By Jennifer Wells, Toronto Star, December 30, 2016
Prepare to be inundated with talk of the “scale-up gap” and “innovation ecosystems” and “superclusters.”
An easy prediction for 2017: Government-speak as it pertains to the country’s economic future will increasingly have the ring of McKinsey sound bites.
I refer here to the global consultancy, which has reached into the country’s highest political office via outgoing McKinsey global managing partner Dominic Barton and the Canadian Advisory Council on Economic Growth he now leads.
In October, the council released Round One of the so-called Path to Prosperity – infrastructure, FDI and boosting the labour talent pool via immigration – and promised “additional ideas” late in 2016, which have yet to materialize.
The infrastructure piece has been much discussed here and elsewhere as the council proposes leveraging sidelined institutional capital to deliver more than $200 billion worth of projects across the next decade. These are revenue-stream projects – user fees, by example – that would appeal to the private sector. Some sort of independent governance structure is imagined led by a “world-class” CEO.
The Canada Pension Plan Investment Board is cited as an example of how this “bank” might work, infused with the kind of private-sector rigour that is meant to deliver projects on time and on budget – to be a “steward of efficiency,” in the council’s words.
When I refer to productive, bankable, investment-ready infrastructure projects offering risk-adjusted returns, know that I am airlifting those words from an Australian task force, the Australians having already forged this path, as previously mentioned in this column. The amended Infrastructure Australia Act of 2014 created an independent board and CEO, part of whose task has been to audit existing pipes, ports, roads and rails and set a long-term plan for nationbuilding infrastructure.
What to watch for as the Canadian version is developed: a commitment to business-case disclosure on proposed institutional capital projects, with full data and analysis transparency. And evidence that successful execution of this private sector pathway will, as promised, expand the amount of capital available for vital projects in which the private sector will have no interest.
On FDI – foreign direct investment – the council advised the creation of an FDI agency “to increase inward FDI and improve Canada’s stature as a destination for foreign capital, skills and companies.” As it now stands, “Canada’s efforts have been limited and haphazard.”
What Are Canada’s Strengths?
Here’s where we tip into 2017. When Barton addressed the Toronto Board of Trade last autumn, he itemized the country’s strengths, or endowments (a highly educated workforce, fiscal stability, abundant natural resources) and weaknesses (an aging population, a failure to “scale” companies as quickly as other countries, limited trade agreements). Our share of “global champions” has shrunk precipitously to just five, he said “We should have many more. My view is a minimum of 18. I think we could actually go to 50.”
So prepare to be inundated with talk of the “scale-up gap” and “innovation ecosystems” and “superclusters.” In a 2015 report, McKinsey studied the TorontoWaterloo innovation corridor, and noted that denser clusters such as Boston and Berlin were drawing three to five times as much venture capital investment as Toronto-Waterloo. Could the Ontario region become a supercluster? And what has to happen to make it so?
For that matter, how do you measure innovation?
The Brookings Institution measures innovation “through the scientific impact of research universities, patenting and venture capital flows.” In this Toronto does not shine, but takes its place among the ranks of “international middleweights,” those cities “striving for a post-recession niche in the global economy.”
So, schemes aimed at further goosing enterprise investment should be in the offing.
And, no doubt, the advisory council will harness yet another favourite McKinsey term in urging the feds to “unleash” the region’s prospects by easing regulatory restrictions – banking, telecom, information sharing in health care. If Barton has his way, supply management will be up for discussion too. (“Supply management drives me crazy,” he said in October, with the caveat that he was speaking for himself, and not on behalf of Finance Minister Bill Morneau.)
The McKinsey exec expressed the view that three or four “clusters” might be a realistic target. Agri-food could be one. Clean tech could be another. Health care? Possibly. “Companies that will actually drive things” in chosen sectors was Barton’s message.
In the weeks and months ahead, there will be a great deal of this talk. If it seems a bit odd hearing federal ministers sound like management consultants, know that they are all speaking from the same McKinsey briefing book.
Our Comment
Most Canadians will need to know more about McKinsey Co., the global management consulting company, and Canada’s “new economy Czar,” Dominic Barton, if they are to stand a chance of appreciating “government-speak as it pertains to the country’s economic future.”
Thus fortified (and Joyce Nelson’s latest book can promise you that), one’s chances of distinguishing between the “so-called” Path to Prosperity and the garden path to massive privatization and foreign direct investment, less “limited” so-called free trade, and further deregulation, will be significantly enhanced.
Dominic Barton, global managing director of McKinsey Co. since 2009, now Chair of Finance Minister Bill Morneau’s (former chair of the C.D. Howe Institute), Advisory Council on Economic Growth, “believes Canada can lead the world in infrastructure spending” (Beyond Banksters, Resisting the New Feudalism, Joyce Nelson).
The Brit’s struggle to save their National Health Service from “the creeping privatization plans outlined largely by McKinsey Co. is one of several cautionary tales included in Beyond Banksters.
What, I wonder, are we to make of the fact that our federal ministers are “all speaking from the same McKinsey briefing book”?
Élan
