Beatty’s list: business priorities and political realities

by John Geddes

The anxious tone the Prime Minister recently injected into the debate on Canada’s economic competitiveness was picked up today and amplified by one of the country’s top business lobbyists—Perrin Beatty, president of the Canadian Chamber of Commerce.

Beatty happens also to be a former Conservative cabinet minister from the long-ago days of Brian Mulroney’s government. So long ago, in fact, that he’s apparently forgotten how certain matters are not to be raised in polite political company. Like ending the way Employment Insurance rules favour perennially high-employment regions, notably parts of the Atlantic provinces and Quebec.

On a sensible list of 10 “barriers to competitiveness” laid out by Beatty in a news conference just off Parliament Hill, the Chamber’s plea for EI reforms to “improve fairness and increase incentives for the unemployed to return to work or relocate to find work” stood out. The very words send chills down spines around Ottawa.

Or, at least, down spines connected to brains containing residual memories of the last serious bid to reform benefits for the unemployed, way back in the mid-1990s. Lloyd Axworthy, now president of University of Winnipeg, tried hard as human resources development minister in those early years of Jean Chrétien’s Liberal government to root out disincentives to finding full-time, year-round work.

But the ever-cautious Chrétien allowed only relatively minor reforms (Lawrence Martin recounted how the Prime Minister pushed back in Iron Man: The Defiant Reign of Jean Chrétien), and Liberals from the East Coast, led by Brian Tobin, fought against even modest moves to penalize repeat EI claimants and reduce the seasonal reliance on benefits in industries like fishing and lumbering (Edward Greenspon and Anthony Wilson-Smith detailed that internal battle in Double Vision: The Inside Story of the Liberals in Power).

In the end, Chrétien publicly regretted making it any harder for seasonal workers to repeatedly resort to EI, after the Liberals took a beating over the issue in the 1997 election, and his government largely reversed its early cuts.

Given the political lesson driven home by this bit of history, I wonder if Beatty seriously thinks Harper’s cagey Conservatives have any thought of risking something serious on the file. There is perhaps a half-teaspoon of political sweetener in the way Beatty casts the Chamber’s recommendation partly in terms of improving access to EI benefits in places where the rules now, quite unjustifiably, make it harder to qualify, including much of Ontario, his home province.

“We would like to equalize the treatment that people receive irrespective of geography,” he told reporters, “so that you don’t build in incentives for people to say, ‘I’m going to stay in a region with persistently high unemployment at the same time that somebody is desperately looking for the skills that I have.’”

It’s a reasonable position. Has been for decades. Yet here we are, listening to it being raised again. Same with other items on Beatty’s wish list.  Improving skills—for how many years have economic commentators been lamenting Canada’s indefensibly poor record on training for the skilled trades? Breaking down barriers between provinces—when will it stop being illegal for a Torontonian to ship some Okanagan cabernet sauvignon back home from a B.C. vacation?

Don’t get your hopes up on these no-brainers. On other points Beatty raised, action of some sort is likely. He called for changes to federal tax breaks for research and development, and Harper has already promised action on that one. However, Beatty wants the rules changed to allow companies to collect tax refunds even on R & D spending that isn’t yet generating a profit. That would cost the federal government real money. So we’ll see.

And Beatty also urged—under the heading “making Canada a magnet for international investment”—the government to clarify exactly what criteria it will use in the future to reject a foreign takeover bid. In case you didn’t catch it, that’s a reference to Harper’s controversial 2010 decision to rebuff the would-be foreign purchase of Saskatchewan’s Potash Corp.

Beatty said Canada should be open to such foreign incursions, including hostile takeovers, with rare exceptions. “Those exceptions should be few and far between,” he added. “They should be clearly spelled out in advance, and people need to know where they stand.”

In fact, the Conservatives pledged to specify the grounds under which future foreign takeovers wouldn’t be approved after being rather vague about why BHP Billiton Ltd.’s bid for Potash was deemed of no “net benefit” to Canada. But there has been no hint of movement by the Tories toward providing the promised precision on this touchy subject, on which economic conservatives clash with nationalists—or regionalists.

For it was Saskatchewan’s fervent opposition to seeing Potash slip into foreign hands, voiced relentlessly by Premier Brad Wall, that scared Harper into nixing that deal. Like Employment Insurance, foreign investment is a file on which economic priorities can be trumped by provincial sensitivities.

Maybe it doesn’t have to go on being that way. Maybe the stakes are high enough to change the game. Beatty says Canada’s industries are by and large “performing poorly,” and chastises Canadians for seeming “unaware of the threat to our economy even though we can measure the impacts.” Harper says the time has come for “major transformations.”

The Liberals used to talk with a similar urgency back in the mid-nineties.




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Beatty’s list: business priorities and political realities

  1. It all depends on when the difficulties from *not* doing anything will show their heads.  If before 2015, then yes, we can expect something will be done.

    If not, then not.

  2. The BHP takeover of Potash would have stripped the Government of Saskatchewan of 10% of its revenues, and forced it to change its royalty regime, destroying is good name and commitments of stability made to other investors in the resource sector in Saskatchewan.  It probably would have had to change its income and corporate tax levels higher.  And shutdown economic growth in Saskatchewan for a decade.

    It would turn a have province back into a have not province for a decade.What is so hard about that for the idiots on Bay Street to understand?

    • Nothing is static. Other potash mines will be developed by other companies, and elsewhere. Prices/volumes will fluctuate and go up and down. Sh*t happens.

      • But BHP had opened declared warfare on the entire investment and royalty regime that Saskatchewan had laid out for the potash industry.

    • Well, why was it so hard for the idiots in Ottawa to understand that selling off Nortel’s patents without letting a Canadian company into the game on equal footing had a bearing into turning a have province into a have not province (not by itself, it is true, but imagine the difference it would have made to my neck of the woods if RIM had gotten the patents it had planned to get)

  3. Have the numbers ever been done that potentially illustrate meaningfully the amount of money transferred periodically to regions of high unemployment. What of the break downs by industry?
    Prince Edward Island three main industries(farming, fishing and tourism) ALL benefit from having their work force subsidized routinely by EI dependent workers and take steps to ensure it within the current layout.
    It would hurt the statusquo greatly to modify the rules away from seasonal workers but it would paint a more realistic picture of the sustainability of certain sectors of the economy should a future free trade agreement penalize Canadian goods for this perceived subsidy.

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