Canada’s five biggest challenges in 2017

Who would have believed the list of five big challenges facing Canada in 2017 would include augury, the ancient Roman practice of reading the future by studying birds? But Donald Trump’s capricious tweets have brought it back. Trump’s bluebird Twitter feed has become an enigmatic omen of what portends when he becomes president on Jan. 20. “Taking the Trump auspices,” as the Romans might have called it—whether on his Buy American protectionism or his unnerving bromance with Vladimir Putin—is challenge No. 1.

What did it mean for Canada when Trump tweeted out: “General Motors is sending Mexican made model of Chevy Cruze to U.S. car dealers tax free across border. Make in U.S.A. or pay big border tax!” Will Trump let American car companies—who build dozens of models in Canada—freely ship vehicles to the U.S. or will a new import tax apply here as well?

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“I think they see us as pretty much the good guys, rather than the bad guys in terms of trade,” the Canadian ambassador to the U.S., David MacNaughton, told the Canadian Press optimistically. Let’s hope so, but I’m not sure where this kind of buoyancy comes from. The Globe and Mail asked incoming White House press secretary Sean Spicer what Trump’s tweet meant for Canada. “[Donald Trump’s] commitment is to the American worker, and to American jobs, and to American industry, and American manufacturing,” Spicer said. Can he fit the word “American” in there any more? No mention of us being the good guys. Any negative changes to our economic relationship, from autos to softwood lumber (and expect that old trade irritant to flare up), will hurt us.

Growing the economy is the second challenge of 2017. Justin Trudeau spent year one running up a $30-billion deficit without stimulating real growth or creating significant new permanent jobs. While billions of dollars of infrastructure money will kick in this year, real growth is only expected to be a meagre two per cent. There is no great secret to lasting political popularity; it’s always fuelled by one thing: jobs. But where will they come from?

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That leads to challenge No. 3: carbon pricing. Trudeau’s national price on carbon moved from rhetoric to reality in the New Year, with the tax in Alberta and the cap-and-trade system in Ontario adding almost five cents a litre to the price of gas. Energy issues in Ontario—though unrelated to the price of gas—are already metastasizing into a dangerous political illness for Kathleen Wynne’s provincial Liberals, and there is a risk their close federal cousins will get cross-contaminated. Meanwhile, Trump won’t support pricing carbon, but he will lower corporate income tax, which could make Canada less competitive. If the U.S. economy starts to take off and ours lags, there will be pressure on Trudeau to rethink the carbon price. He won’t do that, of course—it is his signature policy—but he will have to lead the fight to prove that mechanisms like a cap-and-trade system are effective and efficient, something Ontario’s auditor general questioned in a recent report.

Health is challenge No. 4. While separate health deals have been cut with some Atlantic provinces, the failure to sign a new national health accord is a problem. Both sides are dug in and for good reason: the future looks old, grey and economically stunted. “For the first time in Canada’s history, there are now more seniors age 65 and over than there are children under the age of 15,” the Finance department wrote in their updated long-term economic and fiscal projections. They called this a “demographic tipping point” that will “have a negative impact on economic growth over the coming decades.” Pretty simple to see why Ottawa wants a long-term deal that holds down health transfers to the rate of nominal GDP growth while the provinces want more money to manage the grey wave. This is likely to end with Ottawa imposing its own solution on grumpy provinces.

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Challenge five is leadership. A Kevin O’Leary candidacy for the Conservative job changes the whole landscape in that party. Even though he’s severely hobbled by major problems—he doesn’t speak French and he has off-the-wall policy ideas like allowing people to buy seats in the Senate—he’s the only other person who can pull the same wattage of media attention as Trudeau. That’s why candidates like Lisa Raitt are already going after him. It’s foolish to underestimate the power of his celebrity and force of personality. At the very least he will make the other candidates up their game, which they need to do anyway.

The NDP still don’t have game to up, so that’s their challenge. Maybe Ontario MPP Jagmeet Singh—the under-40, trilingual wrestling champ—is the answer, or maybe it’s the combative MP Charlie Angus, but first the NDP needs to stop self-defeating strategies like openly running down Rachel Notley, the only sitting NDP government in Canada, on the pipeline issue. Are they a party for the working class, for the green class, for both, or neither? A depressed NDP is the secret ingredient to Liberal success, so the NDP’s challenge has national consequences.

Meanwhile, Trudeau must find a way out of the fundraising, cash-for-access controversy before it permanently damages his credibility. He could reinstate the per-vote subsidy, which would have the double effect of hampering the Conservatives’ advantage on small donation collection and do a little democratic reform, shaving off the worst excesses of the first-past-the-post system by rewarding small parties with a buck-fifty for every vote. It’s not perfect, but it gets the PM out of a few jams.

Canada’s 150th birthday augers to be a very challenging year.