Canada emerged from crisis with low debt-to-GDP ratio and best banks in the world.
When Canadian Prime Minister Stephen Harper delivered his keynote speech to the World Economic Forum in Davos, Switzerland, in January, Canada had emerged from the global economic crisis as a bright spot among G-7 nations, enjoying low tax rates on business investment, a low debt-to-GDP ratio and relatively high levels of foreign business investment. The country had even recouped all the jobs it had lost during the global recession. In fact, Forbes rated Canada as the best place in the world to do business in 2012.
During his speech, Harper said Canada had achieved all these goals largely because his administration’s ‘number one priority as a government is prosperity – that is, economic growth and job creation.’
But he continued, ‘As I look around the world, as I look particularly at the developed world, I ask whether the creation of economic growth, and therefore jobs, really is the number one policy priority for everyone.’
Achieving excellence in corporate governance requires leaders to ask themselves a very similar question.
During one of the worst banking crises in history, Canada made sure its banks were among the best in the world. Canadian banks were rated number one worldwide at the time of Harper’s speech. That wasn’t an accident.
‘There are regulations in place that mitigate risks,’ explains Douglas Watt, an associate director for the Conference Board of Canada. He says that while Canadian banks were involved with some of the problems that caused the global downturn in 2008 and 2009, the situation was managed better in Canada because ‘there are a lot of checks and balances in the banking system that make sure unnecessary risks are avoided – and there’s more accountability.’
That accountability extends into the area of foreign direct investment. There is quite a bit of investment coming in, especially in the areas of oil, gas and natural resources, which Canada has in abundance. But all such investments are monitored to make sure they will benefit and sustain the growth of the Canadian economy, and there are regulations that prohibit investments deemed not in the national interest.
Just as good governance can help improve a company’s ability to generate revenue in the best interests of its shareholders, government policy should work in the best economic interests of the country’s people. Canada’s immigration policy is an example of this. The country wants and needs to have skilled immigrants coming into the country to help accelerate economic growth, but this too is executed with checks and balances that have a particular goal in mind.
‘We have a lot of immigration policies that address the business needs of the country,’ says Watt. ‘Every province has its own nomination program. Each province does an audit of the in-demand skills that it needs to fill the labor gap, and if we can’t fulfill those needs internally, the provinces can bring in immigrants that have those skills.’
Immigrants who speak French and English and hold credentials such as teacher, nurse, doctor, lawyer or engineer are given priority because ‘they can function within the workplace and they can be productive citizens quickly.’
Harper’s commitment to his people’s prosperity has moved Canada to create policies that have had the effect of good governance, deterring fraud and enhancing the country’s ability to pursue sustainable growth.
‘It’s difficult – it requires a lot of negotiation, reflection and critical thinking,’ notes Watt. ‘Sometimes difficult decisions need to be made and not everyone will agree.’
