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Release of Compete to Win
Speech by Mr. L. R. Wilson
Chair, Competition Policy Review Panel to
The Economic Club of Toronto
Toronto, Ontario
June 26, 2008

Good afternoon everyone, and thank you Mark for that kind introduction. And thank you all for taking time out of your busy day to be here.

This is a big day for all of us involved in the work of the Competition Policy Review Panel. Today is the culmination of a year’s journey, much travel, many meetings, and a large amount of reading and study. It has been a busy year, and, for us, an extremely rewarding one.

Earlier this morning we submitted our report to the Honourable Jim Prentice, Minister of Industry, and I am happy to be here this afternoon to talk to you about the report, the competitive challenges and opportunities we see for this country, and the national agenda we set forward.

Before I do, I would like to introduce my fellow Panel members. We were in Ottawa this morning, and I am pleased that Tom Jenkins, Executive Chairman and Chief Strategy Officer of Open Text, is able to be here with me this afternoon, and also Brian Levitt, a lawyer and the co-chair of Osler, Hoskin and Harcourt.
Our other Panel members are Murray Edwards, from Calgary, a prominent investor in, and leader of, several companies, and Isabelle Hudon, the President and CEO of the Board of Trade of Metropolitan Montreal. I would also like to introduce Andrew Treusch, the Executive Director of the Secretariat that supported the Panel’s work.

We have titled our report Compete to Win. It is a title that speaks to two of our Panel’s fundamental beliefs about Canada’s future:

First, we believe that Canada must step up its game and become more competitive, both here at home, and abroad. In the global economy, the pace of competition has accelerated, and our competitors are becoming more successful. As a country, we must position ourselves for more wins in this new global marketplace.

The second belief built into our title is that Canada can and will win. In our travels and consultations, and in the quality of the written submissions we received, we saw again and again how talented and engaged Canadians are. We have a wonderful foundation on which to build, and our Panel has every confidence that Canada can thrive in a more competitive environment.
And that is what our report is all about.

Our report and our recommendations reflect one central proposition: greater competitive intensity will yield higher productivity and ultimately a better standard of living for all Canadians.

How?

First, by promoting a vigourous two-way flow of talent, capital and innovation within the Canadian market, and between Canada and the world.

Second, by demonstrating a strong commitment to our openness as a nation – openness to talent, investment and ideas, and openness to competition.

This openness is underpinned by the third factor: better management of our economic affairs here at home, meaning more effective collaboration between and among our governments, businesses, and our educational institutions.

Our report builds on these three fundamentals, underpinned by what we heard and what we learned, and by our own experiences.

What did we hear?

In our consultations, we heard that Canadians are worried about their economic future. They see long-standing Canadian companies being taken over by international buyers, plant closures and painful labour market adjustments, exports to the US threatened by a rising dollar and slowed by a thickening border, and a weak Canadian foothold in many emerging world markets.

They see Canada’s economic standing in the world at risk, as more aggressive and determined competitors rise in rank to displace us.

And individual Canadians, on average, have seen little growth in real earnings for a quarter century.

Many of these warning signs arise from the underlying weakness associated with poor productivity growth.

Productivity isn’t about working more to earn less – it’s about working smarter to earn more. Our poor productivity can’t simply be traced to the way we work. Much of the responsibility resides with inappropriate public policies, ineffective management, and weak leadership.

Productivity is at the heart of our standard of living. It drives our earnings – as individuals, as firms, and ultimately, as a country.

It is a well-known fact that our productivity growth has lagged well behind that of the US, and other industrialized countries over the last quarter century.

Our report today is about the next quarter century – about our children and grandchildren. We want the next generation to have better jobs, more opportunity, and to enjoy a higher standard of living.

We cannot devote another decade to the politics of simply dividing the spoils of past economic growth and budget surpluses. We need to focus on policies which generate future growth and opportunity.
Our Panel’s journey leads us to conclude that we cannot take our current standard of living for granted. We need a call to action.

So how do we propose to boost our productivity? Well, let’s start with a more competitive mindset.

There is a dynamic interaction between competitiveness and productivity.

A competitive mindset strives for improvement. For innovation. For efficiency. It relentlessly focuses on the future and on doing things better. It demands constant attention to productivity improvements.

In short, competitiveness and competition matter.

We believe that more intense competition in Canada will spur the innovation and the productivity improvements that will ultimately create more wealth and better jobs.

Ours is an ambitious and forward-looking agenda, and it calls for sustained, dedicated focus on our competitiveness, and a national effort in support of it.

Some may question why we appear so concerned, at a time when we seem to be weathering the current financial storms relatively well, with low unemployment, a strong currency, and sound economic fundamentals.

Well, take a peek at the broader landscape.

Our competitors are no longer local, or national, or even continental. They are global.

The forces of globalization have quickened in pace and intensity. Capital and people are increasingly mobile. There is a dramatically increased world demand for basic commodities, food and energy. Powerful new competitors are emerging, especially the so-called BRIC countries – Brazil, Russia, India and China.

For most sectors scale is now defined in truly global terms, and new business dynamics are giving rise to global value chains. Moreover, the internet is transforming not only how we work and do business, but how we live.

These factors are increasingly impacting Canada’s economic performance, compelling us to consider how best to respond to the rapidly developing global marketplace.

And so our report calls for Canada to urgently adapt to these fundamental changes – standing still is not an option.

Our report, and the Competitiveness Agenda it puts forward, is therefore both a wake-up call, and a call to action.

A call for governments to reconsider their policy frameworks. For businesses to more aggressively seek out opportunities around the world. And for all Canadians to adopt a much more competitive mindset.

For governments, our report provides recommendations for legislative change, as well as a comprehensive agenda of policy recommendations.

Our mandate included a review of two key pieces of legislation – the Investment Canada Act and the Competition Act.

Much has changed since the Investment Canada Act came into effect more than 20 years ago, and our recommendations aim to make the Act more reflective of the dynamics of today’s global commerce, and the importance of foreign investment to Canada’s economy.

In essence, we recommend that the scope of the Act be narrowed, and that the thresholds for review be raised. The administration of the Act should be made more transparent and predictable, and the onus under the Act should be reversed so that the Minister would be required to articulate why a transaction is contrary to Canada’s interest before disallowing it, rather than requiring a prospective investor to demonstrate a “net benefit” to Canada.

Let me repeat: competition matters. By being more open to investment and investors we will encourage greater competition in Canada.

The benefits of competition are also at the heart of our recommendations for amending a second piece of legislation, the Competition Act. By and large, the Act works well; our recommendations are a tune-up – a streamlining, not an overhaul.

We have made a series of recommendations aimed at updating and modernizing the Act, and achieving greater consistency with best practices internationally.

We also examined the rules governing foreign investment and ownership in specific industry sectors, from air transport to uranium mining, and from telecommunications and broadcasting to financial services. As you can well imagine, there was much interest in our work in these areas, and we heard from many interested parties.

I won’t go through the individual recommendations in detail, as the report speaks for itself. However, our recommendations dealing with these regimes call for greater liberalization, which in turn will attract more investment and competition.

The goal is to enhance our competitive position and make Canada an even more attractive destination for talent, investment, and innovation. Our policies must create the winning conditions for economic success, and they must reflect our national interest.

But, as you all know, the conditions for economic success involve much more than the legislation we were asked to review.

From our Panel’s business experience both here and abroad, and from the submissions and presentations we received, we know that a broad range of policy and regulatory factors impact a jurisdiction’s competitiveness as a destination for investment and talent.

For that reason, our report identifies ten public policy priority areas in which we believe action is crucial. Again, I won’t go through them in detail, but I want to be clear that in these areas, we are speaking not only to the Government of Canada, but to all our governments, as well as our business and educational leaders.

We call for a tax system which encourages investment and work.

We call for stronger and sustained efforts by the federal and provincial governments to improve the workings of the Canadian economic union – to remove unnecessary barriers to trade and labour mobility within the country.

We propose ways to better ensure that Canada’s talented men and women meet our labour market needs, as well as to recruit and retain the best talent from around the world.

We make recommendations aimed at encouraging entrepreneurialism in Canada, and fostering growth businesses.

We make specific recommendations to address the role of boards of directors of public companies when dealing with mergers and acquisitions.

We make recommendations to provide our cities with the tools to attract business, investment and talent.

We call for the federal government to bring even stronger leadership to international trade and investment issues, with a particular focus on our economic relationship with the United States.

We recommend that all regulations be reviewed through the lens of Canadian competitiveness, and that regulatory bodies streamline their review procedures.

We also propose ways for Canada to become leaders in innovation and world-class in our management of intellectual property.

It is a broad and ambitious report, and its implementation will require a sustained effort.

With this sustained effort in mind, we propose the establishment of a new Canadian Competitiveness Council.

Such a Council would be the prime public advocate, and a powerful voice for competition in Canada. To identify policies and practices in both the public and private sectors which hinder our competitiveness.

Our report calls for the new Council to be led by a private sector Chairman, and a joint public-private sector Board, with a majority from outside government. We see the Council being independent of government but reporting to Parliament, and looking at ways to improve our competitiveness in all segments of society.

There are roles for all of us in advancing Canada’s competitiveness. There is a role for the federal government and for the provinces and territories. Our report is also aimed at city mayors, business leaders and university and college presidents. It speaks to each and every one of us – as workers, as parents – and to all who have a stake in, and believe in, this great country.

The reason we are here in Toronto today, speaking to a largely business audience, is that our Panel believes that business must play a key role in our global competitiveness agenda.

As Canadian business leaders we must become even more ambitious. We must embrace greater risk-taking and infuse a more entrepreneurial spirit in our organizations.

We need to invest more in R&D, dedicating more of our attention to developing tomorrow’s products and services.

We must pay more attention to market development opportunities, particularly outside the country.

We must invest more in developing skills and talent.

The best way to ensure that successful Canadian businesses are not simply absorbed by international consolidators – to avoid being ‘hollowed out’ – is to take the play to the other end of the rink.

Canadian firms must become more savvy and determined global players.

That will take hard work. It will take commitment. And it will take some measure of sacrifice.

But I believe that as business leaders we can and must raise our sights. We have done that before. Free trade in North America changed the game, and upped the stakes. It was tough, but Canadians competed. And we succeeded.

Our Panel was formed last summer when many were concerned about the so-called ‘hollowing out’ of corporate Canada.

We gave careful consideration to the related developments, and the implications of those concerns.

To our Panel, the answer was clear. The response to the hollowing out concerns should not be a call for new barriers or increased protection. Rather, we should view this as a wake-up call and as a compelling reason to become a more competitive – a more successful – nation.

It goes to the heart of what we call our mindset, and ultimately, to leadership.

Do we have what it takes to be the best, or are we content with endlessly bickering over who gets what?

We believe we should be working and investing now to produce more opportunity and greater economic wealth for all of us in the future.

If we don’t make this our goal, we may find less and less to divide up and to invest in this country. We will have squandered a great legacy. No land on earth has ever been so well-endowed by nature and as successfully developed by the efforts of our forefathers.

A recurring theme during our consultations was that Canada as a nation just doesn’t work well enough – we seem to be increasingly dysfunctional. We have trouble getting our act together.

We need to demand that our governments – federal, provincial, territorial and municipal – work better together in pursuit of a common goal: the best interests of Canada. Conflicting and overlapping policies and barriers, and endless intergovernmental disputes, unnecessarily fragment our country. Too often we adopt policies, regulations and programs that make a small country even smaller.

During our work we met with, and received submissions from, outstanding researchers and representatives of all segments of Canadian society: concerned individuals, policy commentators, mayors, university presidents, union leaders and politicians. To person, they spoke and wrote with passion and commitment about what they believed was in Canada’s best interest.

And so, with their input and advice, we have taken our best shot at outlining a path forward given the constraints of time and resources, and our own limitations.

I’m sure I speak for all members of the Panel when I say that we have thoroughly enjoyed the opportunity to take stock and reflect on the future of this great country. We invite you to carefully consider our recommendations.

Thank you.