It was a busy week in Parliament last week. The King came to Ottawa to deliver a Speech From the Throne. His speech – almost exclusively a re-hash of Liberal promises from the April election – was deeply depressing for anyone who thinks the words “knowledge economy” have any meaning.
The main feature of the Speech from the Throne was that it spelled out, in excruciating detail, how the Liberals intend to double down on re-creating the Canadian economy of the 1960s. Oh sure, the King uttered a line in there early on about how his government is committed to “building a new economy.” But read the document: that sentiment was in no way followed up by anything resembling a commitment to any kind of new economy. Instead, here are the major economic elements to which the government is committed:
- Speeding up permits for major construction projects like roads and pipelines and whatnot: because natural resources have to get to the coasts somehow!
- Building a lot of houses
- Spending more on defense
- Breaking down internal trade barriers
- Er…
- That’s it.
Whatever you think of the merits of the various proposals here, this is not a new economy. It is barely even a warmed-over version of the old economy. At best, it is about finding new markets for old products, not developing any new products. I am unsure if it is more that the Liberals have no sweet clue about how to create a new economy, or that they are uninterested in doing so. But it’s one of those two.
Now some might argue otherwise because look! Evan Solomon! Minister of Artificial Intelligence and Digital Innovation! How New Economy is that? All I can say is: please try not to be that person. Solomon is a Minster without a department with a mandate which is completely undefined. Is it an internally-facing ministry meant to diffuse digital innovation and AI throughout government? Or an externally-facing ministry meant to diffuse these things across the economy? Two weeks after Solomon was named Minister, we still have no clue. And the Liberal Manifesto and the cabinet’s One Big Mandate Letter give conflicting impressions about the extent to which the Government sees its AI/digital strategy is about skill expansion/diffusion vs. handing money to techbros (the mandate letter reads like the former, the manifesto the latter). One would be forgiven for suspecting the Carney government is making things up as it goes along.
Anyways, the point here is still: despite Carney’s globe-trotting central banker/Goldman Sachs reputation, this government seems to be staying as far away from a Davos/future industry agenda as humanly possible. The Liberal “new economy” is all pretty much all construction and primary industries. This is not a world which requires a lot of higher education.
Scared yet? We’re just getting started. Back on Thursday our new Prime Minister was seen to tweet:
In other words, this government seems determined to continue in the tradition of both the former government – and the opposition parties for that matter – in framing the country’s ills as problems of costs to be solved by tax cuts and giveaways rather than problems of growth and the institutional investments required to generate it. This way lies Peronism and perpetual stagnation.
And this is from our allegedly “serious” party.
So, takeaway number one. Universities need to throw away EVERYTHING in their playbooks for Government Relations. Selling yourself as “the future” to a government that is desperately trying to reverse our economy into the 1960s is pointless. This government and this Prime Minster Do. Not. Care. Until they do, arguing for universities as “crucial” investments is a waste of time. The real fight is over the shape of the Canadian economy.
On to a more abstract point about budgeting. One of the reasons we aren’t getting a budget before fall, despite the government just having been elected with a pretty detailed budget-ready manifesto and the Department of Finance being perfectly capable of putting together a set of Main Estimates for the House of Commons (as it showed on Thursday), is that Carney is trying to introduce a new set of rules with respect to public budgeting. He spent part of this week insisting that he would balance the “operating budget” within three years, which sparked a lot of incredulity given that i) the economy is about to be in the tank and ii) the Liberals have ring-fenced most of the federal budget by saying they won’t touch transfers to provinces or transfers to institutions. In theory, that means very significant cuts to program spending. Like, say, research budgets.
Except: there is currently no such thing as an “operating budget”. What Carney wants to do is to exempt from the budget balance requirement anything that can be seen as “capital investment”, which means basically that the main game in Ottawa over the next few years is going to be how to get your favourite piece of spending classed as “capital” instead of “operating”. And that’s a live issue because the definition the Liberals touted in the election campaign, to wit…
…anything that builds an asset, held directly on the government’s own balance sheet, a company’s or another order of government’s. This will include direct investments the government makes in machinery, equipment, land and buildings, as well as new incentives that support the formation of private capital (e.g. patents, plan and technology) or which meaningful raise private sector productivity.
…is so loose you could drive a truck through it. Will CFI spending count as capital? Probably, but not necessarily since universities (in most provinces anyway) are neither a government nor a company. Will tri-council spending? Probably not, but that’s not going to stop folks claiming it supports capital formation/raises productivity, so who knows? So, takeaway number two: get used to arguing distinctions between capital and operating because this might be the only place the sector gets traction in the next little while.
A final point of importance is something that is not exactly new but has been given fresh salience by being in the Throne Speech, and that is the government’s commitment to limit temporary immigration – that is Temporary Foreign Workers (TFWs) plus international students – to below five percent of the population by 2027. Or, to put it another way: every extra TFW is one international student less. What the government has done here is set up a zero-sum game between institutions of higher education and people like the manager of the Kincardine Tim Horton’s whose business model simply cannot work if they are not allowed to employ foreign nationals at below-market rates.
This, my friends, is the fight post-secondary education needs to pick and needs to win. It won’t be easy, because the captains of Canadian industry are largely clueless about competing on anything other than price, meaning low-wage labour is pretty dear to their hearts and they will fight hard for TFWs. But it is the dilemma this country faces in a nutshell: should we use our scarce temporary immigration spots to make things cheaper in the short-term? Or should we use them to develop a skilled workforce and build our scientific and technological talent base for the long term?
So, I know this won’t come easy to institutions but: screw Bay Street. Light the torches. Find the pitchforks. Pick up anything you have handy and smash the windows of your local Tim Horton’s. Fight for international students and against TFWs. This is an existential contest: it decides whether Canada is going to be a country that gets wealthier based on investments in skills, education and science, or a country that bathes in mediocrity because we go mental if the price of a cruller goes up twenty-five cents.
And if the sector ducks this fight because direct confrontation with business is icky and makes some Board members uncomfortable? Well, then the sector deserves everything it gets. That’s the third, and most important takeaway of the last week.
