By Carlo Dade
In the Leader Post
April 7, 2014
There is huge potential for the people of Saskatchewan to benefit from a world with growing demand for what the province produces. But, as the rail capacity issue and a strike at the Port of Vancouver show, the ability to get our products to market is not something we can take for granted.
Despite recent ups and downs in the global economy, there will be an unprecedented long-term increase in demand both for natural resources and the expertise and technology to extract and harness them. The global middle class in places like China, Brazil and Indonesia is projected to grow from 1.9 billion today to more than five billion by 2030.
That is another three billion mouths to feed.
The U.S. Department of Agriculture forecasts that over the next 10 years, world wheat trade will expand by 19 per cent, soybean trade will climb by 36 per cent and world meat trade will rise by 22 per cent. In China alone, aggregate net imports of grains, oilseeds and cotton will rise 61 per cent.
The demand growth is putting greater focus on Canada as a future supplier. The blips we’ve run into getting grain to port and getting a pipeline built to carry oil to Asia, if repeated, could make Canada appear to Asia as a supplier that will leave it cold, hungry and in the dark.
And it is not just about moving goods. If Saskatchewan wants to be a world leader in selling services and equipment related to agriculture and to attract foreign investment, then it will have to move people. Just 35 flights a day out of YQR with direct connections to only four global gateway airports just won’t cut it.
But an even bigger problem is that the clock is ticking on our ability to address deficiencies in moving products, people and money to where they are needed.
As Linda Nazareth points out in her new book Economorphics, the window when demographic trends create the ideal climate for economic growth is rapidly closing in Canada. As that window closes, so does our ability to take on large infrastructure projects.
The portion of Canadians older than 60 is projected to rise from 21 per cent in 2012 to 28.5 per cent in 2030.
A population that is living longer and saving less will require unprecedented amounts of taxpayer support. Even if Saskatchewan’s economy is booming, there is a danger that the province will be faced with the equally deadly choices of raising taxes on business or on workers to pay for increased social services. Tax business and you become uncompetitive. Tax workers and you drive away immigrants. What young healthy person will want to move to a place where most of one’s salary goes to fund hip replacements for people he or she has never met?
The aging population also affects China, Mexico and most of the world outside of Africa and the Middle East. According to the World Economic Forum, in 2050, the number of people over the age of 60 in China will surpass the world’s entire over-60 population in 2010. Older populations save less, and this will lead to a decline of available capital, force up interest rates, put further pressures on global liquidity, and make borrowing for things like large infrastructure projects more expensive.
These factors add urgency to our need to solve trade infrastructure problems.
Industry and government, users and suppliers must come together to bury the hatchet and get to work on solutions. Some solutions should be simple, such as a united, western-Canadian plan for infrastructure that puts trade at the forefront. Western Canada is the country’s gateway to Asia and its future it inextricably tied to a successful export economy. This is why solving these problems is especially important in this part of the country. Other solutions will require more work, and that is what the Foundation hopes to contribute to.
Our major competitors for Asian markets have figured this out. Australia’s prime minister has long advocated building trade infrastructure, and is not alone in doing this.
The question is, will Canada be alone in not doing this?
Carlo Dade is the Director of the Centre for Trade & Investment at the Canada West Foundation. The Canada West Foundation is the only think tank with an exclusive focus on policies that shape the quality of life in western Canada. Visit us on-line at www.cwf.ca.