Canada losing ‘tens of billions’ in GDP annually due to internal trade barriers, says McLellan
“Business hates uncertainty,” Anne McLellan, Co-Chair of the Coalition for a Better Future told David Wojcik, host of the Mississauga Board of Trade podcast. / SCREENSHOT
Canada must incentivize domestic trade and investment to strengthen the Canadian economy amid geopolitical uncertainty, says Anne McLellan, Co-Chair of the Coalition for a Better Future.
“Business hates uncertainty,” she told David Wojcik, host of the Mississauga Board of Trade podcast. “Right now, what have we got? Geopolitical uncertainty, largely driven by the President of the United States. Okay, so there are things outside our control. Interprovincial trade barriers are completely within our control. That is something we can do as Canadians, as provinces, and the government of Canada to increase our GDP.”
According to McLellan, the resistance to internal trade reform is because of the fear of sectoral winners and losers. “There will always be winners and losers,” she said. “You will be disrupting certain aspects of the Canadian economy, you have to figure out whether that disruption is deserving … of financial or other assistance to make the transition to the new world, but it's just something we have to get on with.”
McLellan’s comments came prior to Bill C-5, the One Canadian Economy Act, received royal assent on June 26. Bill C-5 aims to increase internal trade by accepting comparable provincial regulations as meeting federal requirements for trade in Canada.
Domestic trade barriers are not the only challenge facing the Canadian economy, McLellan said, noting a lack of private sector investment is hindering economic innovation. “[Research and development, investments in machinery and worker training] are the three major things that drive productivity increases, and those are the things that we're falling behind on in relation to our key competitors in the G7 and beyond.”
While the federal and provincial governments can’t force private sector investment, they can create an environment where investors feel comfortable investing large amounts of money in long-term projects, said McLellan. “You have to have a high degree of certainty. These are hugely expensive projects. People have to go to the capital markets or investment funds, pension plan funds, and convince these investors that there's a reasonable return on investment.”
McLellan also noted Canadian pension plans as a potential source of investment, particularly in infrastructure. “A lot of [pension plans] invest in things like toll highways, airports, other kinds of physical infrastructure around the world,” she said. “I am hopeful that we will see Canadian pension funds turning more of an eye to what might be available here in Canada.”
Referring to the Coalition’s recent report titled Time to Execute: Canada’s Crucible Moment, McLellan spoke about the importance of infrastructure to Canada’s economy. “We have to renew a lot of our infrastructure. For example, we see that happening in the Port of Montreal. It's got to happen in the Port of Vancouver. It's got to happen at our airports. We've got to build out our highways, our railways. There are huge infrastructure potential investments to ensure that we can move product to market in an efficient way,” she said, adding that to have private sector investment, “the right regulatory regime” and “a high degree of certainty” is needed.
