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Emerging From COVID-19: Canada’s Opportunity

By Blair Sheppard and Kai Lakhdar

By embracing four principles, Canada will position itself to become a force for positive change in the world.

Maple Leaf Illustration for Canada


COVID-19 has been devastating for Canada, affecting our health, economy and social structures. Recovery from the pandemic will be a significant challenge, but one that provides unique opportunities to address the deeper issues confronting our country.

Rarely has there been such goodwill directed toward the government combined with a sense of broad reflection on the part of many citizens. We have learned clear lessons from COVID-19, particularly around our ability to act quickly and collectively in the face of a global threat. These are lessons we need to embrace as we forge a new future. The world is different. We are different. And that’s why now is the moment for us to take bold action to accelerate change and create the world we desire.

Beyond the pandemic, Canada is facing a number of difficult challenges, with few easy answers. One of our most pressing social issues is the increasing wealth disparity between individuals (the top 1% of households control more than 20 per cent of Canada’s wealth), between urban and rural regions and across generations. Added to that, our population is aging quickly, putting substantial pressure on our social services system and creating an ongoing burden for young wage earners. Household debt is also a major issue, although marginally less than it was pre-COVID-19.

Meanwhile, Canada’s economy, founded on small business, is reeling from the impact of the pandemic and the difficult but necessary decisions made to address it. In the current environment, technology is both an opportunity and a challenge. Businesses need to innovate, but innovation often creates stress for those likely to lose their jobs due to new technology.

There is also the critical issue of climate change. It threatens the lifestyle of those in the territories and puts other regions of the country at risk of extreme weather events like floods, droughts and forest fires. As the world increasingly focuses on decarbonization, Canada’s natural resources sector is also threatened — putting people’s livelihoods at risk.

Taken together, these challenges are monumental. It is difficult to imagine that Canada can effect real change in any one area, much less across all of them. But in Canada’s response to COVID-19, we can see what is possible when governments, businesses and individuals work together. If there was ever a time when we could make major progress on all fronts, that time is now.


Canada’s Advantages

In Canada we have a number of unique advantages that can be used to enable an inclusive economic order that serves everyone — not just the most fortunate — while also improving the well-being of our citizens, our economy and the environment. These advantages include:

GEOGRAPHIC LOCATION. Canada sits next to the powerful U.S. economy, which has faced significant challenges in recent years. It will likely take time to address issues including polarized political ideologies; the concern of those considering emigration to, or capital investment in, the U.S.; and the erosion of institutional trust. Given its proximity, Canada has a unique advantage in terms of accessing the U.S. market and driving change on shared issues.

EDUCATION. Canada has a strong and well-balanced higher education system, including globally competitive universities. By comparison, in both the U.S. and the UK, there is a large gap between top-ranked universities and others. The strength of Canada’s education system is an advantage, given that, after the events of recent years, the U.S. — the country that has traditionally attracted the best and brightest students from around the world — may be perceived to be less welcoming to those looking to emigrate for academic reasons.

RULE OF LAW. On the global stage, Canada is perceived as a country with robust ethical principles, balanced decision making and a strong justice system. In a post-COVID-19 world that values both stability and resilience, Canada stands to benefit and strengthen its global position even further.

INCLUSIVENESS. In Canada, diversity and inclusiveness are generally accepted and appreciated. Ipsos often ranks the country as a global leader in terms of inclusiveness and social cohesion. Canada is also often ranked as one of the top five countries in the world to live, work or study — while Vancouver, Toronto and Calgary often rank among the top ten cities in the world for livability. Canada is typically viewed as both comfortable and safe, making it a highly desirable destination for those looking to emigrate in search of a better life. While there is plenty of room to improve in terms of diversity and inclusion, Canada has built a solid foundation on which to base future action.

SIZE. Within the global powers, Canada is a mid-sized economy that is large enough to matter — it has the tenth largest GDP in the world — but small enough that coordinated systemic change is a real possibility. This gives it a unique opportunity to create collaborative solutions to troubling issues that larger economies might find daunting.

NATURAL RESOURCES. Canada is an economy largely driven by natural resources — a possible liability in a world increasingly focused on reducing carbon emissions and enhancing the circular economy. But the types of natural resources found here are well suited to adaptation. Canada has accessible deposits of a number of essential rare metals, an abundance of fresh water (access to 20 per cent of the world’s total fresh water) and large swaths of arable land. In many other countries, arable land is an increasingly rare and diminishing commodity.

TECHNOLOGY ECOSYSTEM. Canada is home to a highly skilled technology workforce and a robust ecosystem of technology research, development and commercialization activities. While too many talented Canadian innovators move to the United States and leading companies have struggled with next-generation disruption, if Canada can address these challenges and maintain, sustain and amplify its technology advantage, it will be well positioned to be a leading source of innovation globally in the years ahead.

MINDSET. While there is no such thing as an average Canadian, many Canadians do share traits and characteristics that will be beneficial as the world continues to accelerate toward a new normal. Canadians are, on balance, humble, inclusive in both social and economic terms and proud of their heritage and natural resources, and many care for the environment in different ways. All of these qualities will be essential moving forward.


Writing a New Story: Four Principles

For Canada to become a leading innovator, efforts must be coordinated across four strategic action areas. Each has been targeted by various policies to some degree, but to make transformational change, we need to shape these policies and actions into a cohesive whole.

1. Target the World’s Top Talent

To import the brightest people from around the world, Canada needs to actively promote that it welcomes intelligent students. We can do this by creating path-to-citizenship and competition-based immigration policies that encourage the most capable students to stay in the country to build businesses once their education is complete. To avoid placing an additional tax burden on citizens, prospective students should be charged full tuition and ancillary fees, with privately funded scholarships supporting top-of-the-pyramid students unable to afford education costs.

It is worth remembering many Silicon Valley start-ups were founded by or grown through the expertise of immigrants who initially travelled to the U.S. to study. In fact, close to 25 per cent of billion-dollar start-up companies were founded by such students, while over 80 per cent have former international students working in key positions. The Silicon Valley ecosystem approach is founded on the premise that the educational curriculum is well aligned with the industrial strategy and priorities of the region’s innovation hub.

Our goal should be to develop innovation hubs adjacent to universities throughout Canada, with focus areas aligned to each institution’s location and expertise. Founded at the Rotman School of Management, the Creative Destruction Lab personifies this approach, operating through nine locations worldwide and uniting the global innovation community. To make such innovation hubs sustainable, Canada should also focus on attracting trade talent by touting the advantages of investing in Canada to prospective businesses and investors.

To forge a stronger innovation ecosystem and drive additional positive immigration, Canada should also work to build synergistic innovation capabilities with the countries from which top students and start-up founders come. An example would be intentionally supporting educational development in key countries.

2. Embrace Electrification and Decarbonization

Frost & Sullivan estimates that more than $3.4 trillion will be invested globally in renewables over the next decade — adding an economic case to the societal and environmental outcomes that would be generated by Canada prioritizing electrification and decarbonization initiatives. Canada is well positioned to become a powerhouse in both areas, given its abundant access to hydro, wind and tidal power and to the materials and capabilities essential for building an electric future.

While Canada has historically embraced an extraction-led economy, we can evolve and lead the revolution to a carbonneutral — even carbon-negative — world. But our transformation would require a concerted effort across the full spectrum of carbon-contributing activities. Efforts would need to be innovation-led, drive significant job creation, allow for additional value-added activities to be conducted in the country and foster an explosion of small business growth. Examples across the five major contributors to carbon equivalents in the atmosphere include the following.

AGRICULTURE AND FOOD. Over the next 30 years, feeding the world’s growing population will require a 60 per cent increase in global food production — if not more. Today, Canada imports much of our fresh food from southern countries during the winter. Importing food generates a major carbon cost related to transportation, while also limiting our control over the specific farming practices used. At the same time, because of the amount of arable land in Canada, we also engage in direct farming practices that yield significant carbon.

To decarbonize agricultural and food-related activities, we need to radically transform farming practices, both in Canada and globally. For example, incorporating carbon-capture technologies into greenhouse-based farming activities would improve farming practices and decrease Canada’s reliance on imports. By taking a leadership role in the development of sustainable agriculture, Canada has an opportunity to address regional economic disparities by creating technology-based, well-paying jobs in rural areas, while also contributing to carbon emissions reductions.

ENERGY GENERATION AND STORAGE. With its abundant access to water, wind, tidal and solar power sources, in addition to many of the raw materials required for advanced forms of energy storage, Canada has the ability to become a leader in clean energy generation and energy storage. To make this shift, it needs to develop an explicit strategy to drive energy generation to renewable sources or to highly efficient nuclear and make a concerted effort to use these sources to power industrial and service systems in the country. Canada should also support related ecosystem activities, including the development of advanced battery storage technologies.

BUILDING AND CONSTRUCTION. Construction is one sector in which Canada is making excellent strides in terms of innovation, in part due to the high cost of construction activities in the country. A number of alternative building materials have been developed in Canada — materials that are not only carbon friendly, but also longer lasting. For example, concrete made from blast furnace slag is both carbon neutral and lasts for centuries. By accelerating its development of alternative construction materials and other carbon-friendly building solutions, Canada can foster economic growth while addressing critical environmental challenges.

TRANSPORTATION. Canada lags far behind leaders in terms of electrification of transport. This is a missed opportunity, given that we’re well positioned to develop an advantage in low-carbon energy generation. Canada should move quickly to embrace this opportunity, such as by supporting R&D activities, providing site location funding, creating incentive programs and building regional innovation clusters.

MANUFACTURING. Canada can take and protect a lead in electricity-intensive manufacturing. We have a variety of fundamental competitive attributes, including natural resource proximity, labour cost advantage and a burning platform for transforming the competitiveness of our manufacturing sector. As an example, Canada has a lead in aluminum production that it should work to protect. There are many other electricity-intensive industries that could be attracted, and many could be converted.

3. Focus on Systemic Healthcare Changes

Given that Canada’s population is highly distributed geographically, it makes sense for us to embrace the transformation of our healthcare system to prioritize prevention and the delivery of health services in home- and community-based settings. But to effectively transform our approach, we’ll need to embrace innovative technologies and focus efforts on driving real systemic change across the country.

We have an excellent foundation for making systemic changes to healthcare, including a growing ecosystem of innovative health technology companies and a small enough population to implement changes more readily than countries with larger populations. Reimagining Canada’s healthcare systems would create substantial benefits: It would allow for better distribution of healthcare work, be more cost-efficient, improve the quality and consistency of care across the country and support the wellbeing of Canadians by pairing health-sustaining practices with healthcare practices.

Transforming Canada’s health system to make it more sustainable and value driven would require coordinated changes across a number of dimensions. Key opportunity areas include:

HOME CARE. For many people, home is a comfort — a source of positive emotional and physical associations. When facing health issues, Canadians typically want to stay at home as long as possible. But current health systems in Canada are largely institution centric. Enabling a model focused on providing care at home first would require major investments in a number of areas (e.g. technology, process, people). Yet such a transformation could lead to system efficiencies, improved service delivery and a better patient experience. It could also alleviate gaps in healthcare access between urban and rural communities and enhance health outcomes among vulnerable groups.

DIGITAL HEALTH. The opportunity to use digital technologies to give patients access to their health data, help families support their loved ones, move care closer to home and enhance access to care isn’t new. But the COVID-19 crisis has turned the use of digital health technologies from an opportunity into an imperative — and technologies quickly proved their value. Canada needs to embrace this realization as part of any health system transformation. By integrating digital health solutions within our health systems, Canada can take advantage of a relatively untapped opportunity to improve care, particularly for rural patients, in addition to making key processes more efficient (e.g. follow-up care, non-acute care).

PREVENTION. Canada’s publicly funded healthcare systems primarily focus on treating the sick rather than on managing the health and well-being of individuals. Transforming to a prevention-focused model of care would be challenging, requiring collaboration between primary and other healthcare providers, development of new models of care, engagement with employers and other organizations, community promotion and the use of consumer-centric technologies. But the benefits could be enormous in terms of reducing healthcare costs and improving the health of Canadians and, therefore, their ability to contribute to the economy.

HEALTH HUMAN RESOURCES. The combination of demographic changes and fiscal constraints means that Canada, along with many developed countries, will soon be facing a major shortage of health sector human resources. COVID-19 has demonstrated the severity of this challenge — one only projected to worsen over the next decade. While projections indicate that by 2030 demand for health workers will rise to 80 million globally, the World Health Organization estimates there will be a shortage of more than 20 per cent. This gap emphasizes the need for Canada to develop more efficient care models, talent development programs and targeted immigration policies. As resource shortages are typically felt most in rural areas, such programs would also help alleviate inequalities between rural and urban communities.

SOCIAL DETERMINANTS. Social determinants of health include a range of factors that greatly influence the health status of individuals — such as income and social status, access to social support networks, level of education and literacy, employment and working conditions and social and physical environments. To achieve the best outcomes from health system transformation in Canada, there needs to be a coordinated and targeted focus on improving social determinants. For example, by improving social housing solutions in combination with the healthcare system, Canada could generate stronger and more sustainable outcomes than it would otherwise.

4. Support the Growth of Small Businesses

Canada is a small-business-led country and should remain so. It’s the best way to make sure rural economic growth remains consistent with national GDP growth, while also ensuring reasonable income distribution within the larger economy. Unfortunately, small businesses across Canada have been severely impacted by COVID-19. While data shows insolvencies are down compared to 2019, the real damage may lie ahead — which would only put more of the country’s most vulnerable groups at risk.

To drive future economic growth, Canada needs to undertake a nationwide effort to massively grow our small business footprint and support the scaling of Canadian small businesses. We recommend the adoption of a strategy similar to the one suggested by the Global Alliance for Mass Entrepreneurship (GAME) but adjusted to our unique context and post-COVID recovery strategy. GAME is an alliance of mission-aligned partners aiming to create a thriving environment for mass entrepreneurship in India resulting in 10 million entrepreneurs, 50 per cent women, who create 50 million jobs by 2030.

Developing well-balanced entrepreneurial-driven ecosystems that encourage women, youth and minority innovators can significantly enhance the potential of small businesses. Canada already has this ethos. It’s not surprising, for example, that Shopify — a platform designed to enhance the performance of small businesses — was invented here. What Canada needs to do now is focus on accelerating and sustaining our entrepreneurial ecosystems across the country and on creating policies and technology business incentives that encourage the development of responsible and values-driven businesses — both here and globally. By doing so, Canada will be well positioned to grow sustainable businesses able to contribute to, and lead the world in, solving the critical challenges we face.


In closing

While seizing the opportunities outlined herein won’t be easy, it will be worth it. Consider the value such transformation would generate for this and the next generation of Canadians. Our children, new immigrants and the next few rounds of graduates would be better positioned for future-focused roles, helping to bridge potential talent gaps. We would build on our existing strengths to become a global leader in transitioning to a carbonneutral economy, reinvigorating our industrial and service economy base and providing new pathways for innovative companies to emerge. And we would strengthen the health of our communities, building a strong foundation for supporting our most vulnerable citizens.

Some might say our vision is too challenging to achieve. We say, let’s work together and prove them wrong.

Blair Sheppard is the Global Leader for Strategy and Leadership at PwC Global. Kai Lakhdar is a Partner with Strategy& and the Pension Fund Sector Leader at PwC Canada. They would like to acknowledge: Malcolm Brown, a Senior Strategic Adviser at PwC Canada; Ellen Corkery Dooher, the Federal Government and Public Sector Leader at PwC Canada; Owen Taylor, the National Government and Public Services Leader at PwC Canada; and Matthew Wetmore, the National Managing Partner, Industries and Regions for Strategy&, PwC Canada.

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