These days, the news is filled with a variety of stories about government transparency, election spending, RCMP controversies, among others but what Canadians are really talking about is the economy.It is a subject about which the government is painfully aware yet seems reluctant to tackle.That seems to be a bit of a question in the provinces of Ontario and to a lesser degree Quebec.One would think that since the Prime Minister of Canada is an economist, he would have a comprehensive plan in place or rather, in effect.The lack of government leadership here seems to indicate there is no plan, or at least one he is willing to share with Canadians.
This opens the door to a huge amount of speculation and the media is going to find their own stories on this; perhaps erroneously.Surprisingly, the Finance Minister has not particularly boasted about improvements in the economy since his “tax reducing” budget.The west is doing well because of energy exports and increasing commodity prices, however the rest of the country is struggling.It seems that any mention of the economy to the Finance Minister is a cue to mention this singular expanding and profitable sphere of the economy.
What is evident though is that Canada’s economy is not growing as it should and that is directly traceable to the Ontario economy and in particular, the shrinking manufacturing sector.It is not a situation that has escaped the eye of the Governor of the Bank of Canada, Mark Carney.He recognizes that the Ontario Government has offered incentives for manufacturing and his moves at rate cutting are also an enticement for investment here.So why hasn’t it happened?The answer lies south of the border.
Ontario’s manufacturing capability was built on the export of goods to the USA.The industrial sector (and particularly the automotive sector) has been in retreat for several years.They have closed Canadian operations due to the increased cost of manufacturing as a result of the slip of the US dollar. They have looked off shore for cheaper supply in Asia.Similarly, these companies have sought to increase their bottom line, not through technological improvement but lower cost in the supply chain.It is actually a self defeating approach since putting people out of work means they can't buy the products these companies are producing.In other words, they are creating and perpetuating their own demise.
Restructuring will not put people back to work.Bay Street and Wall Street should know better.So should the economists and financiers.Equally guilty are the unions who should be looking toward protecting their memberships by working with the employers.Still it is an “us versus them” mentality and unfortunately it is all too often the companies who refuse to work with the unions.They prefer to dictate.
It doesn’t take an MBA to realize that people can't buy what they can't afford, and when faced with no option, they will buy what gives them the best bang for their buck.Oddly enough it is the foreign owned domestic automotive manufacturing companies like Honda, Volkswagen and Toyota among others who are doing well by meeting the needs of the buyer.They have established long term partnerships in their supply chain with a strong and steady workforce.They have long term commitment to their presence in the North American marketplace, something the general public doesn’t share about our own automotive industry.Quite simply, they don’t trust the Big 3.Why should they?At any rate, today it is impossible to identify what is truly a domestic manufacturer when the “foreign” companies have their supply chain in domestic markets.
Every night the financial news has at least one expert; usually from a bank, investment house or worse, an elected politician who has the answer.Unfortunately their answers are usually self serving to the benefit of their employers, not to the general public.They are quite simply little more than bean counters.They have no concept of the real situation on the street.Their real interest is in making money through stocks, bonds and funds as well as other economic areas..Their argument is strangely familiar; If companies are being invested in by people then they can expand and that is good for the economy.The truth is they don’t invest in the companies.I would hesitate to bet that there is more money invested by corporate America in the financial markets than in their own businesses.In short these experts are “selling” to corporations.They aren’t interested in your $100 investment when they can see a million dollar investment from another company.
This leaves the individual on the street high and dry.They essentially have no ability to counter the feeding frenzy of greed being dined upon daily.This irresponsible attitude of business, has led to numerous problems for the consumer: Runaway energy prices, Subprime Mortgages, High Ratio Lending, Increased debt, Decreased saving, Declining income and lastly, no vision by anyone for stability.The really sad part of all this is that no one anywhere is standing up and telling government and business to put a stop to it; if they are they don’t last long and are quickly replaced by several more experts who will toe the corporate line.Of course government is aware of all this, some of it is directly traceable to their actions or lack of action.
Corporate lobbyists are constantly seeking legislation that is favourable to their employers.Taxes imposed by government account for billions of dollars of annual revenue and of course since they are percentage based, the higher the commodity the greater their income.
Canadians need stability in their lives for their own personal sense of safety and that of their families.Neither government nor business seems to be listening.The answers are there and can be legislated but there is no political will and business will not take less than the maximum it can extract for profit.Their interests are not with anything but their bottom line whether it is profit taking or taxation revenue.The question to be answered is a matter of how long before the consumer breaks?Will it happen before the house of cards collapses?
The last card in this picture is the TSFA (Tax Free Savings Account) that is to become effective in 2009.This is essentially an account where you may hold up to $5000 in investments and earn interest tax free.To date, there has been no information made available on this other than its announcement in the last budget.This can be a vehicle for short term investment while liquid assets accumulate so they can be rolled over into RRSP’s down the road.The problem with it is the markets.The average person knows next to nothing about investment.They also are unlikely to hold $5000 to gamble.For those who do have the money and are savvy, one would wonder why they would need this account in the first place.So where is the stability for the average Canadian?It isn't in the markets that are controlled by corporations who are playing them like a roulette wheel.The average Canadian’s stability is in their RRSP’s, their bank accounts and their homes.
The government has failed to meet the needs of the average Canadian with this program and understanding what little detail is available even months after the announcement.