Recently, I was pleased to attend a meeting of the Canadian Australian Chamber of Commerce that was addressed by Jack Cowin, founder and chairman of Competitive Foods Australia Limited. Cowin is an expatriate Canadian that I met in Perth, Australia, when we both immigrated there in 1969. While I was involved in mining, he had come to deliver fast food to starving Aussies. Today, he owns a company with $1.2 billion in annual sales revenues that includes 319 fast food restaurants trading as Hungry Jack’s, KFC and Domino’s Pizza.
Cowin’s message, as a dual Canadian-Australian citizen, was that Canadians should look beyond the United States, just as he did. He pointed out that a third of the planet’s population lives in China and India and that their economies hardly slowed down during the recent economic crisis. In contrast to the United States, this is in an enviable situation indeed.
Cowin weighed Canada’s recent economic performance against that of Australia’s. Both countries emerged from the economic crisis relatively unscathed, compared to other developed countries, because of the strength of our banking systems and important resource bases. However, Australia hardly noticed the recession, while in Canada, industrial production fell 15 per cent, 400,000 people became unemployed and real GDP dropped three per cent.
What is the difference between our two countries? Australia has a more diversified and Asia-centric trade base. While our major trade partner, the United States, takes 75 per cent of our exports, China takes 20 per cent of Australia’s. China is our fourth largest export market; however, only about two per cent of our exports are destined to that booming economy.
Growth is now returning, but which country will do best? In a recent speech, Mark Carney, Governor of the Bank of Canada, pointed out that four developments would have to occur for “securing strong, sustainable and balanced” global growth: “fiscal consolidation” in the United States and several other advanced countries (Japan, Britain, Germany and France); more U.S. household savings; higher domestic demand in China and other emerging markets; and currency appreciation in countries like China with large current account surpluses.
In a recent column in the Globe and Mail, Jeffrey Simpson wrote that “U.S. fiscal consolidation is a pipe dream. The country’s deficits are enormous, its debt staggering, its political system deadlocked. If a significant improvement in the U.S. balance sheet is critical for world growth, forget it.” It is not likely that Japan and Europe will do much better and remains to be seen as to what China does about letting its currency float upwards.
Both Cowin and Carney warn that the United States is burdening itself with debt, postponing days of fiscal reckoning. ”Buy American” protectionist tendencies are appearing. The challenge for Canadian business is to move beyond the cocoon of the American economy. As Simpson says, “It’s a hard challenge for a country with so many branch plants, so few head offices, so much self-satisfaction and a long tradition of looking only south.”
Canada’s mining industry and its suppliers are perhaps this country’s leading sector in realizing the opportunities that lie in investment and trade outside of North America. There are approximately 5,000 Canadian mining projects in about 100 countries worldwide. Many of the products and services used in these entrepreneurial investments come from Canada.
But what is the Canadian government doing? In my view, next to nothing. Budgets for trade diversification and trade promotion have shrunk to nil. Our diplomatic corps — except perhaps those in Washington and Afghanistan — are starved for personnel and funding. There is effectively no long-term plan in place that will help our trading nation to prosper over the long term in a globalizing world.
Jon Baird, managing director of CAMESE and the immediate past president of PDAC, is interested in collective approaches to enhancing the Canadian brand in the world of mining.