Dear Minister Bains,
I am writing to you on behalf of Canadians who want a vibrant, strong and burgeoning innovation sector in our country. In your mandate letter, the Prime Minister wrote: “your overarching goal will be to help Canadian businesses grow, innovate and export so that they can create good quality jobs and wealth for Canadians.” As the Shadow Minister for Innovation, Science and Economic Development, I feel it is my responsibility to ensure your government is held to account for its failure to support local businesses and decisions that are driving investment out of Canada.
Through your mandate letter, you were also tasked with working “closely with the Minister of International Trade to help Canadian firms compete successfully in export markets.” This requires a low tax environment in which Canadian businesses can grow and compete. Unfortunately, new regulations and higher taxes introduced by your government are making it increasingly difficult for Canadian entrepreneurs to compete internationally. Worse still, your government raised taxes on local businesses, only to turn around and hand out hundreds of millions of dollars to Bombardier, and a number of wealthy, well-connected corporations through the Superclusters program.
In recent months, we have seen report after report raising concerns about Canada’s competitiveness vis-a-vis the United States. Most recently, Herbert Grubel, Senior Fellow at the Fraser Institute and Professor Emeritus at Simon Fraser University, highlighted in the Financial Post that outflows of foreign direct investment made by Canadians abroad “reached a record $100 billion in 2017.” Professor Grubel contrasted this trend against the inflow of foreign direct investment into Canada, which “reached a low of $30 billion in 2016 and is likely to decrease further in 2018.” Professor Grubel’s analysis was based on Statistics Canada data. His concerns come a few short weeks after the International Monetary Fund released its Staff Concluding Statement of the 2018 Article IV Mission report on the Canadian economy, where it flagged several concerns regarding Canadian companies’ ability to compete with their American counterparts.
Your government’s decisions to raise taxes, increase red tape, and complicate the environmental assessment process have negatively impacted investor confidence. You have made it clear that Canada is closed for business. Instead of rewarding well-connected corporations, working with the Minister of International Trade and the Finance Minister to rectify Canada’s diminishing competitive edge should be your primary focus.
I, like many Canadians, am also very concerned about the cost of your government’s Superclusters program – a staggering $950 million – compared to the actual benefit. The utter lack of details surrounding what each individual Supercluster will be doing with their “award” does nothing to clarify what the benefits will be or when Canadians will see a return on what you claim is an “investment.”
You have defined a Supercluster as a “made-in Canada Silicon Valley.” The irony of the Superclusters program is that it seeks to replicate Silicon Valley in Canada in a manner that does not at all resemble how the original Silicon Valley came to be. Silicon Valley originated from the birth of one company with a revolutionary transistor product whose founder chose the location for personal reasons. Silicon Valley then became the cumulative result of a series of innovative businesses opening up, branching out into new ventures, with some failing along the way and making room for more innovative brands. At no point was there a cabinet member who put their finger down on a map of Palo Alto and decided that a hub would be created there.
Of course, Canada’s Conservatives support fostering good, well-paying jobs across the country. However, we do not believe that the Supercluster program is the best way to do that. The premise of the program pits one industry against another in competition for the government’s favour. It is clear that political motivations factored into determining the finalists, as they just so happen to be evenly distributed across the country. Toronto Star business columnist Jennifer Wells expressed this problem best when she wrote: “in amending the initial list of potential sectors in the fall, clean-tech was dropped, as was health/bio-tech. Was this because they were less worthy? Or because they introduced a regional overlap?” Industry success is not meant to be determined by such a heavy-handed top-down approach.
Alternatively, that astronomical $950 million could be put to better use for the benefit of all businesses in Canada — in the form of tax cuts and credits — not just your government’s chosen few.
Your department’s raison d’etre is to work “with Canadians in all areas of the economy and in all parts of the country to improve conditions for investment, enhance Canada’s innovation performance, increase Canada’s share of global trade, and build a fair, efficient and competitive marketplace.” This is not done through government handouts, but by lowering taxes and cutting red tape. For this, Minister, you will have my support every step of the way.
Matt Jeneroux, MP
Shadow Minister for Innovation, Science and Economic Development
Shadow Minister for Science