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www.policymagazine.ca January—February 2021 Canadian Politics and Public Policy 2021—The Year Ahead $6.95 Volume 9 – Issue 1
Clean energy, off the grid. Made by bold research. A sustainable way to transport clean energy across Canada and the world One big barrier to a low carbon economy? The lack of a safe, affordable way to transport clean energy. McGill researchers are developing new ways of storing and generating clean energy with reusable metal powders. This technology can help us power remote communities, electrify the transport sector, and trade clean energy across the world. Jeffrey Bergthorson and Keena Trowell
In This Canadian Politics Issue 2 From and Public the Editor / L. Ian MacDonald Policy 2021—The Year Ahead Canadian Politics and 3 Kevin Lynch and Paul Deegan Brace Yourselves: The Tests of 2021 Public Policy EDITOR AND PUBLISHER 6 Jeremy Kinsman Global 2021: A Saner, Less Fragmented World L. Ian MacDonald lianmacdonald@gmail.com ASSOCIATE EDITOR 9 Dan Woynillowicz and Eric St. Pierre How a New Bilateral Bromance Could Enhance Climate Action Lisa Van Dusen lvandusen@policymagazine.ca 12 Kevin Page Fiscal Policy and the Post-COVID Recovery CONTRIBUTING WRITERS Thomas S. Axworthy, Andrew Balfour, Yaroslav Baran, 15 Dr. Tim Evans Can the Delivery of COVID-19 Vaccines Match the Speed of James Baxter, Derek H. Burney, their Discovery? Catherine Cano, Stéphanie Chouinard, Margaret Clarke, Rachel Curran, Paul Deegan, John Delacourt, 17 John Delacourt An End to the Annus Horribilis? Team Trudeau’s Year Ahead Susan Delacourt, Graham Fraser, Dan Gagnier, Helaina Gaspard, Martin Goldfarb, Sarah Goldfeder, 20 Geoff Norquay and Yaroslav Baran Erin O’Toole’s 2021 To-Do List: Broaden the Base Patrick Gossage, Frank Graves, Jeremy Kinsman, Shachi Kurl, 23 Robin V. Sears Canada’s 2021 Political Forecast: Less Trump Noise, Brad Lavigne, Kevin Lynch, Leslie MacKinnon, Peter Mansbridge, More Sabre Rattling Carissima Mathen, Elizabeth May, Velma McColl, David McLaughlin, 25 lizabeth May E The Greens’ Annamie Paul—Ready to Make History, Again David Mitchell, Don Newman, Geoff Norquay, Fen Osler-Hampson, Kevin Page, Robin V. Sears, America 2021 Vianne Timmons, Brian Topp, Lori Turnbull, Jaime Watt, Anthony Wilson-Smith 27 Sarah Goldfeder In Between What Was and What Could Be America WEB DESIGN on the World Stage Nicolas Landry policy@nicolaslandry.ca 29 Lisa Van Dusen Joe Biden’s New Role: Humanist-in-Chief SOCIAL MEDIA EDITOR Grace MacDonald 31 John Weekes Canada’s Goal: Re-engaging the World on Trade gmacdonald@policymagazine.ca GRAPHIC DESIGN & PRODUCTION Monica Thomas Canada and the World monica@foothillsgraphics.ca 33 Stéphanie Chouinard Revising the Official Languages Act: Will History Repeat Itself? Policy Policy is published six times annually by LPAC Ltd. The contents are 36 Lori Turnbull Maintaining Confidence in the Convention of Confidence copyrighted, but may be reproduced with permission and attribution in print, and viewed free of charge at the 38 Michael Chong Canada as a Sentinel of Freedom, Then and Now Policy home page at policymagazine.ca. Price: $6.95 per issue 40 Column / Don Newman Playing the Prediction Game: An Election in 2021 Annual Subscription: $39.95 PRINTED AND DISTRIBUTED BY St. Joseph Communications, Book Reviews 1165 Kenaston Street, Ottawa, Ontario, K1A 1A4 41 Review by Anthony Wilson-Smith War: How Conflict Shaped Us Available in Air Canada Maple Leaf Lounges across Canada, as well as Margaret MacMillan VIA Rail Lounges in Montreal, Ottawa and Toronto. 42 Review by Derek H. Burney The Man Who Ran Washington: The Life and Times of James A. Baker III Now available on PressReader. Peter Baker and Susan Glasse Cover photos: Justin Trudeau, Adam Scotti photo. Joe Biden, Gage Skidmore Flickr photo Special thanks to our sponsors and advertisers who are solely responsible for the content of their ads. Connect with us: @policy_mag facebook.com/policymagazine
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2 From the Editor / L. Ian MacDonald 2021—The Year Ahead W elcome to our special issue, our capacity for creative, collaborative da. Our own Associate Editor Lisa Van 2021—The Year Ahead. For longer-term thinking.” Dusen, herself an experienced Wash- openers, and to state the Foreign affairs writer Jeremy Kinsman ington hand, looks at the challenges obvious, it’s impossible to look at the was at the table in an era when Cana- facing Joe Biden and Kamala Harris year just beginning without looking da’s voice as a middle power mattered as they step into “the metaphorical- at the one we’ve recently completed: in the world. He pointedly asks: “Do ly ransacked Oval Office.” And John 2020—The Year of the Pandemic. we still have the stuff, the will and Weekes, Canada’s chief negotiator on ability to be a key player again?” the first NAFTA, points out that much The year that changed everything. of the Canada-US bilateral comes The year of the virus that swept ashore Pandemic or post-pandemic, climate down to trade, trade, trade. worldwide and killed over a million change remains an even larger threat and a half people before Christmas. Back home, noted fiscal authority to the world’s health, economy and Kevin Page looks at the federal spend- The year that changed the way we environment. Dan Woynillowicz and ing envelope going into Budget 2021. live and the way we work. The year of Eric St. Pierre look at environmental And McGill’s Dr. Tim Evans, Execu- the mask and social distancing, The issues between Canada and the US as tive Director of the federal health task year we discovered the difference be- well as the global conversation. force, weighs the challenges of getting tween working from home and hav- With 2021 considered a likely election vaccines into the arms of Canadians. ing to work from home. The year of year in Canada, we offer a package on the Zoom call. The year of the virtu- In Canada and the World, Stépha- the positioning and prospects of four al school class. The year of postponed nie Chouinard writes of the Trudeau parties, not from the perspective of weddings, cancelled funerals and fore- government’s promise in its throne pundits but from the vantage point of gone grad dances. The year of ex- speech to update the 1969 Official some of the most experienced opera- hausted health care workers and se- Languages Act, noting it’s not clear tives. John Delacourt looks back at the niors abandoned in long-term care what that means for minority French pandemic and the events of 2020 as a residences. The year, as it ended, with and English-speaking communities. formative experience for the Liberals, vaccines on the horizon. who “can take stock and be hopeful.” Lori Turnbull writes of the game of And the year of government, present For the Conservatives, longtime strat- parliamentary chicken going on be- in our lives with emergency relief pro- egists Geoff Norquay and Yaroslav Ba- tween the Liberals and the opposi- ran write of Erin O’Toole’s need to tion over the government falling on a grams to help workers without work, lead a united party by sidelining some non-confidence vote and contends it businesses suddenly out of business, of the “SoCon” voices of intolerance, endangers the constitutional conven- and families with no means of keep- and making a home for moderate Pro- tion that the government either has ing a roof over their heads. The year gressive Conservatives. the confidence of the House, or not. fiscal frameworks became redundant, with record deficits and debts as a per- On the NDP, onetime national direc- And Conservative foreign affairs critic centage of output. tor Robin Sears notes that for a fresh- Michael Chong looks back at his par- man leader, Jagmeet Singh been an ef- ents, post-war immigrants to Cana- And the year of the defeat of Donald fective presence in a minority House. da from Hong Kong and the Nether- Trump and his replacement by a nor- How he plays the balance of power lands, as an example of Canada as a mal person, Joe Biden. card is a big question going into the beacon of hope and freedom. W hatever the new normal budget. For the Greens, former lead- And columnist Don Newman looks may be, the year ahead er Elizabeth May writes that the par- ahead to a Canadian election and pre- may result in a different ty made the right call in choosing An- dicts who’s going to win and why. normal. And we’ve brought together namie Paul as her successor. Finally, in Book Reviews, Anthony a group of outstanding writers to help Looking at America 2021, former Wilson-Smith reviews Margaret Mac- us think about it. State Department officer Sarah Gold- Millan’s War: How Conflict Shaped To begin, Kevin Lynch and Paul Dee- feder writes that Team Biden will be- Us. And Derek Burney looks at Peter gan enumerate policy and social chal- gin from a well-formed institutional Baker and Susan Glasser’s The Man lenges confronting Canadians in outlook on the US global leadership Who Ran Washington a bio of James 2021. As they write: “These will test role, and its relationship with Cana- A. Baker. Policy
3 Then Vice President Joe Biden, weeks before leaving office in 2016, with Justin Trudeau in the PM’s former Centre Block office. Biden takes office as President in January 2021 with the US, Canada and the world in a very different place with the pandemic and a new post-Trump political era. Adam Scotti photo Brace Yourselves: The Tests of 2021 Where 2020 was a year of shocks, 2021 will be a year of Kevin Lynch tests. Tests of international collaboration, of policy inno- and Paul Deegan A vation, of systemic integrity and of societal resilience. We year ago, most Canadians have experienced the previously unthinkable in so many had never heard of a novel coronavirus. Yet, COVID-19, negative ways recently, that if we can meet the challenges a particularly virulent virus, dom- of the next year, our sense of the possible might just take inated our lives and livelihoods in a turn for the better. 2020 and will continue to shape them throughout 2021. Its toll on public health, economies, govern- ment finances, businesses, and fam- ilies will last for decades. We had been warned. On May 15, 2017, the cover of TIME magazine blared, “WARNING: WE ARE NOT READY FOR THE NEXT PANDEMIC”. A second “black swan” crisis in just two decades points to the need for bet- ter contingency planning and greater resiliency built into our core health, financial, and economic systems. We January—February 2021
4 should not forget these lessons as we look ahead. Canadian governments Canadian governments and Canadians face a and Canadians face a number of number of must-tackle challenges in 2021. must-tackle challenges in 2021. These These will test our capacity for creative, collaborative, will test our capacity for creative, col- longer-term thinking, and whether we can raise our policy laborative, longer-term thinking, and whether we can raise our policy game game to emerge stronger and more resilient. to emerge stronger and more resilient in an uncertain and interconnected post-COVID world. The first test for all governments is European producers to Canadians are face a troubling drop in longer-term to control the COVID-19 pandemic. firming up, we are experiencing a sig- real growth to 1.2 percent according Without flattening the COVID curve, nificant second wave of the pandem- to Bank of Canada estimates, due to a ic, leading to renewed lockdowns in wicked combination of poor produc- the recovery will be planked. various parts of the country and in- tivity performance, weak capital in- While newly developed vaccines hold creasing pressures on the health care vestment, slow labour force growth the promise of controlling the virus, system. The slower the execution of and lasting scarring from the pandem- it is the execution of the vaccination the vaccination program, the slower ic recession. That implies stagnant program itself that holds the key to the economic recovery and the great- per capita incomes, or even worse for success—delivering a two-dose vacci- er the economic and social costs. We segments of the population. As for- nation to 38 million Canadians, across should have been better prepared, par- mer Senior Deputy Governor Carolyn immense geography and various juris- ticularly after Canada’s experiences Wilkins said recently, “Businesses are dictions, and in lockstep with other with SARS in 2003 and H1N1 in 2009. investing less because of the pandem- countries. Canada’s less-than-stellar ic, and that puts a lid on how much T record to date with widespread rapid potential the economy has to grow.” he second challenge is a growth testing and contact tracing elicits con- strategy for the recovery and Rebuilding Canada’s potential cern on the execution front. Add to beyond. The economy will not growth will require a clear plan to this the fact that the newly developed return to pre-pandemic levels until improve our competitiveness, en- vaccines are neither licensed for pro- 2022, and that assumes a vaccine-as- courage productive investments and duction in Canada nor guaranteed for sisted rebound combined with a shift create a Canadian global advantage. earliest delivery in the government’s in government spending from income Governments cannot solve all prob- vaccine purchase arrangements, and and liquidity support to growth- en- lems, but they can help create the the execution risks rise. hancing measures. Beyond the imme- conditions to make the private sec- As Canada’s plans to distribute these diate challenge of recovery, which is to tor more successful. We are at one of vaccines from American, British, and get back to pre-COVID levels, we also those pivotal moments. A third challenge is the glaring ab- Canadian Real GDP Forecast sence of a fiscal anchor from the gov- ernment’s policy playbook. A fiscal anchor is not something that waits for 7 better times—it is something that is a 6 prerequisite for sustained better times. 5 Federal debt will have risen an as- 5.5% 4 tounding 75 percent between last year 3 4.0% and next year according to the Fall 3.0% Economic Statement 2020. This debt 2 burden, which future generations will 1 2.0% 1.7% 2020 bear, comes at both a cost and a risk. 0 2021 2022 2023 2024 2025 -1 The debt servicing cost is manageable -2 while interest rates are at abnormal- ly low levels because of the pandem- -3 ic recession, but they will gradually -4 rise as growth returns. The risk is that -5 -5.7% international financial markets begin -6 to lose faith in our ability to manage -7 our fiscal affairs—after all, how much confidence should they place on a fis- Source: BMO Economics Policy
5 cal projection of a drop in the deficit gas emissions from oil sands opera- an income issue, it is an opportuni- from nearly $400 billion this year to tions, allowing time for the province ty issue with unequal access to dig- under $100 billion by 2022 without to diversify its economy and become ital skills and broadband, and it is a any fiscal constraints. To avoid this, a global clean energy leader. This is health issue which the pandemic has and its caustic effects on growth and where new thinking and a new narra- laid bare. As Binyamin Applebaum of confidence, the government should tive is so desperately needed. As Gross the New York Times has written, “The articulate a credible fiscal anchor for argues, “Eliminating unpopular en- distribution of wealth and income these uncertain times. ergy sources or technologies, like nu- has a meaningful influence on the clear or carbon capture, from the con- distribution of opportunity, on the A related challenge is fiscal federal- mechanics of the business cycle, and versation is short-sighted. Renewable ism: provincial fiscal situations are on the pace of innovation.” electricity generation alone won’t not good, some are dire, and all be- get us there—this is an all-technolo- lieve that increased federal transfers During the COVID crisis, many low- gies-on-deck problem.” are in order, particularly since the er-wage workers were overrepresent- C federal government has loudly ar- ed in essential roles in the retail and gued it has unused fiscal firepower. anada-US relations are a chal- health care sectors where working The health system clearly has to be lenge that always looms large remotely is not an option. Women better prepared for future pandem- over Canada’s foreign and and minorities were overrepresented ics, and this will take money, part- trade policy priorities, and never more in service-sector job cuts due to the nerships and surge capacity. And, so than during the chaotic Trump pandemic. Inequality is becoming as with the Liberal government signal- presidency. While the Biden adminis- much a blocker to economic growth ling new policy ambitions in areas tration will be a welcome change for as it is an unacceptable social reali- of provincial or shared jurisdiction, most Canadians, it will come with un- ty in advanced western economies. the price tags to encourage provincial resolved issues—including pipelines, This is a challenge that Canada can buy-in will be lofty. This combina- Buy America, softwood lumber tariffs, lead on, both at home and abroad, tion of provincial fiscal gaps and fed- Huawei involvement in 5G networks but feel- good rhetorical bromides are eral policy plans will only place more and national security exemptions— not a plan. upward pressures on federal transfer that will all continue to affect the Ca- nadian economy. There are decades where nothing spending, and reinforce the need for happens and there are weeks where a fiscal anchor. Now is the time to reach out to the decades happen. This saying seems There is no question that we need to Biden administration, which will be particularly apt to describe what has transition to a low carbon, greener struggling in the fraught political af- transpired during the pandemic. And economy. But, as Samantha Gross of termath of the election, on how we we will continue to be tested, but the the Brookings Institution has argued, can work together to solve common focus will shift from the immediate “Those pushing to end fossil fuel pro- issues, not present a list of “asks” and crisis to the recovery and beyond. duction now are missing the point concerns. This could include upgrad- The longer-term challenges before that fossil fuels will still be needed for ing NORAD’s 1980s-era North Warn- us in 2021 will also demand a much some time in certain sectors.” The re- ing System in the Arctic; ensuring more innovative and cooperative ap- ality is that energy is our biggest ex- that both countries have an adequate proach to policy-making—both at port earner, and a major source of val- supply of critical goods ranging from home and with our allies. ue-added growth, well-paying jobs personal protective equipment to Having been caught flat-footed, the and tax revenues. The challenge is pharmaceutical compounds; invest- questions we need to ask ourselves how to sustain a robust Canadian en- ing in next-generation North Amer- today are do we have the necessary ergy sector and make real progress on ican energy grids and clean energy strategic planning skills within gov- climate change. It is not an “either or” production; expanding environmen- ernment, the right incentives for pri- choice, it is about achieving both. tal co-operation; and engaging China vate-sector expansion, and the col- together, with allies, where we have This is not just an Alberta problem, lective will and wisdom to “build common purpose. it is a pan-Canadian issue—both eco- back better”? nomically and politically. Why can’t The International Monetary Fund Contributing Writer Kevin Lynch was we reduce carbon dioxide emissions (IMF) has identified income inequal- formerly Clerk of the Privy Council and in the oil sands through the deploy- ity as an impediment to the recovery Vice Chair of BMO Financial Group. ment of Generation IV Small Modu- in most countries, including Cana- lar Nuclear Reactors to meet the steam da. The challenge of inequality has Contributing Writer Paul Deegan, CEO and heat requirements of Alberta’s risen significantly during the pan- of Deegan Public Strategies, was a public heavy oil industry, which are current- demic, with ongoing social, econom- affairs executive at BMO Financial ly met by carbon intensive fuels? This ic and political impacts. The IMF has Group and CN, and served in the would dramatically limit greenhouse highlighted that inequality is not just Clinton White House. January—February 2021
6 The G7 in Toronto in 1988, when Canada was not only host, but an influential player at the table. (L to R) European Commission President Jacques Delors and G7 leaders Ciriaco De Mita; Margaret Thatcher; Ronald Reagan; Brian Mulroney; François Mitterrand; Noboru Takeshita and Helmut Kohl. Colin McConnell, Toronto Star Photograph Archive, Courtesy of Toronto Public Library Global 2021: A Saner, Less Fragmented World Canada has spent the past four years wedged between an Jeremy Kinsman D unrecognizably belligerent United States and an unpro- onald Trump’s exit from the ductively belligerent China. Provided the economic dam- White House wins our dis- age from the COVID lockdown doesn’t produce geopolit- another rupted and divided world chance to get its collective ical consequences that make 2020 look good, a new US act together to meet existential glob- administration and a fresh appreciation of both democ- al challenges. racy and multilateralism present a new opportunity for Only 20 years ago, Canadian diplo- macy was at the front end of the post- Canadian leadership in 2021. Cold War effort to design and anchor new inclusive norms for internation- al governance. Do we still have the stuff, the will and ability, to be a key player again? We have a stake in successful interna- tional cooperative outcomes. It needs Policy
7 robust outreach diplomacy. Cana- We have a stake in successful international da can’t just fall into line behind Joe Biden’s more congenial US leadership cooperative outcomes. It needs robust outreach and hope for the best. diplomacy. Canada can’t just fall into line behind Joe Biden’s The world has vastly changed in 20 more congenial US leadership and hope for the best. years. Optimistic assumptions were crushed by events whose residue still disrupts. The jihadist attacks of Sep- tember 11, 2001 re-cast global pri- M orities, fed enduring terrorism, and prompted the long Afghan war and ost countries now impa- serves that “the world order has (so tiently endure an overlong far) endured because it is in every- the disastrous and divisive US/UK and dysfunctional US tran- body’s interest.” But that general in- invasion of Iraq that spewed refu- sition, anticipating the remedial terest has to be translated into com- gees into Europe. Borders stiffened succession of Joe Biden, a welcome mon purpose, and it doesn’t come and populist nationalism gained multilateralist. easily. Two decades ago, as the dean traction, bolstered by ubiquitous so- of G8 finance ministers, Paul Martin cial networks that polarized publics. But expectation of restoration comes argued convincingly that the world With the encouragement of Russia, with a hedge. Germany, as an im- needed a more inclusive forum to nativist populists vilified globaliza- portant example, had since the war negotiate trade-offs on critical glob- tion and liberal democracy. Mean- viewed the US as its key ally, protec- al challenges. It became the G20. while, China continued its remark- tor, and democratic mentor before But it isn’t working. Notions that a able and inexorable rise in economic Trump turned the privileged relation- democratic G7 enlarged to include stature, shifting the global balance ship into what Germans came to call India, South Korea, and Australia of power, with an increasingly na- the US “catastrophe.” The US repu- would provide a more inclusive but tionalist posture. tation for can-do competence plum- effective forum than either the G7 meted as the world witnessed with a or the G20 begs how to engage Chi- Barack Obama’s election in 2008 had “mixture of concern, disbelief, and na. The increasingly fractious rival- lifted hopes of a reprise of construc- schadenfreude,” a “leaderless Ameri- ry between China and the US for tive internationalism. But the finan- ca slip into a deep pandemic winter,” economic primacy is apt to define cial cataclysm he inherited laid bare per CNN’s Brian Stelter. Chancellor our age. an unfair system that privileged capi- Merkel’s observation that “the times tal over ordinary people’s welfare. we could rely on the US are some- A rare US bipartisan consensus con- what over” won’t now be archived cludes that China has gamed inter- The world’s mood trended to pes- national trade rules, bullies neigh- simism and identity-based nation- just because of a close election. bours, and represses human rights alism, including in the UK. The US Trump leaves behind a polarized US in Xinjiang and Hong Kong. Can- elected as president a disruptive na- which could reverse direction again. ada, other democracies, and Chi- tionalist who wrought carnage on Even though the incoming Biden na’s neighbours agree. Incoming US international cooperation and insti- team is reassuringly experienced, pos- Secretary of State Antony Blinken tutions. Pledging to “no longer sur- itive, and outward-looking, it will face knows the resolution of key global render the country to the false song an obstinate partisan opposition, the issues needs agreement between the of globalism,” Trump tore up foun- overwhelming domestic priority to US and China. He has previewed the dational agreements in the name of manage the pandemic and econom- bilateral relationship as a composite “America first,” upending 75 years of ic recovery, and the many unexpect- of components that are adversarial, US international leadership. ed things that land on the president’s competitive, and also, where possi- desk. US allies share German worries ble, cooperative, recognizing that Just how scorched he left the institu- on global warming and the pandem- about the extent to which the new tional landscape was clear when the ic, China is an essential factor. The administration will have much room increasingly deadlocked G20 met vir- US will resist calls to “de-couple” for range and transformative am- tually on November 21, under the western economies from China’s bitions in foreign affairs. So, others inauspicious rotating chairmanship and won’t endorse an allied Cold need to maintain creative momen- of Trump ally Saudi Arabia. Trump War “containment” strategy. But tum to reform and reinforce interna- mocked hopes of concrete progress the Biden administration will move tional cooperation. Will Canada be in on the agenda, trashing the notion warily and firmly. Other countries the front rank? of global warming, and skipping the need to engage China on multilat- critical session on the global pandem- Princeton University international eral issues. Canada needs a realistic ic to play golf. relations theorist John Ikenberry ob- and open-eyed approach only possi- January—February 2021
8 ble after resolution of our debilitat- tions of our world. We badly need But crisis response has been excellent, ing hostage dispute. like-minded solidarity groups to gal- notably in procuring PPE, and evacu- vanize institutional reform and pos- ating Canadians during the pandem- Of course, our main bilateral prior- itive outcomes for such essential UN ic. Work to save NAFTA and craft the ity is our critical relationship with activities as peacekeeping, humani- ground-breaking CETA with the EU the US. Canada has, in the Biden ad- tarian aid, poverty, migration, and was outstanding. ministration, a partner on whom we public health, including immedi- can count for civil discussion and ately the COMAX coalition of over negotiation based on shared facts 100 countries to assure equitable af- As to our creative and evidence. But it will be no plea- fordable COVID-19 vaccine distri- policy capacity, the sure cruise: US political themes are inward and protection-ish. We need bution, in which Canada should be perception in the foreign to remain in campaign communi- a protagonist. affairs community is that it cations mode toward all levels of Ottawa has been working with atrophied under recent the US, to temper impulses to “buy like-minded internationalist coun- top-down governments America,” and to lift the US view tries to try to unlock some key mul- of the benefits of the North Ameri- centralized in PMOs and tilateral issues. On trade, the Otta- can partnership. wa Group initiative of middle-power leaders with narrower countries to revive and reform the international aims. O ther regions are organizing. World Trade Organization is mak- Asian countries including ing progress. But it will need a wid- China, Japan and Austra- er buy-in from the great powers. lia, representing one-third of global More broadly, then-Foreign Minis- GDP have created the tariff-cutting ter Chrystia Freeland encouraged the “Regional Comprehensive Economic formation of the Multilateral Alliance We need to revive the creative ca- Partnership.” Canada must succeed in group that brings together Canadian, pacities of the Foreign Service and Asia. Looking ahead, our Comprehen- German, French and other partners re-energize our international public sive Economic and Trade Agreement seeking ways to re-build trust and diplomacy. The world also sees “the with the EU could become the tem- purpose in multilateral fora. One ex- other North America” through inter- plate for a comprehensive North At- emplary success stands out as a mod- acting with multitudes of Canadi- lantic economic partnership between el of international governance—the an scientists, entrepreneurs, scholars the European Union and North Amer- Arctic Council, an innovative, bot- and students, artists, humanitarian ica as an expansion of NAFTA. tom-up consensus-based organiza- workers, military, firefighters, and Canada needs to work every day tion of the eight circumpolar states innumerable family ties. Including abroad to strengthen opportunities and Indigenous peoples that guides public consultation in the policy from a diversity of partnerships, in- the sustainable development and process is essential. cluding to build support for glob- shared custody of the world’s High al multilateral reform. Twenty years North in line with the UN’s interna- The pandemic makes it emphatical- ago, Foreign Minister Lloyd Axwor- tional legal norms. ly clear we are all in the same global J thy was the leading protagonist for boat. But it needs fixing to stay afloat. “human security,” a paradigm plac- oe Biden has pledged to convene Canadians are globalists. That repair ing people at the centre of new a summit of democracies to ad- work is rightfully our brand. norms of international behaviour dress democracy’s global reces- sion and to restore a better example. Contributing Writer Jeremy Kinsman and accountability. With like-mind- It should reaffirm that universal hu- is a former Canadian Ambassador to ed middle-rank states and interna- tional NGOs we formed the Human man rights are democracy’s building Moscow, former Ambassador to the Security Network to design and pro- blocks and our commitment to have European Union, and former High mote landmark initiatives to end the the backs of human rights defenders Commissioner to London. He is a use of anti-personnel land mines, everywhere, consistently. Distinguished Fellow of the Canadian and to establish both a Responsibil- International Council. As to our creative policy capacity, ity to Protect (RTP) to prevent trag- the perception in the foreign affairs edies such as Rwanda and Srebren- community is that it atrophied un- ica, and an International Criminal der recent top-down governments Court to apply principles of univer- centralized in PMOs and leaders sal justice. with narrower international aims, Today the United Nations system focused on signaling our virtues, ab- is bogged down by the fragmenta- sorbed by electoral politics. Policy
9 How a New Bilateral Bromance Could Enhance Climate Action There may be no issue that better illustrates the shared ident Joe Biden is as committed to climate action as candidate Biden was. interests of Canada and our nearest neighbour than the need to address climate change. After four years during Biden was a compromise candidate for the Democratic nomination. As which an American president did everything in his power the primary started heating up in ear- to reverse progress on global warming mitigation, Canada ly 2020, climate action emerged as a key issue among Democratic primary now has a partner it can work with. voters and the contenders jockeyed for position. Based in part on his em- brace of the Green New Deal, Bernie Sanders briefly topped the polls and Dan Woynillowicz hicle emission regulations (which are took early leads in the Iowa caucuses, harmonized between our two coun- where he was edged out by Pete Butt- and Eric St. Pierre igieg, and in New Hampshire, which tries), while others, such as rules to I reduce potent methane pollution he narrowly won. Meanwhile, Jay Ins- n the days following the Ameri- lee, the governor of Washington State, from the oil and gas sector, bolstered can presidential election, you focused his run singularly on climate opposition to regulating pollution in could sense a weary (and wary) change, laying out the most compre- Canada on the grounds that it would relief settle in among most Canadi- hensive climate platform conceivable. ans. It had been a challenging four impact competitiveness. Kamala Harris laid out a $10 trillion years, to put it mildly, and now there climate plan and played up her creden- was at least one reason to look for- tials as a prosecutor who would target ward with some optimism. This sen- Biden was a big polluters. timent was even more acute among compromise those Canadians concerned about cli- candidate for the Democratic Meanwhile Biden, the establish- mate change; there was even a sense ment candidate and frontrunner, laid nomination. As the primary of ebullience among those of us work- out a moderate approach to climate ing to advance climate solutions. started heating up in early change that was broadly perceived as 2020, climate action a potential drag on his candidacy. Simply put, Donald Trump’s presiden- cy had been a train wreck for federal emerged as a key issue But as the primaries wore on, it be- climate policy in the US, with the de- among Democratic primary came clear that climate change bris field sprawling northward into voters and the contenders wasn’t just going to be a significant Canada. Trump had his team scour- jockeyed for position. issue for the Democratic base. Opin- ing for any and every opportunity to ion research published in April by the roll back and weaken environmental Yale Program on Climate Communi- regulations. The result? According to cation, part of an ongoing study of a New York Times analysis, informed views on climate change dating back by research from Harvard Law School, to 2008, found a significant shift in Columbia Law School and other public opinion: “Today, the Alarmed With the arrival of a US administra- sources, the Trump administration re- (26 percent) outnumber the Dismis- tion that not only accepts the myriad versed, revoked and rolled back more sive (7 percent) nearly 4 to 1. In 2014, threats posed by a changing climate— than 80 environmental rules and reg- they were tied at 1 to 1. That’s a ma- to health, the environment, the econ- ulations, and 20 rollbacks were still in jor shift in the political, social and omy, and security—but aspires to find progress as of November. cultural climate of climate change.” opportunity in addressing them, Can- Some of those had a direct impact on ada once again has an ally and part- Similarly, research in May target- Canada, such as the weakening of ve- ner. Presuming, of course, that Pres- ing “persuadable voters” conducted January—February 2021
10 Global Warming’s Six Americas: Five-Year Trend diplomacy and set the US economy on a trajectory to achieve net zero 100% emissions by 2050. 12% Dismissive ▼ 5 pts 7% Polling commissioned by the New York Times just weeks before the vote Doubtful ▼ 3 pts 11% 15% seemed to prove-out the thesis that climate action could be a vote-win- Disengaged ▼ 1 pts 7% ner: 66 percent of respondents were 8% supportive of Biden’s $2 trillion cli- Cautious ▼ 4 pts 20% mate plan. In the weeks following the election, it became clear that 24% young Americans had cast ballots in 50% record numbers, playing a key role in handing a victory to Joe Biden, 28% with early research suggesting cli- Concerned ▼ 2 pts mate change concerns were a major driver of this turnout. 30% As President-elect Biden began the transition process, it was abundant- ly clear he had won a clear climate 26% mandate—and high expectations to Alarmed ▲ 15 pts 11% go with it. I 0% 2015 2020 n the midst of the election the Biden campaign had signalled its interest in appointing a “cli- Data from 11 national surveys (N=13,609) from March 2015 to April 2020. mate czar” who would drive climate Sources: Yale Program on Climate Change Communication and George Mason University Centre for Climate Change Communication action from the White House. Expe- rience from the Obama administra- tion informed the Biden team of this imperative, and so Obama alumni by the Global Strategy Group found bite he would repeat numerous times teamed up with academic experts and that, contrary to previous elections, throughout the campaign: “When I former government officials to provide climate change was not a liability but hear the words ‘climate change’ I hear Biden’s transition team with advice an advantage among swing voters. another word: ‘jobs.’ We can solve our on how to deliver on his climate agen- While not necessarily a top issue for climate crisis and our economic crisis da using every department and agen- all voters, it was found to be just that at the same time.” It was a position cy. Unconventionally but wisely, the for the voters Biden would need to that echoed the approach to the post- Climate 21 Project shied away from win over in November: young people 2008 financial crash recovery, when prescribing policy advice and instead and persuadable Trump voters. Biden, as Barack Obama’s vice presi- focused on delivering “actionable ad- dent, oversaw a recovery program that vice for a rapid-start, whole-of-govern- As it became clear that Biden would combined economic stimulus with ment climate response coordinated by be the Democratic nominee, he clean energy innovation. the White House and accountable to struck a Unity Task Force. Co-chaired Biden’s platform included two key the president,” including memos with by former Senator and Secretary planks that wove together his cli- recommendations for 11 White House of State John Kerry and Congress- offices, federal departments, and fed- woman Alexandra Ocasio-Cortez, it mate, energy and economic ambi- eral agencies, as well as cross-cut- merged climate action recommenda- tions into a plan for a clean energy ting recommendations on personnel tions from leading House and Senate revolution, environmental justice, and hiring. Democrats, Biden’s primary platform, modern sustainable infrastructure and a cross-section of civil society cli- and an equitable, clean-energy fu- Appointments to date suggest that mate change and environmental jus- ture. With a federal commitment of President-elect Biden got the message: tice advocates, to inform Biden’s plat- $2 trillion over four years, Biden laid John Kerry, who helped forge the Par- form for the general election. out a vision and numerous goals, is Agreement, has been appointed spe- plans and programs to undo Trump’s cial presidential envoy for climate— This approach united his base, expand- regulatory rollback spree, re-engage now a cabinet-level appointment with ed his appeal, and informed a sound- Washington in international climate a seat on the National Security Coun- Policy
11 cil—and asked to help raise global am- It was Vice President Biden who visited Canada in bition for action. Brian Deese, a bril- liant former climate aide to President the waning days of the Obama administration to Obama, has been tapped to lead the urge Trudeau to take up Obama’s progressive torch and National Economic Council. And Jan- there is significant alignment between the two leaders’ et Yellen, who was chair of the Fed- climate plans. eral Reserve under President Obama, has been nominated Treasury Secre- tary, hot on the heels of a stint with former Bank of Canada and Bank of England governor and current UN en- tech sector that punches above its mandates to take action to address the voy on climate finance Mark Carney climate crisis. They also now share weight and whose growth will be fu- leading the Group of 30, a think tank the challenge of doing so within the eled by exports to, among other plac- of former and current policy makers, context of pandemic-ravaged econo- es, the US. academics and finance executives ex- mies, and, despite majority support, ploring how best to shift the global Domestic pipeline politics in general, polarized electorates and regional di- economy toward net zero emissions. and Keystone XL in particular, mean visions on matters of climate and en- It’s clear that Biden means business. that the federal government will need ergy policy. to be seen to champion it with Biden, A t first blush, all of this is won- despite his commitment to rescind Prime Minister Trudeau appears derful news for Canada and permits and cancel the project. But primed to this potential. His govern- our climate ambitions, for the from both a diplomatic and practical ment’s strengthened climate plan, re- federal government especially. There’s perspective, it should hardly be “top leased in December on the five-year some hope that the brief 2015-2017 of the agenda,” as Foreign Affairs Min- anniversary of the Paris Agreement, bromance enjoyed by Prime Minister ister François-Philippe Champagne noted “there is an opportunity to Justin Trudeau and President Barack has vowed it would be. collaborate with the incoming Unit- Obama could be rekindled with Presi- ed States Administration on strong But we simply can’t afford to get dent Biden. After all, it was Vice Presi- cross-border climate action that can mired in a divisive, and now mostly better position the North American dent Biden who visited Canada in the symbolic, debate about pipelines. The waning days of the Obama admin- economy, as well as Canadian workers economic and political winds have and companies so that they can con- istration to urge Trudeau to take up shifted, and clean energy collabora- Obama’s progressive torch and there tinue to be globally competitive.” tion and effective climate action must is significant alignment between the be the top priority. While seizing this opportunity, and two leaders’ climate plans. tackling this challenge, are better There is, after all, precedent for doing done in collaboration than isolation, But while there is undoubtedly plen- so. In June 2016, President Obama, ty of scope for collaboration, there are the reality is that while President-elect Prime Minister Trudeau and Mexican Biden will be a much stronger ally for also some warning signs that require President Enrique Peña Nieto estab- prompt prioritization by the Trudeau Canada than Trump was, his first pri- lished the North American Climate, ority will be Americans and the Amer- government. All of those climate-ac- Clean Energy, and Environment Part- ican economy. Canada has managed tion induced jobs and economic ben- nership. But by November 2016 Don- to carve out exceptions and partner- efits Biden promised? He wants them ald Trump was President-elect, and ships to our advantage in the past, in the US. From zero-emission ve- the partnership was effectively dead. and the imperative is that Prime Min- hicle manufacturing to producing the batteries that go in them, to ad- While it needs to be updated—to re- ister Trudeau do so again—for our en- vanced biofuels and clean-tech solu- flect the heightened ambition of new vironment and our economy. tions, Biden has “Buy American” on net zero targets and new opportuni- Dan Woynillowicz is the Principal his mind. ties to develop North American sup- of Polaris Strategy + Insight, a ply chains for batteries, zero emission public policy consulting firm focused Last fall, Canada landed commitments on climate change and the energy vehicles and other clean technolo- from Ford and Fiat Chrysler Automo- transition. gies—and may not necessarily include biles to re-tool their Canadian assem- Mexico this time around, this collabo- Eric St. Pierre is the Executive Director bly plants to produce electric vehicles rative approach could be coupled with of the Trottier Family Foundation, for the Canadian and American mar- a commitment to keeping the borders which supports organizations that kets alike. We have the ability to pro- work towards the advancement of open to free-flowing trade. duce and export a surplus of clean, re- scientific inquiry, the promotion of newable power that can help the US For the first time ever, we have feder- education, fostering better health, achieve its 2035 decarbonization goal. al leaders in Ottawa and Washington, protecting the environment and And we’re home to a growing clean DC who have been elected with clear mitigating climate change. January—February 2021
12 Fiscal Policy and the Post- COVID Recovery Governments around the world, including Canada’s, have Fiscal policy is the use of govern- ment spending and revenues to pro- spent nearly a year re-orienting their fiscal calculations mote growth and the provision of around the health and economic Catch-22 of a deadly pan- common goods. Economic channels demic that could only be contained by a self-induced eco- include the allocation of resources, income distribution, savings and in- nomic coma. As COVID-19 vaccines begin to make their vestment and aggregate demand. way into the bloodstreams of Canadians, the economic re- Fiscal policy can be used to stabilize an unstable economy through built- covery could still take many shapes, writes former Parlia- in stabilizers (e.g., unemployment mentary Budget Officer and Institute of Fiscal Studies and benefits; progressive tax systems) Democracy founder Kevin Page. and stimulus measures (i.e., defi- cit financed measures to strengthen demand). Fiscal policy was an im- portant stabilizing influence in the Kevin Page The International Monetary Fund 2008-09 global financial crisis. (IMF) is calling for a global coordina- H G istorians debate key turn- tion of fiscal policy and continued. overnment capacity to use ing points in history—Pax fiscal policy as an economic Continued monetary and fiscal poli- Romana; the birth of spiri- stabilizer depends on its fis- cy support to help vulnerable people tual leaders like Jesus and Moham- and businesses while the pandemic cal room. The reduction in feder- med; the invention of the printing evolves—avoiding premature with- al debt in Canada from 66 percent press; the renaissance; and many of GDP in 1995-96 to 28 percent of more. Will the 2020 global pandemic drawal. A synchronized global infra- GDP in 2007-08 (corresponding re- mark an inflection point, the begin- structure investment push to support duction in public debt charges from ning of a special moment in human growth, limit recession after-effects 5.9 to 1.7 percent) gave the federal history? Can global leaders imagine (i.e., so-called scarring) and address government of Canada much needed a new future? Can countries, public climate goals. “‘Build back better”’ is fiscal space to support the Canadian and private sectors and citizens work now a global motto. economy in both the 2008-9 finan- together to address challenges and opportunities? Chart 1: Federal Debt and Interest Charges (% of GDP) The year 2020 started with the spread of the COVID-19 virus around the 70 7 world. It has ended with the roll-out 60 6 of vaccines. The pandemic has tak- en its toll on human lives—1.6 mil- 50 5 lion deaths globally; 13,000 deaths 40 4 in Canada. In the Dave Matthew’s song “Space Between”, the singer/ 30 3 songwriter makes the case that life is 20 2 about bridging the gaps that lie be- tween people. The cooperation of 10 1 international pharmaceutical efforts 0 0 has highlighted the power of collab- 1971-72 1975-76 1979-80 1983-84 1987-88 1991-92 1999-00 2023-24 2025-26 2015-16 2003-04 2007-08 2019-20 2011-12 1967-68 1995-96 oration bridging gaps. Policymak- ers are now coalescing on agendas focused on sustainability, inclusion Federal Debt (left axis) Public Debt Charges (right axis) and resilience. Source: Department of Finance Fiscal Reference Tables; 2020 Fall Economic Statement Policy
13 cial crisis and the 2020 pandemic. three objectives: infection fighting; tors are seen to influence the effec- The fiscal advantage was supported disaster relief; and support for aggre- tiveness of stimulus. These include by a AAA bond rating (i.e., highest gate demand. the economic context, and the tim- investment grade) from the major ing, size, composition and duration H agencies. ow much fiscal stimulus will of the fiscal stimulus. be needed to support de- Canada unloaded fiscal firepower to In the 2020 Fall Economic Statement, mand in a post-pandemic support Canadian households and the government indicated an inten- economy is an open question. Cana- businesses to facilitate social distanc- tion to use fiscal stimulus to strength- dian national accounts numbers for ing and slow the spread of the virus. en the post COVID-19 recovery. the first three quarters of 2020 show a Direct fiscal supports in 2020-21 are Different economic scenarios were pre- deep dive, a strong bounce and an in- estimated at $275 billion (12.5 per- sented with stimulus values ranging in crease in savings. Blanchard’s advice cent of GDP). Total federal-provin- the $70 billion to $100 billion range is for governments to be ready but cial-territorial multi-year supports over a three-year period starting in should not commit to a specific level including tax payment deferrals and 2021. As well, the government indicat- of fiscal expansion before the outlook credit supports are estimated near ed intention to use labour market indi- becomes clearer. $600 billion. cators—employment rate, unemploy- There are downside and upside eco- How does the federal budgetary defi- ment, hours worked—as guardrails to nomic risks around the post-pandem- cit go from $39.4 billion (1.7 percent guide the shape of fiscal stimulus. ic economic recovery. The key driver of GDP) in 2019-20 to $381.6 billion remains the evolution of the virus. A One of my favourite holiday movies in 2020-21 (17.5 percent of GDP)? U-shaped recovery for GDP is linked is “Planes, Trains and Automobiles”’. Start with $381.6 billion. Take away to struggles controlling the virus and In the 1987 film, the principal char- $275 billion in direct fiscal supports. the cumulative impact of scarring on acters, including Jim Neal (played Take away a $76 billion drop in bud- jobs and investment. A Z-shaped re- by Steve Martin) and Del Griffith getary revenue from the Budget 2019 covery is linked to successful global (played by the late Canadian icon projection because of a deep reces- vaccination and the release of pent John Candy), struggle to get home sion. We are left with a deficit of $31 up consumer demand highlighted by for the holidays. By comparison, our billion—a number that would not recent increases in savings and the re- new Finance Minister Chrystia Free- raise eyebrows in financial markets in turn of investor confidence. land and newly named Deputy Min- normal times. International research on the poten- ister Michael Sabia will spend the Olivier Blanchard, a former Chief tial impacts of fiscal stimulus has in- holidays trying to get Canada back Economist at the International Mon- creased significantly since the 2008 to fiscal normalcy. The Finance mov- etary Fund, makes the case that fiscal financial crisis and introduction of ie would be more akin to “Fiscal An- policy during the COVID19 crisis has record-low interest rates. Many fac- chors, Guardrails and Rules”. Table 1: Fall Economic Statement 2020 ($ billions) PROJECTION 2019-2020 2020-2021 2021-2022 2022-2023 2023-2024 2024-2025 2025-2026 Budgetary revenues 334.1 275.4 335.9 357.8 377.3 398.5 417.3 Total expenses, ex net actuarial losses 362.9 641.6 441.5 396.4 410.1 423.4 438.4 Net actuarial losses -10.6 -15.4 -15.6 -12.1 -10.5 -6.0 -3.9 Budgetary Balance before stimulus -39.4 -381.6 -121.2 -50.7 -43.3 -30.9 -24.9 Planned stimulus $70 – to – $100 billion over 3 years Federal debt before planned stimulus 721.4 1,107.4 1,228.5 1,279.3 1,322.6 1,353.4 1,378.3 Percent of GDP before planned stimulus Budgetary Revenues 14.5 12.6 14.4 14.6 14.7 14.9 15.0 Program expenses 14.6 28.5 18.1 15.2 15.0 14.7 14.5 Public debt charges 1.1 0.9 0.9 0.9 1.0 1.1 1.2 Budgetary balance -1.7 -17.5 -5.2 -2.1 -1.7 -1.2 -0.9 Federal debt 31.2 50.7 52.6 52.1 51.6 50.6 49.6 Source: Department of Finance, 2020 Fall Economic Statement January—February 2021
14 Chart 2: Debt-to-GDP Ratio Under Discretionary Spending Alternative Scenarios (%) LOW INTEREST RATES HIGHER INTEREST RATES 60 55 50 45 40 35 30 2030-31 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 2025-26 2026-27 2027-28 2028-29 2029-30 2030-31 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 2025-26 2026-27 2027-28 2028-29 2029-30 Baseline 1% Spending 3% Spending 4.5% Spending 4.5% Spending + 5% Revenue Source: IFSD calculations There is a genuine intellectual debate face of aging demographics. On the have a permanent impact on around fiscal discipline in a post-pan- other hand, provinces are not sus- deficits. Fiscal analysis should demic environment. tainable, largely because of assump- accompany the setting of fiscal On the one side, some argue that in tions regarding health care spending guardrails (e.g., estimates of the a low-interest rate environment there growth. output gap, cyclically-adjusted is a “‘get of jail free” card for running budget balances, spending and It is said that discipline is about up large debt to support households tax multipliers) knowing what needs to be done, and businesses during a lockdown to even if you do not want to do it. Can- c Long fiscal sustainability protect and support growth. Debt-to- ada will need a fiscal planning frame- analysis should be tabled with GDP should fall with primary budget work with discipline or risk passing the budget. balances and interest rates lower than on higher unnecessary debt to future the growth in the economy. 2 Set a fiscal anchor. It should be a generations; not being able to sup- prudent level of debt relative to On the other side, some argue that port Canadians in the next recession; income. higher debt will eventually be paid by and potentially losing a hard-earned AAA credit rating. 3 Set fiscal rules. These are higher taxes. They argue it is voodoo operational targets consistent economics to assume interest rates There is lots of good advice on fiscal with the fiscal anchor including will stay low for long and that public discipline from international organi- primary balances (program investment will pay for itself. High- zations. Are we able to implement it? spending, less revenues); er debt will limit fiscal room for fu- 1 Outline a fiscal strategy. How will discretionary spending growth; ture generations and create economic fiscal policy be used to support and public debt interest charges as instability risks. Fiscal consolidations economic recovery and long-term a percent of GDP. are costly—a lesson learned in Cana- da in the 1990s. structural policy shifts (e.g. climate 4 Establish escape clauses. change)? How will corrective Fiscal policy needs to adjust if Finance scenarios and work by IFSD fiscal measures (e.g. spending assumptions are substantially suggest Canada is headed for a much restraints and tax increases) be altered. higher debt-to-GDP ratio over the introduced over the medium-term medium term—likely in the 50 to 5 Use the Parliamentary Budget as economic conditions improve. 55 percent range. This is well above Office to provide support for the 30 percent debt-GDP ratio in the a Investment spending should Parliament on the enforceability pre-pandemic period. On a positive be defined. Non-investment of the fiscal anchors, guardrails note, these debt numbers are well initiatives should not be deficit- and rules. below debt loads of most advanced financed in a post pandemic Contributing Writer Kevin Page is the countries. PBO analysis suggests this period. founding President and CEO of the level of federal debt with the current b If fiscal stimulus is required, Institute for Fiscal Studies and fiscal structure (i.e., before initiatives a performance framework Democracy at University of Ottawa highlighted in the 2020 Speech from should be established. Stimulus and was previously Canada’s first the Throne) could be sustainable in programming should not Parliamentary Budget Officer. Policy
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