EDITORIAL PAGE — Canada’s economic woes worry foreign

The writing is on the wall, and in red ink. Our preoccupation with things constitutional and our perceived inability or unwillingness to deal with economic issues have worried foreigners. Statistics Canada reports that investors elsewhere have been dumping billions of dollars of Canadian investments in recent months, reversing a 2-year trend of increasing investment.

We’ve also had our triple-A foreign-currency credit card downgraded by a major international credit-rating agency, which is concerned about our soaring deficit and declining trade surplus. The action was mostly symbolic since it only affected foreign currency loans, and about 98% of our debt is in Canadian dollars and still rated AAA. But it served to demonstrate that while our lifestyle may be rated number one in the world, outsiders believe we are still trying to ignore the price tag.

That is a wakeup call, alerting us to the massive extent to which our governments have borrowed for the delivery of services they couldn’t afford. As our trade surplus has plunged dramatically, it can no longer be relied upon to help finance our standard of living.

Do Canadians care? In poll after poll, most say the economy is their number one concern. Politicians who continue to ignore this message do so at their own risk.

One need only look south of the border, where the economy is the most powerful issue driving this year’s political race. The candidates have talked about taxes, budget deficits, trade, the global economy, welfare reform, health care costs, crumbling infrastructure, and the banking crisis. And they have looked beyond their own borders and debate the merits of Japan’s industrial strategy, and the value of an apprenticeship program, based on a German model, as a tool to create a better-trained workforce. With the economy on the front-burner, it’s no surprise the U.S. is attracting more exploration funding this year than any other country. After studying programs in 180 countries representing 80% of worldwide exploration spending, Metals Economics Group says the U.S. attracted 21.4% of budgeted expenditure for all companies surveyed. Canada, on top last year, fell to third place after Australia.

These numbers, and the fact that foreign companies (including Canadians) are the big spenders, won’t surprise the U.S. Bureau of Mines. The agency reported two years ago that foreign interests control over 50% of its gold mining and cement capacity, and roughly 19% of its total metals industry assets.

The report said most economists felt the growth in foreign investment wasn’t a threat to national security, but “simply the price the country must pay to finance its continuing trade deficit.” This deficit weakened the dollar, which in turn made U.S. assets less expensive to foreigners with stronger currencies.

Foreign investment has become more noticeable in Canada’s resource sector too. Our companies are more active abroad. There is nothing sinister about this. The global economy is at our door, bringing with it trade and competitive trends with potential negative implications as well as opportunities for many sectors of the economy.

While Americans are beginning to grapple with how to meet these new challenges, too many Canadian politicians are otherwise occupied, or still churning out policies more appropriate to the past than to the future.