Senate group calls for new era of 'cooperative federalism' to guide post-pandemic recovery

Debbie Lawes
October 26, 2021

An informal group of 14 Senators is betting that the COVID-19 pandemic is the crisis that will finally spur governments, industry and other stakeholders to take the bold steps needed to address Canada’s decades-long productivity and competitiveness challenges.

At first glance, the report from the Senate Prosperity Action Group resembles the latest in a long line of innovation-tackling reports that have attempted — with limited success — to steer both the public and private sectors towards policies and approaches that capitalize on the country’s scientific and industrial strengths to drive economic growth and social cohesion.

“The post-pandemic global economy will be more competitive, increasingly disruptive and profoundly different,” the group writes. “As several excellent studies and reports — including the work of the Industry Strategy Council (Canada's Economic Strategy Tables), Business Council of Canada, Council of Canadian Innovators, Public Policy Forum, Ontario 360 and the Century Initiative — have emphasized, in order to achieve long-term prosperity, Canada will need to adopt new strategies, build strong partner­ships among a broad range of key stakeholders, and execute relentlessly and expeditiously to overcome long-standing challenges.”

Related article:Industry Strategy Council proposes ambitious economic growth plan in the face of COVID-19

This newest prosperity report aims to build on the work of those previous studies, says the group’s chair, Senator Peter Harder. “Our report doesn’t presume to be tilling ground that hasn’t been well tilled already. So why did we issue it and what’s new here?”

What distinguishes this report, he says, is that it’s designed to drive a post-pandemic recovery at a time when Canada was already facing five big global transitions: moving to a low-carbon economy, the rise of the Fourth Industrial Revolution, an aging population and talent shortage, the new geopolitical dynamics of globalization, and the need for more inclusive and shared prosperity.

The Senate group heard from more than 70 witnesses over 10 months, culminating in a 66-page report, Rising to the Challenge of New Global Realities: Forging a new path for sustainable, inclusive and shared prosperity in Canada, with three broad recommendations: Develop a national economic growth strategy, implement a sustainable fiscal management plan with credible fiscal anchors, and establish a new Prosperity Council. Each recommendation includes several hows for getting there.

For example, the Prosperity Council would be comprised of representatives from federal, provincial and territorial governments, business, labour, Indigenous, civil society and communities. This “Grand Alliance” would steer Canada towards a “new era of constructive and cooperative federalism.”

“If this [sic] to be a truly inclusive plan — and a successful one — then those who are affected by it must be engaged in its formation,” the report states.

This will require “deliberate, strategic policy considerations that align all the actors in the economy,” Harder told Research Money. “We’re very much focused on getting the how right so we can accelerate our ability to do the what.”

Related article: Canada needs a targeted industrial strategy to improve innovation performance, experts say

The Prosperity Council would also monitor the country’s success in promoting sustainable, inclusive and shared prosperity based on a set of priorities and key performance indicators related to: global competitiveness, economy and growth; employment, training and talent attraction; R&D and technology adoption; and sustainable, inclusive and shared prosperity.

Setting targets isn’t new, but it has fallen out of favour politically. For example, the federal government’s Canada’s 2002 Innovation Strategy set several ambitious targets for Canada to achieve by 2010, including ranking among the top five R&D performing countries, doubling the government’s investments in R&D and raising venture capital investments per capita to prevailing U.S. levels. Each of those targets was missed.

“Politicians don’t always like targets because they lead to accountability,” says Harder, stressing the need for other stakeholders on the Prosperity Council. “You need a diverse group that can help inform our performance and our gaps. You need that arms-length credibility.”

The report also calls for the new Prosperity Council to hold an annual summit to build consensus on major economic and social policy issues, from a national childcare program and labour market training to regulatory barriers and promoting research, innovation and commercialization opportunities.

“This is all about having economic growth that sustains our social and economic well-being and that will not come through inertia,” warns Harder. “It will come through deliberate, strategic policy considerations that align all the actors in the economy … the economy is too diverse and interrelated to have just the government of Canada be responsible here.”


Recommended Key Performance Indicators

R&D and Technology Adoption

Indicator Current Performance 2030 Performance Target
Gross Domestic R&D Spending Canada is ranked 18th among 37 OECD countries at 1.5% of GDP Reach OECD average of 2.5% of GDP or Top 10 in OECD (Ireland is 10th at 2.3% of GDP)
ICT Adoption Canada is ranked 38th out of 141 countries Top 10 in WEF – GCI (Norway is ranked 10th)
Digital Competitiveness Canada is ranked 12th out of 63 countries in the IMD World Digital Competitiveness Index Top 10 in IMD World Digital Competitiveness Index (Finland is currently ranked 10th)

Source: Rising to the Challenge of New Global Realities, A Report by the Senate Prosperity Action Group, September 2021

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