure off Ontario employment and housing and provides much needed workers to places that are having a hard time finding them.
Build Baby Build:
There was one line that stood out to me on building and that was “we need to build homes on a scale not seen since the Second World War”. They outline how they will do this by creating a new agency with the goal of investing in new home building technology, providing low cost financing for affordable units, tax incentives for multi-residential unit construction and conversions, and importantly cutting governmental charges on building homes. Of all the development costs, government charges (taxes) have gone up the most in percentage terms of any development cost in the past 20 years, for a variety of reasons. They claim on their website that cutting development costs in half, will spur $8 Billion of private investment (every year!), let’s bookmark that to see how that pans out 5 years from now. They also said they will work with cities to speed up approvals and try to systematize things across Canada so builders can work anywhere, again I think this is a positive thing. Toronto’s approval timeline is around 30 months right now, that’s just approval! The actual construction of a high rise takes about 2-3 years, but the approvals and delays at 7 years on average to that timeline. So if we are able to even cut down the delays by half, it would immensely improve affordability. Businesses are all about systems, and the systems of many municipal governments are way to complicated and exclusionary when it comes to getting things built. I really hope that municipal governments across Canada are able to get on board with the provinces and federal governments and start rubber stamping thousands more units per year.
Innovation and Investment:
I heard a business owner say and I think this goes for builders and housing developers, that they are running their businesses in Canada “in spite of” the local government. I do believe strongly in oversight, making sure workers are safe, making sure that monopolies don’t prevent competition, supporting and championing local businesses. All levels of government should work hard to be partners with business, not roadblocks. Another great line from the platform was lets change “why are we doing this” to “how can we get this done”.
When it comes to housing, when it comes to business, when it comes to trades, innovation and re-investment. We really need to start asking how we can enable things to happen, not why they should or shouldn’t be allowed in the first place (while being smart about the investments obviously). I’ve made videos and spoken about Canada’s declining business investments in the past and how a lot of our big business investments have instead moved into residential housing and inflating asset prices, this has been somewhat of a trend across many western countries lead by the US. There are points in the liberal platform that address this as well and point to specific plans for increasing investment in Canadian companies and businesses. I read a very interesting piece from the BoC where they mentioned that global capital flows historically went to the US and their “Superstar” firms which also tends to attracts global talent. Canada needs to invest and encourage a larger start up and entrepreneurial culture that can potentially create multiple global superstar competitors that will make Canada a more attractive place for global capital. One problem with the ultra ambitious, is that they frequently run into market size and somewhat fragmented, or limited markets in Canada. Naturally, at some point every company will expand internationally, and finding success in the US is the ultimate victory because of the liquidity of the market, start up culture, and global capital flows, wealth in general, can make companies grow exponentially.
The Future of Canada
There is so much to talk about here and the layers go very deep. I don’t know how much the Carney government will be able to accomplish, but I really hope that at least some of their ideas get through and I think as a nation we’ve reached a point in time where everyone is on board to try and resolve some of these bigger issues and people are united in the idea of doing so. I feel a positive national spirit building in Canada and I hope that this will be the catalyst towards helping Canada become a real player on the world stage. If there has even been a moment in time where the country and all levels of government seem willing to make massive changes, it’s right now, and I really hope that they are able to do that, and that they have enough runway and political pressure to get some of these major projects through. Amidst all the chaos of the past 5 years, first COVID, now a trade war, I actually find myself feeling optimistic about what the future of Canada might hold, and I no longer feel this imminent urge to pack my bags and leave for better opportunities elsewhere in the world. Only time will tell what ends up happening and what doesn’t, but I have a lot more hope than I did a few months and years ago. There will be a lot of bumps in the road along the way, but I have faith now, which is not something I could say 5 years ago. Let’s see what we can do.