Yahoo Finance Diane Francis: Why our friends Down Under are doing so much better than us
In 2022, I wrote a column asking why Canada couldn’t be as smart and successful as Australia. Two years later, by almost any metric, Australia continues to outperform us economically, while maintaining its social democracy and generous welfare programs.
Canada now has a population of over 40 million, while Australia is home to around 27 million. Both are resource-rich and have educated populations. Yet since 2015, Prime Minister Justin Trudeau has been driving Canada into a ditch.
A 2021 OECD report predicted Canada would have the lowest per capita GDP growth of any advanced economy throughout this decade, as well as between 2030 and 2060. “In other words,” reads a commentary from the Business Council of British Columbia, “Canada will be dead last not only for the next decade, but also for the three decades after that.”
Two years ago, in a rare public rebuke, former Bank of Canada governor Stephen Poloz said at a conference in Banff that Canada is a chronic underachiever because of poor political decisions and its failure to address unresolved issues.
“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”; “interprovincial barriers that cost four per cent a year in GDP alone to Canada”; and falling foreign investment.
The result is that our peers, such as Australia, continue to outperform Canada, thanks to Trudeau’s cabinet of environmental activists and professional politicians who lack financial, business, geopolitical, economic and technological expertise.
The difference in how the two countries compare in terms of their health-care systems is stark: according to WorldData.info, Australia has 3.84 hospital beds per 1,000 inhabitants, while Canada has 2.52; and Australia has 4.1 physicians per 1,000 inhabitants, while Canada has only 2.46.
Economically, Australia has 3.7 per cent unemployment and Canada has 5.2 per cent; Australia’s inflation rate is 6.59 per cent and Canada’s is 6.8 per cent; Australia’s average income is US$60,840 ($82,460) and Canada’s is US$52,960; Australia’s central government debt is 38.63 per cent of GDP and Canada’s is 49.83 per cent; Australia’s overall government debt is 55.7 per cent of GDP and Canada’s is 106.59 per cent.
Canada also lags Australia in “productivity performance,” as well as GDP growth. “Some analysts attributed Canada’s weak productivity growth (relative to the U.S.) to rising commodity prices and an appreciation in the Canadian dollar,” wrote Stephen Kirchner, an Australian economist and senior fellow at the Fraser institute, in the Toronto Sun in 2022.
“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.”
Two big differences separate the two countries policy approaches in recent years. Exhibit A: Canada’s Liberal government has allowed unprecedented levels of immigration, which has swamped health-care systems and driven housing prices to unaffordable levels.
Australia, on the other hand, has kept immigration relatively steady compared to pre-pandemic levels, admitting around 80,000 permanent residents last year, compared to 471,770 in Canada.
Exhibit B: In 2022, Trudeau dismissed billions in German investment to build a major liquefied natural gas hub in New Brunswick, and he even questioned the “business case” of doing so. German companies have since started doing more business with Australian energy suppliers.
By the time the current duo in Ottawa call an election in 2025, it’s a good bet that Canada’s economic and international standing will have fallen even further compared with Australia’s.
