Fighting Trump’s Tariffs: Funding Private Capital or State Investments?
Canada’s industry minister emerged from a cabinet meeting recently to inform us that there had been discussion of a robust response to US aggressions with Canada-first procurement policies and a “C.D. Howe” moment to build and diversify our domestic economy.
The C.D. Howe (1886 – 1960) reference, of course, was an homage to the Second World War “Minister of Everything” who oversaw the country’s wartime industrialization, accomplished through 28 Crown corporations and a rigorous system of supply chain and price controls. It’s been a very long time since we have heard that kind of national policy talk from our political class.
Canadian business is also speaking out with its plan for the country, but not like the Canadian wartime tradition associated with Howe. The Business Council of Canada is suddenly on board with a massive Canadian investment program – provided they don’t have to pay for it. They want “a five-year 100 per cent capital cost allowance for businesses making strategic investments in domestic production.”
Then-prime minister William Lyon Mackenzie King (1874 – 1950) led a government that brought Canada’s economy to a wartime footing. C.D. Howe, King’s “minister of everything,” played an integral part in that effort.
Canadian Companies Full of Cash
Canadian companies are currently holding (Q3 2004) $727-billion in cash deposits. There are 27 Canadian companies with more than $1-billion in cash. Brookfield Asset Management is sitting on over $11-billion in cash, Air Canada has just under $6-billion, Teck Resources has over $5-billion, and Shopify just under $5-billion. In 2012, when he was still governor of the Bank of Canada, Mark Carney called this out as “dead money.”
We are already buying Canadian and are ready to support Canadian businesses that pay their taxes, provide living wages, and help us achieve our climate goals.
But it’s rich for corporate Canada to use the sovereignty crisis to demand a free ride to cover the costs of their investment decisions, which may or may not be what we need. The Mackenzie King government in the Second World War doubled corporate taxes and added an excess profits tax which generated revenues for the investments essential for the national interest.
Canada does have a C.D. Howe moment for the taking, and it does not begin with the Business Council and dishing out billions in subsidies to profitable companies. The federal government has extensive authority, power, and resources, and the responsibility to protect Canadian sovereignty and economic independence.
Crown Corporations for Common Good
Nothing stops Canada today from using Crown corporations to develop strategic sectors of the economy, as we have throughout our history. The Canada Development Investment Corporation (CDEV), a federal Crown corporation, manages government assets and investments, and it was used to buy the controversial TML pipeline in 2018. CDEV could be better used in a wide range of sectors, including renewable energy and a national east-west electrical grid.
The Business Development Bank, Export Development Canada, Canada Growth Fund, and Strategic Innovation Fund are financial Crown corporations capable of deploying billions of dollars in strategic investments. Farm Credit Canada, another Crown corporation, has a mandate to support farmers and invest in machinery, equipment, greenhouses, and other food security programs and projects. The Canada Housing and Mortgage Corporation has multiple funds to support affordable housing, and without changing its existing mandate could become a national homebuilder. Transportation infrastructure, ports, airports, fisheries, forests, and more are waiting for federal economic initiatives.
There are many other powers Canada can bring to bear to protect our independence. The Defence Production Act provides authority to marshal resources and investments for any matter relating to our defence – shipbuilding, aerospace, and Arctic sovereignty, among others. For example, the authority exists under the Act to establish strategic stockpiles of Canadian steel and aluminum to meet Canadian needs. The Boeing Winnipeg plant produces components crucial to Canadian defence and national policy. •
