Search

The integration of the Canadian market calls for a coordination of policy among the provincial governments, and between provinces and the federal government. The areas which call for greater cooperation and policy development involve tax and fiscal policy. Potential barriers to coordination between governments lie in the diversity of languages, geographical distance, and the discriminatory effects of government policy regarding the flow of trade, capital and labor.

Long-term effects will be seen in the Canadian economy as a result of the selected consitutional option for Canada. Both positive and negative impacts will be made on the economy regardless of the chosen option. The Economic Council of Canada's 28th Annual Review 'A Joint Venture' considers some of these options. Among the constitutional proposals are the existing political structure, decentralization on a moderate or extensive-scale, sovereignty-association, or a regional confederacy. A cost-and-benefit analysis was used to determine the viability of each option using as factors the following: effect on economic integration, transition costs, efficiency gains, dynamic gains, and the long-term effects of a revamp of taxes, transfers, and spending functions on per capita income in the proposed system.

The Economic Council of Canada, in its statement 'New Faces in the Crowd', reports on the findings of its research into the economic effects of immigration. Research results reveal a positive but limited effect on the Canadian economy by immigration. The research focused on economic efficiency, tax and dependency levels, and unemployment. Higher immigration levels will only slightly ameliorate the effects of an aging population. Periods characterized by high immigration typically display low unemployment levels as high unemployment rates discourages immigration. Projections reveal that higher immigration levels will have little effect on the distribution of population and political power among the provinces. In sum, the report reveals that immigration benefits Canada by creating efficiencies of scale in the domestic market, though benefits on a per capita basis are small.

The Economic Council of Canada calls on Canadians to assess the constitutional options of the region from an economic perspective. Through the Council's 28th Annual Review, 'A Joint Venture,' Canadians are made to focus on the improvement of the standard of living and the government's role in economic development as measures in deciding on the constitutional fate of Canada. Creating the wealth necessary to increase the standard of living of Canadians calls for enhancing productivity and encouraging industrial R&D. A closer coordination of economic policies between the federal government and the provinces in the event of decentralization can facilitate better trade relations between provinces.

The use of acquisitions and mergers as a means for corporate expansion of Canadian companies did not have an effect on the financial growth of the acquired firms. A study conducted by the Economic Council of Canada on more than 100 public companies that underwent takeovers and mergers within the period 1968-1983 showed that no changes in profitability occurred for the median of all companies surveyed.

Canada is expected to make a slow and difficult economic recovery as a result of the recessions of the 1980s and the 1990s, an inflation of consumer prices, and a decrease in total outputs. The Economic Council of Canada's 28th Annual Review, 'A Joint Venture,' notes of the serious impact of persistently high levels of unemployment on Canadians. This unemployment issue reflects the impact of economic problems, such as federal deficit and industrial inefficiency, on political and social problems. The Council's report proposes two key changes to improve Canada's economy and raise the standard of living. One way is through the restructuring of Canadian industry to create higher-value-added-products. Another is by introducing changes in economic policy to address the problems of unemployment, federal debt, and inflation.

The continuing debate on the constitutional future of Canada has encouraged Canadians to take on one of two markedly different visions of federalism. The 'communities' vision is a decentralized concept of government wherein emphasis is on the needs of each province. The 'broad' vision calls for equity among all Canadians as facilitated by a federal government operating under a uniform tax policy. In its 28th Annual Review 'A Joint Venture,' the Economic Council of Canada examines fiscal policy in an intergovernmental context and discusses the effectivity of such a policy to provincially autonomous governments. A close examination of the two perceptions shows certain disadvantages arising from the implementation of either vision separately. What is suggested is a reconciling of the two visions to preserve economic union while maintaining a certain degree of autonomy for the provinces.

The annual review of the Economic Council of Canada, which is entitled 'Transitions for the 90s', deals with the effects of a strong Canadian dollar, the federal government deficit, increasing unemployment, high interest rates, and strong inflation expectations. The Council believes that the status quo is not effective due to fragmented decision making and an inflexible economy. There is a lack of coordination of economic policy between different agencies of the federal government and between the federal government and the provinces. Government, business, and labor have only slowly responded to the major changes in the economic environment and show an inability to adapt to market changes. The solution to Canada's economic trouble lies in public sector pricing based on mutual recognition between federal and provincial governments, and closer relations between business and labor.

An Economic Council of Canada research team studied Canadian industrial and labor productivity. Productivity is one of the major factors effecting Canada's economic competitiveness with the international trading community. Research, which focuses on many aspects of competitiveness, including total factor productivity (TFP), the overall productivity of Canadian production, reveals that TFP has declined severely since 1973. The growth of productivity in Canadian manufacturing industries has slowed down relative to all other Group of Seven nations. The decline in productivity is a result of the appreciation of the Canadian dollar relative to the US dollar, a rise in the real price of energy, and wages rising faster than the other costs of inputs.

The Economic Council of Canada, in its statement 'New Faces in the Crowd', reports on the results of its study on the social effects of immigration. The Council has concluded that racial prejudice against non-white immigrants has diminished among those having contact with immigrants, typically residents of major urban centers where immigrants frequently live, with the exception of the province of Quebec. While contact with immigrants from different cultures leads to greater tolerance and prejudice diminishes as the proportion of minorities to the population grows, a rapid influx of large numbers of visible minorities into Canada would lead to greater intolerance. Research into the economic behavior of immigrants reveals that their levels of dependency typically are lower than those of native-born Canadians.

The Economic Council of Canada, in its statement 'New Faces in the Crowd', reports on the conclusions of its study on the economic effects of immigration. During the 1980s, 1,250,000 immigrants entered Canada, a third of whom were of European origin, and the majority of who were from Asia, Africa, the Caribbean islands, and Latin America. Immigration does not have a negative effect on employment levels, and Canada should increase immigration to 1% of Canada's population annually by the year 2015 on the basis of humanitarian and social grounds. An increase should be gradual in order to ameliorate any social friction resulting from increased immigration. The recommendation is predicated upon unemployment levels remaining low.

An analysis of Newfoundland's economy since the Economic Council of Canada's study three years ago identifies increasing economic declines, indicated by rising unemployment and minimal productivity improvements. The fishing industry has not expanded as expected; this lack of expansion is credited to overly optimistic processing plant development and too little attention paid to markets. In addition, the development of offshore oil is not proceeding as predicted due to lower oil prices, difficult geological formations, and the controversy over the ownership of the oil. The future of Newfoundland's economy is similar to that of Canada as a whole, in that it does not depend on natural resources (which are abundant) but upon how well the people can organize themselves, how transportation systems can be improved, and how well the people are educated and trained.

Interprovincial trade remains an important aspect of Canadian economic policy. The Economic Council of Canada, through its 28th annual review entitled 'A Joint Venture,' emphasizes the importance of the domestic market as an experimental venue and a preparatory mechanism for international competition. The Council's report looks into the various constitutional options for Canada and the viability of maintaining economic union in a proposed state of provincial autonomy.

Economic Council of Canada senior economist Brian Powell, the research director for the Council's study of poverty, believes that the study will provide new insight into Canadian poverty. Powell states that the three objectives of the study are: to understand the causes and nature of poverty; to understand how social programs impact upon poor people; and to estimate the costs of various programs to alleviate poverty. Powell says the research will investigate head-counts of poor people, the depth of poverty of subgroups, and the duration of poverty and factors that change family circumstances. Using a longitudinal database and computer modelling, the study will assess how government programs could effect individual poor peoples' decisions to work or seek training and how the system impacts on various issues, including: women and poverty; the working poor; and the children of poverty.

A new Economic Council of Canada study suggests that Petro-Canada Ltd has little reason to remain a Crown corporation, especially in light of its 1984 mandate to operate as much as possible like a business enterprise. It is recommended that privatization of Petro-Canada should come only after the Canadian government examines the long-term outlook for the oil and gas sector, the nature and degree of public-policy goals in that area, and what policy tools it has at its disposal. Subject areas covered in the study include: Petro-Canada's history, the expansion of the company's role under the government's National Energy Program, and the ways in which the firm's performance is monitored.

The Economic Council of Canada examined public enterprise and found that some Crown businesses do not serve their original purposes or are not appropriate policy instruments. The Council recommends that independent commissions monitor, regulate, and advise governments on capital expenditures of publicly held electric utilities. Technological changes and increased US competition place in question continued public telecommunications monopolies. Transit authorities are urged to consider private contracting for mass transit services. The Council recommends that Air Canada and Petro-Canada be privatized and that share offerings be available only to Canadians initially. Overall, the Council believes that government enterprise be seen as an instrument of last resort.

'Connections: An Energy Strategy for the Future' was published by the Economic Council in early 1984 and expressed concern regarding the scope of Canadian energy objectives. The new energy strategy proposed by the Council called for revenue sharing between the provincial and federal governments, settling issues related to the management of resources, and changes in federally owned land taxation. Since the report was issued, there have been major energy policy developments. Briefly discussed are: The Atlantic Accord, The Western Accord, The Quebec Budget, The New Frontier Energy Policy, and The Natural Gas Pricing Agreement.

Canadian government loans to private industries amounted to $17.5 billion, and $27.5 billion had been spent in support of insurance and guarantees on loans, as of March 31, 1980. According to a report issued by the Economic Council of Canada, these moneys could be better utilized if paid to industries in the form of production subsidies that encourage investment and increase productivity, thereby raising Canada's standard of living. The report estimates that production subsidies could raise the living standards by $92 million without increasing government expenditures.

The province of Newfoundland has the highest debt in all of Canada and is undergoing its worst recession in 50 years. Newfoundland's major natural resource industries are fishing and petroleum; falling oil prices and decreasing government subsidies for fisheries are not helping Newfoundland's economy. A report from the Economic Council of Canada recommends government-sponsored employee training programs, rather than direct financial aid, to help reduce Newfoundland's high unemployment levels.