Things the Liberal government knows that just ain’t so—Canada is the ‘best place to invest’
Despite all the evidence, Prime Minister Trudeau, his government (and those around them) really believe their policies have made Canada the best place to invest.
For example, the government's new Invest in Canada agency, headed by—wait for it—Ian McKay, former national director of the Liberal Party of Canada, recently put its spin on Statistics Canada’s latest data on foreign direct investment. Here’s what the agency put out on social media: “The results are in and Canada has over performed again! Total investment reached $66.8B in 2019—that’s 42.5% higher than the 10-year average!”
Then it added, “Global investors continue to recognize Canada as the best place to invest.”
It was shared by a host of Liberals including Catherine McKenna, Minister of Infrastructure and Communities, and Gerald Butts, the self-described “Co-Founder Team Trudeau” who added: “Amazing how the overwhelming domestic media narrative not only disregards the facts, but promotes the opposite story.”
And that ladies and gentlemen is what the Liberals think. With Canada in an investment crisis, they believe it’s just a “domestic media narrative.” But let’s look at the actual facts from Statistics Canada.
StatsCan recently released its data on GDP growth in 2019, which included business investment (or in StatsCan language, Business gross fixed capital formation). Business investment was down $2.4 billion or -0.7 per cent in 2019. This includes both domestic and foreign direct investment.
Extending the analysis over five years, business investment has declined by 8.9 per cent. But it’s actually much worse, as this number includes business investment in “residential structures.” Remove residential structures from the equation—business investment in machinery and equipment, intellectual property and non-residential structures has decreased by 17.3 per cent.
Now let’s go back to focus on foreign investment.
Invest in Canada is partially right. Foreign investment did rebound slightly in 2019 (up $10.5 billion), as it did in 2018. But the government agency didn’t mention that this rebound came after five years of decreasing foreign investment. And that foreign investment remains 6.5 per cent lower than it was in 2013, and $58.7 billion or 47 per cent lower than in 2007 (pre-2008/09 recession).
In addition, Canadian investors continue to flee their own country for more favourable investment climates. Canadian investment abroad increased $37 billion in 2019, which dwarfs the slight rebound in foreign investment mentioned above.
With foreign investment of $66.8 billion in Canada in 2019 and Canadian investment abroad at $101.6 billion, it means that—on net—nearly $35 billion in investment left the country. Extending this analysis to the past five years reveals that more than $185 billion in net investment has left Canada.
Given this evidence, it’s unfathomable that anyone would suggest, let alone actually believe, that businesses and investors view Canada as the “best place to invest.”
Finally, look at how Canada has plummeted in competitiveness report cards done by external organizations such as the World Bank’s Ease of Doing Business report where Canada has dropped to 23rd in 2020 from 4th in 2007, or the latest World Economic Forum’s Global Competitiveness Report, which ranks Canada 14th and our neighbour the United States 2nd.
Canada has massive investment potential, and we’re the kind of country investment should flock to enthusiastically. Instead, the opposite is true. Only the folks in government in Ottawa could conclude that this is just a “domestic media narrative.”
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