The public sector faces many challenges this year. At a high level, governments will need to maintain Canada’s prosperity and manage public risk in post-economic crisis conditions. For public servants themselves, although the “new normal” is poorly defined, their role will require a more systematic and holistic approach to changing policies, as much to support the private sector and to improve the efficiency of public services as to look after the well-being of Canadians.
CGE asked the federal Policy Horizons Canada to give us what they see as eleven “wicked” issues that governments and public servants should consider in 2011. The list is not, of course, definitive. Coming events will add other ones, as well as mixing those that are urgent and important, old and new, reversible and irreversible.
Our goal is to stimulate public servant exploration and planning, bearing in mind that despite agonizing or even paralyzing uncertainty, the fact that nothing is certain doesn’t mean that we can be certain of nothing.
No more wheelbarrow, but no Lamborgini
The recession is over. Does that mean we are on our way to rapid growth? No. A weaker than expected U.S. economy, the higher Canadian dollar and the overall fragility of the global recovery are expected to translate into slow growth: the Canadian economy is forecasted to grow by only 2.3 percent over 2011, according to the Bank of Canada. Domestic factors including a pull back in the Canadian housing market and highly indebted Canadian consumers may reduce growth potential, in addition to affecting employment and private sector investment. With the potential exception of resource rich provinces, Canada will continue to experience economic adjustments, excess capacity and moderate unemployment rates for most of 2011.
However, no country exists in isolation. Public finances of OECD countries are unfavorable compared to Canada’s. The unpredictability of the foreign debt crisis and the potential for currency and trade “wars” are also of concern. If these risks translate into reality, they could easily alter the direction, course or speed of Canada’s recovery, potentially requiring fiscal flexibility. International business competition is getting tougher because of emerging economies, and the increasing combativeness of long established competitors. Post-crisis, a different ecosystem of demand is developing with some corporate species facing a difficult evolution and new Canadian predators slow to emerge.
As we exit the recession, astute thinking and timely execution will be required to avoid “bubbles” and maintain domestic growth. Additional attention must be paid to aligning our productivity and innovation with the changing global economic order.
Loan$, Mortgage$, Intere$t … Oh my!
Canada hit a historic high. Personal debt to disposable income ratio jumped by over 60 percent between the mid-1990s and 2010 to near U.S. levels. With record low interest rates, debt accumulation, mortgage and consumer indebtedness seems easy for many Canadians. But for how long?
Who’s at risk? Canadian households with a debt service ratio of 40 percent or higher are vulnerable. Low-income families have the highest debt to disposable income ratio at 180 percent and their average debt-service to disposable income ratio is at 25 percent. Three quarters of overall household debt is still held by families earning $50,000 annually or higher. Should there be a limit to the number of personal credit cards? Do we need stronger norms for lines of credit?
The high rate of Canadian household indebtedness relative to economic and financial fundamentals is a source of risk not only to Canadian families but also to the Canadian economy. All of the Canadian debt metrics point to growing vulnerability, although not to a looming U.S.-style crisis (there are no signs of a serious housing bubble). In 2011 or later, Canadians will be on the watch for rising interest rates as higher debt servicing could transform both their financial future and the magnitude of the recovery. For now, several independent groups and associations will continue to call for increased attention to personal finance issues.
40 years of multiculturalism: where do we go from here?
In 1971, Canada became the first country in the world to declare multiculturalism as official policy. The policy direction provided a social foundation for a path to a vibrant cultural mosaic, with an understanding of mutual respect for all Canadians. After 40 years of multiculturalism, is the idea still reflective of Canada’s growing diversity?
According to Statistics Canada projections, by 2031 nearly one in three Canadians will be a visible minority, more than one in ten will have a non-Christian religion, and nearly three out of ten will have a mother tongue that is neither English nor French. Individual identities are not monolithic; they have multiple layers. For example, Michaelle Jean could check more than one box: Canadian, Haitian, Anglophone, Francophone.
Internationally, Canada is recognized as a leader and a successful model in multiculturalism. However, this is not to say that tensions do not exist. Religion, integration, accommodation and language issues are continually picked up in the media through events such as the “Commission des accommodements raisonnables” in Quebec, cases of honour killings and increasing focus on Canadian values and rights.
In 2011, Canadians will have an opportunity to appreciate, assess, celebrate and reflect on the progress made, and to ask themselves: where do we go from here?
Cleantech: where does Canada fit?
What are the five main areas for cleantech: energy, transportation, building and construction, agriculture and water, and waste management? This industry is evolving at a dizzying speed. China, Japan and South Korea will invest almost US$509 billion on green energy alone from 2009-2013, compared to $172 billion for the U.S., where “green jobs” and “green stimulus” are on the agenda. The European Union is still ahead of the pack and has launched initiatives in research and development, green procurement and new ecological standards to keep ahead in various niches.
So where does Canada stand in this global race? Cleantech has gone from less than five percent of investments in 2001 to the second highest category of investments in 2010. According to the latest report from Sustainable Development Technology Canada, the Canadian cleantech industry grew by 47 percent from 2008 to 2009, playing an important role in the economic recovery by creating many jobs. Forecasts indicate that this growth could hit 117 percent between 2010 and 2012. Despite all this, is Canada falling behind?
International competition is forcing Canada to do more in order to keep up: bringing its products to market faster and supporting its new green champions before someone steals them away. Will the cleantech sector help Canadian competitiveness? Will it need more investments, technology transfers, specialized workers and green policy innovations? We’ll know soon enough.
Living in a digital world!
Canadians are reshaping the way they connect and work with the world: online banking, shopping, research, reading news, working, dating, long-distance calling and social networking.
Technology advances, such as Web 2.0, have enabled us to experience a shift from the traditional one-way information society to a more interactive and collaborative approach. While collaboration can lead to more inclusive decisions, better public s