A Continental Perspective: Making Canada Matter More from the Ground Up

Mary W. Rowe You can see the way we’ve curated today, we’re trying to do 30,000ft back down to the local, back to different jurisdictions. Yesterday, you heard big … Last night, those of you that were at the dinner heard, bit of a snapshot discussion about the economy. What we wanted to do was start today to talk about the biggest picture there is, which is … which we riffed off of a report on Making Canada Matter More. So these folks are going to talk to you about the context, the Canadian context. And we appreciate you being here. Over to you, Andrea.

Andrea Barrack Happy to get started here. Thank you very much, Mary. I love the title of this panel, Making Canada Matter More feels like our more humble and polite version of Make America Great Again, in a way. But the title is pulled from a Public Policy Forum publication, which is authored by two of our panelists to strategize on how Canada can matter more – both to the United States and globally in a time of geopolitical uncertainty. Many of the assets that are explored, the Arctic, critical minerals, energy, aren’t obviously city issues. And given that Canada is mostly urban, with three quarters of us living in cities, we’re going to explore this morning the roles that cities play in the economic, social and environmental future of Canada. And we have an amazing panel to share their perspectives. Two of the three authors of the report, Drew Fagan and Janice Stein, are both from the Munk School of Global Affairs and Public Policy. And we also have two chief economists, my colleague Frances Donald from RBC and Pedro Antunes from the Conference Board of Canada. So maybe to kick us off, I’ll ask a few questions, but then they’ll come in on Slido. So please, lets have this be interactive, but we’re going to kick off maybe with the economics part of it. And Pedro, I’ll start with you. The Conference Board just put out a report noting the modest growth in the last quarter. Do you see this as being uniform across the country or are we seeing differentiation in different regions and cities?

Pedro Antunes Well, that’s that’s a good question. In fact, I would say it’s been remarkably similar because the impact on the economy is really one of high interest rates, high inflation that really eat away at purchasing power for a lot of households. And so it’s very much reflected across most cities, across most provinces. What we’re seeing is that weakness in consumer spending driving that kind of weaker growth. There’s also kind of a pan-Canadian, and I want to talk a little bit more about this later, but weakness in business investment, which is an ongoing problem. And, you know, if we get into issues around productivity, we can touch on that as well. But what’s remarkable about the last couple of years and again, dramatic changes going forward is what’s happening with the demographics. And I just wanted to mention some of that because just two weeks ago and I guess it was the 24th of October, we had an announcement from our Minister of Immigration, Mark Miller, around cuts to non permanent residents. So that’s going to be a very dramatic, dramatic change from what we’ve seen in the last couple of years. And it’s going to have an impact on employers across Canada and again, affecting pretty much all regions and probably the bigger centers more than than some of the smaller centers. But it’s going to be a massive impact. And just to say that over the last two years, we’ve had very weak economic growth, especially … when I said two years, I mean, ’23 and ’24 or so, ’24, we’re almost at the end of it, but very strong population growth, demographic growth that I never thought I’d see. 3% growth in 23/ 24 compared to what is typically around 1 or 1.2% growth in population. So just such a dramatic change in the fundamental driver of the economy, and that’s affected, you know, across  Canada. We’ve, because of that, we’ve been able to fill a lot of job vacancies. We had a million job vacancies. We’ve cut those in half. Employers were really hanging on to employees, even as the Bank of Canada was turning the tourniquet on the economy, raising interest rates and slowing economic activity down in 2024. So now we’re moving into a period where population growth, according to the plan that the Federal Government and the Immigration Minister announced, is going to be negative, not 3%, but now all of a sudden next year, -0.2%, -0.2% as we exit, according to the plan, over 900,000 nonpermanent residents. So that’s going to you know, already the economy is weak, consumer spending is weak. And that’s going to add to that weakness. And we need to be aware of how that’s going to play out in the economy.

Andrea Barrack Okay, great. Frances, I’m going to let you add any perspective you have to what he said, but maybe if you can also layer in upcoming tariff wars, stuff in the US. What do we need to also be paying attention to, particularly from a city context around, you know, protecting vulnerable regions?

Frances Donald There’s a lot in there. First of all, I agree with every … As always, I agree with what Pedro says, and what a pleasure to be on this panel with Pedro. So I’ll add that I completely agree. Regionally, the impact and the growth is fairly … it’s the same themes across the regions, but it’s not the same themes by income group. And I have to tell you, Andrea, I’m having a little bit of an existential crisis with economics in general right now, and in part because of some of the issues that Pedro mentioned, immigration impacting our numbers, but also because of how reliant we’ve become on discussing the economy from the national lens. There are a lot of stories in the Canadian economy that are getting very lost. So when I turn on the TV and I see CBC or BNN talking about “GDP is resilient,” “the economy’s not in a recession. What are you complaining about?” I think we’re losing the fact that actually there are portions of this economy that are very much in a recession and it’s low and middle income Canadians. Now, remember, we say everybody has the same inflation, but that’s not true at all. Low income and middle income Canadians, many of whom live in cities, have experienced higher inflation because a larger share of what they consume is food, energy and essentials. Low income Canadians are now spending 105% percent of their disposable income on essentials. That means they’re going into debt when they’re saving just for essentials. High income Canadians are benefiting from resilient home prices, stock markets that are doing well. And because high income Canadians spend more in our economy, the aggregate economy looks a lot better than what’s happening under the surface. And when you add on top of that population growth, a lot of our data looks just fine. But people in Canada are not just fine. And I really fear for my profession if we don’t start being vocal about the fact that our traditional indicators are not telling the Canadian economic story.

Janice Stein  What a great point. I just can’t resist. I’m just going to go off script for a moment because I read something this morning in which one of our leaders talked about a vibe-session, not a recession. Right. Well, the only people who talk up a vibe-session are people who are not expe riencing what you just talked about, Frances. So there’s an interesting project that I’m just in. And here’s really the point on this and boy, does this matter for cities. The way economists think about inflation, and I really do understand the way you do it. There’s core inflation. I get all the differences … Is not the way that group of people that you talk about think about inflation. They think about – how much did a carton of eggs cost two years ago or two and a half years ago? And what am I paying for it now? And do I buy it or not? Now why do we carea bout that? We care about that because these people are experiencing disproportionate hardship. And many of these people are in cities. Although there’s some in the rural areas. And I’ll tell you another reason why we care about it – they’re Trump voters. And the more people say the economy’s great. What are you talking about?” Frankly, let me just interpolate. You’re not very sophisticated, aren’t you? This is a vibe session. That’s, in fact, what people are voting for Trumps all over the Western democratic world. We need measures of inflation as lived experience from our economists friends.

Frances Donald And you know what? It’s not even that hard. Like, maybe we should just work through lunch. Like …

Janice Stein Yeah, exactly

Frances Donald Not. It’s not hard for me to go on television and say year over year inflation, what you paid today versus last year is up 2%. But compared to 2020, it’s up over 20% more for food. That’s not difficult to say it. And so your question about tariffs is very relevant here because the whole concept around a lot of the movements that we’ve seen is that there’s been a cost of living crisis, but tariffs are going to increase prices for everybody in every region, U.S. and Canada. They’re going to increase them in price level terms. And therefore, central banks and economists will say it’s a one-off shock that drops out of prices afterwards. But for most Canadians and Americans, it will be a permanent shock. And the word permanent is very different for folks than one-off. So we need to be careful about that.

Andrea Barrack So I mean, Janice, you mentioned Trump and people voting for Trump and certainly the tariffs are there. Drew, the report was released in September before the election. I’m curious if there’s any changes that you would make to the recommendations or even the headline of the report, given what we’ve been seeing.

Drew Fagan And the whole point of the report was to get ahead of this issue to the degree we could, regardless of who won on November 5th, I’m not even sure we mentioned the two leaders. We didn’t mention the Democratic nominee or the Republican nominee. It was a Canadian strategy for a changing United States that wasn’t entirely dependent on what happened on November 5th, although we’re hearing that big time. We’re seeing it in technicolor. I just want to add one point on the Trump voters. It’s also the conservative voters to a sizable extent, too. Once the Conservative Party really started focusing on the cost of living in the way they have, their numbers started rising as well. So there is a bit of an echo here on housing costs, on inflation, not to the same extent, not to the same extent of anger, but it’s reflected here as well. And you see those numbers being solid. So the strategy really was to look ahead. We have always, in negotiations with the United States, not just been the demander, but the big brain with regard to these negotiations, thinking through how the Canadian interest can be recognized in a continental way. Now, that’s primarily with the United States. We’ve also had to grapple with bilateral relationship, trilateral relationship with Mexico. But we landed on four areas in particular. One is defense, and you’re reading about that with regard to the change in geopolitics and the requirement really for Canada step up particularly what we focus on is on the Arctic. And then we focus in two areas – critical minerals, thinking about, what is the real resource, the benefit that Canada brings to the United States and to us like energy in the free trade agreement, we think critical minerals and deeper integration with regard to energy as well. What does this all mean for cities? Again, the fourth is technology actually, which is based very strongly in cities, but it’s also about higher productivity. It’s about the Canadian interest in building our economy. And there’s so much to do. And the challenge in these areas is as much ours as theirs. So when we think about this relationship going forward, essentially what we’re saying is we’re not alone. We have things to offer and in our own interest we have to negotiate from the United States. And this gives us a greater sense of strength with regard to those negotiations. It may not feel that way after the last two weeks and the issues of tariffs and the 51st and, by the way, 52nd state, because he actually gave us two. But there’s a strategy there.

Andrea Barrack Okay, that’s great. And part of the report actually talking about technology and AI actually mentions the fact that in order to scale our energy and our critical minerals, we do need that and recruitment will be a big issue. So maybe I can ask everyone who’s interested, like comment on … we need to attract the best and the brightest to be able to do that. And part of that is the urban landscape we’re able to offer. What are the kinds of things we need to be thinking about if that’s what we need to do?

Janice Stein Yeah, I think that’s a really critical point, Andrea. The technology was the fourth pillar, but in a way it’s the platform. It’s better to think about it as the platform, which undergirds absolutely everything that we’re going to do. And that’s a city’s issue, by and large. It just is a city’s issue. So let me just take a moment to paint a picture. I said to Andrea and Frances to create, frankly, to share the sense of urgency that I feel right now about where this country is, I don’t remember feeling this sense of urgency over a long career about the scope of the challenges we face because the international and the domestic converge in ways that are having a multiplying effect on us. Let’s not get distracted by President-elect Trump. There are profound changes going on in the United States and the period of the 30 years before are not ever coming back. Right? It is a very different, United States, and that’s why we wrote the report that we did that way. Tariffs, you talked about Frances, they are going to have … and when people say it’s a one-off effect, it’s one shot. First of all, to come back to our other conversation, it’s not … people will not feel that shock the same way. It will depend on how much insulation you have, how resilient you are. And there’s going to be, to put it bluntly, a class difference here in the way people feel it. And it’s going to compound some of the problems we were talking about in the earlier panel this morning. It’s going to compound the anger, too, and it’s going to compound polarization. And we need to understand that and build on that and plan for that. The third thing, just before I get to technology, why the Arctic? Why the Arctic? Because it’s ours. It’s ours. And we have invested almost nothing in securing it and defending it at a time when the ice is melting. And that is going to be one of the most strategic waterways that is going to connect Asia to Europe. It defies imagination, frankly. Now, why is the Arctic interesting to talk about for just two minutes? Because we are not going to succeed in the Arctic if we don’t build a cross-cutting coalition. How do you read the defense policy update? Just one time is enough. But just read it. 12 hubs. So why ask … Are they connected to civilian infrastructure? No, they’re not.

Andrea Barrack Pedro, you look like you’re dying to get in here. Please go ahead.

Pedro Antunes I just wanted to mention something else about the new administration south of the border, and that is around well, first of all, we’re seeing a much more insular world. I wonder about our, you know, essentially our work and efforts to reduce emissions globally and especially with what’s happening in the States. And what does that mean for cities in Canada? Well, you know, I think we’re going to be much more focused going forward on mitigation or we have to be much more focused on mitigation in addition to the investments required for reducing our carbon footprint or our carbon use. So, you know, I just wonder about you know, if you look at Statistics Canada’s data as to where our public investment in infrastructure is as a share of GDP, it doesn’t seem that bad. And in fact, when you look at the stock of public assets, they’re back on the rise as a share of population. But there’s a lot more going on here because a lot of these assets that we’re requiring are no longer assets. They’re essentially replacing displaced assets or adding to the need of infrastructure that we didn’t have before. And I think this is why we’re still talking about these massive infrastructure gaps across the country. So two points. One is I think we’re going to have to focus a lot more on mitigation going forward and those investments required for municipalities. The other point that’s really important, that we haven’t talked about yet Frances, is the cost of capital. We’ve seen two decades of very cheap interest rates prior to the pandemic. During the pandemic, interest rates were at zero. Those days are over. Even as the Bank of Canada has lowered rates by 125 basis points over the last, you know, this and several months. If you look at yields, this is what market drives in terms of the cost of capital. Long term yields have barely dropped. Yields are going to be based on that demand for capital and the amount of sovereign debt that exists in the world. The U.S. is running 6 or 7% deficits as a share of GDP. China used to buy U.S. treasuries. They’re now selling them and running huge deficits themselves. The same with India. So the demand for capital is going to drive and keep interest rates high for a long time. And this affects everyone, low income households, young households who just got themselves in debt. Municipalities, federal governments and businesses.

Andrea Barrack So the theme of this conference is the infrastructure deficit. And obviously cost of capital is going to have a real impact on that. So I’m really interested in people’s views then, if you do need to then prioritize … I mean, I’ve looked at the conference for the rest of the day, talk on need for local infrastructure, climate infrastructure, transportation infrastructure. Where is the capital infusion going to have the biggest impact? Where do we start when we think about those things? Because we may not be able to afford it all? Anyone jump in.

Drew Fagan Well. You know, I was deputy minister of infrastructure for four years. I solved all the infrastructure problems. So to me, it’s academic. Not that academic is a bad word. So …

Andrea Barrack You know, people know you here Drew, you can’t just get away with that.

Drew Fagan We’re spending. Pedro, you nailed it like, in terms of numbers we’re actually doing much better. Like you go back to, say, 2000 or 2010, what we were spending on infrastructure was actually negligible. And at the municipal level, where most of the infrastructure is owned, this is a period in repair, rehabilitation was very much under serviced. In numbers it’s better, far better than it was. For one thing, the federal government has stepped in, in a big way. You go back to, say, the Stephen Harper era, he doubled spending. Trudeau’s era has doubled spending. Do we spend it well? No. There’s a lot of systems friction and there’s a big political thumb on where we spend it. And we actually … people will say, we all do that. We do it more than countries that we look to for a whole variety of reasons. And we get into that in the book. Australia and New Zealand and others. So you see the frustrations here with regard to transit in Toronto, with regard to the Eglinton line. Also, not just … we’re an expensive builder and we’re slow to actually build and there’s a whole variety of reasons which we do get into in the book on that. There’s also the challenge of inequity, and that’s where we get to the Arctic and other areas where we’re thinking across the country. You know, in the Arctic and the ability to sort of use dual use, so civilian and military benefit. You know, I’ve done a fair bit of work in the Arctic with regard to infrastructure. You know, it’s shocking the level of infrastructure in the north. Take Nunavut, for example, all the communities in Nunavut –  they’re solid waste or dumps. Right, now, we don’t have that in the South except in some Indigenous, unfortunately, Indigenous communities. You can go across … The 53 communities in the north. What’s their power come from? Where does their power come from? It’s diesel, all but one community. There are means by which we can actually coordinate, including the hubs and others, to better effect. So there’s a double benefit from it. So that’s where it connects to kind of other spending as well.

Janice Stein You know, if I can weigh in, I think there are two really critical things here. First of all, we have to invest in our digital infrastructure. You know, Zita was saying last night and she’s absolutely right, newfoundland has a terrible infrastructure gap and you have to shut down part of the economy for half the year because there’s no flights. Just think about the economic consequences of that because there are no flights. But in addition, so we got into this conversation, how much digital infrastructure – digital infrastructure is the infrastructure of the next 50 years, frankly. Where’s the plan, the focus? And let me say the execution on the digital infrastructure, one of the big themes of the report is “execution eats strategy every day for lunch.” Okay. And we are too slow is about the … I’m biting my tongue here … In comparison to everybody else. We don’t execute at speed. Take our mining sector, take our infrastructure sector. It doesn’t matter where you look. We are simply too slow. And the gap between how we execute and the way other countries execute is growing. So if you ask me, because there was a discussion last night, what can we do about this? My answer is hope is not a strategy. All right. We’re past that. It’s not about hope, because we won’t … We will be … Argentina and Canada had the same GDP in 1900. They hoped. Okay?

Andrea Barrack Okay. I’m going to move along. We actually have a question that’s come in. And it’s for our economists mostly, but asking if we’re experiencing a k-shaped, bifurcated, post-pandemic economic recovery and how that’s resulted in increasing socioeconomic divides for our country. I can tell, Frances, this is like your … you are chomping at the bit …

Frances Donald I’m so excited that someone asked this question because it’s the right question to ask. And it’s been a long time that I have been on a panel where I forgot I was the panelist because I was enjoying the conversation so much. So I do tend, and Pedro, you can take another side of this. I do tend to use the K-shaped story more for the United States, and there’s a different word I use in Canada. So if you’re not familiar, economists are simplistic people, and we like to assign letters to recovery. So like a V is you drop and then you reaccelerate. A U is, you kind of drop slowly and then re-accelerate. Or L is you don’t re-accelerate. And following Covid, there was a lot of conversations about a K which was certain portions of the economy would re-accelerate and certain would actually go in the other direction. And at the time we would use it to talk about the difference between manufacturing and services-based sectors. But what we’ve seen in the United States is a very clear divide between higher income and lower income, and the higher income folks are benefiting from basically stock market returns. You talk about cost of capital, you know, who doesn’t worry about that as much? CEOs and large companies, because they have personal connections and they have the ability to access different types of capital streams then smaller businesses. Smaller businesses in the United States have their lowest confidence level since the Great Recession. They’re in a recession, and low income Americans the same. So it’s very K-shaped. In Canada, I use a different word, and maybe it’s semantics, which is unevenness, because the real challenge, the group that has been most disproportionately falling behind is actually middle income. It’s the second and third income. So though that group has seen real wages rise about 3% in the past three years, whereas high income have seen real wages rise about 13%, I can’t remember if I use that statistic today already, but that’s how important is. And I say it twice. So it’s the middle there that is really suffering over that. And I’ll reiterate a point that I made, which is that inflation is hitting groups differently. So if you’re a renter, your cost of living crisis is much worse than if you’re a current homeowner, even with rates moving higher. And I just, while I have the mic, want to emphasize two things: Cost of capital. One of the challenges I expect for Canada is folks don’t know this but … and I only in the past couple of years came to recognize is about 80% of the move in our market interest rates are driven by what’s happening in the United States. So we have a forecast that the Bank of Canada is going to cut rates down to 2%. It’s a little bit more aggressive than some other shops, but that the U.S., because they’re experiencing an AI boom and they own, operate and are benefiting from digital technology more than any other country in the world, we only have interest rates going to 4% there. Canada is going to, in our opinion, lose some control over their own domestic cost of capital. And that to me is one of the larger issues that we have yet to address. We’re talking a lot about infrastructure here, but as I’m listening to this, I’m reminded … So my two year old, when it’s snowing outside, I get so excited. He puts his hat on his jacket, his gloves, and then he runs out the door without his boots. He just goes right in is sock feet. And so no matter his grand aspirations for the top of him, he never gets very far. And I keep thinking about this conversation and how at the end of the day, to execute on all of these things, we need to attract and retain people and we need to attract and retain businesses. And we cannot do that in the midst of a housing crisis. And any time I talk to a policymaker and they say, how do we do this? How do we do this? My answer is always fix the housing market. It used to be that we could hire Canadians because they were cheaper effectively to do work around the world. Like I’m probably 80% as good as a New York economist, but I cost 60% as much. That’s a good deal. When you’re in a cost of living crisis, our wage growth is necessary in this country to attract and retain the best minds in the world, is no longer a competitive advantage. And so we’re you know, we should be thinking about our hat and our mitts and our coats. We have to do that because conversely, you can’t run outside in just your boots. But I looked outside of the books and the … I’m going to buy all of them because fixing the housing market is the first thing that we have to do to attain all of these other large ambitions.

Andrea Barrack Okay, We have a priority. That’s great.

Janice Stein Again we build a coalition around the priority. Because I think that’s really critical. That’s critical for every one of the targets you had in the report. We need a coalition where private sector leaders lean in around the goal, around one, one, make the hard choices that housing. That’s what we’re going to focus for the next two years. And we will just not … put the other stuff on hold. Really lean in, have a plan to execute with markers and pay attention to how well we’re executing.

Andrea Barrack Pedro, do you agree? Is that the priority?

Pedro Antunes Well, I just wanted to point out that certainly attracting people is important and having, you know, but also attracting private investment. And we talked about public sector investment. We’re a disaster in attracting private sector investment. We’re running well low, well below other OECD countries in Europe and way below the U.S.. And the challenge with the Trump administration coming in now, we’ve already seen the effects of that. Imagine a 25% tariff. What does that do? Even if it’s a bluff, it’s going to affect the business decision already. And we’ve been suffering that since 2016. In fact, since prior to 2016 when we started calling NAFTA the devil. So this is n ongoing challenge. And I would say that one thing that we never look at is our tax competitiveness, at least at the very basic, look at that. We are not competing on these subsidies. We’re not competing with the IRA on a … You know, these investments and bets that we’re making on battery plants. I wonder if that’s the right choice. But they’re very focused, very, you know, we’re picking industrial policy. We’re picking winners and that’s always scary to me. Let’s look at the tax regime. And, you know, when we talk about a capital income taxes, for example, the capital gains tax that we just implemented. Sure. We’re all for everyone paying the right amount of tax based on their income. But have we taken a step back and looked at how does that compare to the U.S.? You know, how do … are we competitive in that before we make these big decisions? So I think tax reform is, and nobody talks about it, nobody talks about looking at investment attractiveness and competitiveness.

Andrea Barrack Drew, jump in And then we got one more question from the audience.

Drew Fagan One announcement I expect is probably  – it may not come up in the coming election, but I would expect that a conservative government would launch some sort of process with regard to taxation and tax competitiveness. But part of the challenge with that, then, if you talk to conservative insiders on the balance between good taxation and good policy. Same thing on housing to a sizable extent, there are reasons why it’s so hard to build, right? Is that, you know, you wonder how once the report is done, they’re going to really dig in, where they’re really going to execute. And I’ll give you one example, and that goes actually the previous conservative government, that was the reduction in the GST from 7% federally to 5%, (went higher with regard to provincial add-ons). And the finance department tried and tried and tried again to get Stephen Harper not to do this, but he ran on this. It’s kind of the flip this time. And he insisted – in this case, good tax policy would probably reductions and you know better than I do that reductions in certain areas, and you ran them off Pedro, and probably an increase in the value- added tax. He will not touch that, if that’s the advice he gives for populist political reasons. So there’s that balance with regard to execution that we’re having challenges with.

Andrea Barrack Okay. And our question is tax related for sure. Is inflation hitting regions differently? Thoughts on whether we need to redesign our federal transfer payments. Is this a political wedge issue potentially as well?

Janice Stein God, I shudder. I just shudder at the thought of the person power hours that would take inside and the distraction that would create in the community outside. Again, I think this is, you know, this is the kind of question that we actually have to take very seriously because we can’t agree on this panel what the priority should be, right? And that’s why we frankly don’t have any priorities and don’t execute against priorities that we don’t have. So it’s not that one is better than the other. It’s that without one or two or three priorities and a plan for execution, we will be here Mary, three years from now and we will be having the same conversation. And that’s … I think the priorities, frankly, as I look out, have to be set by people in this room. They have to be set by private sector leaders, by leaders in civil society, by communities and by universities. And the message goes to the government “this is what we care about.” I’ll give you a concrete example. We recruit. That’s what we do with the U of T. We recruit because we are in internationally, we are an international star among universities, the only one in Canada. We can’t maintain that status without recruitment. Okay. So they know beforehand they’re going to pay higher taxes when they come here. They’re okay with that. What they’re not okay with is the housing prices. And let’s look at the last regulation that came on. You can’t buy a house in this country until you’re a permanent resident.  Yeah. Look at your face. You go recruit people, the talent that you want to maintain what we have, which is really critical for the productivity in this country. And you say to them, I’m sorry, you’re going to have to rent because there’s no exemption for the class of recruits that we need to invest in a high talent economy. Now that approach is lunacy, frankly. There’s no priorities in which you say, I’m going to give up, I’m going to give up tax reform for 3 or 4 years in order to focus on the housing market.

Drew Fagan And this is the crunchiest example, because I’ve had the conversation with a colleague who actually is going through this process now and people are everywhere. The transfer payment question is really relevant with regard to infrastructure, which is our focus today, particularly municipal infrastructure. You know, 30 years ago, 40 years ago, municipalities had a minority share of the infrastructure, but with transfers down from higher orders of government, they now have 60% of the infrastructure. They have 12% of the taxing power. So you’ve got so much systems friction with regard to being dependent on grants from the higher orders of government, if I can, just the Feds and the province. And the politics among them right now, the Feds and the Ontario government aren’t really talking. They’re both going into an election. It’s not systematized enough. And in addition, sometimes there’s one-off deals on political preferences. So there’s that balance that’s just gotten worse over time as opposed to …

Andrea Barrack Okay. So Frances, last comment and then I’m going to do a last question for everyone. And I need to allow a lot of time for that because you all have a lot to say. But you go ahead.

Frances Donald Okay. I’ll be brief. I agree with you. And I think the the really big issue at the heart of this comes back to why this conference is so important and why the theme is so important. Anyone who took an Econ101 class was taught economics effectively through a demand side lens, which is how well the economy does is based on our willingness and ability to buy things or do things as companies or people. Do I want to go to a restaurant and can I go to the restaurant? But in the past 4 to 8 years, our economy is shifting to a different driver, supply side. I may want to and be able to go to a restaurant, but it’s not open because it doesn’t have enough people to work there. I may want to and be able to spend money on building housing, but I can’t because we don’t have the underlying water or sewage infrastructure that exists there. I may want to be able to buy an iPhone, but I can’t get it through a port. And I’ve been very loud about this. The dollars that we spend on demand side policies, like giving people money to buy homes increases the amount of demand and increases prices for those. But if we spent that same amount of money on infrastructure and that’s why getting the transmission mechanism of that is verya  important question and why we should examine where is it going and how does it go and how do we get more money there, will actually reduce prices. If we built more homes, prices would decline. That’s a simplistic example, I know it’s more complicated than that. So I think one of the most important things we need to do as we have this infrastructure discussion, especially from the public lens, is realize that a dollar spent has radically different implications for inflation and growth, and a dollar of government spent does not necessarily produce inflation if it’s on things like infrastructure. And we need everybody to be so loud about that because there’s still a prevailing view that any dollars spent from government are inflationary. They are empirically not if they are spent on items like infrastructure. So getting the mechanisms and the transmission mechanism right is a core question. And I want to thank whoever asks that one because it’s not something I’d thought about. So I appreciate it.

Andrea Barrack Okay. So we’re going to try to wrap up. I tried last night to do one of hope. We are not going to do hope today. We’ve talked about a bias for action. We’ve talked about the need for ensuring that our cities are places where everyone low, medium income can live and live well. Infrastructure is the theme of this conference and Janice’s are just to prioritize. So if each of you could say with that bias for action, if we’re going to develop coalitions and try to get shit done, what is the priority we should be focused on that will have the biggest impact? Start with Pedro.

Pedro Antunes Okay. Well, I do have something specific, I guess, in terms of our productivity challenge that we kind of alluded to a little bit, but we didn’t get into one of the big declines or big causes of decline in productivity that we’ve seen in the last two years. It’s very focused on different industries. One of those industries is transportation, the transportation industry. There’s two subsectors within transportation that are down in terms of productivity. One is public transit, and it’s down because there’s a lot less users and we still have the same infrastructure, We still run the same busses and trains still have the same people operating those, just the usage is down. So the revenues are down. That affects your productivity in that sector. And because of that, because of that decline in use of public transit, we have congestion everywhere. It’s not just the big cities, it’s everywhere. So my suggestion is rather than investing in electric vehicles for every one and five ton vehicles that cost $70,000 and more, perhaps a solution would be to get people back using it for public transit. And the way to do that is to subsidize it and to invest in public infrastructure.

Andrea Barrack OK one vote for public transit. That’s good. I’m going to move us along. Just about two minutes left, Frances.

Frances Donald Well, I’ve already mentioned it – boots first, build more housing. I know that’s more complicated … but I just need to say I was also going to say congestion. Just a reminder, Ontario is 40% of Canada’s GDP. Toronto is 20%. You can’t move around. You want to fix productivity, start with congestion in Toronto.

Andrea Barrack So congestion.

Frances Donald I don’t even live there … yeah.

Andrea Barrack We appreciate you advocating on our behalf. Yeah, it’s a priority.

Frances Donald Housing. I’ll pick housing.

Andrea Barrack Housing. Okay.

Janice Stein Digital infrastructure. Pedro talked about the fact the United States owns and operates and benefits, and these next ten years are going to be … That’s what’s going to drive their economy. The gap for us will grow. We have to invest in digital infrastructure and businesses have to invest in training their workers on digital technologies. We will be out of the game, frankly, if we don’t do it. So that’s my priority because we won’t have an economy.

Andrea Barrack Okay, Drew.

Drew Fagan And the point about cities and the economic drivers, let’s look at Toronto, but not just Toronto. Transit oriented development is actually doing well in Toronto, believe it or not. Part of the challenge with congestion in the 416 is that there’s so much construction, but the Ontario line is going to be done much better than the Eglinton line, including major development, highrise development, including rental … two issues of equity, at transit nodes, all transit stations. So we’re making progress there. What we’re not doing with regard to congestion is tolling. And if New York City can do it, come back after she stepped away. We need to start thinking about this to the point about supply and demand. The people that we subsidize in terms of transportation in the big cities, for the most part, are the drivers, not the people who are using transit, who actually in Toronto in particular, pay most of the freight.

Andrea Barrack Okay. So is that a congestion priority? [Yes] Okay. So we don’t have one priority, but we have three, which is not too bad. So I think we can work on this, build coalitions, bias for action, get things done. Don’t have hope have a plan. Thank you so much to our panelists, I appreciate it.