 (EM729) 
December 21, 2011
In Brief:
Chongqing, Bangalore and CanadaReform will lead way to successChongqing, China, has a population of 30 million – almost as big as Canada’s - and is the biggest mega city on the planet. New factories are springing up daily. Entrepreneurship is evident everywhere. Bangalore, India, is huge also and populated by world leaders in IT, aerospace and industrial research. Its business leaders are writing many of the rules of a new industrial revolution. The extraordinary performances of these cities and others like them have lifted hundreds of millions of people out of poverty. The global impact of this is startling. China and India are on track to be the first and third largest economies in the world in less than a generation. Both countries still have huge problems. Corruption, environmental degradation, political stresses and governance failures are all obvious. However, their track records suggest that the big story for India and China is how far they have come and how far they could go. These changes are very positive in many respects. There are new possibilities for partnership, new markets and new opportunities arising from the Indian and Chinese communities in Canada. As well, more comfort and economic security for 40% of humanity should appeal to us all. There is, however, the problem of how we compete with these giants. While we are partly protected from competitive forces by the resource wealth of Western Canada, we are exposed because of economic weakness in Central Canada and the longstanding lack of competitiveness in Atlantic Canada. The determinant of how well we do in competing with businesses in Bangalore and Chongqing will be our productivity and here there is cause for serious concern. Our productivity performance is poor. For thirty years, policy makers have said that businesses need to do more research, innovate more and manage change better if we are to turn this situation around. The fact that these prognostications have been made for many years and that governments and businesses have acted on them with little result should cause us to look deeper. When we look deeper, we will almost certainly find that outdated public policies and institutions are a large part of the problem and that to compete against places like Chongqing and Bangalore; we need to reinvent important public policies and institutions. What needs reinvention? We need to reinvent healthcare because it is destroying the capacity of governments to fund the infrastructure necessary for better productivity. This reinvention could include physician payment systems based on clinical treatment guidelines, enhanced scope for health professionals other than physicians, elimination of the public delivery clause in the Canada Health Act and a debate on end of life care. We need to reinvent the intergovernmental transfer system. It encourages careless finance, discourages labour mobility and has damaged competitiveness in recipient jurisdictions and Canada as a whole. This could be done by shifting GST revenue to provinces in return for an end to transfers, adopting Australia’s fairer method of calculating equalization and publishing benchmarks on program comparability by province. We need to reinvent governments so that they become entrepreneurial and nimble. Canadian governments have become very centralized, the opposite of what needs to happen. Governments could be made more entrepreneurial by putting the operations of governments under boards that operate within a centralized policy framework but which are guided by citizens with appropriate qualifications. Governments should also build the broadest possible network of public-private partnerships so that the knowledge of the private sector can be brought to bear on public problems. We should reinvent some aspects of our education and employment support systems. We often have jobs that go unfilled because people with the requisite skills are not available. To correct this, we urgently need to modernize EI, update our antiquated apprenticeship programs and renew our community college systems. The important point is that India and China have reinvented themselves and economic leadership has shifted to them. We must do some of the same if we are to effectively partner and compete with them. 
a native of Prince Edward Island, was awarded a Bachelor of Arts degree (honours economics) from Dalhousie University and an MBA from York University. He was awarded a Centennial Fellowship by the Canadian Imperial Bank of Commerce and York University to study at York, Harvard and Oxford Universities as well as the European Institute of Business Studies. Mr. MacKinnon served as Director, Planning and Economics and Executive Director, Development Strategy in the Nova Scotia Department of Economic Development from 1976 to 1981. He later served in several senior capacities in the Ontario Public Service, the Bank of Montreal and as CEO of the Ontario Hospital Association from 1996 to 2003. Mr. MacKinnon is a Public Member of the Council of the Ontario College of Physicians and Surgeons and is the Chair of its Finance Committee and a member of its Executive, Complaints and Outreach committees. He serves on several Boards of Directors, including the West Park Health Centre. He recently finished my five year term on the Standards Council of Canada and was subsequently elected to the board of the Canadian Standards Association. He has advised the Ontario Chamber of Commerce and other Ontario organizations on fiscal federalism issues particularly on the impact of regional subsidies on recipient and source provinces. He is currently the Chair for the Ontario Institute for Public Policy www.oipp.ca. |
David MacKinnon, 
