Thank you.
On behalf of the Public Policy Forum, I thank the finance committee for the opportunity to address the critical issue of how COVID-19 has impacted the economy, and what can be done.
I'll be speaking about the general public interest and not the state of the think tank sector.
PPF is embarking on a post-COVID research and convening project that we call “Rebuild Canada”. Our work starts from the premise that the crisis has thrown up new issues with which we must deal, as well as changing the trajectories of long-standing issues that we have not yet adequately addressed. There are many of them.
I was struck in the recent jobs numbers that young people make up 14% of the population and have lost 30% of the jobs. Nearly half as many again are still employed but have lost all or a majority of the hours they usually work. Research from previous recessions shows that unlucky timing in entering the labour market reduces earnings for at least a decade.
As with public debt, digital infrastructure, gig work or the decoupling of China and the United States, policy-makers are going to be left with a host of issues with major consequences. Rebuild Canada will gather some of the best established and up-and-coming policy minds and generate fresh ideas for decision-makers such as you.
Our first choice is whether we seek a return to the pre-pandemic status quo or strive to turn this cataclysm into a catalyst for a more productive, resilient and fair economy and society. With that in mind, I'm going to briefly touch on two issues that we will look at.
The first is climate and energy. Nowhere is the crisis more acute than in Canada's oil and gas producing provinces. As policy is considered, three realities stand out. One, climate change is getting worse. Two, an energy transition is already under way, driven by both public opinion and international investors. Three, a move away from fossil fuels will occur over decades, not years.
Just 3.8% of new vehicles sold in Canada today are electric or hydrogen. Internal combustion autos still comprise 99% of the passenger fleet, and the average life span of a modern car is about 13 years. It is clear that we will be running on gasoline for a while yet. If fossil fuels are going to be with us and climate change is getting worse, there's only one possible solution. We need to pursue all four pathways of the government's 2018 Generation Energy Council report, including a cleaner oil and gas sector.
Norway provides a model of climate cleanliness at home and the export of low-carbon oil abroad. The alternative to a cleaner oil and gas pathway, given continued demand, is to become a net importer and forgo the $76 billion that Canada earns toward our balance of payments from oil exports.
One place to start being cleaner and continuing to make this money for our government and for other revenue is by matching U.S. incentives for carbon capture, including the so-called 45Q tax credit. Canada at one time was a world leader in carbon capture, one of many steps in reducing emissions. Today, our homegrown technologies are being tried out south of the border. I see in the PPF's energy future forum project a strong desire to re-establish leadership at home and to sell abroad.
The second thing I want to talk about is quality of information in a democracy. As some of you know, I spent most of my career at The Globe and Mail, including as Ottawa bureau chief, founding editor of globeandmail.com and editor-in-chief. The COVID crisis is having two major effects on the news industry.
First, it is decimating revenues at journalism-based organizations at the very time that demand for reliable and local information is greater than ever. In releasing its first quarter results two weeks ago, Torstar Corporation reported print ad revenues at its dailies and weeklies down 58%. Digital was also down. This is typical of the industry and comes on top of a decade of declines that have taken ad revenues for dailies from $2.5 billion in 2008 to potentially as low as $600 million to $700 million this year. The news media is bleeding out.
A broke press is not a press at its best. Community newspapers are the most vulnerable, because they generally lack any subscription revenue. Weekly publishers are worried that their critical flyer business may never come back as retailers announce plans to go online. Everyone knows the only growth area is digital advertising and that it is thoroughly dominated by Facebook and Google, neither of which employs journalists who can go out and establish whether 5G cell towers cause COVID-19 or whether a conspiracy theory is at work.
There are different ways to rebalance the finances of reporter-based news media and the algorithm-led global platforms. An obvious and overdue point is to finally make foreign digital services subject to the same sales tax obligations as Canadian news media. Some people also think we should finally extend section 19 of the Income Tax Act to the Internet.
As you know, France and Australia have turned to competition law to pressure platform companies to negotiate content payments with news publishers. PPF’s “The Shattered Mirror” report recommended an alternative of imposing some form of levy, as with cable TV, on digital operations that do not invest in Canadian journalism.
We also need to activate the three useful vehicles to support journalism contained in the federal government’s 2019 budget. I’m proud to have played a role in designing the labour tax credit and the extension of charitable status to journalistic organizations. Now, with news media facing a Waterloo moment over COVID, it is time to get the money out the door.
Historically, when Canada’s ability to provide news about the country to its citizens was threatened, we used policy to create a CBC and a section 19 and a split-run magazine policy. We need to be resolute again.
Thank you.