In Stéphane Dion, the Liberals have selected a big-thinking leader who’s heavier on policy than charisma. Naturally, he will emphasize the environment and national unity (issues he’s made his own since entering federal politics) in the run-up to the next federal election.

But what will he have to say about the economy? On this score, perhaps deliberately, Dion’s slate is mostly blank. This will soon change, both because of his own pointy-headed instincts, and because his coming frontal attack on the Conservatives will need to have sharp economic teeth.

As a whole, the Liberal leadership campaign mostly ignored economics, and Dion was no exception. His limited economic platform discussed economic upsides from conservation, and the need for aggressive commercialization of Canadian research. Not much meat on the bones here, but he’s identified two genuine challenges — and, refreshingly, without pretending that either can be solved with a tax cut.

There are other themes, however, that the new leader and his team will need to incorporate into a pre-election economic platform that seriously challenges the Conservatives:

  • Federal Budgets: The shrinking federal debt continues to free up discretionary funds each year (the so-called “fiscal dividend”). Finance Minister Jim Flaherty will spend all of it, and then some, on tax cuts — which explains the bizarre juxtaposition of federal spending cuts amidst hefty federal surpluses. And despite his pretensions of helping out the “middle class,” most of those tax cuts will land in households way up the income ladder.

    This approach provides an easy target. During the campaign, Dion spoke broadly of modernizing the social infrastructure. Paying for this is simple: keep taxes where they are (among the lower third of industrial countries), and commit most of the coming surpluses to child care, infrastructure, and other priorities. It’s interesting that apart from a couple of targeted incentives for research, Dion’s platform didn’t mention tax cuts at all.

  • Environment: Here, too, the Harper government’s duplicity and irresponsibility presents a wide target, and the hardening commitment of public opinion to environmental protection makes this a sure vote-winner. Just rejoining Kyoto and reversing Harper’s cuts to environmental programs would go a long way. But Dion has much bigger ideas — and given the mushiness of the past Liberal government’s Kyoto plan, it’s a good thing, too.

    It is possible that a greener economy can be a stronger economy, but only if there’s a lot more real spending on energy-efficient investments and public transportation infrastructure. Dion’s Liberals could develop a plan for building these things that was as important (both economically and symbolically) as building the St. Lawrence Seaway was in another era. And why not pay for it with taxes on the oil sands plants that will account for 60 per cent of Canada’s net new greenhouse gas emissions by 2020?

  • Research and Innovation: Dion’s campaign references to R&D evoked the Liberals’ old “Innovation Agenda” (overseen by former Industry Minister and Dion-endorser Allan Rock). But the new leader’s high-tech agenda will have to get much more concrete than that fuzzy plan, which left no lasting impression whatsoever on the Canadian economy.

    Dion’s focus on the pragmatic difficulties of commercialization is welcome, as is his intriguing proposal to develop Sector Technology Councils to help targeted industries achieve critical mass. With Canada’s economy deindustrializing before our eyes, this is an immense challenge that will require a corresponding federal commitment.

  • Canada’s Economic Role: Indeed, this deindustrialization is itself terrain where the Liberals could stake a politically attractive claim as “nation-builders.” The Harper government celebrates Canada’s new role as energy superpower, reinforcing it with their laissez-faire tax and trade policies. Staple resources again account for most of our exports. Meanwhile, Canada’s capacity to develop and produce innovative, high-tech products withers in the face of a sky-high loonie, China’s challenge, and corporate underinvestment. Economically, environmentally and strategically, this is a dead-end street.

Once upon a time, Liberals took this sort of structural challenge seriously. If they can find the political courage and policy creativity to do it again, proposing modern tools and levers to deliberately shape investment in more socially beneficial, environmentally sustainable ways, it would be one more nail in the Harper government’s coffin.

jimstanford

Jim Stanford

Jim Stanford is economist and director of the Centre for Future Work, and divides his time between Vancouver and Sydney. He has a PhD in economics from the New School for Social Research in New York,...