If we’re fortunate, the current general election campaign should give us some vision of Canada’s future that can inspire hope among its people for better times. But this shouldn’t prevent us from independently considering what this future should be like, and how we can best create it.
Let’s start with what’s bothering Canadians now, and then see how we can address this. Their most immediate and pressing concern, leaving aside President Trump’s tariffs, is that of affordability, due to sharply rising prices, most notably for food and housing, far outpacing the increase in most people’s incomes. And then there are also the costs of truly fixing our medicare system, achieving the green transition, providing for our proper national defence, as well as building sufficient affordable housing.
To fix these problems, we have to greatly increase our national income, and so increase our tax base, distribute this greater income more equally among our people so everyone can afford what they need, and more actively use our federal institutions, particularly our crown corporations, to tackle problems of housing and the green transition.
First, to increase our national income, let’s focus on building up those industries and companies capable of greatly increasing their production, with products consistent with our green transition. Starting specifically with car production, Canada could invite Chinese carmaker BYD to produce its affordable electric cars here, using local components and subject to our labour and environmental standards. The federal government could incentivize Hyundai, for example, to make their cars here—and leverage the significant public funding given to Volkswagen to make car batteries in Canada to also get it to make electric cars here.
It doesn’t need to stop at cars. Why not get French train maker Alstom, which took over Bombardier’s train making facility in Quebec, to make its latest electric high speed train here—not only for the Canadian market, but also for the much larger American market, which appears to be opening up to the advantages of high speed train travel. The federal government could also assist French airplane maker Airbus, which took over Bombardier’s CSeries airliner production in Quebec, to domestically produce the projected stretch version of this plane which reportedly would produce fewer emissions, and be quieter and cheaper to run, than either Boeing’s 737 or Airbus’s own A320.
Alberta and Saskatchewan, having little hydropower, get most of their electricity from fossil fuels, and need to increase their electricity production to enable the increased electrification of their societies. The federal government could then assist them to instead make significant use of emission free nuclear energy to produce electricity, preferably using safe and reliable CANDU reactors built here, or small modular reactors being developed in Ontario. These reactors can all be built in Alberta and Saskatchewan, and also be exported elsewhere from there.
Nationally, why not insist that future fighter planes, ships and submarines needed for our national defence be built here, even if by foreign companies? And finally, why not create a national internet based Technology Enterprise Exchange and an associated Venture Stock Exchange, bringing together commercial researchers, entrepreneurs and investors, to create and scale up more new technologically advanced companies here?
I said above that we have to distribute more equally among our people the increased national income created by our greater production. It’s often assumed that increasing our national income will automatically lift everyone’s income, but this isn’t necessarily so. For example, according to Statistics Canada, though labour productivity in Canada increased 66 per cent from 1976 to 2018, average manufacturing wages after inflation went up only one per cent, whereas corporation profits increased 175 per cent, and the incomes of top executives shot up from about 20 times the average worker’s income to 210 times in 2023, according to the Canadian Centre for Policy Alternatives.
The result of these greatly unequal gains is that the share of total market income of the financially bottom fifth of the population decreased from 2.2 per cent in 1976 to one per cent in 2018, while that of the top fifth increased from 45.3 per cent to 52.6 per cent. And then from 2019 to 2024, according to the Parliamentary Budget Officer, the average household income of the bottom 40 per cent of the population has actually diminished in absolute terms. More specifically, according to Statistics Canada, in 2021 the average income of the bottom half of tax filers went down $1,400 to $21,100, while that of the top one per cent increased 9.4 per cent, to $579,000.
Related to this depressed financial condition of lower income Canadians is the change in the legally set minimum wage. If the minimum wage in 1976 had increased since then proportionately to the growth of labour productivity and inflation, it would now be $24.15/hour, whereas it is now actually only $16.56/hour on average. One result of this, according to the Canadian Centre for Policy Alternatives, is that a person working full-time on a minimum wage can afford a one bedroom apartment in only 9 of 62 urban areas in Canada, and a two bedroom apartment in only three such areas (based on rental data from the Canada Mortgage and Housing Corporation).
So it`s hardly surprising that 41 per cent of working Canadians are feeling financially stressed, according to a report by the National Payroll Institute, 60 per cent of these people spending more than 40 per cent of their income on housing, leading to their increased debt. Admittedly, the federal Liberal government has instituted a number of benefit programs which have reduced Canadians’ poverty rate. Nevertheless, looking at all the above income figures, it seems to me that further reforms are necessary, including to the operation of our economic system, if all Canadians are to share fairly in the increased income of our country and to lead decent and less stressful lives.
The first of these necessary reforms is that company boards of directors should be composed of equal numbers of shareholder and employee representatives, determining the distribution of company revenues between shareholders, senior executives and regular workers, and all other decisions affecting employees. Bear in mind that only 15 per cent of private sector workers in Canada now have union protection. Such an equal system of boardroom representation would treat employees as genuine partners in their company, generating their greater loyalty and contribution to it. Note that Germany, which has such a system, is by far the highest per capita exporter of goods among G7 countries and has the second highest per capita income.
Next, the federal minimum wage should be set so as to give full-time minimum wage workers an income at least 40 per cent more than the government determined low income or poverty level for a person living in their area with one dependent. This would result now in a minimum wage varying from $16.95 per hour in a rural area to $24.62 per hour in a city of more than 500,000 residents, according to the differing living costs of these areas. Raising the minimum wage this way would then also push up all income levels that are proximately above the minimum wage so as to maintain appropriate wage differentials between different kinds or ranks of workers.
Admittedly, increasing significantly the minimum wage, and lower wage levels above it, could raise somewhat the price of some goods and services. However, lower wage workers would then be paying more only for the portion of these goods and services which they purchase, whereas they would be paid more for producing all these goods and services. For example, a lower wage worker at, say, McDonald’s, would be paid more for all the hamburgers they produce, but would pay more for only a hamburger that they may purchase.
As for those people not able to work full-time, or not at all, the federal government should ensure that their total income raises them to the minimum income level for their area and number of dependents which enables them to satisfy all their household’s essential needs. The ultimate aim here is to eliminate poverty in Canada as its national income grows.
Finally, complementing these reforms, the government must greatly increase the availability and affordability of housing, given its recent sharply rising cost and the greater demand for it. In fact, the federal government has made available almost $88 billion in various funds for housing, aiming to build 1.2 million additional units by 2031. The trouble with this provision is that the private developers accessing these funds are generally more interested in building more expensive market housing, not social or affordable housing below current market prices for which there is a greater need.
The solution to this problem is for the federal government to mandate the Canada Mortgage and Housing Corporation (CMHC), a federal crown corporation, to build the necessary social and affordable housing, allocating to it enough funds for this purpose (though the CMHC itself has $300 billion in assets). In fact, the CMHC used to do this, most notably for returning veterans after the Second World War, though this role was discontinued by the federal government in the 1990s. So Canada now has only four per cent social housing, well below the average for developed nations, which needs to be reversed.
The ideas in this article, taken together and properly executed, would result in a Canada with more jobs, higher incomes, particularly for lower earners who most need more income, less poverty, better housing, and a Canada with the financial resources to meet the other great challenges of our time which I mentioned above. My hope is that this vision of Canada might inspire our leaders and people to create a better future for our country.
This article was originally published in The Hill Times. It is reprinted here with the author’s permission.
