Yesterday I attended a Vancouver Board of Trade luncheon talk by David Dodge, Governor of the Bank of Canada. I joined the Board of Trade a few months ago so I could get a better understanding of today's business issues. As a member of the Board of Trade, I have to say that the luncheon talks are incredibly interesting, and the food, delicious.
But I have to be honest: Mr. Dodge's talk on the current turbulent global financial markets, risky loan standards and central bank policies was difficult to comprehend, even though I've taught courses on the economic development of B.C. As he started explaining the intricacies of securitization of loans, my mind drifted into thinking about what the Green Party of Canada's take on his talk would be and where Canada should go in terms of solutions. That, of course, lead me to think about the real underlying problem: for as long as I can remember, Canada has been hugely vulnerable to downturns in the U.S. economy, especially the U.S. housing market.
Just as I wrote down in my notebook "we need to diversify our markets and manufacture value-added products," Mr. Dodge said exactly the same thing. (That made me feel good.)
In response to a question from the audience about the difficulty of setting policies that are good for both the resource-based West and the manufacturing-based East of Canada, he shifted to the big picture. Labour and capital, he said, need to move from lower value-added sectors to higher value-added sectors. "This makes us wealthy. This makes us much more resilient. This augers better for the future," said Mr. Dodge. I couldn't agree more.
Canada is vulnerable to downturns in the U.S. economy because we have focused too heavily on exports of low-value wood products into the U.S. housing market. Boy is it time to change. We should be directing federal resources (like funds from the Mountain Pine Beetle Program) and tax incentives to stimulate investment in the value-added wood products' sector. Instead of increasing raw log exports of pine beetle-damaged wood and making pellets out of it to be burned in Europe, we should be manufacturing furniture and flooring and kitchen cabinets. Why, for example, was the Tolko mill just north of Kamloops, which milled decking and panelling out of pine beetle-damaged wood, not rebuilt after it burned down during the catastrophic forest fires of 2003?
I don't want to hear the excuse that we can't have a furniture industry in Canada because our costs are too high or that we do not have a big enough domestic market.
If we want a more secure and sustainable economy we have to go the route of adding value. Even the Governor of the Bank of Canada agrees!
Easier said than done. I'd love to hear your suggestions about how we can do it.
Footnote: I joined the Board of Trade because I am serious about my bid to become Vancouver Centre's next Member of Parliament and considered it a good way to meet movers and shakers in Vancouver's business community. So far, it's offered great R.O.I. (Return on Investment)
To learn more about me and my campaign in Vancouver Centre, visit http://votecarr.ca