Appearing like a basket brimming with billion-dollar Easter eggs, Canada’s bold new federal budget arrived this week with the promise of $290 billion in stimulus spending rising to $323 billion five years out.
This is ambitious and understandably has a domestic focus. However, we should use this opportunity to take a step back from the tried-and-true stimulus formulae and think strategically about how to best deploy these considerable funds to ensure Canada’s long-term prosperity in a dynamic and shifting global economy.
Shovel-ready infrastructure spending and immediate benefits to average Canadians may well help kick-start our flagging economy and provide needed relief in the short term. In the long-term interests of future-proofing Canada, however, our federal calculus must account for a rising Asia.
The Asia Pacific region has become an increasingly significant player in the global economy and will continue to grow in importance over the next 15 years. By 2030, Asia will account for 53 per cent of the world’s population, 50 per cent of the world’s GDP, 64 per cent of the global middle class and more than 40 per cent of global middle-class consumption.
Our international competitors—including the United Kingdom, France, United States and Australia—are already successfully investing in the emerging and established economies of the Asia Pacific. If Canada wants to remain competitive and reap the benefits of this global long game, it needs to strategically deepen and diversify its existing partnerships in the region, and earmark some of those billion-dollar Easter eggs for Canada’s Asia engagement.
Finance Minister Bill Morneau’s new budget casts a wide net across diverse Canadian communities and interests, but little or no reference is made to explicitly dedicating funds to expanding trade or directly engaging with Asia. Taking a deeper dive into the 2016 federal budget, however, we soon discover that it includes five strategic planks that with some innovative thinking could inform and fund a platform for the Canadian government’s advancement of its Asia strategy: clean tech, youth, tech accelerators, good governance and culture.
The Asia Pacific Foundation of Canada’s Building Blocks for a Canada-Asia Strategy, an advisory document released earlier this year, suggests how the government could strategically target some of the proposed $290 billion in stimulus spending for maximum impact in these areas.
The budget includes billions of dollars dedicated to the promotion and advancement of a greener world. That world must include Asia, where Canada with its advanced technologies and know-how in areas like fuel cells, clean transportation, energy management technologies, renewable energy, and waste and water treatment technologies, can meet Asia’s expanding needs.
It is vital that monies are set aside to assist Canada’s private and academic sectors in promoting Canadian high-tech and innovative solutions as well as dedicating funds to science and technology partnerships with Asia’s developing economies. This will build Canada’s brand and reputation as a clean-tech leader, and increase our relevance in the region.
With a total budget allocation of nearly $675 million, the federal budget includes monies to help young Canadians gain the skills, abilities, work experience and co-op placements they need to find and maintain good employment in the global economy.
A good portion of this money should be targeted at encouraging Canadians to get that experience in Asia. Currently, while Canadian businesses are crying out for Asia-competent staff, less than one per cent of our students pursue learning and work opportunities in Asia. As opportunities for economic engagement with Asia increase, this gap will also increase—unless we follow the example of countries like Australia, New Zealand and the United States, and invest in making our young people Asia-ready.
While a drop in the bucket, APF Canada has seeded its own program to expand co-op opportunities in Asia for Canadian students but with more money, more students will be provided with placements in high-growth Asian economies.
The new federal budget includes money to bolster Canada’s innovation networks and clusters, including funds to renew the Canadian Technology Accelerator Initiative, with programs available in nine locations in the US, UK, France and India.
Building cross-border partnerships to promote entrepreneurship and innovation is vital to Canada’s long-term prosperity, and must include the creation of stronger linkages between ecosystems in Canada and around the world.
India is a good place to start, but we should not stop there. Now is the time to be diversifying our innovation networks and clusters across Asia. Businesses and governments in the Philippines, Indonesia, Cambodia and even Korea, Japan and China, are eager to build new partnerships and share experiences on how to establish healthy innovation ecosystems and catalyze entrepreneurship. Providing support for young Canadian companies to dock into Asian incubators and accelerators will be essential in helping these firms understand how to design and build to scale and to cope with price sensitivities and cultural realities.
The federal budget allocates $2.5 billion to projects and initiatives that intersect with the promotion of good governance, including new funding for the International Assistance Envelope that will increase Canada's ability to respond to emerging international assistance priorities.
A significant proportion of this money should be specifically earmarked for assistance to Asian countries to help them establish transparency and accountability informed by Canadian best practices. We can also be sharing Canadian expertise on public service modernization, developing fiscal frameworks, tax structures, financial regulatory systems, public health-care systems, pensions administration and sustainable welfare programs.
Some of this money should also be targeted at building Asia’s capacity to respond to non-traditional security threats like food and water insecurity and disaster risks. In addition, our investments in studying trans-boundary water issues in North America could be leveraged to assist countries further afield, like Bangladesh, India, Nepal and China.
With a total budget allocation into the billions, including monies earmarked for the promotion of Canadian artists and cultural industries abroad, Canada’s planned culture spend must include an Asia component. We should strengthen the already significant people-to-people relations between Canada and Asia by increasing Canadian cultural advocacy and programming in Asian countries, showcasing the next generation of Canadian talent in digital and performing arts and virtual technologies, while improving the cultural fluency of Canadians domestically.
As we more closely consider the budget Easter basket that arrived this week, placing Asia high on the list of criteria required to access this new federal stimulus funding will be critical. Investing in old programs or old markets, while an easy spend, will have all the sustenance of a sugar high. What is required now is thoughtful consideration of Canada’s long-term well-being in a global economy that is increasingly being sustained by a growing Asia.
Stewart Beck is the president and chief executive officer of the Asia Pacific Foundation of Canada, a not-for-profit organization focused on Canada’s relations with Asia.
This piece was first published in Embassy News on March 28, 2016.