PANEL 1 — Canada’s unique chance for growth: Attract return-hungry global investors to badly needed infrastructure projects
Panelists make case for a federal infrastructure bank, inclusive growth, change in monetary policy and a collaborative approach to growing companies
Canada Growth Summit, Panel 1 | Beyond a Two Percent Future
Oct. 12, 2016, Ottawa
Opening remarks:
Victor Dodig, President & CEO, CIBC
Panelists:
Victor Dodig, President & CEO, CIBC
Roberta Jamieson, President & CEO, Indspire
Chris Ragan, Associate Professor, Economics, McGill
Michael Sabia, President & CEO, Caisse de dépôt et placement du Québec
Moderator:
Theophilos Argitis, Ottawa Bureau Chief, Bloomberg News
Session Recap
By Carl Meyer
Canada has a unique opportunity top attract billions of global investment dollars in much-needed infrastructure projects— if government leaders can get the policies right, including the robust inclusion of Indigenous peoples, attendees at the Public Policy Forum’s Growth Summit heard.
Canada faces an infrastructure crunch, needing big new projects to thrive, but federal and provincial governments have no cash to finance them. Meanwhile, there is now 16 trillion dollars being invested in negative yielding bonds and investors are hunting for returns, said Michael Sabia, president and CEO of Quebec’s $250 billion pension fund, Caisse de dépôt et placement du Québec.
“Get past this maniacal preoccupation with monetary policy”
Sabia made the case for a federal infrastructure bank that would coordinate projects and attract capital that is looking for better returns.
“If there has ever been a time when global co-ordination is important, this is one of those times,” said Sabia, speaking at the opening panel, Beyond a Two Percent Future.
Sabia is a member of the Trudeau government’s 14-member Advisory Council on Economic Growth. The Public Policy Forum panel was a chance for him and other council members to expand on the opportunities and challenges ahead for the federal government as it tries to tackle the economic slowdown.
If economic projections for 2016 hold, Canada will have had back-to-back annual growth of less than two percent — only the third time that this has happened since World War II, said Theophilos Argitis, Ottawa bureau chief of Bloomberg News and the panel’s moderator.
For maybe the first time, there exists a broad “confluence” of interests between public and investor needs, said Sabia.
It’s the right time for an infrastructure bank, he said, funded in part by government capital. Governments need to “get past this maniacal preoccupation with monetary policy” as well as break out of the “ideology” surrounding austerity economics, he said.
In his opening remarks, Victor Dodig, President and CEO of the Canadian Imperial Bank of Commerce, said there needs to be more collaborative thinking and action to support small, medium and startup companies.
Dodig said banks, insurance companies and pension plans could come together to create a Canadian growth fund, in order to encourage the development of an “ecosystem” that would help smaller companies achieve scale at a quicker pace. It would fill gaps in Canada’s funding and expertise landscape.
Dodig said the fund could be targeted to businesses who are past the venture funding stage, but need capital for long-term growth. Equally as important, he said, the fund could pair up companies with an advisory committee which could provide veteran advice.
But bringing everyone to the table also means including Indigenous groups, especially when it comes to natural resource projects. The conversation about infrastructure often rings hollow to long-time watchers of Indigenous affairs.
“It’s time that the bottom line in our country becomes our collective well being,”
“There IS no infrastructure” in many Indigenous communities, said Roberta Jamieson, president and CEO of the Indigenous-led charity Indspire which invests in Indigenous education. The Royal Commission on Aboriginal Peoples, she noted, recommended spending $38 billion over a 20-year period, something that hasn’t even come close to reality.
Jamieson also said Indigenous peoples must be included in project management and business decision-making in order to change the perception that they are contributors, not just passively affected.
“It’s time that the bottom line in our country becomes our collective well being,” she said. “We need indigenous people to step up and share with us the knowledge of living in harmony, as you develop the economy, with the land.”
She said more opportunities for education are needed, including an investment fund for Indigenous post-secondary students. “If we can’t get our kids out of high school, how are they going to get into the labour market?”
“Canada has a value proposition as a location for headquarters and production that is pretty remarkable, in terms of our labour market, our quality of life, our overall business environment. We’ve got to sell that.”
Chris Ragan, associate professor of economics at McGill University and also a growth council member, agreed it was important for Canada to improve the labour force participation of its more vulnerable populations.
But he also said there was a danger in the conversation steering too far in the direction of publicly funded infrastructure. “Public infrastructure will crowd out, not in an economic sense but in conversation, the focus that needs to be paid to private capital,” he said.
Research published over the last decade suggests that the single biggest driver of productivity, sector-by-sector, was competition, said Ragan. One way to boost competition, he said, was to improve exposure to trade. Another way was to boost inward investment flows.
“Can we attract foreign capital to come in, not so much to buy our existing firms, but to set up shop so that they can have access to the US market — or if CETA gets passed, access through Canada to the European market?” he said.
“Canada has a value proposition as a location for headquarters and production that is pretty remarkable, in terms of our labour market, our quality of life, our overall business environment. We’ve got to sell that.”
Another way to drive growth is to examine where competition might be impeded by some types of regulation, he said, naming the airline industry as an example.
“Do we have regulations that are preventing airlines from being as competitive as they would otherwise be? I think the answer is yes,” he said. “Do we have consumers that are footing the bill for that lack of competition? I think the answer is yes.”
He also named telecommunications and supply management as areas where increased competition could drive growth.
