From swaggering to staggering – Canada’s decline into irrelevance

From the MacDonald Laurier Institute

It’s remarkable how much our international reputation has faded over the past 10 years, both diplomatically and economically.

It is remarkable how much attitudes about Canada have shifted, both here and abroad, over the past 10 years. A decade ago, riding the wave of a booming economy, Canada was widely admired for a banking system that had got through the 2008-2009 global financial crisis without government bailouts. Today the country’s global stature is much diminished and Canadians are rapidly losing confidence in their economic prospects.

In the years leading up to 2016 Canadians grew accustomed to global accolades. In a 2003 cover story, The Economist touted the prospects for “cool Canada,” following up in 2006 that Canada’s relative economic performance made it a “superstar” as the “only country running both current-account and budget surpluses.” Steve Poloz, then chief economist at EDC, said in 2005 the stars were aligned for Canadian firms to achieve the “productivity miracle” already realized in the U.S. In 2012, the OECD secretariat forecast Canada’s economic growth would lead the G7 nations over the next 50 years. Our AAA credit rating, stable economy and resource riches prompted the IMF in 2012 to recommend central banks hold more currency reserves in Canadian dollars, leading to headlines about “loonie set to join global currency elite” as a safe haven in turbulent times.

A Maclean’s article reporting 2011 poll results proclaimed Canada was “on top of the world” and “Canadians have never felt so upbeat about the future.” A year later, Joe O’Connor could claim in this newspaper that “Canada’s got swagger.” This confidence was reinforced when Britain hired Mark Carney in 2012 as the first foreign-born governor of the Bank of England, calling him the “best central banker of his generation.” On the global stage, in 2016 U.S. President Barack Obama told Parliament: “the world needs more Canada.”

A stable banking system was not Canada’s only perceived financial advantage. Some analysts predicted Toronto would become a major trading centre for the North American cap-and-trade carbon market. Moody’s Analytics projected Toronto’s financial services industry would employ more people than London’s by 2017. Tiff Macklem, then dean of the Rotman School, wrote an op-ed in 2016 touting Toronto’s “potential to become the leading global fintech hub.”

That was then. Today Canada’s reality is much different than people were expecting before 2015. Its finance sector is known for being “an ATM and safe deposit box for money laundering,” according to Jonathan Manthorpe in his 2019 book, Claws of the Panda. In 2018, The Economist noted that Canada “has long had a reputation as a place to snow-wash money.” Regulation is split between federal and provincial governments and there are almost no restrictions on lawyers involved in laundering.

Instead of buoyant economic growth, the OECD last year downgraded Canada’s prospects to 2060 to dead last out of 38 nations. In a 2019 feature, The Economist noted that the top Canadian firm on Fortune’s list of the world’s largest companies ranked 241st, concluding that our “economy and business culture will have to become more American.”

Nothing has damaged Canada’s economy and global stature more than the obstacles governments have deployed to hamper our energy industry. In 2011, the late Jim Prentice, then vice-chairman of CIBC, reviewed the slew of Canadian energy projects then underway, from hydro in Labrador to Alberta’s oil sands, and concluded “no one else is bringing on energy projects on the pace and scale of Canada.” Today, by contrast, British Columbia and Quebec are struggling to meet electricity demand, while the oil sands have slashed investment.

The harm from discouraging oil and gas development was fully revealed after Russia’s 2022 invasion of Ukraine. Canada was unable to answer Europe’s desperate need for oil and gas. When German Chancellor Scholz visited Canada to plead for more natural gas, our prime minister claimed there was “no business case” to support LNG exports to Europe. Meanwhile, since March 2022, American firms have signed now fewer than 57 supply agreements with Europe for 73 million metric tons of LNG annually, according to a recent report in the Wall Street Journal.

A recent Nanos poll found even fewer Canadians (just 13 per cent) thought our global reputation had improved than were satisfied with the state of our economy (23 per cent). The Wall Street Journal said last year that Canada’s paltry defence spending should disqualify us from G7 membership, while Spain is openly lobbying to take our place. We have become irrelevant to the geopolitics of our natural allies, whether the problem at hand is the growing rivalry between the U.S. on the one hand and Russia and China on the other or the EU’s fixation on rectifying its energy and defence deficits.

More broadly, Canada has failed in its traditional role of explaining the U.S. to the rest of the world. Though it’s strange to recall, immediately after Donald Trump’s election in 2016, the hope was Trudeau would be the “Trump Whisperer,” establishing Canada as an “indispensable nation,” to quote Maclean’s Scott Gilmore. Instead, we have reverted to our traditional sense of moral superiority over Americans and now parrot the global chorus condemning the direction of U.S. politics. We have a plan for dealing with Trump, the prime minister assures us. Good luck to us with that.

Philip Cross is a senior fellow at the Macdonald-Laurier Institute.

Related Topics:#Canada'sDecline #MacdonaldLaurierInstitute #PhilipCross #SwaggeringToStaggering

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Canada among NATO members that could face penalties for lack of military spending

Published on December 21, 2024

Todayville

From the Daily Caller News Foundation

By J.D. Foster

Trump should insist on these measures and order that unless they are carried out the United States will not participate in NATO. If Canada is allowed entry to the Brussels headquarters, then United States representatives would stay out.

Steps Trump Could Take To Get NATO Free Riders Off America’s Back

In thinking about NATO, one has to ask: “How stupid do they think we are?”

The “they,” of course, are many of the other NATO members, and the answer is they think we are as stupid as we have been for the last quarter century. As President-elect Donald Trump observed in his NBC interview, NATO “takes advantage of the U.S.”

Canada is among the “they.” In November, The Economist reported that Canada spends about 1.3% of GDP on defense. The ridiculously low NATO minimum is 2%. Not to worry, though, Premier Justin Trudeau promises Canada will hit 2% — by 2032.

A quarter of NATO’s 32 members fall short of the 2% minimum. The con goes like this: We are short now, but we will get there eventually. Trust us, wink, wink.

The United States has put up with this nonsense from some members since the collapse of the Soviet Union. That is how stupid we have been.

Trump once threatened to pull the United States out of NATO, then he suggested the United States might not come to the defense of a NATO member like Canada. Naturally, free-riding NATO members grumbled.

In another context, former Army Lt. Gen. Russell Honore famously outlined the first step in how the United States should approach NATO: Don’t get stuck on stupid.

NATO is a coalition of mutual defense. Members who contribute little to the mutual defense are useless. Any country not spending its 2% of GDP on defense by mid-year 2025 should see its membership suspended immediately.

What does suspended mean? Consequences. Its military should not be permitted to participate in any NATO planning or exercises. And its offices at NATO headquarters and all other NATO facilities should be shuttered and its citizens banned until such time as their membership returns to good standing. And, of course, the famous Article V assuring mutual defense would be suspended.

Further, Trump should insist on these measures and order that unless they are carried out the United States will not participate in NATO. If Canada is allowed entry to the Brussels headquarters, then United States representatives would stay out.

Nor should he stop there. The 2% threshold would be fine in a world at peace with no enemies lurking. That does not describe the world today. Trump should declare the threshold for avoiding membership suspension will be 2.5% in 2026 and 3% by 2028 – not 2030 as some suggest.

The purpose is not to destroy NATO, but to force NATO to be relevant. America needs strong defense partners who pull their weight, not defense welfare queens. If NATO’s members cannot abide by these terms, then it is time to move on and let NATO go the way of the League of Nations.

Trump may need to take the lead in creating a new coalition of those willing to defend Western values. As he did in rewriting the former U.S.-Mexico-Canada trade agreement, it may be time to replace a defective arrangement with a much better one.

This still leaves the problem of free riders. Take Belgium, for example, another security free rider. Suppose a new defense coalition arises including the United States and Poland and others bordering Russia. Hiding behind the coalition’s protection, Belgium could just quit all defense spending to focus on making chocolates.

This won’t do. The members of the new defense coalition must also agree to impose a tariff regime on the security free riders to help pay for the defense provided.

The best solution is for NATO to rise to our mutual security challenges. If NATO can’t do this, then other arrangements will be needed. But it is time to move on from stupid.

J.D. Foster is the former chief economist at the Office of Management and Budget and former chief economist and senior vice president at the U.S. Chamber of Commerce. He now resides in relative freedom in the hills of Idaho.

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You wouldn’t believe how complicated distributing public money can get

Published on December 15, 2024

Todayville

David Clinton

Veteran Affairs: the Big Picture

While researching posts for The Audit, I’ll often confront massive datasets representing the operations of agencies with which I’m not in the least familiar. Getting to the point where all the raw numbers turn into a useful picture can take considerable effort, but it’s a satisfying process.

But my first attempts to understand Veteran Affairs Canada (VAC) felt a bit different. I wasn’t just looking at funding and costs, but at the frustrations and suffering of people who, to a greater or lesser degree, were harmed through their service to the country. Here, I hope, is part of their story.

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Veterans Affairs Funding

There are currently more than 460,000 living veterans of the Canadian military. The estimated 2024-25 spending allocation for Veteran Affairs Canada – whose mandate is to serve that population – is around $4.8 billion. The department employs less than four thousand people, which is actually around eight percent fewer than in 2010. Having said that, employment at the distinct Veterans Review and Appeal Board has grown from zero to 161 since 2017.

Besides VAC, the Office of Infrastructure of Canada will spend around $16.5 million on their Veteran Homelessness Program, and Department of National Defence has another $1.6 million budgeted for Community Support for Sexual Misconduct Survivors Program – something for which veterans will also be eligible.

In addition, nearly $2.5 million in grants from various government agencies (including Canada Mortgage and Housing Corporation) was given in 2023 to the Homes for Heroes Foundation, which provides housing and support for at-risk veterans.

Non-government agencies also work to support veterans. In 2023, for instance, the War Amps reported spending $2.7 million on “Service Bureau and Advocacy” and around $700,000 on “Veterans Issues – Special”. The Royal Canadian Legion Dominion Command spent around $1.15 million on veterans services in 2022.

The True Patriot Love Foundation is also a big player in this area, channeling nearly $2.7 million in 2024 to other charities working for veterans. At the same time, more than 30 percent of their own budget came from government sources.

One example of such flow-through funding was the $360,000 given by True Patriot Love to Veterans Transition Network in 2024. In 2023, Veterans Transition Network themselves received another $2.2 million from government along with a total of $1.7 million from other charities.

These kinds of ultra-complex relationships are common in Canada’s charitable sector. The complexity may provide benefits that outsiders can’t easily see. At the same time, knowing whether moving funds through multiple organizations leads to unnecessary inefficiencies and waste is something that would probably require a serious forensic audit.

Veterans Affairs Spending

The largest line items in this year’s VAC spending include $1.6 billion for pain and suffering compensation, $1.34 billion for the Income Replacement Benefit, and $990 million for pensions for disability and death.

In 2023, VAC awarded $41.6 million in external contracts. The largest of those was worth $13.8 million and went to 674725 ONTARIO LTD for “Other Business services not Elsewhere Specified”. 674725 Ontario Ltd. appears to be closely associated with a company called Agilec which, in turn, is a part of Excellence Canada. Here’s how Excellence Canada describes itself:

“Founded in 1992 by Industry Canada as the National Quality Institute (NQI), then rebranded as Excellence Canada in 2011, we are an independent, not-for-profit corporation that is dedicated to advancing organizational performance across Canada.”

In that context, it’s interesting that in 2022, VAC awarded a $159 million contract to a joint venture between WCG International Consultants Ltd. and March of Dimes Canada for “Other Health Services not Specified Elsewhere”.

What makes that interesting? Well, WCG also shows up on an Innovation, Science and Economic Development Canada (ISED) page related to compliance with the Investment Canada Act (ICA). The ICA exists to provide transparency relating to foreign investments in the interest of maintaining a fair and competitive marketplace

This particular page identifies a “U.S.” company called Ancora BidCo Pty Ltd as the new owners of a number of businesses under contract with the federal government. Those businesses include 674725 Ontario Ltd. and WCG International Consultants Ltd.

In fact, Ancora isn’t really a U.S. company at all. They’re actually Australian (as the Pty designation suggests). But their parent company – the private equity firm Madison Dearborn Partners, LLC – indeed operates in Chicago.

There’s no direct evidence to suggest there’s anything dark and nefarious happening here. But it is strange that so many discrete contracts turn out to be awarded to what now amounts to a single foreign for-profit company.

External Contracting Patterns

Has VAC been increasing their reliance on external contracts in recent years? Well, as you can see from this graphic, it’s complicated:

I don’t know what policy changes drove those two huge spikes in 2014 ($933 million) and 2021 ($2.25 billion). But I can tell you which specific vendors are responsible for most of the increase.

In 2014, three contracts worth a total of $803 million went to Medavie Inc for “Other Business services not Elsewhere Specified”. That was 86 percent of the sum of all VAC contracts from that year.

An eye-popping 98 percent of 2021’s external spending went to just six contracts worth $2.2 billion. Medavie Inc received one of those contracts – worth $228 million. But the other five (worth a total of $1.99 billion) were all joint ventures involving WCG International Consultants Ltd.

Lifemark Health Corp. (currently owned by Loblaw) partnered with WCG for three of those contracts, and March of Dimes Canada had the other two dance slots.

What Is Medavie?

Medavie Inc. is the owner of:

Medavie Blue Cross
Medavie EMS Inc.
Medavie health Services New Brunswick Inc.
Emergency Medical Care Inc.

Between them, those companies provide health insurance, healthcare training, and emergency management services. They also provide public health program administration – which would probably account for the majority of those contract amounts.

What’s not clear to me is why there’s no record of Medavie receiving any federal contracts of any sort since 2021 – despite the fact that the VAC website tells us that they’re still actively engaged in service provision through Partners in Canadian Veterans Rehabilitation Services (PCVRS).

What Is WCG International Consultants Ltd?

As we’ve seen, WCG is now owned by an American private equity firm and is most certainly no longer not-for-profit. Their website tells us that they’re part of the APM Group, which is an Australian company providing “services in early childhood, youth, employment, insurance, justice, veterans, health, disability, and aged care”.

You’re correct to assume the APM Group is more or less synonymous with Ancora BidCo Pty Ltd. More specifically: all of APM’s publicly-traded shares were bought out in the past couple of months on behalf of Madison Dearborn Partners.

Just one more detail: according to WCG’s website, they’re:

“Partners in Canadian Veterans Rehabilitation Services (PCVRS) coordinates and administers the Rehabilitation Services and Vocational Assistance Program on behalf of Veterans Affairs Canada (VAC).”

Curious about PCVRS? Since late 2022, they’ve been tasked with administering all medical, psycho-social and vocational assistance services on behalf of VAC. However, reports suggest that not everyone has been happy with either accessibility or responsiveness under the new system.

None of this is necessarily inappropriate. And if you’re willing to work at it, you’ll be able to use public information sources to uncover a wealth of related relationships and details. But the vast amounts of money involved, along with the operational complexity make abuse possible. Which means external oversight is a good thing.

Besides all that logistical stuff, what really matters is whether veterans themselves are receiving the support and services they deserve. And that’s a question only they can answer.

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