We Need to be a Country of Business with CIBC's Lisa Raitt

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Lisa Raitt: Canada has to turn into a country of business. We're not at the moment. We're not.
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GIles Gherson: Hello, I'm Giles Gerson, and this is Toronto Talks, the voice of Toronto's business community.
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GIles Gherson: What are we talking about? Each episode is a conversation with top business leaders about
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GIles Gherson: how they're shaping growth, driving competitiveness, and building up our economy. It's about what they
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GIles Gherson: believe it will take to make sure the Toronto region remains one of the world's great global
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GIles Gherson: cities. Here's today's conversation. Lisa, welcome to Toronto Talks. Thank you very much.
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GIles Gherson: And we're delighted to have you and actually excited to have you. We've been looking to have
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GIles Gherson: you for some time. Why? Because you have your respected voice, a long-standing respected voice,
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GIles Gherson: an influential voice on economic and business policy, which is what we like to talk about.
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GIles Gherson: And of course, you are a member of the Business Council of Toronto's Climate and Energy Transition
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GIles Gherson: Council, which is
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GIles Gherson: incidental in this conversation, but important
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GIles Gherson: because you do play a significant role there.
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GIles Gherson: But when I think about your career,
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GIles Gherson: and I want to ask you a little bit about this, but
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GIles Gherson: you were an MP for 11 years.
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GIles Gherson: You were a member of cabinet
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GIles Gherson: in three big portfolios.
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GIles Gherson: Natural resources, labor,
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GIles Gherson: and transport.
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GIles Gherson: Deputy chair of CIBC.
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GIles Gherson: And
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GIles Gherson: that's all.
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GIles Gherson: And then you started, of course,
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GIles Gherson: with Anne McClellan.
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GIles Gherson: a whole organization devoted to productivity and growth,
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GIles Gherson: which is what we're very keen on ourselves.
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GIles Gherson: But I want to just ask you, you grew up in Sydney, Nova Scotia.
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GIles Gherson: You had an incredible career.
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GIles Gherson: Was it planned?
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Lisa Raitt: No.
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Lisa Raitt: No, no, no, no.
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GIles Gherson: Did you imagine as a child that you would be doing what you're doing today?
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Lisa Raitt: As a child, I wanted to be prime minister.
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Lisa Raitt: Oh, there we are.
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Lisa Raitt: So there's always been some kind of interest in politics.
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Lisa Raitt: No question about that.
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Lisa Raitt: I've always been attracted to leadership.
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Lisa Raitt: So I was part of the student council, that kind of stuff.
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Lisa Raitt: I've always been a little bit of a climber kind of thing.
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Lisa Raitt: But did I think I was going to be at the Port of Toronto?
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Lisa Raitt: No.
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Lisa Raitt: Didn't even think I was going to be a lawyer.
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Lisa Raitt: Harbormaster and CEO.
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Lisa Raitt: It was a great corporate secretary.
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Lisa Raitt: What a place to learn about everything.
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Lisa Raitt: And I was just blessed.
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Lisa Raitt: But no, no plan at all.
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Lisa Raitt: Went to St. FX.
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Lisa Raitt: In fact, I started in science.
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Lisa Raitt: I got a master's in chemistry.
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Lisa Raitt: And yeah, don't really use that.
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Lisa Raitt: But it's, you know, I just kind of, every time something came up, I leveled up and put my hand up for it.
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Lisa Raitt: And it just dragged me along.
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GIles Gherson: Grabbing the opportunities as they came.
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Lisa Raitt: Yeah, kind of getting swept up.
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Lisa Raitt: NCIBC being there now, I never would have thought I'd work for a bank, quite frankly.
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Lisa Raitt: Listen, I'll tell you a secret.
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Lisa Raitt: When politicians are thinking about their next move in life, the holy grail is to land a place at the bank.
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Lisa Raitt: Absolutely.
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Lisa Raitt: Internally, there's always a pecking order.
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Lisa Raitt: It's like, well, no, Prentice and then Flaherty and Baird and maybe Kenny.
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Lisa Raitt: Raitt's name never came on the list of where you'd end up at a bank.
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GIles Gherson: But then I did.
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Lisa Raitt: Glad I did.
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GIles Gherson: Yeah.
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GIles Gherson: And you've enjoyed that, obviously.
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Lisa Raitt: I really do.
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Lisa Raitt: I like it.
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Lisa Raitt: And I think it's because the government has become so entrenched in economic policy in
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Lisa Raitt: the last six years that I've actually been able to be useful.
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Lisa Raitt: And I'm glad.
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Lisa Raitt: And thank you for the invitation to sit on the Business Council of Toronto.
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GIles Gherson: Well, that's all about, as you know, business leaders leaning in on productivity and growth.
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GIles Gherson: I mean, one of the things that I think is probably fair to say is that the business community in Canada is polite and relatively passive, I think, compared to their U.S. counterparts.
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GIles Gherson: And I think from our perspective, we felt that we needed a little bit more energy in terms of fighting for the kinds of policies that would drive economic growth and prosperity.
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GIles Gherson: Because I think one of the things we reflect on here at the board is that we've had about 10 years of flatlined income growth in Canada.
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GIles Gherson: And that's not good for anyone.
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GIles Gherson: But the only way you're going to drive that up is with a stronger economy.
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GIles Gherson: And so how do you get that economy onto a higher growth path for all of our benefits?
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GIles Gherson: And that's what we're really interested in.
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Lisa Raitt: Yeah.
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Lisa Raitt: And you guys push on policy.
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Lisa Raitt: So the thing that Ann and I do is we came at it from a different point of view, recognized, obviously, the problem we were having, particularly in GDP per capita.
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Lisa Raitt: And you know that is a metric that if it keeps going down is going to really show up in people's day-to-day lives.
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GIles Gherson: I think it is.
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GIles Gherson: I think it is.
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Lisa Raitt: And it has.
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Lisa Raitt: So we started this organization with the help of the Business Council of Canada, actually.
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Lisa Raitt: They're no longer part of it, but they got us going.
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Lisa Raitt: and we measure markers we measure kpis every year the same 21 kpis just to catch trends on what's
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Lisa Raitt: happening in the country trend isn't good giles it's not good at all it's going like that yeah
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Lisa Raitt: and we're not making any progress in a couple of the key areas we communicate that to yourself we
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Lisa Raitt: communicate it to politicians bureaucrats just kind of like sending them the message you really
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Lisa Raitt: got to do something now now is the time you don't have the luxury of waiting 10 years boom by no 10
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GIles Gherson: I mean, it's interesting because when I became CEO of the Board of Trade, we did some work with Boston Consulting Suicider.
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GIles Gherson: What is the GDP per capita?
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GIles Gherson: I know.
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GIles Gherson: So what is our income per capita in the GTHA compared to U.S. cities?
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GIles Gherson: Because we almost compare ourselves to Canadian cities, but we're the largest city in Canada, 20% of the national economy.
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GIles Gherson: What's more interesting is how are we comparing with our neighbors to the south?
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GIles Gherson: And so they went away and did the work and they came back.
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GIles Gherson: And what they told us was, this is about three years ago now, that GDP per capita in the GTHA was $113,000 Canadian.
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GIles Gherson: To the average of 11 U.S. major metros, it was $185,000.
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GIles Gherson: So a $72,000 per worker gap in output.
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GIles Gherson: Wow.
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GIles Gherson: That's significant.
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GIles Gherson: Actually, we asked them to do it a year ago, to go back and look at the numbers.
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GIles Gherson: To your point, has anything improved?
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GIles Gherson: It was now a $99,000 gap.
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Lisa Raitt: So nearly $100,000 is getting worse.
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Lisa Raitt: It's getting worse.
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Lisa Raitt: And people are struggling, and they don't know why they're struggling, but it's this constant drip, drip, drip, drip, drip.
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Lisa Raitt: And the problem with long-term growth, you know it, is it takes a while to get that flywheel going before you can actually see the results.
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GIles Gherson: And people want immediacy, but it's hard to get that.
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GIles Gherson: What I was going to ask you was, given the scale of the gap, I mean, the way to define it, I think, is to say we are poorer than our American neighbors.
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GIles Gherson: If there's a $100,000 gap between what our workers put out and what their sort of workers put out in terms of the economy, that is significant.
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GIles Gherson: And we're a lot poorer than we probably think we are, to coin a phrase.
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GIles Gherson: And so yet there's still a lot of complacency around that.
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GIles Gherson: I mean, I find that interesting because, you know, people travel to the U.S.
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GIles Gherson: They see essentially, I think, you know, a landscape that is wealthier.
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Lisa Raitt: because they believe one thing that makes them erroneously build in extra money to their 99,000,
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Lisa Raitt: which is healthcare is free. That's what they think to themselves.
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GIles Gherson: Yeah. Well, especially paid for by our kids, probably.
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Lisa Raitt: I agree with you. I agree with you. But healthcare is free. Therefore,
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Lisa Raitt: we're not as bad as the United States. And until you see, and you're seeing it right now,
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Lisa Raitt: quite frankly, the amount of people who are choosing to start businesses in the United States,
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Lisa Raitt: go to their careers in the United States.
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GIles Gherson: We've talked about this.
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GIles Gherson: We've talked about the outflow of capital.
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Lisa Raitt: This is a big problem.
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Lisa Raitt: Not only capital, human resources.
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Lisa Raitt: Human resources.
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Lisa Raitt: Lots of kids, professionals, especially in this city,
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Lisa Raitt: have decided they're going to make their path in the United States
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Lisa Raitt: because they figured out the delta,
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Lisa Raitt: which is houses are a little bit more affordable in the United States.
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Lisa Raitt: They're getting paid $100,000 more, at least.
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Lisa Raitt: You have the numbers yourselves.
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Lisa Raitt: And they can buy their health insurance.
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GIles Gherson: Yeah.
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Lisa Raitt: They can buy it.
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GIles Gherson: They rely on it probably too.
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GIles Gherson: I mean, that is becoming the issue though.
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GIles Gherson: that is this flow of talent.
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GIles Gherson: And what we find is that many people
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GIles Gherson: who have made it here then go to the U.S.
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GIles Gherson: because they think their opportunities are larger there.
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GIles Gherson: And probably they are.
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GIles Gherson: And they're seeing their kids do the same thing
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GIles Gherson: as you just pointed out.
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GIles Gherson: And then companies, what we're finding
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GIles Gherson: is a number of our members are really in the last year,
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GIles Gherson: interestingly, I mean, it was happening for 10 years.
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GIles Gherson: But it's kind of sped up
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GIles Gherson: because companies want to get behind the tariff wall.
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GIles Gherson: Of course.
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GIles Gherson: access to that large market, don't have to worry about tariffs. And then you get all kinds of
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GIles Gherson: benefits once you're there that people often aren't aware of. You get a property tax rebate
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GIles Gherson: probably for 10 years. You're going to have some subsidy for your-
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GIles Gherson: Yeah. Your mortgages are very different down there.
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GIles Gherson: Yeah. And we don't realize, I think, the gap. And so once you're there, I mean, I've talked to a
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GIles Gherson: number of folks who've gone there and expanded their businesses there. And what I always hear
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GIles Gherson: back from them is, wow, I wish I'd done this earlier. And I hate to hear that because we're
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GIles Gherson: about growing the Canadian economy and growing the Toronto economy, but what can we do about that?
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GIles Gherson: We had an election last year, a new prime minister, Mark Carney. What intrigued us about his agenda
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GIles Gherson: was a phrase, which is, we need a wave of capital. We need to ignite a wave of capital
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GIles Gherson: to grow our productivity and our economy. And we completely agree with that.
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GIles Gherson: What's your assessment of the past years? You said that numbers haven't really changed
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GIles Gherson: yet? What are we seeing? Okay, so it's not necessarily a positive review, but what I'm
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Lisa Raitt: going to say is this stuff takes time. So I'm not going to hack on them for not trying. A for effort,
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Lisa Raitt: A plus for effort, no question about it. But we got to have a reality check, right? Some of the
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Lisa Raitt: projects that he's talking about, so the data centers, pipelines, listen, we don't need foreign
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Lisa Raitt: investment. We've got big companies right here in Canada who have a balance sheet who can do these
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Lisa Raitt: things. What they need is regulatory certainty, which the prime minister can deliver a little
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Lisa Raitt: bit quicker than going to Saudi Arabia or going to the Emirates and bringing back investment. So
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Lisa Raitt: when we talk about bringing investment here, be really careful about what it is we actually need.
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Lisa Raitt: I think we do need investment in terms of manufacturing. I think there's a lot of
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Lisa Raitt: Canadian manufacturers who would love to have access to bigger pools of capital. So more
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Lisa Raitt: investors that are available, angel investors, mid investors, all those kinds of things.
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Lisa Raitt: Not necessarily foreign investment.
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Lisa Raitt: So look in the pool that you have here as well.
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Lisa Raitt: Make it easier for people to be able to invest in Canadian things.
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Lisa Raitt: Make it easier for the pension plans to be able to invest in things that are going to
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Lisa Raitt: drive productivity and connectivity.
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Lisa Raitt: Those things, I think, are matter.
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Lisa Raitt: So I agree that he has to do what he's doing to open up markets, but it's not just about
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Lisa Raitt: investment.
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Lisa Raitt: It's about making sure that we have that good balance going forward.
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GIles Gherson: I mean, when you hear the government, the prime minister talk and cabinet, they talk about crowding in investment, which is kind of interesting phrase because I think for the last 10 years, we kind of crowded out investment.
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GIles Gherson: Right.
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GIles Gherson: And they talk about crowding in investment and they really focus on three areas that are kind of government driven.
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GIles Gherson: Defense, growing the defense budget and having a defense investment agency to sort of try to coordinate, I guess, investment in defense industries.
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GIles Gherson: They've talked about housing, which is a critical issue, building houses faster across the country through the Build Canada housing.
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GIles Gherson: And then you've got infrastructure with the major projects office in Calgary trying to coordinate.
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GIles Gherson: But interestingly, it's sort of using government capital to try to pull in capital from domestic sources, from private sources.
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GIles Gherson: What's missing, it seems to me, is the rest of the economy.
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GIles Gherson: Lisa Raid has a company.
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GIles Gherson: She wants to grow her company.
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GIles Gherson: It's in manufacturing.
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GIles Gherson: What's she going to do?
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GIles Gherson: She needs to grow.
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GIles Gherson: She needs to probably bring on new technology.
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GIles Gherson: We're seeing a massive wave of technology change.
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GIles Gherson: You have to invest in that technology.
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GIles Gherson: Where are you going to get that capital from?
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GIles Gherson: What about the regulations?
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GIles Gherson: What about the taxes that you're going to be paying?
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GIles Gherson: And so it seems to us that the big missing piece in the agenda so far
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GIles Gherson: has been unleashing private capital to do whatever it wants to do, as opposed to defense, which is
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GIles Gherson: important, housing, very important, and infrastructure, very important. But what about
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GIles Gherson: the rest of the economy where you're going to get the flywheel spinning? And it seems to have some
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GIles Gherson: regulation attacks. We haven't seen a whole lot. We have not. And I agree with you vehemently. I
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Lisa Raitt: think you're exactly correct. When you take a look at housing, look, that is a silo of importance
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Lisa Raitt: from a political point of view as well, right? People are very frustrated and upset by the fact
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Lisa Raitt: that they can't afford the market. Well, you can't afford the market for two reasons. We haven't
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Lisa Raitt: built because of all the regulatory expenses and all that stuff. But as well, you don't make enough
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Lisa Raitt: money, right? Salaries are deflated. They're just not making enough money to get into the market.
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GIles Gherson: That's not flatlining of income. That's exactly it. If it had grown, maybe you've been able to
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Lisa Raitt: grow with the market, maybe because that's a market force. On defense, what foreign investment
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Lisa Raitt: is going to be truly able to bring in money for defense in our country. Like really, when you
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Lisa Raitt: think about it, the Chinese, the Germans, I don't know how that's necessarily going to work. Perhaps
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Lisa Raitt: what it's about is just buying subs from South Korea or whatever they're going to do with the
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Lisa Raitt: subs with Sweden, that kind of horse trading in terms of we'll give you this if you give us that.
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Lisa Raitt: So those are big plays. But again, the jobs associated with those are finite and they're
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Lisa Raitt: not getting to the number of the problem, which is innovation and entrepreneurship, in order to
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Lisa Raitt: create those great new Canadian companies. And they are bereft of policy around that stuff. I know
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Lisa Raitt: that's not fair to say, but I'm not seeing anything that gets my 21-year-old son excited about starting
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Lisa Raitt: a company in Canada. All he hears is it's going to be so difficult. Well, it's interesting. When
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GIles Gherson: you think about both the Biden administration and then the Trump administration in the U.S.,
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GIles Gherson: in the Biden administration, they were trying to re-industrialize quite aggressively using
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GIles Gherson: subsidies, right? The IRA subsidies, the Inflation Reduction Act subsidy. It was like a piñata,
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GIles Gherson: right? A huge amount of, like almost a trillion dollars. And even Canadian companies said,
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Lisa Raitt: how do I grab a stick and beat that piñata and get the money? And so a lot of companies
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GIles Gherson: moved south under the Biden administration to get access to these kinds of subsidies.
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GIles Gherson: Then came Trump and the Big Beautiful Bill Act, significant tax reform again. He did it Trump one,
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GIles Gherson: did it in Trump too. And the combination of those two has really left our corporate tax system
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GIles Gherson: way out of line with the US. Putting aside things like taxes on small business,
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GIles Gherson: I mean, we're really far out of line. And when we talk to politicians, they'll say,
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GIles Gherson: or government administrative finance, both federal and provincially, they'll say, well,
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GIles Gherson: Two things. One, we've got a limited amount of resources to do tax reform.
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GIles Gherson: And then the second thing they'll say is, often you don't get much of an impact.
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GIles Gherson: But I beg to differ because it seems to me that what Biden did and what Trump did was turn heads.
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GIles Gherson: They did big stuff that caused people to say, I got to get a piece of that, right?
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GIles Gherson: Even Canadian investors, I got to get a piece of that in the US.
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GIles Gherson: We tend to do small things here.
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GIles Gherson: Small adjustment to tax here, small adjustment to regulation there.
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GIles Gherson: Heads aren't really turned.
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GIles Gherson: And then the finance departments, whether in Queens Park or in Ottawa, say, well, we didn't
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GIles Gherson: get much of an impact for that.
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GIles Gherson: Why would we do more?
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GIles Gherson: The answer is you didn't do enough to cause people.
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GIles Gherson: I mean, Lord Keynes, the great economist, said economics is about animal spirits, right?
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GIles Gherson: It's getting excited, either positively or negatively, right?
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GIles Gherson: Yeah.
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GIles Gherson: Where's the animal spirit?
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GIles Gherson: You know, you got to get those animal spirits going.
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GIles Gherson: What do you think about that?
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GIles Gherson: I mean, do you think that, I mean, I think we need a more aggressive policy.
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Lisa Raitt: We do, but we also need execution.
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Lisa Raitt: So let's use India as an example.
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Lisa Raitt: Big trip to India.
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Lisa Raitt: Very important relationship.
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Lisa Raitt: So when you think about it from Modi's point of view, right, 2047 is the 100th anniversary
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Lisa Raitt: of independence.
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Lisa Raitt: Big anniversary.
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Lisa Raitt: They want to be ready for it.
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Lisa Raitt: They talk about, they want 200 new airports in India.
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Lisa Raitt: They talk about adding thousands and thousands and thousands of gigawatts to the actual grade.
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Lisa Raitt: Canada can play very well in those two spaces.
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Lisa Raitt: It is an incredible opportunity for Canada.
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Lisa Raitt: So yeah, Prime Minister goes.
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Lisa Raitt: That's great.
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Lisa Raitt: And they say, hypothetically, I'm not saying this is what they said, but hypothetically,
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Lisa Raitt: they say, we'll take everything you got.
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Lisa Raitt: Like, we need it all.
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Lisa Raitt: Just send it.
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Lisa Raitt: But can you send it to us?
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Lisa Raitt: And we only have like between 2026 and 2047.
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Lisa Raitt: We've got 20 years here.
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Lisa Raitt: I don't have 11 years to wait for you to go through a regulatory process.
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Lisa Raitt: So can you deliver in the next three years?
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Lisa Raitt: And I think that is the piece that's missing in order to get people excited.
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Lisa Raitt: I think the major projects office was an exciting announcement.
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Lisa Raitt: I think that allowed the prime minister to go out and say, I'm in charge.
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Lisa Raitt: Things are different.
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Lisa Raitt: Watch me.
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Lisa Raitt: And now we're not seeing anything.
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Lisa Raitt: And the longer that time goes, the more difficult it's going to be for the other big players
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Lisa Raitt: in the world who want to import from us, not companies coming in to invest, but people who
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Lisa Raitt: want to buy our stuff, saying, well, can they really depend upon them? Can they really get it
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Lisa Raitt: done this time? Because everybody knows that we totally fumbled the ball when it came to LNG the
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GIles Gherson: first time around. We got a second chance to do this. Let's see. Now it's going, which is good.
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Lisa Raitt: Maybe. Yeah. Well, it is. No, we have LNG and we've got Cedar coming on and we've got wood fiber. I
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Lisa Raitt: mean, all those good things are really good. But yeah, let's see. They're saying, yeah, let's see.
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GIles Gherson: Well, I mean, it's interesting. I mean, I think that we probably are going to see some announcements from the major projects office.
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GIles Gherson: My sense is they're kind of spooling up and then they'll make some announcements soon, which will be great, I think, for confidence.
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GIles Gherson: But it's a finite number of projects.
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GIles Gherson: I mean, if you look at Southern Ontario here for where we are, there's really only one project out of the 33 that have been announced so far.
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GIles Gherson: It's the SMRs in Darlington.
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Lisa Raitt: Oh, of course. Yeah.
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GIles Gherson: And that's a huge, interesting issue because we're spending a lot on those SMRs, which is great, in order to be a first mover for commercial SMRs out of Canada, out of Ontario.
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GIles Gherson: But the Americans have just announced six SMRs, and they're going to be the same model that we're building.
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Lisa Raitt: And if they build them faster, then the supply chain won't be here.
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GIles Gherson: It'll be in the U.S.
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GIles Gherson: And we will have kind of spent all this money to be kind of an also-ran.
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GIles Gherson: Again, it's to your point about speed.
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GIles Gherson: We don't tend to move with the speed we need to that the U.S. increasingly is moving at,
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GIles Gherson: and other countries are as well.
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GIles Gherson: I mean, it is about, they're highly aggressive.
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GIles Gherson: And I would say it's a kind of offensive, they use offense.
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Lisa Raitt: We're defense, I feel.
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Lisa Raitt: Always.
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Lisa Raitt: We want to protect what we have, and we don't want to necessarily anyone to disturb us.
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Lisa Raitt: That's why you got the big elbows up thing happening.
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Lisa Raitt: Don't take my stuff away.
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Lisa Raitt: That's kind of the reaction.
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Lisa Raitt: Donald Trump's going to take something away from me, as opposed to we need to be very much on the
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Lisa Raitt: offense and saying, okay, opportunity time. What can we do? Let's get this going.
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GIles Gherson: I mean, to your point about, I mean, we're agreeing with this, how to get Canadians
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GIles Gherson: sort of exercised about this to see the need for a real push on economic growth.
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GIles Gherson: Back to housing, you made the point about income sort of flatlining. And as a result,
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GIles Gherson: people are struggling to buy houses. And it is interesting that we've seen a significant increase
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GIles Gherson: in the cost of building houses. We've seen substantial construction inflation, particularly
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GIles Gherson: since COVID. And while incomes have been fairly flat. And so now what's happened is it costs more
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GIles Gherson: to build a house than people can afford to buy. So now buildings are saying, well, I'm not going
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GIles Gherson: to go build a new housing subdivision because no one can afford the $1,000 a square foot or whatever
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GIles Gherson: it is that it now costs to build. So that gap is really holding us back. And why are people not
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Lisa Raitt: getting paid more? What's happening? Well, you put the squeeze on governments. How many times do we
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Lisa Raitt: see, not to go after the Trudeau government, but how many times did you hear a finance minister say
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Lisa Raitt: the rich can pay a little bit more? The rich can pay a little bit more. Companies can pay a little
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Lisa Raitt: bit more. They should have excess profits taxes, all those kinds of things. When you squeeze a
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Lisa Raitt: company, where do you think it's going to come out of? It's going to come out of how many people you
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GIles Gherson: employ. That's where it's going to come out. And I mean, every dollar the government spends
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GIles Gherson: presumably comes out of, unless it's debt, comes out of business profits, right? And the employees
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GIles Gherson: that they pay and the taxes that they pay and the consumption taxes that they pay. Great way of
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GIles Gherson: looking at it. So if you don't have those business profits, you're not having business growth,
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GIles Gherson: you're not going to grow revenues to government, right? And that's the big problem. And I think
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Lisa Raitt: we need to focus on having people increase. We need to focus on making sure people get paid more.
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Lisa Raitt: I don't know how we're going to do it over time.
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Lisa Raitt: That's why when we talk about the auto sector, those are really good paid jobs.
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Lisa Raitt: Losing those, that's going to be problematic.
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GIles Gherson: Well, we've got to keep that sector.
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GIles Gherson: I mean, one of the things that I found interesting when I was in government was when we worked hard on the auto sector because I was in economic development.
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GIles Gherson: And we actually sort of worked hard on the EV strategy and the batteries.
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GIles Gherson: And the premise for us was if we could keep the GDP, the economic growth, from having the production here.
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GIles Gherson: Because remember, auto production here and the supply chain around it leads to exports.
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GIles Gherson: So we get export earnings, hugely valuable to the country, hugely valuable for our balance of payments.
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GIles Gherson: We don't have many other alternatives.
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GIles Gherson: I mean, autos is a huge source of payments from abroad.
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GIles Gherson: It pays for our imports by exporting.
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GIles Gherson: And then all of this production.
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GIles Gherson: And then employment as well.
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GIles Gherson: But I found governments tend to sort of focus on the employment first rather than the GDP, which can create employment.
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Lisa Raitt: Yeah.
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Lisa Raitt: But that's our metric, right?
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Lisa Raitt: Whenever you see an announcement from a government official, from a politician, it's always how many jobs have we created because it's that connection, connectivity with the individual.
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Lisa Raitt: You're telling the voter you have a chance of getting a job out of all of this.
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GIles Gherson: And the problem with that is it doesn't look at the multiplier effect.
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Lisa Raitt: Agreed.
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Lisa Raitt: Look, I think we've been incredibly, for many years, including within my own government,
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Lisa Raitt: Giles, to be honest, we've been really, I would say, blind to the fact that we have to think about
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Lisa Raitt: the economy. Other countries do this all the time, and they do it really, really well. I mean,
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Lisa Raitt: we got stuck on this whole thing. We need industrial policy. No, we just need people
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Lisa Raitt: thinking about it from a business point of view. I don't feel Canada is necessarily a business
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Lisa Raitt: oriented country all the time, quite frankly. And we need to. We need to have the wins. We need to
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Lisa Raitt: have more Shopify's. We need to have those kinds of companies to spur us on. But it shouldn't be
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Lisa Raitt: just one. It shouldn't be 11 or 12. We really need to do better. Because if you look at the
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Lisa Raitt: statistics, I saw an interesting chart. If you take a look at the Canadians who are running
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Lisa Raitt: big companies around the world, we really punch above our way. We're sending our best and our
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GIles Gherson: brightest. We're making the world great again. Well, it's true. So many Canadians of talent
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GIles Gherson: have gone to run large corporations, you say, around the world and into the U.S.
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GIles Gherson: And they tend to do very, very well because we have an excellent education system.
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GIles Gherson: They've been well-educated and they're smart.
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GIles Gherson: And if only those people were here, I think we'd be doing a lot better.
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GIles Gherson: We'd probably agree on that.
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Lisa Raitt: I do agree with you, but that's getting to the nub of the psyche of the Canadian,
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Lisa Raitt: of the Canadian business person.
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Lisa Raitt: And this was told to me.
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Lisa Raitt: Anne and I did a roundtable.
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Lisa Raitt: It was business people, senior people.
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Lisa Raitt: And this was the analysis that when a Canadian sells their company and they make $100 million,
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Lisa Raitt: they think, how big is my cottage going to be in Muskoka?
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Lisa Raitt: When an American makes their $100 million, they say, okay, great.
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Lisa Raitt: How do I employ that to do this again?
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GIles Gherson: And that's the difference.
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GIles Gherson: I mean, it's exactly right.
388
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GIles Gherson: And changing that mentality, I think, is going to be probably a job for the ages, but it has
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GIles Gherson: to be done.
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GIles Gherson: I'm certainly hopeful that even the current government, with its focus on economic growth,
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GIles Gherson: and keep that focus can help change that mindset to some degree.
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GIles Gherson: I mean, it needed to be done.
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GIles Gherson: The provincial government here is also interested in doing the same thing.
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GIles Gherson: But funnily enough, I do think it does come back to something that the prime minister said,
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GIles Gherson: and we've been saying it a little bit, I think, last year before that,
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GIles Gherson: which was you look at the amount of dollars spent on consumption,
397
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GIles Gherson: that the government will spend on consumption, versus on growing productive capacity.
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GIles Gherson: I know Minister Bethlehem Favre, the finance minister of Ontario will say, I've got 85% of my budget goes to social infrastructure, 15% goes to economic infrastructure.
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GIles Gherson: And I would argue that if you went back 50 or 60 years, looking at a federal or provincial government, you would have found a much better balance between essentially the resources that were devoted to growing the economy and daily consumption.
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Lisa Raitt: Yep. And you can blame politicians wanting to get elected for all of that, quite frankly, because nothing gets you more votes than dropping the price on dropping the amount of GST that you bring in or by adding another program or another another amount of money going out to pensioners about increasing the pensionable age to 67.
401
00:25:04,720 --> 00:25:09,580
Lisa Raitt: That's gone. It's back to 65. And other countries have moved forward on those things. But we are so
402
00:25:10,220 --> 00:25:16,920
Lisa Raitt: intent in this country politically on 25 ridings that can swing you between a majority and a
403
00:25:17,100 --> 00:25:22,800
Lisa Raitt: minority and a win and a non-win that we tend to, we as a politician, tend to promise the world
404
00:25:23,200 --> 00:25:28,120
Lisa Raitt: just to get that one specific individual community vote that's needed in order to put you on the
405
00:25:28,120 --> 00:25:31,600
GIles Gherson: for a short-term period. That's it. It's all short-termism, not long-term stuff.
406
00:25:31,880 --> 00:25:45,240
GIles Gherson: But we've been rattled by Trump. We've been rattled by the disruption, by the tariffs, by the threats of more tariffs. Is that enough to change that mindset? Because that's essentially what gave us the government approach today that we have versus 10 years ago.
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Lisa Raitt: Yeah. So are we on the burning platform? I mean, have we hit rock bottom yet? No,
408
00:25:48,710 --> 00:25:54,360
Lisa Raitt: we haven't hit rock bottom yet. I think there's a little bit of ways to go. I think that with the
409
00:25:54,840 --> 00:26:01,440
Lisa Raitt: ports in Iran being closed right now, by virtue of Donald Trump and his massive amounts of military
410
00:26:01,660 --> 00:26:08,700
Lisa Raitt: might, we are going to feel and hit an incredible amount of, I would say, inflation that is going to
411
00:26:08,700 --> 00:26:12,180
Lisa Raitt: be noticeable for people. And I'm not just talking about gas. I'm talking about everything.
412
00:26:12,200 --> 00:26:16,580
Lisa Raitt: It's everything. Well, plastics, you know, everything is plastics. It's fertilizers.
413
00:26:17,180 --> 00:26:23,400
Lisa Raitt: It's everything. And we're going to seal it. And that $99,000 that we currently have right now is
414
00:26:23,400 --> 00:26:28,220
Lisa Raitt: going to feel smaller and smaller and smaller. And it's going to bring on this kind of notion of not
415
00:26:28,320 --> 00:26:33,120
Lisa Raitt: only scarcity, not only hoarding, unfortunately, but it's also going to be, okay, right now, what?
416
00:26:33,280 --> 00:26:37,220
Lisa Raitt: Now what are we going to do? And that's where the prime minister and the premier, quite frankly,
417
00:26:37,660 --> 00:26:41,680
Lisa Raitt: have to step in and say a little bit more than just, we're going to fight Donald Trump.
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00:26:42,500 --> 00:26:48,460
Lisa Raitt: great. We need you to do that because those section 232 tariffs and those section 301
419
00:26:49,840 --> 00:26:53,120
Lisa Raitt: investigations, really problematic. And we're probably in a bad spot.
420
00:26:53,320 --> 00:26:54,260
GIles Gherson: Well, we've got a bunch more coming.
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00:26:54,450 --> 00:26:57,400
Lisa Raitt: The China stuff is a problem in our supply chain. Pharmaceuticals,
422
00:26:57,680 --> 00:26:59,620
Lisa Raitt: right around the corner. We know that's going to be a hit as well.
423
00:27:00,660 --> 00:27:04,680
Lisa Raitt: We need to get that sorted. That's incredibly important, but it's not everything.
424
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GIles Gherson: And it does mean keeping your eye on the ball on growing the economy, getting us out of this rut.
425
00:27:12,620 --> 00:27:15,880
GIles Gherson: if we're going to have the kind of prosperity that we want to have for our kids.
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00:27:16,100 --> 00:27:17,960
Lisa Raitt: Don't chase ghosts, right?
427
00:27:18,400 --> 00:27:21,280
Lisa Raitt: Don't chase, don't try to be the next thing that you think is going to happen.
428
00:27:21,470 --> 00:27:26,200
Lisa Raitt: And we get into these worldwide competitions on data centers, for example, and everything else.
429
00:27:26,360 --> 00:27:31,040
Lisa Raitt: Look, when a proponent comes to you, make the deal as attractive as you possibly can.
430
00:27:31,040 --> 00:27:31,560
GIles Gherson: Yeah, and get it, yeah.
431
00:27:31,920 --> 00:27:32,800
Lisa Raitt: And get the deal done.
432
00:27:32,830 --> 00:27:36,080
Lisa Raitt: I think that's what it comes down to instead of saying-
433
00:27:36,080 --> 00:27:37,500
GIles Gherson: Taking advantage of opportunities is what you're saying.
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00:27:37,500 --> 00:27:38,540
Lisa Raitt: Take advantage of opportunities.
435
00:27:38,700 --> 00:27:44,280
Lisa Raitt: but you got to show the opportunity is going to be frictionless or less frictioned when you go for
436
00:27:44,360 --> 00:27:52,800
Lisa Raitt: the process of regulatory systems or taxation or whatever. It's business. Canada has to turn into
437
00:27:52,900 --> 00:27:56,880
GIles Gherson: a country of business. We're not at the moment. We're not. One last thing on regulation,
438
00:27:57,260 --> 00:28:03,060
GIles Gherson: because one of the things I think that has, you know, there's a concern to us is that we see
439
00:28:03,400 --> 00:28:08,660
GIles Gherson: from time to time efforts to simplify regulations, to reduce regulations, but it's always
440
00:28:08,680 --> 00:28:13,480
GIles Gherson: overwhelmed by new regulations that keep on coming. And it seems to me that if you look at the federal
441
00:28:13,660 --> 00:28:18,220
GIles Gherson: government and you look at the government of Ontario, there isn't, and probably other provincial
442
00:28:18,440 --> 00:28:24,020
GIles Gherson: governments across the country, there isn't really a structured approach to simplifying regulation,
443
00:28:24,430 --> 00:28:30,080
GIles Gherson: right? I mean, we just did a report on this and we called for a regulatory simplification,
444
00:28:30,830 --> 00:28:35,920
GIles Gherson: weird term, regulatory simplification commissioner reporting to the prime minister and reporting to
445
00:28:35,940 --> 00:28:40,520
GIles Gherson: the premier, so one in each level of government, with real authority, speaking for the prime
446
00:28:40,680 --> 00:28:46,900
GIles Gherson: minister, speaking for the premier to cabinet members, as opposed to what the federal government
447
00:28:46,990 --> 00:28:51,460
GIles Gherson: has, which is Treasury Board. Part of what it does is ready to reform, but I don't really sense that
448
00:28:51,460 --> 00:28:56,600
GIles Gherson: it's driving anything, right? And in Ontario, with the best effort in the world, they've got,
449
00:28:56,710 --> 00:29:01,640
GIles Gherson: you know, a more junior minister of red tape production, which sounds great, and has had very
450
00:29:01,660 --> 00:29:07,640
GIles Gherson: good people in it, generally speaking. But it's hard from that capacity to get the attention of
451
00:29:07,640 --> 00:29:12,700
GIles Gherson: the senior regulatory ministers, right? And so it seems to me the structure of both isn't serious.
452
00:29:12,810 --> 00:29:16,800
GIles Gherson: It isn't really going to deliver the kinds of change we need to see.
453
00:29:17,140 --> 00:29:24,300
Lisa Raitt: Agreed. So two things on regulation. The first one is, anecdotally, I have probably 30,000 photos
454
00:29:24,410 --> 00:29:30,540
Lisa Raitt: on my phone and on my computer in the iCloud. It is overwhelming. AI can help me find the duplicates.
455
00:29:30,620 --> 00:29:32,100
Lisa Raitt: It can help me organize them.
456
00:29:32,220 --> 00:29:33,620
Lisa Raitt: It can help me put them in batches.
457
00:29:33,620 --> 00:29:37,480
Lisa Raitt: It can help me make quicker decisions on whether or not I want this picture or I don't want
458
00:29:37,560 --> 00:29:37,900
Lisa Raitt: this picture.
459
00:29:38,500 --> 00:29:40,180
Lisa Raitt: Regulations can be exactly the same thing.
460
00:29:40,520 --> 00:29:45,120
Lisa Raitt: You should be employing AI in order to batch out what it is, what's happening here and
461
00:29:45,200 --> 00:29:45,340
Lisa Raitt: here.
462
00:29:45,700 --> 00:29:50,620
Lisa Raitt: What happens right now, Giles, is you'll go to a federal, provincial, territorial, indigenous
463
00:29:51,160 --> 00:29:54,940
Lisa Raitt: meeting of all the ministers, and someone will mention, you know this, you've been there.
464
00:29:55,280 --> 00:29:57,500
Lisa Raitt: Someone will mention a regulation and we'll go in Ontario.
465
00:29:57,780 --> 00:29:57,960
Lisa Raitt: Really?
466
00:29:58,040 --> 00:29:58,500
Lisa Raitt: You do that?
467
00:29:58,640 --> 00:29:59,120
Lisa Raitt: That's crazy.
468
00:29:59,300 --> 00:29:59,840
Lisa Raitt: Why would you do that?
469
00:30:00,040 --> 00:30:01,940
Lisa Raitt: Now I understand why we're not working with one another.
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00:30:02,080 --> 00:30:02,280
GIles Gherson: Right.
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00:30:02,720 --> 00:30:03,960
Lisa Raitt: You can't have that happen.
472
00:30:04,140 --> 00:30:06,500
Lisa Raitt: You've got to have the data, the facts, and the understanding.
473
00:30:06,760 --> 00:30:07,900
Lisa Raitt: So that's one part.
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00:30:07,910 --> 00:30:10,160
Lisa Raitt: I think AI has evolved.
475
00:30:10,740 --> 00:30:15,920
Lisa Raitt: I mean, my God, we are the, this is the birthplace of AI, for goodness sake, here in Toronto.
476
00:30:16,660 --> 00:30:19,400
Lisa Raitt: Why doesn't somebody write that for the Canadian government?
477
00:30:19,560 --> 00:30:19,940
Lisa Raitt: What a gift.
478
00:30:20,320 --> 00:30:20,980
Lisa Raitt: Like, give it to them.
479
00:30:21,540 --> 00:30:22,720
Lisa Raitt: Don't let the government run it.
480
00:30:23,080 --> 00:30:23,860
Lisa Raitt: Have it run outside.
481
00:30:24,400 --> 00:30:25,400
Lisa Raitt: But figure that part out.
482
00:30:26,020 --> 00:30:27,720
Lisa Raitt: The second piece on regulation is this.
483
00:30:27,770 --> 00:30:29,140
Lisa Raitt: And this is where it takes boldness.
484
00:30:29,660 --> 00:30:32,600
Lisa Raitt: It's not just regulation that you can see that needs to be removed.
485
00:30:32,980 --> 00:30:35,040
Lisa Raitt: It is the Canada Labor Code.
486
00:30:35,420 --> 00:30:37,080
Lisa Raitt: It is Investment Canada Act.
487
00:30:37,520 --> 00:30:38,620
Lisa Raitt: Those are regulations as well.
488
00:30:38,640 --> 00:30:39,200
Lisa Raitt: Oh, absolutely.
489
00:30:39,290 --> 00:30:40,120
Lisa Raitt: You can't get rid of them.
490
00:30:40,470 --> 00:30:41,400
Lisa Raitt: And we're not going to get rid of them.
491
00:30:41,710 --> 00:30:42,340
Lisa Raitt: What we can do.
492
00:30:42,340 --> 00:30:42,780
Lisa Raitt: Streamline them.
493
00:30:44,020 --> 00:30:44,720
Lisa Raitt: What we can do.
494
00:30:45,560 --> 00:30:46,120
Lisa Raitt: We can streamline.
495
00:30:46,480 --> 00:30:46,560
Lisa Raitt: Yeah.
496
00:30:46,560 --> 00:30:47,940
Lisa Raitt: But what we can do is also this.
497
00:30:48,150 --> 00:30:53,140
Lisa Raitt: I think, and you've heard this policy around, I think we have to declare an emergency.
498
00:30:54,120 --> 00:30:58,640
Lisa Raitt: And I think we have to say the supply chain of Canada is in such a state right now that
499
00:30:58,660 --> 00:31:05,180
Lisa Raitt: we need time and we need to protect it in order to be able to build on it and grow it and show
500
00:31:05,250 --> 00:31:12,020
Lisa Raitt: the world that we are a strong supply chain. And for a limited period of time, you do suspend
501
00:31:12,530 --> 00:31:17,260
GIles Gherson: certain rules. Well, I think that makes sense. I mean, one of the things you could also do is use
502
00:31:17,320 --> 00:31:26,380
GIles Gherson: your AI example to shift many of our regulations to international standards. We have a lot of made
503
00:31:26,400 --> 00:31:32,600
GIles Gherson: in Canada, made in Ontario standards that are just different enough to cause friction, right?
504
00:31:33,060 --> 00:31:38,480
GIles Gherson: And cause cost and delays. You know, we don't live in a world now where, you know, there's vast
505
00:31:38,600 --> 00:31:42,240
GIles Gherson: disparity actually in standards. By and large, much of the world, certainly, you know, I think of
506
00:31:42,420 --> 00:31:45,860
GIles Gherson: Europe, you think of Asia, you think of, you know, many parts of the world, now the Middle East,
507
00:31:46,500 --> 00:31:51,800
GIles Gherson: where standards are really shifted towards what we have. Why not have international standards as
508
00:31:51,980 --> 00:31:56,360
GIles Gherson: opposed to made in Ontario, made in Canada? It is an excellent question. When I was minister
509
00:31:56,380 --> 00:32:01,540
Lisa Raitt: transport, we were trying to amend a rule where how many flight attendants you needed, depending
510
00:32:01,640 --> 00:32:05,440
Lisa Raitt: upon whether or not you're a wide body or a narrow body. And we wanted to follow the European
511
00:32:06,300 --> 00:32:11,640
Lisa Raitt: example or the American example. And I just kept being told by officials, no, Minister, we can't do
512
00:32:11,760 --> 00:32:16,660
Lisa Raitt: that. We have to do our own complete entire study from the ground up. I just say, just adopt their
513
00:32:16,780 --> 00:32:23,240
Lisa Raitt: standards. These are flying to those countries. We have a general understanding of what's important
514
00:32:23,260 --> 00:32:25,000
Lisa Raitt: and safety, aviation, aviation safety.
515
00:32:25,480 --> 00:32:26,940
Lisa Raitt: Why don't we just implement it?
516
00:32:26,980 --> 00:32:27,660
Lisa Raitt: No, we can't do that.
517
00:32:27,920 --> 00:32:30,000
Lisa Raitt: Same thing with using your phones on planes, right?
518
00:32:30,460 --> 00:32:33,360
Lisa Raitt: For the longest time, you had to stow it in the thing in front of you
519
00:32:33,360 --> 00:32:34,800
Lisa Raitt: to show that you weren't touching it at all.
520
00:32:35,140 --> 00:32:36,540
Lisa Raitt: Other countries got rid of it a long time,
521
00:32:36,700 --> 00:32:37,800
Lisa Raitt: taking your shoes off in airports.
522
00:32:38,280 --> 00:32:39,780
Lisa Raitt: Like, I could go on and on and on.
523
00:32:39,820 --> 00:32:42,160
GIles Gherson: One of my favorite examples, and I'll end on this,
524
00:32:42,300 --> 00:32:43,640
GIles Gherson: since you were a minister of transport.
525
00:32:44,480 --> 00:32:45,880
GIles Gherson: Billy Bishop Airport, right?
526
00:32:46,140 --> 00:32:47,240
GIles Gherson: It has a tripartite agreement.
527
00:32:47,260 --> 00:32:47,600
GIles Gherson: That's right.
528
00:32:47,680 --> 00:32:51,380
GIles Gherson: The tripartite agreement says one airplane can fly
529
00:32:51,400 --> 00:32:55,220
GIles Gherson: into Billy Bishop Airport commercial aircraft, the Q400 that was...
530
00:32:55,380 --> 00:32:55,820
Lisa Raitt: Essentially, yeah.
531
00:32:56,420 --> 00:32:57,340
GIles Gherson: Well, and so...
532
00:32:57,360 --> 00:32:58,420
GIles Gherson: It's a triple prop, yeah.
533
00:32:58,660 --> 00:33:00,120
GIles Gherson: But it doesn't say here's the emission standard.
534
00:33:00,480 --> 00:33:02,640
GIles Gherson: It doesn't say here's the noise level.
535
00:33:03,000 --> 00:33:05,360
GIles Gherson: It says this actually identifies the actual plane.
536
00:33:05,540 --> 00:33:05,700
Lisa Raitt: Yeah.
537
00:33:05,980 --> 00:33:09,240
GIles Gherson: And so you can't fly anything else really into it.
538
00:33:10,160 --> 00:33:11,540
GIles Gherson: But talk about prescriptive regulation.
539
00:33:11,960 --> 00:33:12,040
Lisa Raitt: Yeah.
540
00:33:12,820 --> 00:33:13,880
GIles Gherson: Anyway, that's going to change, hopefully,
541
00:33:14,200 --> 00:33:16,220
GIles Gherson: because we're going to get a change in the tripartite, we think.
542
00:33:17,020 --> 00:33:17,940
Lisa Raitt: I would love to see that.
543
00:33:18,020 --> 00:33:21,560
Lisa Raitt: And there's always going to be a noise contour that you have to abide by.
544
00:33:21,590 --> 00:33:22,560
Lisa Raitt: I think that makes a lot of sense.
545
00:33:22,580 --> 00:33:22,820
GIles Gherson: Absolutely.
546
00:33:22,980 --> 00:33:24,500
GIles Gherson: But just what's the international standard for it?
547
00:33:24,520 --> 00:33:25,020
Lisa Raitt: But that's fine.
548
00:33:25,060 --> 00:33:25,820
GIles Gherson: But that's fine.
549
00:33:25,850 --> 00:33:27,000
Lisa Raitt: And we can mitigate against that.
550
00:33:27,000 --> 00:33:29,160
Lisa Raitt: You can put those walls up like they've done already down there.
551
00:33:29,200 --> 00:33:29,860
GIles Gherson: Those blast walls, yeah.
552
00:33:30,000 --> 00:33:30,340
Lisa Raitt: Absolutely.
553
00:33:31,000 --> 00:33:35,480
Lisa Raitt: On this topic, if I could just say one thing, the scare mongering and the fear mongering
554
00:33:35,900 --> 00:33:38,480
Lisa Raitt: with respect to that airport is completely blown out of proportion.
555
00:33:39,060 --> 00:33:40,600
Lisa Raitt: It's a very, very safe airport.
556
00:33:40,830 --> 00:33:43,620
Lisa Raitt: And it's run impeccably by the Port of Toronto.
557
00:33:44,060 --> 00:33:45,740
Lisa Raitt: And I think we've got a jewel there.
558
00:33:45,930 --> 00:33:46,860
Lisa Raitt: And I'm biased.
559
00:33:47,260 --> 00:33:50,280
Lisa Raitt: But I don't use it because I live out in Milton.
560
00:33:50,400 --> 00:33:50,800
Lisa Raitt: Right, right.
561
00:33:50,820 --> 00:33:52,060
Lisa Raitt: But I know lots of people who do.
562
00:33:52,180 --> 00:33:52,400
GIles Gherson: Oh, yeah.
563
00:33:52,580 --> 00:33:55,880
GIles Gherson: I mean, for your colleagues in the financial services sector, for sure.
564
00:33:56,080 --> 00:33:56,540
GIles Gherson: Oh, for sure.
565
00:33:56,720 --> 00:33:56,940
Lisa Raitt: For sure.
566
00:33:57,420 --> 00:34:00,580
Lisa Raitt: So I think it's an ability for us to get out of our own way.
567
00:34:00,960 --> 00:34:02,140
GIles Gherson: I think we're turning the corner on that one.
568
00:34:02,540 --> 00:34:03,320
GIles Gherson: Lisa, thank you very much.
569
00:34:03,620 --> 00:34:04,120
GIles Gherson: Lovely to have you.
570
00:34:04,440 --> 00:34:05,220
Lisa Raitt: Thank you very much, Vass.
571
00:34:05,360 --> 00:34:05,420
Lisa Raitt: Great.
572
00:34:05,820 --> 00:34:05,880
GIles Gherson: Thanks.
573
00:34:07,200 --> 00:34:09,120
GIles Gherson: Thanks for listening to Toronto Talks,
574
00:34:09,820 --> 00:34:12,379
GIles Gherson: conversations with the leaders shaping the region's economy.
575
00:34:13,000 --> 00:34:15,060
GIles Gherson: Follow us wherever you get your podcasts.