The EconomistJuly 27th 2019 Special reportCanada 72
1Canada seems to be getting better at this. Outfits like the mars
Discovery District, an “innovation hub” in Toronto, are helping it
shed its technological inferiority complex. The hub promotes col-
laboration among 1,300 firms and other institutions, such as regu-
lators and banks. It was founded in 2000 to commercialise medi-
cal technologies but has branched into other fields.
One long-standing problem has been that Canadian enter-
prises are slow to use the inventions of such companies. Vern
Brownell, the boss of d-Wave, which calls itself the world’s leading
quantum-computing firm, says that just 0.25% of its revenue
comes from Canadian customers. Vancouver’s digital-technology
“supercluster”, one of five set up by the Trudeau government, tries
to confront that problem. “Large organisations don’t know where
the innovators are,” says Sue Paish, the supercluster’s boss. Rather
than just make matches, it helps firms design projects in which it
invests. The government has given the supercluster C$153m to in-
vest over five years and it must raise at least that much privately.
Something seems to be working. In 2017 Toronto created nearly
29,000 technology jobs, more than Silicon Valley, Seattle, New
York and Washington, dc, combined, according to cbre, a proper-
ty-services and investment firm. Canada’s lower costs and rela-
tively liberal immigration regime help. A “global talent stream”
programme allows firms to bring in a foreign worker and family
within two weeks. Yung Wu, the mars’s director, calls it a “game-
changer”. American tech giants such as Uber and Microsoft have
boosted their research and development activities in Canada.
While the country’s economy has been growing at around 2%,
information-technology services have been expanding at triple
that rate since 2016. Growth is occurring “in areas where we are al-
most certain to see much more productivity”, says Mr Poloz.
Canada remains less keen to use competition as a way of boost-
ing that productivity. Unlike authorities in other rich countries, its
Competition Bureau cannot compel firms to provide information,
says its chief, Matthew Boswell. Its budget per citizen is less than a
quarter that of its counterpart in Australia. Mr Boswell thinks the
principle of allowing anti-competitive mergers should, “at the
very least”, be restricted to exporting companies. “Canada could
see a 4-5% boost in productivity through pro-competitive regula-
tory reform and reduced barriers to entry,” he says.
Many may balk at that. Canada came through the global finan-
cial crisis better than America did, in part because its banks are
prudent, well-regulated and untroubled by excessive competition.
It hopes to match American smarts and scale while remaining Ca-
nadian in character. Its technology culture is more patient than
Silicon Valley’s. “The vibe in the Valley might have been defined by
‘Move fast and break things’,” says Mr Wu. “It’s different here.” 7Needs workSource: Institute for Research on Public PolicyCanada relative to the United States
United States=1007080901001101984 90 95 2000 05 10 15 17Hours worked
per personGDP per hour workedB
urnaby mountainin a suburb of Vancouver, British Colum-
bia’s biggest city, is a tranquil spot which affords a spectacular
view of the North Shore mountains. Yet the area around it is the
site of Canada’s fiercest political battle, which pits environmental-
ists against the oil industry. The Liberal prime minister has been
caught in the middle. At the foot of the mountain is one terminus
of the Trans Mountain pipeline, which carries 300,000 barrels of
oil a day from Alberta, the province to the east of British Columbia.
Tankers deliver the oil to America’s west coast and to Asia.
The conflict comes because the pipeline is at capacity, forcing
Alberta’s producers to ship oil by rail to the United States. The
bottleneck cost them C$20bn in revenue in 2013-17. So the province
wants to treble capacity by adding another pipe alongside the ex-
isting one. But the project has provoked opposition from British
Columbia, environmentalists and some of the indigenous groups
along the pipeline’s 1,147km (713-mile) route. They have fought it
with protests and court challenges. If the planet is to avoid cata-
strophic climate change, “why are we expanding oil production
[by building a pipeline] with a lifetime of 50 years?” asks Sophie
Harrison, formerly an activist with Dogwood, a Vancouver ngo.
Justin Trudeau has overruled the objectors. When Trans Moun-
tain’s Texan owner decided last year to give up fighting to expand
it, the federal government bought the pipeline for C$4.5bn. On
June 18th it gave the go-ahead for expansion to begin.Balancing act
The pipeline row is part of a larger battle over energy and climate
change that is one of Mr Trudeau’s biggest headaches. A large part
of his pitch to voters is that he can reconcile protection of the envi-
ronment with the need for economic growth. Partisans from both
sides are making it hard for him. One of the main issues in Octo-
ber’s election will be whether he has got the balance right.
Canada’s oil reserves are the world’s third-largest. Oil and gas
extraction, and industries related to it, account for about 7% of
gdpand a fifth of exports. Mr Trudeau cannot disregard that indus-
try, but he also wants, by 2030, to meet Canada’s commitment,
made by Stephen Harper and reaffirmed under the Paris climate
agreement, to cut emissions of greenhouse gases by 30% from the
levels of 2005. Canadians are currently among the world’s biggest
emitters per person, each of them belching out nearly three times
more greenhouse gases than the average person in g20 countries.
To square green goals with economic ones, Mr Trudeau has set a
national standard for pricing carbon emissions, which seeks to cut
pollution by raising its price.
Dogwood called the pipeline approval “flawed and unlawful”.
Alberta’s new Conservative premier, Jason Kenney, said it was “just
another step in a process that has...taken too long”. Meanwhile, he
has scrapped Alberta’s consumer carbon tax (though he has kept a
carbon-pricing scheme for large emitters). Alberta has joined On-
tario, New Brunswick, Saskatchewan and Manitoba in challenging
the national carbon price in court. Andrew Scheer, the opposition
leader, says if he becomes prime minister he will scrap the tax and
replace it with his own climate plan.
Mr Trudeau’s “typical, liberal, centrist compromise ap-
proach...hasn’t pleased anybody”, observes Duane Bratt, a politicalKeeping it green
The biggest wedge issue is the environmentThe environment