Recommendation for the National Development Strategy of Canada
by www.canadanewstar.com Chief Editor Mr. F. Jiang 2015.01.01
Canada is one of the world's most suited places to live. It has a wealth of resources, vast land, and a multicultural environment of peace. As one of the G7 countries, Canada has shown good management with the federal government able to control basic deficit. There is a good education system, with high proportion of the population having higher education.
There is universal access to health care and there is a responsive social welfare system to protect the unemployed and vulnerable groups. Canada has good international reputation and actively participates in the rescue services of the United Nations. It is a nation of immigrants who have settled here from across the globe to live, work, and contribute.
Canada's vast land can produce an abundance of food, vegetables, fruits, poultry and fish. There is a wealth of minerals, oil and gas resources and water resources. There are also many world-renowned companies including the world’s 3rd largest airlines manufacturing company, the largest auto parts company in North America,
five large, strong anti-recessional banks, but, some companies under bankcruptcy or heading toward collapse, including Northern Telecom and BlackBerry. Unfortunately many well-known chains (including oil companies, supermarkets, chain restaurants, etc.) have been acquired by foreign companies. Canada is home to many scenic area, however they do not attract many foreign tourists.
Canada has many famous universities, there are numerous inventions and creativity, but the success of innovative companies in Canada are not many.
While the Canadian federal government has exhibited the greatest debt reduction out of all the G7 countries, a sizeable deficit still exists within all levels of government which places us at a risk of bankruptcy.
1 Now, the federal government is concerned for the following:
(1). Immense principal debt and interest payments (the federal debt is over $613 billion CAN, which estimates to $17000 per citizen http://www.debtclock.ca)
(2). World economic weakness; slumping oil and mineral prices
(3). Fall of historical companies, including Nortel and the current struggles of Blackberry
(4). Acquisition of large retail chains by foreign companies: Canadian Petroleum, high-yield agricultural and livestock products in Canada; despite a significant drop in oil prices, retail prices of oil and foods are still high
(5). With an increasing aging population, social welfare and medical expenses will continue to increase
(6). Low employment rate into the technology industry with many jobless university graduates, contributing to a waste of educational resources
2 My advice for the federal government
My advice is to develop novel important trading partners, strengthen the venture capital (shares of new companies), enhance the competitiveness of current enterprises and enhance Canada's youth employment rate. Strengthening the resources sector would increase the added value and increase the employment rate.
Optimizing elderly services would reduce medical expenses and burdens on the welfare system. Optimizing government management of tax funds would reduce costs. As Canada hosts more well-known large companies, the federal debt can accelerate the repayment of the debt, the employment rate will increase and social security will become more stable. Specific strategies are as follows:
(1). Developing novel federal trading partners
Canada's largest current trading partner is the United States, followed by China and the European Union. If we consider the proportion of the immigrant population and its market size, Canada can easily raise exports to China, Europe, and the Indian market. This will create more jobs opportunities and can allow new immigrants to play a role in trade transactions.
(2). Supporting Canadian research:
Research fields include: materials, telecommunications, aircraft, automotive, pharmaceuticals and vaccines, agriculture and livestock, cultivation, and environmental protection.
(3). Strengthening the venture capital (shares of new enterprises) to enhance the competitiveness of Canadian businesses and enhance youth employment rate.
Canada is home to many world-renowned universities. There is federal support for various research projects each year however the government receives very little in return. Gaining provincial and municipal cooperation to strengthen the University Technology Park will continue to offer venture capital (possession of certain shares) and allow us to focus on supporting emerging research fields in Canada.
Not only would this support the strength of enterprises and emerging companies in Canada, it would also increase employment of college graduates. Once a business becomes successful, the government will earn high returns and can turn that to reduce debt, resulting in a virtuous circle that allows us to pay off debt early.
I would suggest that all levels of government in Canada should focus on managing crises that led to previously-encountered economic debt. Starting with roadwork and building of infrastructure acts only as a passive approach. This approach is not the most effective way to reverse the economic crisis and may make it more difficult to repay the debt in the long run.
Specifically, I would suggest for the government to reverse a portion of the fund invested in the economic crisis and divert it to many of the innovative technologies of new businesses (eg. new materials, telecommunications, aircraft, train, automotive, pharmaceuticals, vaccines, agriculture, livestock, cultivation, environmental protection), new food processing enterprises, new elderly services, new network services, and then occupy a certain share.
For example, if governments fund C$1 billion for venture capital, an investment of $500 000 allows you to hold 10% shareholder stake in the new business and hire two related technical services staff. Coupled with the entrepreneur himself this equates to three staff persons.
As such one can support up to 2000 new businesses to create at least 6000 direct employment opportunities. Based on the estimation of a 10% success rate to the venture investments, this would result in 200 successful businesses locally, and would play out to redeem long-term economic benefits. The federal government can then withdraw funds from IPO to fund other new companies and repay debt.
In comparison, how many direct and indirect jobs can be created through investing C$1 bilionl in repair highways and build bridges? How many years would it take to repay the debt and interest?
3 Initiating a joint investment as a pilot
I would suggest initiating a joint investment from the federal, provincial and municipal Hamilton government toward the Hamilton City Development Zone as a pilot, and in addition, offer $30 million annually as venture capital for three consecutive years, then wait to see results. Investments should gear toward the characteristics of Hamilton with emphasis on innovation and new technological enterprises.
I would suggest for the government to divert a portion of the funds invested in the economic recession toward the following:
（1）Innovative technologies of new businesses (with innovative advantages of McMaster University, such as new materials, telecommunications, automotive, pharmaceuticals and vaccines, and environmental protection and other fields.)
（2）Food processing businesses (in cooperation with surrounding farms and a majority of Ontario's prominent food processing enterprises)
（3）Elderly services (with the advantage of the Hamilton health sciences group, the establishment of the elderly living area, ancillary services, entertainment, attracting families to settle retirement.)
（4）network services
（5）To encourage and support the establishment of a private art - antique museums, support for antique, art, auction enterprises (focusing on the United States, Britain, Canada, China and India). This will help attract a larger number of tourists and collectors to the city, which will help promote the development of the catering and hotel industry. Near 14 mil tourists visited Toronto in 201 and 12 million tourists visited Niagara falls each year. That means at least 10 mil tourists by pass Hamilton each year.
A sustained venture capital investment of $30 million annually for three years can help reduce the risk of venture capital.
If $500,000 is invested into each new company, VC fund will have 10% stake in the new company, two technical services staff need be hired. Coupled with the entrepreneur himself this equates to three staff persons. Up to 180 new businesses can be supported in these 3 years, creating at least 540 direct jobs. Based on the estimation of a 10% success rate to the venture capital investments, there will be 18 successful businesses locally that would act as new pillars of enterprise that can draw long-term economic benefits. Each level of government can then withdraw from the successful IPO of companies to help repay their debts and fund new companies.
In comparison, how many direct and indirect jobs can be created through investing $90 million in roads and bridges alone? How many years would it take to repay the debt and the accumulated interest?
In my view, if government has huge debt, during the economic slowdown or recession, government should put money on the area which can create more jobs and have high return in the future. Otherwise, they will build up the dept and face bankruptcy.
If the pilot succeed, then it can across the country, so that all levels of government to cut the national debt, increasing employment, making Canada the best country in the world to live and work.
|