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Canada: Federal Government Eyes More Active Role in Economy
Source: ottawacitizen.com
Source Date: Monday, August 11, 2014
Country: Canada
Created: Aug 12, 2014

Prime Minister Stephen Harper’s government has been rethinking its role in the Canadian economy and examining a possible overhaul of how it supports Canada’s strategic industries such as the natural resources sector.

The government’s most senior bureaucrats say it needs to consider taking a more active role in the economy and retooling its economic policies.

Canada is facing a shifting global landscape with an increasing level of state capitalism and state-owned enterprises in strategic sectors, and the country must increasingly take into account security concerns alongside its economic interests, says information prepared for a key committee of deputy ministers.

The effects of environmental concerns on consumers’ behaviour, developing resources in Canada’s North and protecting sovereignty are also emerging challenges the country must grapple with, says the presentation, which was obtained by the Citizen using access to information laws.

“There may be merit in further examining the federal role in Canada’s economy, both in a domestic and an international context, to respond more effectively to evolving global realities,” says a presentation to the co-ordinating committee of federal deputy ministers, which is chaired by Privy Council Clerk Wayne Wouters.

“A number of nations have successfully positioned their strategic sectors globally by pursuing coordinated policy approaches and actions. In the Canadian context, policy makers will require better metrics and benchmarks to clearly understand the scale and relative significance of emerging challenges, to develop appropriate policy responses, and to allocate limited public resources more effectively,” it says.

A number of emerging industries, especially regarding natural resources, are identified as “areas of opportunity” for possible government intervention, including: unconventional oil and gas, water, solar, bioenergy and unconventional hydro. The Conservatives haven’t been afraid in recent years to intervene in the Canadian economy and housing market, for example, even if it goes against some of their economic instincts.

Deputy ministers have also been examining whether the federal government should target support toward high-growth firms in the natural resources and commodities sector, which are seen as key to creating jobs and improving Canadian competitiveness.

In a quickly changing global economy that has been characterized by a commodity boom, rapidly evolving technology and increasing competition, high-growth firms are important for the Canadian economy and the country’s ability to compete globally, the presentation says.

“Despite that changing reality, the focus of policy has not varied significantly, relying for the most part on broad based, general application economic policies,” says the presentation, which was reviewed by the co-ordinating committee sometime between September 2013 and February 2014.

“Do we continue broad support for all firms and all sectors, or do we target our support for some firms and some sectors? What is the right balance?”

Government support in natural resource sectors could include helping leverage private-sector investment through building new public infrastructure such as ports, rail and other transportation links, as well as other public facilities in resource-based communities.

Listed under “recommendations for near term actions” in natural resources, the government was advised to “target” certain categories with its $53-billion New Building Canada Plan (such as transportation, energy, connectivity) to help attract additional public- and private-sector infrastructure funding.

The government has also been considering:

? Continuing with an “open, unstructured forward approach” to natural resource development;

? Taking a more structured approach to investment in infrastructure, talent development and market development; and

? Selecting specific niches to seek to build world-leading expertise and capacity (research, skills, specific products);

However, the deputy ministers caution that high-growth firms “may not be the best communications frame” for new programs and policies.

“One option to move beyond the exclusive focus on high-growth firms could be to adopt a whole-of-government approach to identifying and removing barriers that prevent firms from growing to global scale, including firms in the resource sector,” the prepared presentation deck says.

The government’s approach, whichever model it follows, must also balance environmental interests with economic ones, the committee says. The Conservative government has come under fire for what opposition parties and environmental groups have described as championing certain natural resource projects, such as pipelines, at the expense of the environment.

“An approach to the resource sector that more directly connects with innovation and the environment may help gain broader Canadian consensus and support for Canada’s efforts to leverage the benefits of its strength in natural resources.”

(BY JASON FEKETE)
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