OPINION: Canada’s economic revival requires broad strategy

September 10, 2020
Denise Mullen

After the shock Canadians have experienced in 2020, an economic recovery that focuses on jobs, incomes and business growth is much more important than whether it’s ‘green’ or some other colour.

However, in Canadian politics these days green invariably symbolizes good. Never mind that green policies don’t always deliver positive environmental outcomes, nor that a heavily green recovery strategy runs the risk of producing few economic benefits – in part because the green sector itself is so small.

For policy-makers, the implication is that a preoccupation with everything green may result in a poor allocation of scarce public dollars, and do little to help the individuals and businesses most affected by the COVID-19 disruption.

Canada, like other countries, has racked up massive COVID-19-related government deficits, heralding much higher levels of public sector debt and less future manoeuvring room for fiscal policy. Meanwhile, economic activity as measured by gross domestic product (GDP) contracted by almost 40 per cent at an annualized rate between April and June 2020, the steepest decline on record.

While the economy is slowly healing, the overall decrease in GDP for 2020 is expected to be six to eight per cent, also a shocking number.

And even as many sectors and workers felt the short-term jolt of government-mandated business closures in the spring, the Canadian economy has yet to experience the full consequences of the pandemic because governments have deployed hundreds of billions of dollars to support households, individuals and businesses, blunting the initial damage.

Dialing back these support programs, coupled with escalating business insolvencies and an expected wave of layoffs, will leave many Canadians reeling.

In this setting, policy-makers must strive to restore jobs, kick-start job creation and support business investment. Getting people back to work is the priority. The colour of the job is irrelevant, especially since a large body of research confirms that long-term joblessness has a host of negative consequences, including lower earnings potential, skills deterioration, more people dropping out of the workforce, and increased risks of mental and physical illness.

Green-tinged government stimulus is unlikely to address the re-employment needs of people in industry sectors hammered hardest by the pandemic. We see no reason to expect sizable short-term employment gains from a green recovery. In part, this is because the skill sets of displaced workers are not well matched to green aspirations.

It’s also worth noting that what Statistics Canada treats as the broadly defined “environmental and clean technology sector” represents about two per cent of total employment in Canada. These jobs include workers in utilities (including renewable energy); professional, scientific and technical services; engineering construction, waste management and remediation services; the design and production of clean technology products; and related administrative positions.

Promoting growth in the clean technology and other environmental industries is a fine idea but it won’t make much difference to Canada’s economic performance as we come out of the COVID-19 crisis.

It seems many of the items on the wish list of the federal government have little to do with fast-tracking the economic and job revival the country badly needs. Instead, policy-makers in Ottawa are focused on virtue signalling and pretending that a government that has trouble paying its workers on time can somehow re-engineer Canada’s $2-trillion economy by “building back better.” Count us skeptical and – as taxpayers – worried.

Given the magnitude of the COVID-19 crisis, it makes no sense to focus so much political attention on the small slice of the economy represented by the ‘green/clean’ sector.

Canada requires more jobs, faster business growth, and stepped-up innovation. The green/clean economy can be part of this but in quantitative terms, it’s incapable of driving a broader, sustained economic recovery and post-pandemic expansion.

Jock Finlayson is executive vice-president of the Business Council of British Columbia. Denise Mullen is director of environment and sustainability at the Business Council of B.C.

As published in Troy Media.

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