Why can’t Canada be as smart and successful as Australia?
Exhibit A: In recent weeks, Prime Minister Justin Trudeau dismissed the suggestion that Canada could be a major supplier of liquefied natural gas to Germany, questioning the “business case.” Germany is wealthy, needs to replace Russian energy, and Canada has the third biggest reserves of natural gas on the planet.
It was not only economically reckless, but embarrassing, and not the only example as to why Canada’s leader lags most others. To quote U.S. pundit James Carville: “It’s about the economy, stupid.”
The current government is economically illiterate and the result is the country is slowly sinking in the rankings of most economic metrics among the world’s developed nations who are members of the Organisation for Economic Co-Operation and Development. Canada is becoming the Quebec or Newfoundland of the OECD and the numbers are sobering.
A OECD report from October 2021 predicts, according to Business Council of British Columbia commentary, that Canada “will be the worst performing advanced economy over 2020 to 2030.” It also forecasts that Canada will have the worst economic growth among advanced economies over 2030 to 2060. “In other words, Canada will be dead last not only for the next decade, but also for the three decades after that.”
Canada is a chronic underachiever, a condition caused by poor political decisions and the failure to address unresolved issues, said Canada’s former central bank chief Stephen Poloz at the recent Global Business Forum in Banff.
“We get in our own way,” he said, then listed a few problems: “A political quagmire that requires a crisis to make decisions”; “layers of regulation”; “permit and consultation that take ages to complete”; “Canada is one of the most highly taxed economies on Earth which is discouraging”; “interprovincial barriers that cost four per cent a year in GDP alone to Canada”; and falling foreign investment and disinvestment by Canadians to the U.S., among others.
By almost any metric, Australia is economically superior to Canada and is, to boot, a social democracy with the same health and social benefits for its people. GDP per capita in Canada was US$48,720 in 2022 compared with Australia’s US$52,680. Canada has lagged Australia in “productivity performance” as well as in growth in living standards for years, according to an analysis by the Fraser Institute.
“Some analysts attributed Canada’s weak productivity growth (relative to the U.S.) to rising commodity prices and an appreciation in the Canadian dollar. However, Australia faced much the same shock to commodity prices and its exchange rate over the same period. Indeed, in 2011, Australia’s exchange rate rose to its highest level since being floated in 1983. Put simply, the Australian economy has outperformed Canada because of investment.”
Canada has lower GDP income, higher debts (governmentally and consumer), higher government expenditures, lower innovation and competitiveness rankings, higher unemployment, higher inflation rates, dramatically higher taxation, a lower trade surplus, and lower life expectancy.
Currently, Russia’s terrible war is top of mind as well as the fact that it has upended the world economy, but Canada must address its less-than-competent economic management in Ottawa.
The current duo of Trudeau and Jagmeet Singh at the helm guarantees that by the time they call an election in 2025 it’s a good bet that Canada’s economic and international standing will be lower than is already the case.
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