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The Bank of Nova Scotia\u2019s chief executive said Tuesday that Canada should avoid falling into the pre-pandemic \u201ctrap\u201d of middling economic growth every year once COVID-19 is beaten, and proposed more child-care help, a capital-investment grant and reduced obstacles to interprovincial trade.<\/span><\/p>\nScotiabank CEO Brian Porter said that Canada had been seeing slower growth even before the pandemic, as gross domestic product grew at an average annual rate over the past 20 years of less than two per cent.\u00a0<\/span><\/p>\nCanada is not the only advanced economy experiencing this trend, Porter said, with \u201cconvenience and complacency\u201d among the chief reasons why.\u00a0<\/span><\/p>\n\u201cAs a country, we should not accept the \u2018two-per-cent growth trap,\u2019\u201d the Scotiabank CEO said during the lender\u2019s virtual annual shareholders meeting. \u201cWe have an opportunity today to pursue policies that ensure that Canada does not just go back to pre-pandemic growth, but achieves an even higher and better growth for a sustained period.\u201d<\/span><\/p>\n<\/section>\n\n
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Porter said Scotiabank has been researching and pushing for such moves for some time, and that they are proposing three policies that would boost economic growth, employment and prosperity. Those calls also come as the federal government is set to table a budget next week that will help plot the course Canada will take out of the COVID-19 pandemic. <\/span><\/p>\nThe first policy being pushed by Scotiabank has to do with child-care, with the lender\u2019s CEO saying that more often than not it is women who shelve their career goals to ensure this is provided.\u00a0<\/span><\/p>\nThe issue is one that Porter has previously <\/span>raised<\/span>, and he noted the lender is recommending an annual top-up of $5,000 per child to the federal Canada Child Benefit, which provides a monthly payment to eligible families that depends on their income. <\/span>Furthermore, Scotiabank is advocating that the Canada child tax credit be boosted to $20,000 per child a year, up from $8,000, allowing parents to fully deduct preschool child-care costs.\u00a0<\/span><\/p>\n\u201cProviding greater flexibility to families to find child-care arrangements that are best suited for them is good for women, it\u2019s good for families and it\u2019s good for the country,\u201d Porter said.\u00a0<\/span><\/p>\nSecond on the bank\u2019s list is a one-time, matching grant to entice businesses to invest in machinery, equipment and intellectual property. Such a capital-investment grant could allow a small business to digitize their operations, Porter noted, or for a medium-sized firm to upgrade a factory to make it more efficient.\u00a0<\/span><\/p>\n<\/section>\n\n
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Those two policies, Porter added, could make a \u201cmeaningful impact\u201d on the direction of Canada\u2019s economy. The investment incentive alone, he said, could boost that investment as a share of GDP by up to one percentage point, providing an extra $100 billion to the economy over five years.<\/span><\/p>\nThat incentive has been on Scotiabank\u2019s radar for some time as well. A report from the bank\u2019s economics unit last September said a matching grant of 25 to 50 per cent would cost somewhere around $25 billion to $50 billion a year, based on the annual amount of investment in machinery, equipment and IP since 2010.<\/p>\n
\u201cWhile large, this is substantially less than (the Canada Emergency Response Benefit) or (the Canada Emergency Wage Subsidy) funds paid out this year, for instance, and could easily be financed as these programs roll off,\u201d Scotiabank economists Jean-Fran\u00e7ois Perrault and Rebekah Young wrote. \u201cIt should also yield significant economic payoffs over time, as the government would only disburse funds if investments are actually undertaken.\u201d<\/p>\n
The last policy Porter raised was tearing down interprovincial trade barriers, which has been a longstanding <\/span>goal <\/span>for many in Canada. Porter noted that a working paper from the International Monetary Fund <\/span>estimated <\/span>total liberalization of internal trade in goods could increase Canada\u2019s GDP per capita by almost four per cent a year.\u00a0<\/span><\/p>\n\u201cLet\u2019s prioritize free trade between provinces and territories in the same way we prioritize free trade between countries,\u201d Porter said. \u201cThere is considerable evidence that these three policy recommendations would play an important role in strengthening our economy at this critical time, and they would help ensure Canada does not fall back into the two-per-cent trap.\u201d\u00a0<\/span><\/p>\n\u2022 Email: gzochodne@postmedia.com | Twitter: