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Saskatchewan Institute
Snapshots of Saskatchewan. The SaskBusiness Series Three Years of Insights, Understanding and Impact
When the Saskatchewan Institute began its evidence-based commitment to Saskatchewan, SaskBusiness magazine was one of its first partners. As a major, multi- year initiative of The Conference Board of Canada focusing exclusively on issues relevant to Saskatchewan, the Institute needed an outlet for sharing the knowledge and ideas being generated on issues relevant to the province.
With the April/May 2012 edition, our collaboration began without a lot of fanfare. But three years and 23 articles later, SaskBusiness and the Saskatchewan Institute can look back with pride at how we have addressed themes of leadership, governance, innovation, competitiveness, and more.
The Institute continues its work by collaborating with partners throughout Saskatchewan to produce research that will help public and private sector leaders sharpen their vision for Saskatchewan’s future and find solutions to the challenges needing to be addressed. We remain guided by three foundational themes: developing people, managing growth, and assessing key sectors.
The Institute, working closely with key partners in Saskatchewan, accesses the full complement of expertise at The Conference Board of Canada to conduct independent, balanced, and rigorous analysis of economic trends, organizational performance, and public policy issues.
These first 23 articles not only spurred additional dialogue, they also helped to establish the Institute as a trusted partner and source of insights, understanding, and impact.
The Conference Board of Canada has a long tradition of conducting such analysis and communicating results to leaders. The Saskatchewan Institute will continue to contribute to a shared vision of sustainable prosperity and a clear path toward continued economic growth for the province.
On behalf of all of our investors and supporters—past, present, and future—enjoy the reading.
Roger Francis Director Saskatchewan Institute CONTENTS
4 The World Wants More Saskatchewan
7 Saskatchewan Has Limitless Opportunities if It Can Find The Workers
10 Green Machine: Financing Growth in the New Saskatchewan
12 Saskatchewan’s Social Outlook
14 The Aboriginal Opportunity: Optimizing First Nations and Métis Contributions to Economic Growth and Social Well-Being
16 Embrace the Dragon
18 A Cautionary Tale: Economic Growth and Saskatchewan’s Cities
20 Part of the Solution: Education and the Labour Shortage
22 The Skills Gap: Building Skills Is a Good Investment
24 The Saskatoon Region’s Long-Term Outlook
26 Saskatchewan Innovation
28 Should Saskatchewan Build Knowledge Cities?
30 Collaboration Must Be the New Normal
32 Co-operative Development in Rural and Aboriginal Communities
34 Positioning Saskatchewan’s Credit Unions For Growth
36 From Resource to Knowledge-Based Economy: Is Saskatchewan Firing Up Innovation?
38 Saskatchewan: The Next Norway?
40 Education–Business Partnerships
42 The Transformative Potential of Capacity Development
44 Energy to Grow
46 Game Changer: Express Entry Immigration and Saskatchewan
48 The Art and Science of Effective Decision-Making The ConferenceSB_AprilMay_2012 Board of 2015-04-23Canada 11:07 AM Page 17 Saskatchewan Institute
The World Wants More Diana MacKay, Director, Education, Health and Immigration Programs Saskatchewan The Conference Board of Canada
The world wants what Saskatchewan required for sustainable growth and eco- initiative to help public and private sector produces. Saskatchewan had the strongest nomic resilience. leaders collaborate on the top issues economy in Canada in 2011, and is This first annual forum will attract important to Saskatchewan’s future. expected to record solid growth in 2012. provincial, regional, Canadian, and inter- Saskatchewan enjoys a low unemploy- national thought leaders, decision-mak- A Rising Economic Powerhouse ment rate, and its population is growing ers and influencers to debate a path for Even against the backdrop of a global at a fast pace. The solid growth in the Saskatchewan now and generate a clear slowdown and stabilizing commodity provincial economy, however, brings vision for the province’s future in 2022 prices, Saskatchewan’s economy contin- both opportunities and risks. and 2050. These experts will join speak- ues to set a brisk pace. After growing by Saskatchewan is at a crossroads – ers, including Premier Brad Wall, in 4.2 per cent in 2010 and more than five many changes are underway, and more debating the opportunities and chal- per cent in 2011, real gross domestic changes are certain to come. How can lenges. As they develop a vision for the product is expected to expand by 2.6 per Saskatchewan take full advantage of its future of Saskatchewan, there is a great cent this year. Although 2012 growth is good fortune and ensure lasting prosper- deal to consider: modest compared to the previous two ity for its citizens and businesses? What • how can Saskatchewan ensure ongoing years, it is still one of the strongest out- policy and planning decisions are economic growth and sustainable looks in Canada—and stronger growth required now to capitalize on the boom? prosperity? of 3.5 per cent is forecast in 2013. What infrastructure is needed during the • what options are there to deal with tight Saskatchewan’s sources of growth are growth period and beyond? skilled labour market conditions? widespread – they include agriculture, Decisive action can help ensure that • can immigration policies and programs construction, mining, and manufacturing. Saskatchewan creates the ideal environ- help in the near term? Mining continues to grow at a strong pace, ment to fully capitalize on its robust • what is the education system’s role in driven by the mineral fuels sector, which growth. The first Saskatchewan Forum, supporting sustainable growth? will expand 7.9 per cent in 2012. And hosted by The Conference Board of manufacturing is set for a 3.8 per cent gain. Canada May 29 and 30, will focus on The Forum will shape the direction of the The non-metal mining industry, an investments needed in the current and events that follow, and will contribute to area of weakness this year, because of future workforce, as well as the capital the mandate of the Saskatchewan delays in mine expansions and tempo- access and infrastructure investments Institute, the Conference Board’s new rary production cuts by major potash
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producers, is expected to record blister- ing growth starting in 2013 as a result of EVENT PROGRAM increased capacity. Non-residential busi- ness investment, which is coming off a Day 1—Tuesday, May 29, 2012 very strong year, looks to continue this trend over the near term, and that will lead to productivity gains and stronger Objectives economic prospects. • Learn about the Conference Board’s economic and social outlook for Saskatchewan and the implications for the short, medium, and Tight Labour markets long term. Attracting skilled workers in tight labour • Hear from business leaders from Saskatchewan and across markets is one of the biggest immediate Canada about the current economic climate and the forces driving challenges. Saskatchewan’s unemploy- decisions in their firms. ment rate will average 4.6 per cent this year, boosting real personal disposable • Discuss issues and policy areas requiring priority attention: growth by 1.4 per cent – and an even 1. Investing in the Future Workforce of Saskatchewan stronger income growth is expected next 2. Building the Conditions for Sustainable Growth year. Employers in Saskatchewan – large Plenary Session 1 and small – need workers who have the The Economic Forecast and Social Outlook for Saskatchewan in 2022 required qualifications and skills. Are the province’s immigration policies and pro- Plenary Session 2 grams up to the task of attracting thou- Doing Business in Saskatchewan- Challenges and Opportunities in sands of additional skilled workers? the Decade Ahead What is the education system’s role in supporting ongoing growth? What else can and should be done? Concurrent Sessions • Investing in the Future Workforce of Saskatchewan The Saskatchewan Forum • Building the Conditions for Sustainable Growth The two-day Saskatchewan Forum will be highly interactive, stimulated by ideas presented in advance of and throughout DAY 2—Wednesday, May 30, 2012 the conference, and will include peer-to- peer discussion and debate. The issues will be considered holistically, to ensure Objectives that the interrelationships between eco- • Stimulate creative thinking about the “realm of possible” for the nomic growth, infrastructure needs, future of Saskatchewan’s labour market and the people and employment, and the region’s key sectors organizations driving the province’s economic and social potential. are explored. • Gather input from delegates and collect answers to the three questions. Supporting the Saskatchewan Forum 1. What is your vision for Saskatchewan 10 years from now—in 2022? will be a new Conference Board research 2. What must happen in the next three years? initiative – the Saskatchewan Institute. 3. The Saskatchewan Institute will use the What are the longer-term implications—out to 2050? Conference Board’s renowned economic forecasting, public policy, and organiza- Concurrent Sessions tional performance expertise to examine • The Challenge of Being Nimble and Wise Saskatchewan’s leadership, governance, • Striking a Balance Among Multiple Objectives innovation, and competitiveness challenges. Working with its partners in Plenary Session 3 Saskatchewan, the Institute will produce Lessons in Growth from Those Who’ve Experienced It research that will help public and private sector leaders identify the issues and explore potential solutions. n
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Guest Speakers and Moderators
Co-Chairs Registration Robert C. Watson President and Chief Executive Officer, SaskPower Fees Steve McLellan Chief Executive Officer, Before April 29, 2012- $1,750 Saskatchewan Chamber of Commerce After April 29, 2012- $1,850 Vianne A. Timmons President and Vice-Chancellor, Not-for-profit- $995 University of Regina Government Rate- $1,395 Tammy Cook-Searson Chief, Lac La Ronge, and President, Kitsaki Management Ltd. To register please visit: www.conferenceboard.ca/conf
Keynote Speakers Having Trouble Registering? Premier Brad Wall Government of Saskatchewan Phone Registrar: 1-800-267-0666 Group Executive and Chief E-mail Registrar: Andrew S. Mackenzie [email protected] Executive Non-Ferrous, BHP Canada Inc. All registrations will be confirmed * Program subject to change * Events are HST exempt Please see www.conferenceboard.ca/conf for our Speakers, Moderators and Panellists cancellation policy Glen Hodgson Senior Vice-President and Chief Economist, Conference fees don’t include accommoda- The Conference Board of Canada tions. Please contact the hotel directly for Michael R. Bloom Vice-President, Organizational reservations and mention The Conference Board of Canada to receive the preferred Effectiveness and Learning, The Conference Board of Canada rate of $119 (Standard/Classic) and $139 Ron Styles President and Chief Executive Officer, SaskTel (Ramada Business Class), available until Gavin Semple Chairman, Brandt Group of Companies April 28, 2012. President, CropLife Canada Lorne Hepworth Hotel and Forum Venue Sharon Lee Smith Assistant Deputy Minister, Ramada Hotel and Convention Centre Western Economic Diversification Canada 1818 Victoria Ave Chief Executive Officer, Enterprise Saskatchewan Regina, SK S4P 0R1 Chris Dekker 306-569-1666 Tim Gitzel President and Chief Executive Officer, Cameco Clare E. Isman Deputy Minister, Saskatchewan Ministry of The Conference Board’s Privacy Policy By registering for this event, you are giving us consent Advanced Education, Employment and Immigration, to use information you provided to help us inform you Assistant Deputy Minister, about additional Conference Board products and services. Greg Miller To view our privacy policy, visit Saskatchewan Ministry of Education www.conferenceboard.ca/privacy_policy.htm. If you wish to withdraw your consent to our use of your information, Steve Sousa President and Chief Operating Officer, please contact us at: SaskTel International [email protected] or 1-866-711-2262. Dan McMurty President and Chief Executive Officer, Earn Directors College Continuing Profes- ISM Canada sional Development (CPD) Hours! Conference Board of Canada conferences contribute to Mo Bunden Senior Vice-President and Chief Executive Continuing Professional Development (CPD) hours for Officer, Harvard Developments Inc. Directors College, Chartered Directors. For more infor- mation on CPD requirements and criteria please visit Clément Chartier President Métis National Council www.thedirectorscollege.com. To view all upcoming CBoC conferences, please visit ...and many more! www.conferenceboard.ca/conf.
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HEWAN SASKATC M 2012 U IES R TUNIT FO S OPPOR TLES RS HAS LIMI WORKE HEWAN ND THE SASKATC CAN FI IF IT GSON EN HOD BY GL IST ECONOM D CHIEF IDENT AN ANADA ICE-PRES RD OF C ENIOR V CE BOA S ONFEREN OF THE C
On May 29-30, the Conference Board of growth prospects for 2012 and 2013 global prices should continue for most of Canada hosted its first-ever event together. Annual growth of around three its major commodities – potash, oil, ura- devoted specifically to the challenges and per cent is expected, driven principally by nium, cereal crops and lentils. Natural gas opportunities of one province: the private investment in resource extraction. prices in North America have softened, Saskatchewan Forum. The purpose of the Good jobs are being created and the but are projected to improve as more and two-day event in Regina was to look a unemployment rate will dip below five more energy users switch to gas. Robust decade or more into the future of the per cent in the next year. private sector and government invest- province and try to identify the factors On the surface, Saskatchewan has ment levels are expected to keep the that are needed, and in what combina- many of the right conditions to sustain economy growing at a good clip into the tion, for sustained economic success. this exceptional success. Relatively high next decade. Nearly 250 leaders joined wide-ranging discussions during the forum, which was topped off by an address from Saskatchewan Premier Brad Wall. To appreciate the challenges of look- ing ahead a decade, let’s look back a few years and see what has changed in Saskatchewan. A decade ago, who would have thought that Saskatchewan would be a growth leader in North America? Thanks principally to the rise of emerg- ing markets and the new global demand for what Saskatchewan produces, the province has become one of western Canada’s economic powerhouses. Not surprisingly, the near-term eco- nomic outlook is rosy. Saskatchewan trails only Alberta in terms of economic
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Top: Co-chairs of the 2012 Saskatchewan Forum included Diana McKay (Conference Board of Canada), Robert Watson (SaskPower), Tammy Cook-Searson (Lac La Ronge Indian Band/Kitsaki Management), Vianne Timmons (University of Regina), Steve McLellan (Saskatchewan Chamber of Commerce), and Michael Bloom (Conference Board of Canada). Above: The Forum's 'youth panel' discussed lessons in growth. From left, Victor Thomas (Aspen Medical Canada), Christopher Krywulak (iQmetrix) and Jacob Pope (Aspen Medical Canada). Right: Saskatchewan Premier Brad Wall delivered the conference-closing keynote presentation about real growth and real opportunity for the province.
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Saskatchewan is having newfound If people are the issue, what is the national students, who are a prime source success in attracting people to the solution? No single strategy or action of new talent; continually encouraging province from across Canada and around area is going to solve Saskatchewan’s Saskatchewan ex-pats and other Canadian the world. The province became a net human resource challenge; a multi- migrants to come to the province to work; recipient of migration from other pronged and activist strategy is required. growing public and private investment in provinces in the mid-2000s, reversing a At the top of the list is the full engage- advanced and applied education; encour- decades-long trend of net outflows of ment of First Nations and Métis peoples. aging older workers to stay engaged people. Not only has the province As discussed in the Conference Board of longer; and re-thinking business opera- reversed a historic flow, it is now attract- Canada’s August 2010 study, Sustaining tions by concentrating on core functions ing up to 10,000 international immi- the Canadian Workforce: Alternatives to within the province. grants annually. In 2007, Saskatchewan’s Immigration, raising the labour force par- There are other public policies that population surpassed the million-person ticipation rate for Aboriginal people deserve priority treatment. Saskatchewan mark and keeps on growing. would add another 200,000 workers to will need to focus on innovation, ensur- But probe a bit deeper and you dis- the Canadian labour force by 2026, with ing that business and government are cover that there are limits to the the economies of Saskatchewan and constantly adapting their policies, sys- province’s growth outlook. The key limit- Manitoba the two most likely beneficiar- tems and practices. A sustaining and wel- ing factor is relatively easy to identify; ies. Conference Board research indicates coming environment for private despite the recent inflow of talent from that the single-most important way to investment is required, led by tax reform within Canada and internationally, there increase Aboriginal engagement in the and smarter regulation, which will help are not enough skilled people to do the labour force is to raise the high school ensure adequate access to private invest- available and potential work. The graduation rate for Aboriginal youth, a ment capital. And Saskatchewan must Conference Board projects that growth in rate which lags the national average sig- accelerate efforts to build its public infra- the labour force will slow to around 0.5 nificantly. structure, like roads and water systems. per cent annually after 2015, putting a Other actions in a multi-pronged peo- But job one is people. If Saskatchewan damper on the province’s growth poten- ple strategy should include: active and gets the people strategy right and can tial unless additional action is taken to employment-focused immigration poli- keep growing its workforce at a good grow the workforce. cies; attracting and retaining more inter- pace, the opportunities are limitless. n
THE SASKATCHEWAN INSTITUTE The Saskatchewan economy is thriving, thanks to high demand for what the province produces. But fast paced-growth has risks. This year, The Conference Board of Canada is launching the Saskatchewan Institute – a multi-year initiative focused exclusively on issues that are relevant to Saskatchewan. The Institute will bring together the Conference Board’s full range of expertise in economic analysis and forecasting, public policy research, and organizational performance to address themes of leadership, governance, innovation, competitiveness and more. Saskatchewan is ideally positioned for long-term prosperity if: • government leaders develop optimal public policy frameworks; • business leaders invest capital and achieve transformations in the economy; • all stakeholders work collaboratively to attract and develop new talent; and • community leaders engage in forward planning. The greatest challenge facing Saskatchewan is building the future workforce – determining how many people are needed, in what jobs, with what skills, by when, and from where. Growth also requires investments in the physical envi- ronment – including infrastructure, housing, education, health, sustainable agriculture, and water management. The Conference Board is independent, balanced and rigorous, and possesses a strong multi-disciplinary team that will pursue a holistic approach. The Board can conduct highly credible, targeted economic impact assessment of emerging industry, policy, and strategy options. Through strategic collaborative engage- ment, the Conference Board can contribute to visions and plans for sustainable prosperity and economic growth. Organizations can support the Saskatchewan Institute at a number of funding levels. For more information, please contact: Diana MacKay, Director, Education, Health and Immigration, The Conference Board of Canada Email: [email protected] Twitter: @SaskInstitute n
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GREEN MACHINE Financing Growth in the New Saskatchewan A Study by the Saskatchewan Institute
The Saskatchewan Institute is a major, SASKATCHEWAN’S multi-year initiative of the Conference Board INDUSTRIAL STRUCTURE IS CHANGING Saskatchewan is diversifying from its traditional strength in of Canada that focuses on issues that are agriculture to other resources, such as oil and gas, potash and relevant to Saskatchewan. The Institute’s uranium. In 1976, agriculture was 24.0 per cent of provincial GDP, which decreased to 11.2 per cent in 2011.1 This structural forthcoming study Green Machine: change has largely been driven by real prices for commodities, Financing Growth in the New Saskatchewan which have been strong for most of Saskatchewan’s major assesses the state of capital in the province, exports, and by a greater openness of government to develop- ing these resources. The mining sector, in particular, will have provides estimates of capital demand and a larger role in the provincial economy and in driving future identifies key financial reforms that will growth. make it easier for the province to attract SASKATCHEWAN’S the capital it needs to support continued CAPITAL STRUCTURE WILL ALSO HAVE TO CHANGE economic growth. Demand for capital in Saskatchewan’s resource sectors, espe- cially in mining, will continue to increase. There are 12 major mining projects planned with an estimated $20.2 billion value to be financed over the next five years.2 The sources of capital for mining are different than the agrarian funding Saskatchewan has traditionally relied upon. These projects are capital intensive and bear greater risk and the funding is typi- cally a blend of local and foreign. So capital will become increasingly external to Saskatchewan. Of the major projects by Christa Ross & Erin Butler planned in the province totaling over $100 million, approxi-
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SASKATCHEWAN’S GROSS FIXED CAPITAL FORMATION BY INDUSTRY Source: Saskatchewan Bureau of Statistics
mately 30 per cent of the executing companies are listed on the unions. Junior resource companies may get some working Toronto Stock Exchange and 45 per cent have headquarters capital and commercial loans from credit unions but, as a large outside of Saskatchewan.3 If we look at the junior oil and gas majority of the juniors with operations in Saskatchewan are mov- exploration companies with operations in the province, most ing in from out of province, they will likely be bringing their own are publicly traded and headquartered in Calgary, Alberta.4 funding with them, thereby introducing non-traditional sources of capital. THE STATE OF SASKATCHEWAN’S CAPITAL MARKET The global economy is facing a long-term secular improvement WHAT DOES THIS MEAN FOR in commodity markets. This is a permanent change that will SASKATCHEWAN’S ECONOMIC GROWTH? transform the role of capital in Saskatchewan, as it has done in Saskatchewan’s economic growth will be driven by large-scale Alberta. Saskatchewan has a traditional strength in commu- resource projects with long-term investment horizons that will nity-based funding, most notably through the credit union depend on large funding sources, such as public equity and bond system, which is a much larger player in the province than in markets, and foreign direct investment. Financiers will want to other jurisdictions. know that Saskatchewan has sensible and stable policies on Credit unions have played an important role in funding royalties, taxes, and foreign direct investment, so that they can Saskatchewan’s agricultural industry and supporting small- and ensure a reasonable rate of return. Provincial leaders will need to medium-sized enterprises in the province and will continue to ensure they have appropriate infrastructure, policies, regulations, do so. But the large resource projects that will be the main talent, and the right amount of government involvement in place catalysts of Saskatchewan’s growth will not be funded by credit to attract the capital necessary for continued growth. The Saskatchewan Institute’s forthcoming study Green Machine: Financing Growth in the New Saskatchewan analyzes 1. Saskatchewan Bureau of Statistics Provincial Economic Accounts (1976 GDP) the strategic choices Saskatchewan and provincial leaders must and Statistics Canada, Table 379-0025 (2011 GDP) 2. Enterprise Saskatchewan, The Conference Board of Canada make as the need for capital transforms and expands. 3. Enterprise Saskatchewan, The Conference Board of Canada A copy of the final report will be made available on the 4. The Conference Board of Canada Saskatchewan Institute’s website: www.conferenceboard.ca/si. n
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SASKATCHEWAN’S SOCIAL OUTLOOK by Dr. Michelle Parkouda
To put it modestly, Saskatchewan’s economy WHAT IS A SOCIAL OUTLOOK? A Social Outlook analyzes and forecasts social trends such as: is doing well. The province’s rate of • demographics – aging, immigration, and household compo- economic growth has surpassed the national sition; average seven times in the past decade.1 • individual attitudes – views about health, employment, and financial well-being; The Conference Board of Canada is • social indicators – such as crime, employment, and educa- forecasting that Saskatchewan’s economy tion; and • overall life satisfaction. will grow faster than the country’s as a whole until at least 2035.2 Using data collected from a household survey of Saskatchewan residents, the Conference Board is examining the relationships While decision-makers need to understand between these indicators, to determine their relative impact on overall well-being. the province’s business cycle, they must also The model being developed will report on current and past understand how Saskatchewan society is trends. Based on the interactions among social and economic indicators, it will also project future social trends. This model faring more broadly. Leaders are recognizing will complement the Conference Board’s economic forecasts to that social factors will have an impact on help leaders plan for the province’s growth. The Social Outlook the province’s overall trajectory. To address will enable leaders to determine the potential implications of policy changes on the satisfaction and well-being of this knowledge gap, the Conference Board Saskatchewanians. of Canada’s Saskatchewan Institute is 1. Statistics Canada CANSIM Table 379-0026. The Conference Board of Canada, eData. developing a Social Outlook. 2. The Conference Board of Canada, Long-Term Economic Forecast, 2012.
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FIGURE 1: SASKATCHEWAN RESIDENTS’ LEVEL OF SATISFACTION IN KEY AREAS
WHO WAS SURVEYED? Additional analyses and research are needed to determine how In December 2012, over 1,000 (44 per cent female and 56 per the indicators interact with each other and impact well-being. For cent male) Saskatchewan residents completed a brief telephone instance, are individuals who are less satisfied with the state of survey. Participants ranged in age from 18 to 91 years old, with their natural environment living in areas where natural resources an average age of 55. The majority of respondents were are currently being harvested? How do perceptions of one’s hous- employed (46 per cent full-time and 12 per cent part-time). A ing situation and neighbourhood influence well-being? What can significant portion of the sample was retired (30 per cent). leaders do to better promote residents’ well-being?
WHAT DID THE SURVEY REVEAL? WHAT DOES THIS MEAN FOR Preliminary analyses indicate that overall, residents of RESIDENTS AND LEADERS IN SASKATCHEWAN? Saskatchewan are either “satisfied” or “very satisfied” with The Social Outlook will be a valuable resource for leaders and many elements of their lives. Respondents to the survey decision-makers who want to understand how demographic expressed widespread satisfaction with their lives in general trends, social indicators, and economic factors are affecting the (76 per cent), their housing (79 per cent), and their neigh- well-being of residents of Saskatchewan. It will do this by enabling bourhood (84 per cent) (see Figure 1). Among respondents who leaders to run scenarios to determine the social impacts of poten- are employed, 67 per cent said they are either “satisfied” or tial policy changes. In this respect, Saskatchewan leaders will be “very satisfied” with their current job. in a position to institute changes with greater confidence that Compared to their lives, homes and jobs, Saskatchewanians their policies will have the intended positive effects on are slightly less optimistic about their finances and the state of residents’ well-being. their natural environment. Only 55 per cent of respondents said The Social Outlook will be presented at the upcoming they are “satisfied” or “very satisfied” with their financial posi- Saskatchewan Forum on May 14-15, 2013. The final report tion. Sixty-two per cent said they were “satisfied” or “very will be available on the Saskatchewan Institute’s website: satisfied” with the state of their natural environment. www.conferenceboard.ca/si. n
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THE ABORIGINAL OPPORTUNITY Optimizing First Nations and Métis Contributions to Economic Growth and Social Well-Being
Saskatchewan’s youthful and growing Just as countries like India will enjoy the demographic Aboriginal population is a vital element of advantage of a comparatively young population, so Saskatchewan will have a competitive edge in Canada if it the province’s future economic growth and can leverage the talents of growing numbers of Aboriginal social well-being. Adopting strategies youth. A forthcoming report by The Conference Board of and making investments that optimize the Canada demonstrates that Saskatchewan’s economy could contributions of First Nations and Métis be $1.8 billion larger by 2035 if more Aboriginal people are contributing to their fullest at work. That’s an increase of 2.6 people to the economy and their communities per cent. Increased Aboriginal engagement would increase over the decades ahead should be a employment by 15,000. Likewise, the social contributions that these same youth will make to their families and com- top priority. munities when they have successfully completed high school and transitioned to employment are profound. The benefits are even more powerful when individuals complete a post- secondary qualification.
UNTAPPED POTENTIAL Saskatchewan’s Aboriginal population is younger and has a higher birth rate than non-Aboriginal residents.1 By 2030, almost one out of every four new workers will be by Dr. Michelle Parkouda Aboriginal.2 Yet, in July 2012, the unemployment rate for
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First Nations was 21.3 per cent, more than four times higher than the provincial average of five per cent. Métis unemployment was also high at 9.4 per cent. One of the root causes of lower Aboriginal employment is weak educational attainment. In 2006, 38 per cent of Aboriginal people in Saskatchewan between the ages of 25 to 64 had not completed high school.3 The high school drop-out rate was less than 17 per cent for non- Aboriginal people. However, Aboriginal people who obtain a post-secondary education are employed virtually on par – or in the case of Métis, at an even higher rate – than non- Aboriginal people.4 Another major challenge comes with the transition from school to work. The odds of finding good jobs with opportuni- ties for developing work experience and estab- lishing career progression are stacked against anyone with lower educational attainment, espe- cially when combined with a job market that increasingly demands skills acquired at the post- secondary level.
THE ECONOMIC AND SOCIAL PAYBACK TO HIGHER ABORIGINAL EMPLOYMENT Dr. Eric Howe, an economist at the University of Saskatchewan, has shown the impact of edu- cation on lifetime earnings.5 A First Nations male who completes high school will more than double his lifetime earnings. His increased income will also lead to better futures for his family and his community. Higher educational attainment is a powerful catalyst to well-being. And yet, it is striking how relatively few Aboriginal youth achieve the gains. The Saskatchewan Institute’s forthcoming report offers specific recommendations on what can be done – by employers, communities, and governments at all levels. The final report will form the dialogue at the Saskatchewan Forum 2013. www.conferenceboard.ca/conf n
1. Statistics Canada, 2006 Saskatchewan Population Profile. 2. Sask Trends Monitor, The Saskatchewan Labour Force Supply 2008, 55. 3. Statistics Canada, 2006 Aboriginal Population Profile. 4. Saskatchewan’s Labour Market Commission, “Right People, Right Place, Right Time,” 12. 5. Howe, “Mishchet aen Kishkayhtamihk Nawut ki Wiichiihtonaan,” 6-7.
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EMBRACE THE DRAGON The Conference Board of Canada has long explored the nature of the relationship between Canada and China. Recently, that relationship is being played out in Saskatchewan – Canada’s own “middle kingdom” and the unlikely debutante of the dance with China’s dragon. But what should be Saskatchewan’s stance? by Diana MacKay
FOREIGN DIRECT INVESTMENT • negotiating to a middle ground that allows state-owned cap- The potential of China’s foreign direct investment in ital investments while observing conditions that safeguard Saskatchewan could be one of the most significant elements of security interests; the relationship. Overall, FDI to Canada in 2011 amounted to • continuing to engage Chinese companies so as to build $47 billion, with Saskatchewan receiving $823 million. But in “models” of Chinese investment that balance interests. recent years, Saskatchewan is slipping in competitiveness as compared with the rest of Canada in terms of FDI attraction. TRADE AND MARKET ACCESS This is a direction the province should seek to reverse, espe- Just like FDI, the value of Saskatchewan’s trade with China is cially in light of opportunities for resource development. In no small deal either. In the past 10 years, exports to China have June 2012, the Conference Board produced a report that con- increased by 466 per cent, from $423 million in 2003 to $2.395 sidered the strategic drivers of Canada’s interest in China’s FDI. billion in 2012. The Conference Board’s Global Commerce Fear the Dragon? Chinese Foreign Direct Investment in Canada Centre published a briefing in December 2012 that acknowl- concluded with recommendations on how Canadian foreign edges Canada has emerged from the era of having one single, investment policy might facilitate greater investment flows giant trading partner next door, to an era of having two – and from China. Those considerations included: that just like our trade relationship with the United States, we • clear economy interest and national security tests that are have precious few policy levers to influence the course of trad- competitive with other jurisdictions; ing patterns. We need to manage them carefully. Walking the
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Silk Road: Understanding Canada’s Trade Patterns states that engine and enable societal well-being. China is currently the trade negotiations with China should be among our top for- second-largest source country of skilled immigrants to Canada. eign trade priorities. Policies should focus on helping busi- Further, Canada welcomes more international students from nesses adapt to new competitive environments and developing China than any other country – 21,814 in 2011. According to strategies to promote key areas of strength, rather than on poli- the University of Saskatchewan, the number of graduate stu- cies geared toward protection. dents from China has increased 22 percent since last year. Immigration appears to be one factor that is having a marked Students, whether they stay in Canada or return home, repre- influence on trade. A new report from the Conference Board, sent investments in human capital formation that have impor- The Influence of Immigrants on Trade Diversification in tant impacts in both the short and long term. Saskatchewan, found that the value of goods Saskatchewan Effective management of the circulation of people between imports and exports is proportional to the number of immi- our countries will build important bridges that support cre- grants residing in Saskatchewan from a particular country. As a ativity and innovation, cross-cultural competencies, shared greater number of Chinese immigrants settle in Saskatchewan, security interests, among other factors that will, in turn, lead the province can reduce trade barriers by strategically putting to integrated investments, increased market access, and mutu- the language abilities, knowledge and contacts of these new- ally rewarding trade relationships. comers to work. Paying attention to the tougher issues of mar- ket access is crucial, but the influence of immigrants can boost EMBRACING THE DRAGON Saskatchewan’s competitiveness in international markets. Saskatchewan may not have been groomed for this dance with the dragon. Nevertheless, a charming and nimble partner HUMAN CAPITAL FORMATION Saskatchewan can be. And should the romance flourish, a We must not forget that China plays a major role in Canada’s deeper relationship is well advised. But take the age-old joke stock of the people who now, and in the future, will develop the about a porcupine and substitute the dragon. How should one skills, competencies, and knowledge that fuel our economic make love with a dragon? Very, very carefully. n
Saskatchewan Forum 2013 May 14–15, 2013 • Hotel Bessborough, Saskatoon
Co-chairs Forum Themes for 2013 Register today. Space is limited! • Karen Chad, Vice-President, Research, • Managing the Relationship With China This event brings a broad range of key University of Saskatchewan • Investing in Cities and Communities stakeholders together and facilitates • Darcy Bear, Chief, Whitecap Dakota Sessions include: a holistic view of the province. First Nation • The economic forecast for Saskatchewan For details on the Forum or to register, visit: Keynote Speakers • Saskatchewan’s social outlook www.conferenceboard.ca/conf • Peter Bakker, President, World Business • Financing Saskatchewan’s growth Or contact: Council for Sustainable Development • Saskatchewan’s China strategy Tracie Jones • Paul J. Hill, Chairman, President • Saskatchewan’s leadership role for Canada [email protected] and Chief Executive Officer, The Hill • Doing business with China 613-526-3090 ext. 286 Companies • Competitiveness and market access in • Wallace Fox, Chief, Onion Lake Saskatchewan’s resource sectors Cree Nation
PROUDLY SPONSORED BY
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A CAUTIONARY TALE Economic Growth and Saskatchewan’s Cities
by Glen B. Davies City Manager, City of Regina
Saskatchewan is in a period of tremendous growth. Over the operate within can be exposed during periods of rapid last five years, Saskatchewan’s economy has outperformed that economic growth. The reasons are three-fold: of other provinces and the nation (see Figure 1). There are Growth in the local economy does not translate into more more people living here than at any other time in our history property tax revenues. Property taxes are inelastic. In other and unemployment has been the lowest in the country since words, they generally do not grow in proportion to the growth 2009. Those impressive trends are equally true for Regina. in the economy. Changes to property values simply result in Resource extraction (mining, agriculture) still drives the redistribution of the existing tax base. To increase revenues, province’s economic growth. These industries are largely municipal councils must increase taxes. located outside of the province’s population centres; however, Growth does not pay for growth. Developers generally pay these industries have located their head offices in larger centres, for the initial costs of new infrastructure to service land (water, and need a strong and thriving service sector to support them sewer, roadways, etc.). However, new property taxes generated along with places for their employees to live. by development generally do not cover the long-term, life-cycle Cities in Saskatchewan are key to the sustainability of the costs to service that development. This contributes to the province’s economy. In Saskatchewan, Regina and Saskatoon pattern of deferral of infrastructure renewal. account for 46.3 per cent of the province’s GDP and GDP Increases to property taxes do not necessarily translate growth in these cities has outpaced the province (see Figure 1). into better or more services. Roughly half of the City of But growth in population and the economy is putting pressure Regina’s revenues come from property taxes. For Regina, a one on cities’ ability to provide the basic public services required per cent mill rate increase translates to about $1.7 million on a to ensure economic sustainability in the province. $560 million budget. Meanwhile, the costs of growth are increasing well above the general consumer price index (CPI). THE CAUTIONARY TALE For Regina, additional revenues from property tax increases There is no question that growth is positive; it generates wealth, simply allow us to maintain existing services. lowers unemployment, and increases diversity and opportu- nity. However, for cities, the opportunities created by growth BUT THE CITY’S BUDGET REMAINS BALANCED? can easily outstrip and cripple city budgets, erode infrastruc- It is true, that despite these challenges, the city’s budget ture investment, and hinder future growth. remains balanced year after year. Cities in Saskatchewan, by law, are not allowed to incur a deficit. Now, to be clear, there is THE UNSUSTAINABLE no overwhelming desire for cities to begin incurring deficits. FINANCIAL STRUCTURE OF MUNICIPALITIES But historically, to avoid overburdening taxpayers with Quite simply, the financial structure that municipalities must increases, stay competitive, and keep the budget balanced,
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FIGURE 1 Regina’s Gross Domestic Product (GDP) growth compared to Saskatchewan’s and Canada’s (from The Conference Board of Canada)
FIGURE 2 Shifting responsibility for Canada’s infrastructure (from Canada West Foundation)
municipalities have chosen to defer long-term infrastructure Regina set in motion two public private partnership initiatives, renewal and rehabilitation. one to replace Mosaic Stadium and the other to renew the Wastewater Treatment Plant. INFRASTRUCTURE COSTS New and enhanced revenues. The change to the provincial We know, from work done by the Canada West Foundation, Municipal Operating Grant (MOG) has provided cities that cities are responsible for the greatest proportion of public increased fiscal capacity. We need to build on that success and infrastructure (see Figure 2). The deferral of investment in the explore new taxing authorities for cities to respond to increased renewal of infrastructure is something we can’t ignore. Risk of demands from growth. infrastructure failure could threaten key public services and, Regulatory Frameworks. We need to collaborate with the ultimately, economic growth. It requires smarter planning so province, regional partners, and the private sector to develop a that we can better utilize existing infrastructure investments. transparent, controlled, and sustainable regulatory framework. Many cities are working to increase their population density, Growth that takes place in an ad hoc, uncontrolled environ- thereby minimizing the growth of their geographic footprint ment can increase costs and negatively erode business confi- and the need for more infrastructure (water, sewer, roadways, dence and future investment. parks, transit, etc.) Cities and the public services they provide are ultimately a key lynchpin in economic growth. If we are not careful, growth RESPONDING TO CHALLENGES OF RAPID GROWTH can lead us on a path where we are reactive, ad hoc, short-term Addressing the challenges of growth requires us to look at a focused, and ultimately unsustainable. But with care, we can range of policy responses, including: harness the benefits of this growth to create cities that attract Reducing costs. We must look at delivering services more businesses and people, and are sustainable into the future. n effectively and efficiently. Regina’s Core Services review realized $8 million of ongoing cost reductions. In 2012, Regina identi- The Saskatchewan Forum 2013, which took place on fied approximately $21 million in potential future savings. May 14 and 15, featured “investing in cities and Alternative service delivery. We need to explore alterna- communities” as a major theme. For additional tive ways of doing business, like public private partnerships and information please visit www.conferenceboard.ca/si delivering existing services in new and different ways. In 2012,
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PART OF THE SOLUTION Education and the Labour Shortage
by Angie Zander Communications Manager, WorleyParsons Canada
Many of us want the prosperity of good economic times to con- industry. The result is a new workforce that is relatively ill- tinue as long as it can. All the affected players – including equipped for talent and experience. That’s why WorleyParsons industry – have to ask themselves how to keep the good times actively promotes the expansion of existing programs and rolling. improvement in program operational efficiency. For Paul Labbe, Vice-President of Minerals, Mining and At the recent Saskatchewan Forum in Saskatoon, Chemicals at WorleyParsons Canada, one of the keys to that WorleyParsons representatives communicated directly with sustainability is education. representatives from the Saskatchewan government and post- “It is crucial for industry to be part of a solution,” says Labbe. secondary leaders from both SIAST and the University of “This is a unique time where we need to be tripling or quad- Saskatchewan. On the agenda: leadership and industry con- rupling the capacity and efficiency of our schools in the fields sumers of graduates. Discussions centered around required of technology and engineering.” graduate numbers, benefits of moving mature adults in and “Companies are fervently trying to encourage and support the through the educational stream as they become ready to suc- growth of engineering and technology programs such as SIAST ceed at higher levels, and how improving operational efficien- Technology programs and the University of Saskatchewan.” cies are key low-cost elements that need to be adopted to WorleyParsons is one of the world’s largest providers of proj- improve stakeholder value in education. ect delivery services for the resources and energy sector. In “It is vital for the industry’s continued success and vision to Saskatchewan, the company sees how the growth in scope for promote more graduates – especially those of higher quality – potash and uranium projects is putting more of a strain on from programs such as the SIAST Mining Engineering resources to complete the projects. Technology Program,” says Labbe. “WorleyParsons whole- And not a moment too soon. The global economic outlook heartedly supports cooperative programming, work terms, for potash in Saskatchewan appears to be quite bullish. internships, workplace visits and in-class industry participation Industry is currently planning to invest an estimated $12 billion as best practice to build the graduate experience and develop by 2020 on expansions to its existing mines. To realize that close ties between educators, students and industry.” work done, the projects need people. “Industry needs to work together with our universities and As for the existing workforce? Currently, those with practi- technical institutes to provide the best tools and opportunities cal, big-project experience are aging and will soon leave the for new graduates entering the workforce.”
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And WorleyParsons sees building those ties will help address In Western Canada, these strategies include modularization, labour capabilities as current projects transition into more partial prefabrication of modules, flat packing, and delivering advanced stages of development, particularly into construction. quick assemble pop-ups to replace full-site stick build strate- “WorleyParsons has developed strong capabilities in areas gies. These execution methodologies often require an intensive like modularization to allow owners to execute new mine proj- level of engineering and design earlier in the study cycle than ects with a much smaller construction workforce,” adds Brad normal stick build designs. Van de Veen, Senior Vice-President of WorleyParsonsCord, “These strategies help to alleviate the current labour short- which is WorleyParsons’ construction division. age being experienced in our industry,” says Van de Veen. WorleyParsons works with industry globally to identify and “Saskatchewan has been very reliant on imported labour deliver project execution strategies that require fewer labour from other parts of Canada and the world in the past,” adds and resources on construction sites to complete their projects. Labbe. “This is a trend that needs to change.” n
WorleyParsons employs 40,400 people worldwide in 165 offices and 41 countries. Our vision is to be the preferred global provider of technical, project and operational support services to our customers, using the distinctive WorleyParsons’ culture to create value for our customers and pros- perity for our people. In Canada, WorleyParsons has major office hubs in Vancouver, Edmonton, Toronto and Montreal. Its Canadian operations are headquartered in Calgary. WorleyParsons is also an investor in the Saskatchewan Institute, a major research initiative of The Conference Board of Canada that focuses on issues relevant to Saskatchewan. The Institute works with partners in Saskatchewan to produce research that helps public and private sector lead- ers sharpen their vision for Saskatchewan’s future and find solutions to the challenges they need to address. For more information on how to become involved, visit: www.conferenceboard.ca/si
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THE SKILLS GAP Building Skills is a Good Investment
by Maggie Patterson Research Associate, The Conference Board of Canada
As students return to school this fall, some may be wondering While there are many reasons to pursue an education, the if their educational choices are yielding the best possible invest- potential for increased future remuneration may be an impor- ment in their future. Are they in the right field of study? What tant consideration. Data indicate that post-secondary educa- are their chances of finding meaningful employment? With tion leads to higher lifetime earnings. In 2005, the median roughly 30 per cent of Canadian businesses reporting skills income for Canadians with less than a high school diploma was shortages, The Conference Board of Canada’s research shows $32,029, while college graduates earned $42,937, and univer- that many employers are also skeptical about the type of edu- sity graduates earned $56,048. cation students are pursuing. Canadians in general are highly educated. The Conference The skills gap – the disconnect between the skills required by Board of Canada’s report on How Canada Performs found that 88 an employer and the skills possessed by current and/or poten- per cent of Canadians aged 25 to 64 in 2010 graduated from high tial employees – has become a dominant discussion in Canada. school, roughly 24 per cent obtained a college diploma/certificate, Conference Board research shows Canada is facing multiple and 26 per cent graduated with a university degree. Canadians types of skills gaps. should be experiencing a strong rate of return on their educa- tional investments. Yet, nearly 18 per cent of university-educated and 23 per WHAT DO WE MEAN BY “SKILLS GAP”? cent of college-educated adults aged 25 The Conference Board of Canada defines a “skilled person” as a person who, to 64 earned less than half the national through education, training and experience, makes a useful contribution to the median employment income in 2006. economy and society. Further more, the unemployment rate for Canadians aged 15 to 24 rose to 13.8 A “skills gap” can take many forms, including: per cent in June 2013. 1. too few people having the specific skills required for a specific occupation; The Journal of Commerce reports 2. too few people having sufficient literacy, numeracy, and other employability skills to Saskatchewan is experiencing “the meet general workforce needs; worst labour shortage in history.”i The 3. too many people having skills that are mismatched with local workforce needs; and shortage is felt the hardest in the trades 4. too many people who are over skilled for their current employment. and some specific industries. Michael Bloom, Vice-President of Organiza -
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tional Effectiveness and Learning at The Conference Board of Canada, RESEARCH AND INITIATIVES OF INTEREST states: “Only six per cent of students in upper secondary school, within The Conference Board of Canada. May 2013. How Canada Performs 2013: two years of completing high school, A Report Card on Canada choose to go along a vocational path The Conference Board of Canada. June 2013. The Need to Make Skills Work: towards a trade or technical occupa- The Cost of Ontario’s Skills Gap tion.”ii This is having an impact on the trades, as fewer graduates have the The Conference Board’s new Centre for Skills and Post-Secondary Education is a necessary skills to fill jobs in demand. major research initiative to examine the advanced skills and education challenges Conference Board research has facing Canada. For more information visit: www.conferenceboard.ca/spse also found that many workers possess skills that are unknown to their employers. This is evident, for example, among immigrant pro- Students should also make choices regarding their future occu- fessionals. Likewise, would-be entrants to the workforce may pations based on good information about employment have an abundance of education and training in areas with low prospects, skills required for their selected occupations, and the labour market demand. The skills gap is not a simple problem; best pathways to desired type of employment. it is a complex array of gaps in quantity, quality, and location of The Role of Educational Institutions. Educational institutions skilled people. must also play a role. Daniel Munro and James Stuckey, researchers at the Conference Board, argue for the incorpora- ADDRESSING THE SKILLS GAPS tion of experiential learning opportunities within credential- The Role of Employers. Employers contribute to the enhance- ing programs. Experiential learning places students within ment of skilled people through their investments in workplace workplaces so they can gain relevant workplace skills as part training, well-designed compensation to attract and incent tal- of their education. This can be done through partnerships with ent, and recruitment from abroad. Yet, employer spending on employers, apprenticeships, internships, etc. Providing differ- training and development in Canada has dropped 13 per cent in ent skills training options can increase the employability of stu- recent years and nearly 40 per cent over the past two decades. dents once they are ready to transition into the workforce. The Role of Learners. Students should take a critical look at Investing in education is wise. It is more important than what they hope to achieve through their educational paths. ever for all stakeholders to examine how they can contribute. Developing essential skills such as literacy, numeracy, computer, Connecting education, training and experiential learning to problem-solving, communication, innovation, and teamwork develop an employable workforce is essential to Canada’s global skills is vital, as these skills are transferable and highly valuable. competitiveness. n
i Richard Gilbert. Worst Labour Shortage in History Hitting Saskatchewan. www.journalofcommerce.com/article/id51181/worst-labour-shortage-in-history-hitting-saskatchewan ii CBC News. June job numbers highlight Canada’s Job Mismatch. www.cbc.ca/news/business/story/2013/07/05/business-video-skills-gap.html
Saskatchewan Forum 2014 May 27–28, 2014 • Delta Regina
A premier event for business, government, and community leaders. Saskatchewan Forum themes for 2014: • Saskatchewan in the Innovation Age • Skills for an Innovative Workforce
Register now at: www.conferenceboard.ca/saskforum2014/
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THE SASKATOON REGION’S LONG-TERM OUTLOOK by Erin Butler Research Associate, The Conference Board of Canada Saskatoon is growing quickly, necessitating a hard look at the What’s important about such a strong starting point is that future. For city planners, businesses, and citizens alike, a long- Saskatoon’s attractiveness can have a profound influence on the term outlook for the region’s economy will facilitate good deci- region’s population profile – the kind of factor that significantly sions on current and future investments. The Conference Board drives a long-term outlook. Having more talented people of Canada’s Saskatchewan Institute and the Saskatoon Regional equates to more economic potential. Economic Development Authority (SREDA) have invested together in a study that considers Saskatoon’s five-, ten-, and THE BASE CASE 20-year outlook, including three possible scenarios for the future In the base case forecast, Saskatoon’s total GDP is projected to – a base case, an upside scenario, and a downside scenario. rise by an average of 2.4 per cent annually between 2013 and Long-term forecasts are by nature a tricky business. Even 2035. The base case, or business as usual scenario, is consistent small changes in population, employment, gross domestic with the Conference Board’s long-term forecast for the province product (GDP), and commodity prices can significantly affect as a whole and forms the basis of comparison for the two other results over the long term. The quality of both data and the scenarios. assumptions fueling a forecast is paramount. When done well, economic forecasts should provide stakeholders with impor- THE PESSIMISTIC SCENARIO tant insights on the drivers of long-term growth, the most The pessimistic scenario generates an average GDP gain of important levers for influencing outcomes, the kinds of invest- only 1.8 per cent annually over the same period, with slower ments to make, and how to prioritize these investments. long-term world economic growth generating lower activity. This scenario assumes that investments in human and physical A STRONG STARTING POINT capital are lower than the base case, decreasing productivity. In 2012, among Canadian cities, Saskatoon had the third This scenario also assumes some labour force potential remains fastest-growing economy behind Edmonton and Regina. The untapped and the region’s attractiveness loses some steam. Conference Board forecasts Saskatoon’s GDP growth in 2013 to move to the head of the pack at 5.2 per cent.1 This continues THE OPTIMISTIC SCENARIO a very impressive pattern of growth since 2010. Employment The optimistic scenario shows GDP growth rising on average by numbers are equally robust, with 15,000 jobs created since 2.9 per cent annually through 2035. This scenario assumes 2010 and an unemployment rate dipping below four per cent. stronger world demand for minerals produced in Saskatchewan, With figures like these, Saskatoon is what we would call a very driving larger investments in human and physical capital. The attractive place! scenario also assumes improvements in innovation and produc- tivity. Finally, it assumes improved First Nations and Métis 1 Lefebvre, et al, Insights into 13 Canadian Metropolitan Economies: Fall 2013. engagement in the workforce and continued robust immigration.
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THE GDP GAP 2. Investments in physical capital. This means: The resulting annual GDP gap – i.e., the lost economic poten- • new municipal infrastructure to support transportation tial in one year – between the pessimistic and optimistic and other services; forecasts grows to $5.8 billion by 2035. On a cumulative basis, • cutting-edge industrial machinery and equipment in key the gap amounts to $49.8 billion over the period from now to sectors of the economy; and 2035. That’s roughly equivalent to four times the estimated cost • information and communications systems to enhance to build the Jansen Lake mine by BHP Billiton. business competitiveness. 3. The stimulation of new business creation and outside REALIZING THE OPTIMISTIC FORECAST investment. This means: The vast difference between a relatively modest performance • ensuring Saskatoon enjoys competitive policies, laws, and a stellar one is worth the effort of getting the inputs aligned and regulations; for optimal growth. All stakeholders stand to benefit from • protecting the conditions that lead to long-term maximizing investments that will drive the optimistic forecast economic stability; and SREDA will play a key role in implementing the necessary • creating the social conditions that attract businesses and strategies. investment (i.e. housing, education, healthcare, etc.); and In Saskatoon’s case, this means implementation of an invest- • minding key sectors of the economy that drive growth ment strategy that has three fundamental components: (i.e., mining, construction, retail, etc.). 1. The attraction and management of human capital. This means: What the Saskatoon region will achieve by 2035 is as yet unclear. • continuing to attract international and interprovincial But there is no question that a grand opportunity is upon the migration; city’s doorstep. Understanding the opportunities, harnessing the • integrating Saskatoon’s latent or underutilized work- full potential of those opportunities, and carefully mitigating the force; and inherent challenges of growth are the tasks at hand. Turning this • developing higher productive output among all workers potential into reality will not only require the effort of SREDA, by investing in skills, particularly those skills deemed to but also other key stakeholders in the region who stand to be in short supply (i.e., trades and services). benefit from the economy operating at its peak performance. n
INTERESTED IN READING A FULL REPORT? A complete analysis of the long-term outlook for the Saskatoon region is available on the websites of The Conference Board of Canada and the Saskatoon Regional Economic Development Authority.
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SASKATCHEWAN INNOVATION by Ken Coates and Peter Philips Johnson-Shoyama Graduate School of Public Policy, University of Saskatchewan
To most outsiders, Saskatchewan is land of wheat, open skies, and a history of social policy innovation. While, like all stereotypes, there is an element of truth to this broad-brush portrait, 21st century Saskatchewan is much more than that. Of the folks who know about the province’s current boom, few Much the same is true in agriculture. A good portion of understand the commercial and policy foundations of Saskatchewan’s rural prosperity lies simply with good business Saskatchewan’s prosperity. The simple reality is that the cur- intelligence. The identification of India’s surging demand for rent economic prosperity rests on more than a generation’s pulse crops, for example, convinced farmers to convert sizeable worth of innovation and commercial engagement. portions of their fields to products like lentils. Saskatchewan is On the surface, Saskatchewan is Alberta-redux, with buoy- now Canada’s largest exporter to India, a fast-growing and ant mining (led by potash and uranium), oil and natural gas increasingly-wealthy country. The province is a global leader in development, agriculture, and the related urban booms in the application of new digital technologies to tilling, seeding, Regina and Saskatoon. Underneath the rush of prosperity lie and fertilizing activities, producing increased efficiency in decades of hard work and creativity of the province’s entrepre- production and higher returns at the farm gate. neurs, scientists, and government agencies. Like all Canadian Saskatchewan’s universities – the University of Saskatchewan resource-rich regions, the province benefits from surging global and the University of Regina – have received strong support demand and strong prices, but there is much more to the from the federal and provincial governments in their pursuit of Saskatchewan story than this. economic opportunity in the province. Each campus hosts an Nationally and internationally, far too little attention is paid entrepreneurial park. Although the U of S’s Innovation Place is to innovation efforts in the natural resource economy. This is less well known than its counterparts at the University of most unfortunate. Much of the expansion in the energy sector Toronto, University of Waterloo, University of British Columbia, is due to reusing old wells and capitalizing on new technologies and University of Alberta, it is actually one of the most success- that enable the recovery of up to 30 per cent of the original ful commercialization units in North America. Regina’s energy production. Cameco and AREVA, the province’s major Innovation Place has a strong focus on oil and gas production uranium mining firms, have made dramatic improvements to and, while struggling to emerge from under Calgary’s research extraction, ventilation, and safety systems. With additional shadow, makes important commercial contributions. developments in everything from GIS to aerial prospecting – Saskatchewan has attracted major funding to its two both huge advantages in the vast and difficult-to-access north- national research institutes. The Vaccine and Infectious Disease ern half of the province – the mining industry has made great Organization, the best “one health” (animal and human) facil- strides in identifying viable deposits. ity in North America, has drawn world-leading scientists to
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Saskatoon. Similarly, the investment of close to $500 million in The tendency to dismiss Canada and the Canadian the University of Saskatchewan’s Canadian Light Source, economy as being little more than “hewers of wood and Canada’s first synchrotron (particle accelerator), is poised to drawers of water” misstates the nature and level of innovation bear commercial fruit in the coming years, led by innovative in the country as a whole and Saskatchewan in particular. approaches in bio-medical sciences. Hosting two of the coun- Science and technology innovation is driving resource extrac- try’s largest and most important research facilities has re- tion just as much as it is changing manufacturing and the new enforced Saskatoon’s unofficial status as “Canada’s Science economy. That Saskatchewan has two impressive universities, City.” a highly successful polytechnic (the Saskatchewan Institute for The Government of Saskatchewan, initially under the leader- Applied Science and Technology), an Aboriginal technical ship of Premiers Roy Romanow and Lorne Calvert and, since college (the Saskatchewan Indian Institute of Technologies), 2007, Premier Brad Wall, has re-enforced and supported the and a network of regional colleges is integral, not secondary, to work of the province’s university-based researchers and research- provincial growth and prosperity. In years past, Saskatchewan’s intensive companies. The government has long backed agricul- post-secondary institutions produced thousands of graduates tural research, with the College of Agriculture and Bioresources at who headed west to share in the prosperity in Alberta the University of Saskatchewan standing among North America’s and British Columbia. They are now staying home, in larger best agricultural research centres. In the last five years alone, major numbers than ever. Many are coming back from their western government and corporate support resulted in the establishment sojourn. of impressive and well-funded research centres, including the Saskatchewan has a robust economy built on a combination Global Institute for Water Security, Global Institute for Food of resource wealth, commercial innovation, and province-wide Security, International Minerals Innovation Institute, Institute for entrepreneurship. It has a strong and engaged scientific and Northern Governance and Development, and the Sylvia Fedoruk technological community that works collaboratively with the Canadian Centre for Nuclear Innovation. These research endeav- private sector to identify opportunities for investment and ours are likely to contribute significantly to the long-term stabil- business development. The province has, in sum, a rich and suc- ity and creativity of the regional economy. cessful culture of region-specific innovation that has long Saskatchewan has also been the home to considerable com- escaped national and international notice. Saskatchewan’s mercial innovation among Aboriginal peoples and communi- prosperity surge, which shows no signs of abating in the near ties. The Whitecap Dakota First Nation has invested heavily in future, is founded on the recognition that practical science and community businesses, reducing the local unemployment rate applied technologies can contribute substantially, provided that to the provincial average, which is the lowest in the country. there is the commercial will and ability to capitalize on both the The Meadow Lake Tribal Council has developed an integrated business opportunities and the innovation discoveries. logging, sawmill, pellet plant and energy system that has cre- The waving fields of golden wheat are still in evidence, ated numerous jobs and that will substantially reduce energy although the bright yellow canola crops stand out even more costs at the community level. Regional development corpora- dramatically. Multi-billion dollar investments in potash mines tions, such as Kitsaki (La Ronge) and the Athabasca Basin – the best and most efficient in the world – leave light-coloured Development Corporation, produce substantial annual rev- tailing mounds that stand out on the prairie landscape. Dotted enues (in excess of $100 million), dozens of local jobs, and across the north are a series of profitable and well-managed additional spin-off companies. Aboriginal people in mines, and hundreds of oil and gas wells can be seen in the Saskatchewan are considerably more likely to start new busi- southern part of the province. Saskatchewan is not your grand- nesses than non-Aboriginal people, a significant indication of parent’s prairie province. It is a land built on and committed to the rising class of Indigenous entrepreneurs in the province. innovation, global engagement, and sustained prosperity. n
THE SASKATCHEWAN FORUM 2014 The Saskatchewan Institute works with partners in Saskatchewan to produce research that will help public and private sector leaders sharpen their vision for Saskatchewan’s future and find solutions to the challenges they need to address. The Saskatchewan Forum 2014 focuses on the theme of innovation. Join Ken Coates, Peter Philips, and other leading innovators on May 27-28 in Regina. To register, please visit: www.conferenceboard.ca/conf/14-0022/default.aspx.
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SHOULD SASKATCHEWAN BUILD KNOWLEDGE CITIES? by Carl G. Amrhein Provost and Vice-President (Academic), University of Alberta; Special Executive Advisor, The Conference Board of Canada and Diana MacKay Director, Saskatchewan Institute; The Conference Board of Canada
One of Saskatchewan’s lasting challenges is the cyclical nature nology park. All around the globe, governments and business of market prices for the products of its agricultural and groups are identifying key cities and regions and reinforcing the resource extractive industries. Strategies to mitigate these eco- supports that allow their higher educational institutions to fuel nomic ups and downs have focused primarily on the diversifi- a surge in innovation, talent development, and global compet- cation of exports. Yet, is another well-proven strategy failing to itiveness within these jurisdictions. gain the attention it deserves? The capacity of higher learning Top educational institutions attract world-class staff and institutions to build and fuel “knowledge cities” could be the ambitious students and the subsequent economic benefits can strongest factor determining the competitiveness of be profound – from top dollars paid by international students, Saskatchewan’s economy. These institutions can also help to added spending in the host region, to the hoped for (and smooth peaks and valleys in resource prices by driving an inno- occasionally delivered) new IP, firms, and innovative products. vation agenda that spawns forward-leaning technologies, new The rationale for using PSE institutions as a tool for economic businesses, and stronger communities. growth is not lost on massive global economies like the U.S., Post-secondary educational (PSE) institutions create inno- Europe, and China. In the U.S., institutions like MIT have long vation and economic activity in their host city regions. They championed an emphasis on applied technology in close coop- attract highly-skilled and talented individuals, support com- eration with business. In Germany, cities such as Berlin and mercialization of intellectual property, produce spin-off com- Munich are driving economic growth by connecting consortia panies, and work with industry to solve problems. Success and establishing spin-off parks for the commercialization and varies by country and by sub-region. On one end of the spec- technology transfer of research. In China, recent efforts to bal- trum sit Silicon Valley and the Boston Beltway. Chinese equiv- ance the outflow of students and professors with a countervail- alents can be found in the Zhejiang Province, Hangzhou City, ing inflow demonstrate a keen understanding of the value and in Beijing’s Tsinghua University. The UK has the York tech- international talent brings.
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To attract this talent, some national governments are join- partnerships with key economic initiatives or government- ing with their educational institutions (in whole or a subset) to industry consortia in South America. Together, they could take approach other countries in a shared effort to drive national advantage of compelling business connections with compatible economic benefits. Australia and China are perhaps the most economies, while offering partnership opportunities with clear-cut examples, but there are similar efforts in Europe (at strong knowledge-driven PSE institutions. To South America, the national level as well as at the European Union level). they could offer a compelling message about the value of col- Within Canada’s expansive landscape, there is tremendous laboration on research, talent exchange, business development, scope for the creation of similar economic muscle buttressed by etc. Such outreach would also undoubtedly bolster the region’s our PSE institutions, including some that might achieve world- immigration efforts by advertising Saskatchewan as a great class performance by specializing in areas of excellence and place to study, work, and live. Among Canadian governments deliberately aligning with regional industries and local knowl- and industry, they could present attractive investment oppor- edge-centred initiatives. tunities that would build Canada’s reputation for championing In Saskatchewan, the explicit formation of knowledge cities “the North,” “Indigenous Education,” and so on. in Regina and Saskatoon – well financed by government and In Canada, do we see enough of the kinds of activities that business alike, and built on the foundations of the University of build knowledge cities and compete on the international Regina, the University of Saskatchewan, SIAST, and SIIT – level? No. For our PSE institutions, international activity is could yield important human capital machinery. The cultiva- expensive, competition is increasing, and students are more tion of knowledge-based urban economies in Saskatchewan rigorously researching their options. For many Canadian could put the Canadian prairies boldly on the global map as a cities, investments in their PSE institutions are hampered destination for talent, a source of innovation, and as new names by federal disengagement, misguided provincial austerity, and in the global competition to harness PSE institutions as drivers business blindness to the opportunity of more strategic of stronger communities. Saskatchewan could learn from the partnerships. activities of other cities around the world which are deliber- To overcome these obstacles, it is time for Canada to ately marketing the integration of their PSE institutions in approach the world with all of our assets organized. We have the economic fabric of the region. For example, tapping many strong PSE institutions and a remarkable brand for the capacity of these institutions to attract tourists is a new quality education. By teaming up our cities with our institutions innovation. In Saskatchewan, the strategy might build on this that produce advanced skills and knowledge, and drive eco- idea, perhaps focusing on the attraction of conferences and nomic and social well-being, we could simultaneously trade shows. compete with far larger systems and find a place among them. Saskatchewan could further capitalize on discussions that Canada has amassed tremendous assets in its many universi- are already underway in Canada and Europe that might see the ties, colleges, polytechnics, Indigenous higher educational emergence of consortia of city governments and their PSE institutions, and career colleges. Putting them to work in institutions. Midsized Canadian cities are well situated to adopt regional consortia, as the builders of knowledge cities, is a smart this approach. Building a pan-Canadian series of city-based move. We should go to the world with all that we have. n PSE consortia would be a smart move, both for the cities involved and for Canada. Many Canadian cities are located in places in which they dominate their local hinterland, and have a manageable number of institutions in their jurisdictions. For example, in Alberta and Saskatchewan, the larger cities have a clearly-defined catchment area, and have a small number of major institutions; Edmonton and Calgary each have about five, and Saskatoon and Regina each have one university and Keep Canada Competitive share a polytechnic and an Indigenous technical institute. Take the Strategic Risk Oversight Program Currently, each of these institutions goes to the world inde- March 5, 2014, Saskatoon SK pendently, and at times competitively. But such international activities are expensive, and international partner institutions, This workshop provides board directors with the practical tools and perspectives they need to governments, industries, and students all prefer well-organized guide their company’s corporate risk strategy. opportunities that connect them with Canada, not just one (likely relatively unknown) institution. For more information, please visit Imagine an approach in which, for example, Saskatoon and thedirectorscollege.com or call 1-866-372-1778. Regina – together with their PSE institutions – might court
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The Conference Board of Canada Saskatchewan Institute
COLLABORATION MUST BE THE NEW NORMAL
by Peter Clarke Manager, Co-operative Identity and Performance Sustainability & Citizenship, The Co-operators Group Ltd.
You’ve seen the headlines, you’ve seen the pictures, you may national flood insurance program that has been so over- even have experienced a loss: ice, floods, and thunderstorms whelmed by extreme weather events, that it is now one of the made 2013 the worst year ever for insurance losses in Canada. single largest debt obligations of the U.S. government. An anomaly? Bad luck? Something that will never happen In 2013, Dr. Blair Feltmate and Dr. Jason Thistlewaite, with again? Not likely. If you look at global (figure 1) and Canadian the University of Waterloo completed the first phase of a study (figure 2) trends, extreme weather events and their associated titled Assessing the Viability of Overland Flood Insurance: losses are rising quickly and are likely to continue. The Canadian Residential Property Market. This study and the Indeed, “catastrophic loss” is unfortunately a regular part of continuing discussions that have evolved from it identify some our national vernacular, and the devastating effects on com- key issues. munities, families, and individuals are an increasingly common First, we have to develop up-to-date flood plain mapping occurrence. that not only anticipates the extremes of future weather events, The inevitability of a changing and uncertain future climate but also takes into account the physical assets within the vari- does not necessarily mean that Canadians must continually ous risk zones. This is a cornerstone without which public pol- suffer the ravages of severe weather; however, we must embrace icy and private insurance solutions cannot be realized. a new normal… one of collaboration. This is not a new age Second, we have to weather-harden municipal infrastruc- platitude, or corporate speak. The rapidity in which our envi- ture to mitigate or prevent water inundation events. The aging ronment is changing necessitates collaboration as essential for infrastructure of most urban areas was not designed to handle our economic survival. But what does this mean? the increasing population densities, nor was it designed to han- First of all, Canadians have no overland flood insurance for dle the magnitude of weather events that are occurring more residential property (there is coverage for commercial). In fact, frequently. we are the only country in the G8 without it. Instead, although Third, we must adopt significant building code changes to some of the loss is covered by private insurers, provincial and ensure new infrastructure and residential homes are more federal levels of government provide “bailouts” during disas- resistant to flooding. Status quo development will only exacer- ters. However, as many would know, this type of funding is bate the losses going forward, thus emptying the government inadequate, unsustainable, and the delays can be substantial. coffers. In the end, that money is essentially an inefficient redistribu- Fourth, we must engage homeowners to be active agents of tion of taxpayers’ dollars. The United States has a formal flood and loss prevention around their own homes. This can
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be achieved through educational efforts such as a “home adap- members that will be called upon to invent new adaptive tation audit,” similar to the existing “home energy program.” solutions, as well as implement those mandated by progressive In turn, insurers could incentivize consumers who take the public policy and planning. necessary corrective action to weather-harden their homes It is a significant challenge “we” have before us… to protect through reductions in their insurance premiums. our families, homes, businesses and communities from But who is “we?” “We” are the property and casualty insur- catastrophic loss. To be successful, the stakeholders identified ance industry whose job it is to provide economic security for above must engage in a new normal of collaboration and Canadians. We are the banks and credit unions and other co-operation. n financial institutions who hold mortgages and lend money to individuals, business, and municipalities, and who need to The Co-operators Group Ltd. is an investor in the Saskatchewan Institute, a become more engaged in helping clients protect our – and major research initiative of The Conference Board of Canada that focuses on their – assets. We are the municipal, provincial and federal issues relevant to Saskatchewan. The Institute works with partners in Saskatchewan to produce research that helps private- and public-sector leaders governments who become the facilitators of change by pro vid- sharpen their vision for Saskatchewan’s future and find solutions to the challenges ing good public policy that enables efficient adaptation to they need to address. For more information on how to become involved, visit: our new realities, and we are the industry associations and their www.conferenceboard.ca/SI
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CO-OPERATIVE DEVELOPMENT IN RURAL AND ABORIGINAL COMMUNITIES
by Murray Fulton Professor, Johnson-Shoyama Graduate School of Public Policy and Director, Centre for the Study of Co-operatives, University of Saskatchewan and Dionne Pohler Assistant Professor, Johnson-Shoyama Graduate School of Public Policy and Fellow in Co-operative Strategy and Governance, Centre for the Study of Co-operatives, University of Saskatchewan
Saskatchewan’s continuing prosperity depends upon innova- awareness of the available business possibilities and because the tion. While the focus of innovation is often on new technolo- return on such investments is often not immediate. gies, business leaders and entrepreneurs know that new One of the innovations that FCL will be examining is business practices, governance models, and organizational the Unleashing Local Capital (ULC) project developed by the structures can be equally important because they affect people’s Alberta Community and Co-operative Association, which allows incentives to work and take risks, and because they reflect dif- local investors to establish an Opportunity Development Co-oper- ferent goals and values. Innovation is thus as critical in organi- ative (ODC) that then invests money in local businesses. zational structures and governance as it is in technology. The ODC innovation provides a structure that links local Recognizing this, Federated Co-operatives Limited (FCL) investment money with local business opportunities. Local recently announced a $1-million investment in co-operative lenders are likely to have better knowledge of the investment development in rural and Aboriginal communities in Western opportunities in their community and are probably less likely than Canada over the next two years. FCL’s initiative is premised on shareholders in large financial institutions to take their money the idea that co-operative structures and governance models cre- elsewhere if the return is not instantaneous. However, one still ate different incentives and embody distinct values that differ sig- needs an organizational structure to pool investment funds, nificantly from standard investor-owned corporate entities. reduce risk, and spread administrative costs. The ODC provides These incentives and values result in different decisions and in such a structure. While other organizational forms – for exam- different outcomes. FCL also recognizes that if the benefits of co- ple, a business corporation created by local investors – could operatives are to be achieved, they must be adapted to the con- potentially provide the same benefits, the advantage of the ODC temporary needs of rural and Aboriginal communities. is that it changes incentives – its one-member, one-vote gover- Although co-operatives have had a long history in rural com- nance structure makes it more likely to pay attention to local busi- munities across Western Canada, there is a need for new mod- ness opportunities and to take a longer investment horizon. els to address what are, interestingly, old problems. Take, for Financing is also an issue in Aboriginal communities. As the instance, raising capital to finance investments in local busi- Senate Committee on Aboriginal Peoples observed in 2007, nesses. A recurring problem – indeed, one that has been around “Access to capital has been, and continues to be, a primary issue since the arrival of European settlers – is that large financial for many Aboriginal communities and individuals seeking to institutions are often reluctant to make loans to small businesses start, expand, or acquire a new business.” In other communi- in rural and remote areas. This reluctance stems from a lack of ties, treaty land entitlements and other developments such as
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the duty to consult and accommodate have resulted in a pool of prestigious Rochdale Pioneers Award by the International Co- capital, but no governance structure for making decisions about operative Alliance. Plunkett offers an approach to co-operative how this money will be invested. There is also the day-to-day development that has successfully created community-owned need in Aboriginal communities, as elsewhere, for access to businesses throughout the UK, while the University of basic financial services such as savings and chequing accounts, Saskatchewan (specifically the Centre for the Study of Co-oper- small loans, and so on. atives, the International Centre for Northern Governance and Co-operatives and credit unions offer a solution to these Development, the Edwards School of Business, and the problems, as they have done for countless other groups in vari- Johnson-Shoyama Graduate School of Public Policy) offers ous places over time. Because they are locally owned and are experience and expertise in developing concepts and in assess- controlled through a one-member, one-vote mechanism, co-ops ing their impacts. and credit unions are often able to see investment and lending To make this partnership between academics and practition- opportunities that others miss, and are frequently willing to take ers work, the project has had to pay attention to both structure a longer-term view of the investments and their payoff. and governance. Rather than leave control in the hands of either While the financial sector is an important area for co-opera- group, the project has established advisory bodies with repre- tives, the opportunities for the co-op model are not limited to this sentatives from both inside and outside the university. This industry. In Aboriginal communities, co-operatives offer devel- arrangement has forced both academics and practitioners to not opment possibilities in housing, the delivery of social services, only better communicate what they do, but also to alter their arts and crafts, community stores, and resources. In rural com- approaches to solving problems to accomplish the larger goal. munities, co-operatives offer possibilities in business-to-business While the project is still in its infancy, the key to success services, environmental protection, energy provision, recreation, appears to be the ability of the co-op to meet needs that are
Although co-operatives have had a long history in rural communities across Western Canada, there is a need for new models to address what are old problems.
housing, and social services. In all of these cases, the strength of clearly identified by community residents; success does not the co-operative model is that it offers distinct values and creates occur when residents are simply told that a co-operative is a different incentives, which in turn generate different outcomes. good idea. Moreover, the Plunkett experience suggests that co- While the co-operative model, with its unique ownership op development requires the active leadership of people who and governance structure, offers real possibilities for rural and are not quite at the centre of the dominant social and economic Aboriginal communities, it cannot simply be transplanted into groups in the community. these communities in its current form. Although rural areas Co-operative development clearly requires innovation. Those have long-term experience with co-operatives, it is dated in involved need to identify new incentives, determine new goals many instances and those with co-op development and organi- and perspectives, and discover new ways to adapt the co-opera- zational experience have not updated their thinking accord- tive model to the realities of the 21st century. If Saskatchewan is ingly. And while there are reasons to believe that Aboriginal to prosper, this kind of innovation is every bit as important as values such as sharing, consensus in decision making, and col- the development of new technologies. This is the power of FCL’s lectivism would be conducive to co-op formation, the hard new undertaking. By its actions, FCL is challenging all of us – work of adapting the co-op model to the specifics of Aboriginal business leaders, academics, government officials at all levels, and culture remains to be done. This adaptation for contemporary citizens – to think about how we need to structure incentives and conditions requires innovation. values to make Saskatchewan a better place. n The FCL project’s approach in developing these innovative models is rooted not only in the need to find something that works, but also to understand why it works, and under what The University of Saskatchewan is an investor in the Saskatchewan Institute, a Conference Board of Canada research initiative that helps private and circumstances it may not work. To accomplish these goals the public sector leaders sharpen their vision for Saskatchewan’s future and find project has partnered with the University of Saskatchewan and solutions to the challenges they need to address. For more information, visit: the UK’s Plunkett Foundation, which was recently awarded the www.conferenceboard.ca/SI
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POSITIONING SASKATCHEWAN’S CREDIT UNIONS FOR GROWTH by Michael Grant Director of Research, Industry and Business Strategy, The Conference Board of Canada
Cooperative banking institutions, such as credit unions, were customers. Member ownership is good in the sense that credit created in response to the weaknesses of traditional banks. unions know their customers, which reduces risk. But a reliance Banking typically develops in large urban areas – in Canada’s on members to capitalize the institutions and to fund growth case, Montréal and Toronto. Initially, banks may be reluctant to constrains the ability of individual credit unions to participate lend outside of urban centres because they deem lending to be in Saskatchewan’s growth. risky, either because they do not understand the economies or By their nature, credit unions have limited exposure to cap- because those economies are tied to the fortunes of cyclical ital markets and the inherent risks of capital markets’ funding resource industry. and asset-holding activities. Credit unions’ risks are more Saskatchewan developed its credit union system in relation- related to their role as deposit-taking institutions, their rela- ship to these traditional weaknesses. The importance of credit tively small scale, and their focus on specific geographies. unions is seen in their relative market share and operational foot- print. In Saskatchewan, credit unions have about a 30 per cent THE CREDIT UNION BUSINESS MODEL AND GROWTH market share in commercial lending compared to only an eight In growing economies like Saskatchewan, individual credit per cent market share nationally. Moreover, credit unions main- unions are often faced with a situation where the loan demand tain physical branches in over 300 Saskatchewan communities, growth exceeds deposit growth. This creates funding challenges about 60 more than those served by commercial bank branches. for individual credit unions that affect their ability to respond to loan demand. Banks deal with this situation by drawing in THE CREDIT UNION DIFFERENCE deposits from other markets and by attracting capital through Credit unions differ from large banks in scale, business model, capital markets, options that are limited for credit unions. capitalization, and funding. They rely more on lending activity Credit unions’ relatively small scale and heavy reliance on than do banks, which have a higher share of non-interest physical branches makes it difficult for them to compete, espe- income. Credit union lending practices tend to be far less cycli- cially in a low interest rate environment. They rely heavily on cal than those of major banks. For instance, one study found earning margins based on the spread between short deposit that credit unions’ aggregate loan portfolios were about 25 per rates (interest paid to depositors) and long lending (e.g. mort- cent less sensitive to changes in economic conditions than those gages) rates. A low interest rate environment has created a nar- of banks.1 The tendency is for banks to compete aggressively row spread between these rates. This is why banks have moved for business when the economy is doing well but to quickly to other revenue streams like service charges to earn revenue. withdraw from the market when the economy deteriorates. Credit unions need to evolve to remain competitive. They Credit union lending is much less cyclical. will not remain viable if they simply provide customers with Credit unions are owned by their member/customers whereas banks’ shareholders may differ substantially from their 1 See Smith and Woodbury, Withstanding a Financial Firestorm.
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high-cost cash services while not reaping income through lend- faced with a further tax increase of around $7.6 million, for a ing. Saskatchewan’s credit unions have, indeed, been changing. total impact of $10.6 million per annum. They are consolidating operations and becoming larger in the These taxes come directly out of Saskatchewan credit unions’ process. But policymakers and members probably want to see earnings. Given that the credit unions are heavily reliant on credit unions maintain some of their unique features (in terms their earnings for capital, there will be a knock-on effect in of service and access) and compete. Hence it is important to terms of their assets. Had the province followed suit, have a policy environment that helps credit unions compete Saskatchewan credit unions’ assets would have been reduced by with traditional banks. about $100 million per annum, because they leverage their retained earnings roughly 10 times. POLICY MATTERS Saskatchewan chose not to follow the federal lead. By doing Federal and provincial policy may facilitate change or impede it. so, it has effectively allowed the credit unions to retain $7.6 mil- Saskatchewan’s credit unions are being buffeted by a series of lion in capital and around $76 million in assets every year. The recent policy initiatives that, taken together, are likely to reduce federal moves will reduce capital by roughly $3.6 million and the participation of credit unions in Saskatchewan’s future growth. assets by $36 million per annum. The provincial regulator, the Credit Union Deposit Guarantee Corporation (CUDGC), has adopted Basel capital adequacy stan- A WAY FORWARD dards, which focus on Tier 1 common equity (CET1). Further - Saskatchewan’s credit unions have to continue to evolve if they more, Basel III introduced the concept of a “conservation buffer.” are to remain a viable and relevant competitor to Canada’s This requires an additional 2.5 per cent to CET1, a 30 per cent banks. They will have to continue to develop scale through var- increase in eligible capital to support risk-weighted assets. ious means. The emphasis on CET1 is especially problematic for credit Provincial policies should accommodate the evolution of unions. In Saskatchewan, credit union member shares, at this Saskatchewan’s credit unions. Provincial regulatory policy time, do not qualify as equity because they are redeemable by should help Saskatchewan’s credit unions develop alternative members (so they are Tier 2 capital). That leaves credit unions sources of capital beyond retained earnings. Capital adequacy disadvantaged when building the sort of high-quality capital regulation and supervisory practice should be “right sized” to required by the Basel III rules. the credit union business model. This means that credit unions will need higher earnings to Although it is unlikely that the federal government will support lending. Yet other policies have the effect of reducing change the direction of recent tax increases, it should consider their earnings. For instance, federal tax policies have increased some tax provisions to recognize the increased downloading of taxes on Saskatchewan’s credit unions. We calculate the impact costs from other federal regulatory initiatives such as anti- of actual and possible tax changes on Saskatchewan’s credit money laundering regulation. The federal government also unions. The 2013 federal changes will cost Saskatchewan’s credit needs to review its policies on federal Crown corporations, unions between $3 million and $4 million per annum. most notably Farm Credit Canada, which competes directly Saskatchewan has chosen not to follow the federal lead because with credit unions in the agricultural market. n it recognizes the unique contributions made by its credit unions. Had the Saskatchewan government chosen to follow To access The Conference board of Canada’s full report on “Positioning the federal lead, Saskatchewan’s credit unions would have been Saskatchewan’s Credit Unions for Growth” visit www.conferenceboard.ca/SI.
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FROM A RESOURCE TO KNOWLEDGE-BASED ECONOMY IS SASKATCHEWAN FIRING UP INNOVATION?
by Rozalia Kasleder M.A. University of Regina and Contributor for the Saskatchewan Institute
Most of us have witnessed Saskatchewan transform from a Saskatchewan are adapting to new opportunities, others are have-not province to one with tremendous economic potential. slower to embrace the attitudes and attributes associated with Indeed, the province’s oil and gas reserves, potash and salt innovation. resource areas, and agricultural output have resulted in the low- At the Conference Board’s recent Saskatchewan Forum 2014, est unemployment levels in Canada and consistent wage gains Saskatchewan’s overall innovation performance was questioned. over the past decade. Saskatchewan receives an A+ on In Canada, compared to international peers, research and economic indicators measured by the Conference Board of development (R&D) investment is low. Most R&D in Canada is Canada’s report How Canada Performs.* The province outper- publicly funded. In the U.S., venture capital as a percentage of forms 16 international peers and all provinces with the excep- GDP is three times that of Canada. Other peer countries such tion of Alberta. Saskatchewan excels at providing the world with as Sweden and Norway also rely more heavily on private funds needed natural resources. However, its competitive advantage is for R&D rather than public spending. Canada in general, and subject to volatile commodity prices. Aspirations for long-term Saskatchewan in particular have low population density ham- prosperity will be enhanced if the province can also excel in the pering the friction of ideas in larger centres that can agitate knowledge economy that demands a highly-educated workforce innovative practices. and success in firm-level innovation. High expenditures on R&D in both the U.S. and Finland Innovation is crucial to the sustainability of a high-performing have paid off, as they are global leaders in terms of innovation. economy. Innovative companies are more nimble in responding In addition, Norway was able to use innovation to break its to market opportunities and managing in a rapidly changing global business environment. While some sectors and firms in * See www.conferenceboard.ca/hcp
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As a society, we need to develop a culture of success and innovate by applying strategies that make a difference; things need to get done better and smarter.
reliance on a resource-based economy. Greg Poelzer, executive businesses, communities, and families will all stand to gain from chair, International Centre for Northern Governance and strategic investments. Businesses facing both labour and skills Development, highlighted during the 2014 Saskatchewan challenges must find ways to identify and nurture employees with Forum that the province could learn a lot from Norway. innovation potential. Post-secondary institutions are being called Norway is very similar to Saskatchewan in many ways. on to furnish this talent for entry-level positions and for future Norway also has extensive reserves of oil, natural gas, miner- leadership roles. Communities that unleash their innovators will als, and fresh water, and transitioned from a have-not country deliver services more effectively and be a more attractive place to having the second-highest GDP per capita in Europe and the to live and work. And those individuals who successfully market fifth-highest in the world. Like our province, Norway is also their innovation skills will be sought after by good employers. subject to a harsh climate, is the second-least densely populated Yet, Saskatchewan’s education performance is not as robust as country in Europe, and is surrounded by influential neighbours one would like. Forty per cent of the province’s adults have poor such as Sweden and Russia. Like Saskatchewan, Norway has a literacy and numeracy skills. Economic disparity and inequities large indigenous population, the Sami, concentrated in the in the province are also correlated with access to relevant educa- Arctic area. tional opportunities. Initiatives such as the University of According to Poelzer, the Norwegians were able to turn the Saskatchewan’s program to train nurses in the north through country around due to four key initiatives: a strong commit- remote presence telemonitoring technologies are making great ment to equalization policies, investment into world-class progress. However, more needs to be done. The province should research and education, a strong focus on public-private part- support models – including those in use in other provinces – that nerships, and social consensus. The government of Norway also deliver proven results. established the sovereign wealth fund financed by oil revenues Saskatchewan should also maximize its current wealth and and designed to invest in developed financial markets outside prosperity by branding itself. A strong brand could be very use- of Norway. The sovereign wealth fund, estimated to become the ful in attracting and retaining talent despite a reputation for a largest in the world, reduced Norway’s dependence on volatile harsh climate. Poelzer again pointed out that Nordic countries commodity prices and established a financial base for the attract and retain talent through an extensive network of expenses associated with an aging population. regionally relevant world-class universities, by outperforming During the 2014 Saskatchewan Forum, speakers and partic- larger countries in per capita patents, and by drawing on their ipants alike had an opportunity to evaluate the province’s key high living standards as a competitive advantage. challenges to innovation. Some challenges identified were the Social consensus through public engagement and productivity economic divide between the south and north of the province, are also crucial to sustained wealth. As a society, we need to the skills shortage and low adult literacy rate, talent acquisition develop a culture of success and innovate by applying strategies and loyalty, and social consensus and productivity. Key areas of that make a difference; things need to get done better and smarter. challenge that did not receive adequate attention were the entre- Saskatchewan’s economy is operating as a component of a preneurship shortage, the role of public-private partnerships in larger, global knowledge-based economy. How the province innovation, and product commercialization. engages now and in the future will determine whether The north and south economic divide is a particularly Saskatchewan remains just a provider of basic goods and important issue for it is very unlikely that Saskatchewan will be services or a leader in shaping, developing, protecting, and able to maintain its “most successful province in Canada” sta- preserving our precious resources, studied know-how, and our tus without northern engagement. The young demographic and spirit of collective well-being. There’s no time to delay. Ken growing population in the north gives the province a human Coates, Canada Research Chair in Regional Innovation at the capital advantage that would be a mistake to ignore. University of Saskatchewan, made it clear at the forum: “The Saskatchewan could leverage this human capital by creating a prosperity of today could disappear tomorrow. We did not have strong north for the north. this prosperity ten years ago. We did not change what we did. Education is an essential ingredient for creating the innovative The world changed… We have a collective responsibility not to society that will sustain long-term prosperity – and governments, lose the opportunity.” n
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SASKATCHEWAN: THE NEXT NORWAY? by Dr. Greg Poelzer Executive Chair, International Governance and Development, University of Saskatchewan
On July 24, 2014, the United Nations released its annual Human For most of the 20th century, Saskatchewan was a have-not Development Report. For the sixth consecutive year, Norway province, with its largest export – its residents – headed for was ranked number one among 187 nations. In fact, Norway other provinces in search of economic opportunity. Today, has been ranked number one each and every year since 2001, Saskatchewan is riding an economic boom; yet, many wonder with the exceptions of 2007 and 2008, when it was bested only if this new-found economic prosperity can be sustained. If by Iceland. If we were to pay attention to today’s popular Saskatchewan follows key lessons of the Norwegian experience, thinkers on social and economic development, we should be it could seize a once-in-a-lifetime opportunity to be one of the surprised that small countries with a heavy dependence on nat- most successful – both socially and economically – places on ural resources and rural economies, such as Norway and the planet. Iceland, can do so well. Indeed, many thinkers, such as Richard Florida, argue that the future of economic and social develop- ment lies with large, cosmopolitan, urban centres such at THE NORWEGIAN EXPERIENCE: Toronto, Vancouver, Boston, or San Francisco. Others argue THREE KEY LESSONS that rapidly growing BRICS (Brazil, Russia, India, China, and NO REGION LEFT BEHIND South Africa) are the wave of the future. Many of these Norway is committed to an equalization policy that strives to observers have already written off smaller economies and soci- create comparable standards of services, infrastructure and eties, including places like Saskatchewan. Yet, small regions amenities across all of its regions. Broadband Internet, paved have the greatest potential to lead economic growth and social roads, and access to hospitals and medical facilities can be prosperity in the 21st century. found both in the capital city of Oslo as well as in the small
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community of Alta in the most remote region of Norway. This unlike its Nordic neighbours, understands the critical impor- scale of public investment in areas such as transportation, com- tance of investing in human capital and innovation through munication, healthcare, education, and so on has strengthened education and research. The country and its people are deter- the vitality of rural and northern economies in Norway, linking mined to ensure the development of a dynamic, diversified regional economies and communities across the country as well economy. as to European markets. Norway’s equalization policy fulfills a Along with creating a sovereign wealth fund and completing social contract that no region be marginalized or underserved. province-building, Saskatchewan needs to make smart choices The contrast to Canada – consider Northern Saskatchewan for about its investments in human capacity and innovation example – is substantial. through education and research. The Norwegian model of Saskatchewan is well-placed to complete province-building, leveraging areas of strength in the Norwegian economy especially in the northern half of the province (which competes (through commitments to education and research in those very with northern Manitoba as the poorest region in Canada), areas of strength) and to expanding and diversifying economic through investments in infrastructure, education, sports and sectors has been a hallmark of the Norwegian model. The sus- youth centres and so on. This would also open up the northern tained investments in post-secondary education and research half of the province to much greater economic growth, bene- by the Sask Party government – as well as strategic investments fitting not only the North, but also the province as a whole. in areas such as nuclear research, mining, food security and so Completing province-building will also go a long way to build- on – bode well for a Saskatchewan that will continue to be a ing a social consensus with the northern half of the province. leader of the Canadian economy. Of course, more remains to Aboriginal people and the Northern Saskatchewan population be done. are the fastest-growing parts of the province’s population. Creating sustainable partnerships with First Nations and Métis peoples is critical to the long-term success of the province. A CHOICE OF FUTURES Saskatchewan has all the conditions – a strong social consensus CREATING A SASKATCHEWAN and resource wealth – necessary to become the next Norway. SOVEREIGN WEALTH FUND The path will not be easy and success is not assured. A century’s Norway’s sovereign wealth fund, known as the Norwegian legacy of being a “have-not” province will not be overturned Pensions Fund, is a cornerstone of the Norwegian success story. overnight. But, as Norway has demonstrated, catching up to and Oil was discovered in the North Sea in 1969 and was brought passing your neighbours through wise policy decisions and into production two years later. Following the rapid growth of judicious use of the region’s natural resources endowment is this industry into the 90s, the Norwegian government created possible. A bigger challenge for Saskatchewan is in completing a sovereign wealth fund to ensure that the profits from the province-building and ensuring that the North and Aboriginal extraction of petroleum resources would be used for the long- peoples benefit from and contribute to the economic develop- term prosperity of the nation. The revenue for the fund comes ment of the New Saskatchewan. primarily from taxation on the petroleum sector, as well as the The options laid out here have been available to Alberta dividends from the government owned Statoil. The fund now since the 1970s, but were squandered after an exceptional stands in excess of $800 billion. beginning under Premier Peter Lougheed. British Columbia Norway had the foresight to invest state revenue from its and Manitoba have never moved beyond short-term strategies petroleum resources; Saskatchewan needs to do the same with for provincial development, beyond B.C.’s massive investments its resource revenues. Saskatchewan has an enormous oppor- in highways and hydroelectric power. tunity to do something no other province in Canada (including Saskatchewan is the one province in Canada that has the Alberta) has done successfully: shifting resource-generated perfect combination of resources, spirit of self-reliance, con- wealth from general revenues into a sovereign (provincial) sensus-oriented politics, and the global vision necessary to wealth fund. The long-term economic benefits of doing so are tackle the challenge of becoming the “Next Norway.” n obvious – ensuring resource wealth serves the province in per- petuity, moderating the effects of resource revenue volatility on provincial budgets, and fostering economic diversification to The University of Saskatchewan is a foundational partner in the Saskatchewan avoid the pitfalls of the resource curse and the Dutch disease. Institute, a major research initiative of The Conference Board of Canada that focuses on issues relevant to Saskatchewan. The Institute works with partners in STRATEGIC INVESTMENTS Saskatchewan to produce research that helps private- and public-sector leaders sharpen their vision for Saskatchewan’s future and find solutions to the challenges Although much of Norway’s success is due to its offshore petro- they need to address. For more information on how to become involved, visit: leum resources, this is only part of the story. Norway, not www.conferenceboard.ca/SI
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EDUCATION- BUSINESS PARTNERSHIPS
by Diana MacKay Executive Director, Education, Skills & Immigration, The Conference Board of Canada
The University of Saskatchewan’s partnership with Potash From Saskatchewan’s largest corporations to its smallest Corporation to provide Aboriginal youth with hands-on sci- startups, striking partnerships with educational institutions can ence and mathematics activities recently won a Global Best further corporate goals while enhancing learning outcomes. Award at the International Partnerships Network conference in Everyone should examine what they can do to build more such Brussels. The Kamskénow program illustrates the power of collaborations. business and educational institutions working together to engage students in science and discovery. ESTABLISHING SUCCESSFUL The Conference Board of Canada presents Global EDUCATION–BUSINESS PARTNERSHIPS Best Awards to education-business partnerships every other To better meet the skills and training needs of the workforce, year. The board also produces guidelines on the operating educational institutions around the world are exploring inno- principles that help develop and maintain effective partner- vative partnerships with industry stakeholders. Education-busi- ships, as well as guidelines on the key components of ethical ness partnerships are mutually beneficial cooperative partnerships. relationships involving educational institutions and businesses. Other successful Saskatchewan partnerships have also won These partnerships share obligations, objectives, and contribu- awards, including SaskTel’s and Saskatoon Public Schools’ We tions to achieve desired outcomes that directly support, and are See You program that transformed a 40-foot shipping container aligned with, educational mandates and business needs. into a housing unit stuffed with medical and school supplies, Establishing a clear set of operating principles help partners clothing, blankets, and other donated materials. collaborate and reduce conflicts and misunderstandings. The
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Conference Board’s newly-updated operating principles For example, the section on Manage Effects recommends describe some of the keys to successful education-business part- that partners: nerships in eight areas: inception and development; operation; • consider the effects of actions and test them against ideals intellectual property; resources and financing; governance; peo- and obligations; ple management; communication; and assessment and evalua- • identify and address potentially negative impacts on non- tion. participants; For example, the people management guidelines encourage • exercise diligence when making decisions by considering partners to: responsibilities to all partners and stakeholders; • create a partnership team with a clear mandate and continu- • are open and honest when problems occur and avoid making ity of membership; excuses or rationalizations; • recruit champions and advocates in partner organizations; • find common ground when challenges arise by returning to • indentify and manage personnel requirements and risks (e.g., shared objectives and values; and student and employee turnover); • celebrate and build on positive outcomes and progress made. • involve individuals with varied experience who can bridge educational and business environments; IDENTIFYING BEST PRACTICES FROM • train participants to carry out their roles and responsibilities, AROUND THE WORLD AND IN SASKATCHEWAN and ensure that they are fulfilling them; and To develop the business–education operating principles and • build trust through face-to-face meetings, especially as part- ethical guidelines, the Conference Board partnered with the nerships are being established. International Education-Business Partnership Network (IPN), a global network of education, business, and community organ- Ethical guidelines describe the key components of ethical busi- izations working together to achieve specific economic and ness–education partnerships and provide each partner with a social outcomes. With over 20 years of partnership facilitation rational basis for addressing ethical issues that relate to the experience at both the local and international level, the IPN ideals, obligations, and effects of their partnership. These guide- provides expertise in partnership development, collaborative lines safeguard the interests of partners and participants and learning, and global networking. build trust and mutual respect. They help partners regulate Do you know of a proven or promising partnership between themselves and make informed decisions that benefit everyone an educational institution and a business organization? involved. Ethical business-education partnerships are ones Recommend that the leaders involved nominate the partner- that strive for ideals, adhere to obligations and manage effects. ship for consideration in the next round of Global Best Awards These partnerships treat all partnership participants fairly and that will be announced in Oslo, Norway in 2016. Contact us at equitably and help collaborators find common ground when the Conference Board for more information on the submission challenges arise by returning to shared objectives and values. process, or visit www.conferenceboard.ca/education. n
TACKLING ADVANCED SKILLS AND EDUCATION NEEDS THROUGH THE CENTRE FOR SKILLS AND POST-SECONDARY EDUCATION
While education is a provincial government responsibility, improving the skills and post-secondary education system is a national priority involving stakeholders form across government, business, academic, and community sectors. To examine the advanced skills and education challenges facing Canada today, The Conference Board of Canada created the Centre for Skills and Post-Secondary Education – a major research initiative designed to foster broad collaboration of public and private sector stakeholders working together to think through the development of a national strategy. The centre addresses Canada’s advanced skills needs by helping to renew the roles, structure, activities, and impact of post-secondary education, while ensuring Canada’s skills development and sustainability, competitiveness and quality. To help shape the future of higher education in Canada and develop a national Skills and Post-Secondary Education Strategy, the Conference Board welcomes Saskatchewan stakeholders to attend the 2nd Skills and Post-Secondary Education Summit 2014: Developing the Skills and PSE Strategy for Canada. This national summit takes place on November 5-6 at the Metro Convention Centre in Toronto. For more information on the summit, visit: www.conferenceboard.ca/conf/education For more information on the Centre for Skills and PSE, visit: www.conferenceboard.ca/spse
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THE TRANSFORMATIVE POTENTIAL OF CAPACITY DEVELOPMENT
by Jessica Brichta Research Associate, The Conference Board of Canada
THE BUSINESS CASE FOR CAPACITY DEVELOPMENT the capacity of Canada’s First Nations and Métis people. A study Many businesses in Saskatchewan and elsewhere are meeting by the Centre for the Study of Living Standards found that if by with financial and workforce success by collaborating with First 2026, aboriginal peoples’ educational and labour market out- Nations and Métis communities. Economic development near comes matched non-aboriginal peoples’ 2001 levels, Canada’s aboriginal communities has the potential to benefit the com- cumulative GDP would increase by $401 billion by 2026.2 munities themselves, the firms that partner with them, and the A separate study by The Conference Board of Canada estimates province as a whole. that if aboriginal people in Saskatchewan were employed at the Stakeholders must develop the capacity to work together same rate as the non-aboriginal population, the province’s GDP effectively. Investments in capacity development generate meas- would be $1.8 billion higher in 2035, for a cumulative increase of urable economic and social returns. Firms gain by acquiring a almost $37 billion between 2013 and 2035.3 loyal local labour force that meets their needs, a valuable social Economic development transforms communities. When licence to operate and good community relations. First Nations effectively implemented, it has a positive effect on the economic and Métis communities stand to gain from a variety of human well-being and standard of living of individuals, local commu- capital and community investments by the firms involved. The nities, and their surrounding regions. Common benefits include business case for effective partnering is, therefore, especially increases in self-sufficiency, quality of life, career development, strong. business retention, tax bases, and economic diversification. Investments in economic development have profound effects THE ECONOMIC STAKES 1 Government of Canada, Federal Framework for Aboriginal Economic The federal government currently estimates that the value of Development, 4. major resource developments in or near aboriginal communities 2 Sharpe and others, The Effect of Increasing Aboriginal Educational is more than $315 billion.1 As significant as that is, it pales in Attainment, 37. comparison to the potential that could be realized by increasing 3 Parkouda and Brichta, Realizing the Potential, 14.
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on human capital, the opportunities available to local residents, ships are far-reaching. They not only provide jobs and critical and regional competitiveness. Partnership agreements also economic resources, but they also transform communities and provide communities with critical resources that they can invest expand the opportunities available to the province’s growing in needed social programs. First Nations and Métis populations. Saskatchewan currently has some of the world’s best exam- CHALLENGES TO OVERCOME ples of aboriginal business collaboration in resource develop- However, economic growth is often hindered. Capacity levels ment. These collaborations have substantially enriched the and abilities vary widely across Saskatchewan, both within First capacity of both the communities and firms involved in the Nations and Métis communities and within the companies partnerships. The province, therefore, has the opportunity to looking to partner with them. Capacity development is partic- be recognized as a world leader in capacity development and ularly needed in northern Saskatchewan, where geography, effective partnership building. Other aboriginal communities demographics, and jurisdictional complexities are added chal- and corporations can look to Saskatchewan for examples of lenges. Significant access, infrastructure, and cost-of-living successful partnerships in action. n issues make working in the North an added cost for most firms and many community members. The Saskatchewan Institute is a major research initiative of The Conference Board A forthcoming report from the Saskatchewan Institute of Canada that focuses on issues relevant to Saskatchewan. The institute makes the case for why First Nations and Métis communities works with partners in Saskatchewan to produce research that helps private- and and the firms seeking to partner with them should develop the public-sector leaders sharpen their vision for Saskatchewan’s future and find solutions to the challenges they need to address. A copy of the final report will be capacity to work together to build beneficial and effective part- made available on the Saskatchewan Institute’s website. For more information nerships. The report highlights areas where capacity develop- on how to become involved, visit: www.conferenceboard.ca/SI ment should be targeted, articulates capacity development challenges and provides recommendations for key stakehold- ers. Developing the capacity to partner together effectively will MAY 26–27, 2015 help businesses and communities across Saskatchewan over- DELTA BESSBOROUGH, SASKATOON come barriers that prevent stakeholders from fully capitalizing on economic development opportunities.
SASKATCHEWAN’S LEADERSHIP OPPORTUNITY Saskatchewan First Nations and Métis communities and the firms that work with them can establish strong partnerships that provide both Forum 2015. parties with a wide variety of economic and social benefits. Both sides can build partnership capacity by: A premier event for business, government, • making the business case; • communicating clearly; and community leaders. • exercising patience; The SaskForum 2015 will explore • transforming corporate culture; • separating business from politics; Saskatchewan’s leadership role in the • establishing strong corporate governance; world, in Canada, and within its own • promoting training and development; borders. • investing in growing businesses; and • supporting educational advancement. For more information, visit www.conferenceboard.ca/conf/sask Forward-thinking companies like Cameco, PotashCorp, Graham Group, and Areva are changing the way industry views Or contact Diana MacKay aboriginal partnerships. First Nations and Métis communities, [email protected], 613-526-3090 ext. 410 such as English River First Nation, Onion Lake Cree Nation, Meadow Lake Tribal Council, Whitecap Dakota First Nation, Pinehouse, and the First Nations communities in the Athabasca region have become economic powerhouses and strong indus- try partners in their own right. The benefits of these partner-
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ENERGY TO GROW
by Roger Francis Director, Saskatchewan Institute, The Conference Board of Canada
When you live in Saskatchewan and regularly drive between Saskatoon and Regina on Highway 11, you know the weather often changes halfway. On a November afternoon, just south of Davidson, the wind picked up and pushed the truck down the road with increasing energy. It was the kind of ride where you watch the fuel gauge barely move as the kilometres roll by. Having just accepted a new role as Director of the Saskatchewan Institute for The Conference Board of Canada, my thoughts had become dominated by energy in its many forms. What kind of energy could I apply to the Saskatchewan Institute Leadership is debated, celebrated, and scrutinized by pun- to advance its mandate? How best to direct the energy and dits and business gurus frequently. It’s a hot management topic. experience of the Conference Board through the Institute to From my new position leading the Saskatchewan Institute, provide support and value to Saskatchewan enterprise? What I see leadership as fuel – the careful creation, ignition, and stor- fuel can the Saskatchewan Institute, its investors, and support- ing of energy for key decision-making. ers inject into maintaining and accelerating Saskatchewan’s Saskatchewan has and continues to be a leader in its eco- leadership position? nomic, social, and institutional strength. Its relationships with What is the most important form of energy for key trading partners, stewardship of natural resources, and Saskatchewan (I wondered while passing another B-train management of the extractive industries have important eco- loaded down with grain for the elevators ahead)? What fuels nomic, social, and environmental consequences for all. But growth? what defines leadership success? In what other ways is Leadership. Saskatchewan a leadership champion and how can lessons be
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replicated across the continuum of society and the economy to maintain its position in the years to come? I am pleased to announce that the Saskatchewan Forum in 2015 will explore the theme of leadership in detail. The event will address new challenges and opportunities that are testing the skills of leaders in business, government, academia, and community-based organizations. From May 26-27, 2015 in Saskatoon, Canadian, international, and provincial thought- leaders, decision-makers, and influencers, will invite delegates to take stock of Saskatchewan’s leadership position. A combi- nation of keynote speakers, participant dialogue, interactive presentations, and delegate-expert sharing will provide Saskatchewan’s leaders with unique insights on how Saskatchewan can better develop the leadership talent required by the province’s businesses, economy and society. Leading the Saskatchewan Institute and preparing for this fourth annual Saskatchewan Forum necessitates strong collaboration, intersectoral support and a commitment to discovering the insights that continue to position Saskatchewan as a leader. On behalf of the Saskatchewan Institute and The Conference Board of Canada, I invite you to share your leadership skills, sto- ries, and evidence at The Saskatchewan Forum in 2015. Let’s create an intellectual and practical exchange of knowledge that provides the fuel to continue raising the bar of leadership in Saskatchewan, Canada and the world. n
The Saskatchewan Institute is a major research initiative of The Conference Board of Canada that focuses on issues relevant to Saskatchewan. The Institute works with partners in Saskatchewan to produce research that helps private- and public-sector leaders sharpen their vision for Saskatchewan’s future and find solutions to the challenges they need to address. For more information on how to become involved, visit: www.conferenceboard.ca/SI
NEW SASKATCHEWAN INSTITUTE DIRECTOR ANNOUNCED
Roger Francis has been announced as Director of The Conference Board of Canada’s Saskatchewan Institute. After a corporate career with Cameco, TransGas, and SaskEnergy, Roger has spent the past 15 years running his own consulting and communications company focusing on reputation management, strategy, governance, issues and crisis management, and engagement strategies – all topics at the heart of the mandate of the Saskatchewan Institute. The Saskatchewan Institute has created a strong foundation for the Conference Board’s work in the province and Roger looks forward to expanding the depth and breadth of the scope of services the Conference Board can offer Saskatchewan organizations. Collaboration, partnership, and valued insight remains the Saskatchewan Institute’s strength.
Contact: Roger Francis Director, Saskatchewan Institute 306-241-7714 [email protected]
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GAME CHANGER Express Entry Immigration and Saskatchewan
by Kareem El-Assal Research Associate, Education & Immigration, The Conference Board of Canada
With the recent introduction of the Express Entry system, the CIC became burdened with large backlogs. Employers were business community now has a greater role in influencing immi- frustrated with a system they felt was not responsive enough to gration selection to Canada. On January 1 2015, Express Entry their labour market needs. became Canada’s new application management system for eco- Which brings us to the more dynamic Express Entry system. nomic-class immigrants. Applicants who qualify under the cri- CIC will no longer process applications on a first-come, first- teria set out in the Federal Skilled Worker Program, Federal served basis, but rather, reward with permanent resident status, Skilled Trades Program, and/or Canadian Experience Class will applicants who demonstrate they are positioned to succeed in see their applications managed by the new system. Through Canada. To do this, applicants must score well in Express Express Entry, Citizenship and Immigration Canada (CIC) seeks Entry’s Comprehensive Ranking System, which prioritizes to address labour shortages, reduce and prevent application those with job offers or provincial nominations rather than backlogs, act as a conduit between employers and immigrants, those that have merely waited their turn. This is advantageous and most compellingly, offer a swifter processing standard. All for Saskatchewan, which has the economic clout to entice new- of this bodes well for Saskatchewan. comers to move to “where the jobs are,” rather than settling in In 1967, Canada created the world’s first immigration points traditional Canadian immigrant destinations such as Ontario, system, which emphasized the selection of skilled immigrants. Quebec and British Columbia. Under this application management system, applicants seeking economic-class immigration to Canada were awarded points HOW DOES IT WORK? based on a variety of human capital factors and applications In step one, applicants complete online profiles, which CIC eval- were processed in the order they were received. So long as an uates based on the Comprehensive Ranking System’s 1200-point applicant scored well enough and met CIC’s requirements, they scale, and in parallel, the program requirements of the Federal were eligible for Canadian permanent resident status. Due to Skilled Worker Program, Federal Skilled Trades Program, and/or changing contemporary realities, however, this application man- Canadian Experience Class. A maximum of 600 points are agement system became bloated and unresponsive. Many appli- awarded for human capital factors. Applicants receive an addi- cants waited years on end for their applications to be processed. tional 600 points for job offers supported by a Labour Market
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Impact Assessment or a provincial nomination. Applicants with- Express Entry provides Saskatchewan with an additional lever out a job offer or a provincial nomination must register with of influence. Employers can utilize the province’s strong economic Employment Skills and Development Canada’s Job Bank which position to make Saskatchewan a preferential destination for top- aims to facilitate job matches between applicants and employers. tier immigrants. By tabling job offers to prospective immigrants, In step two, applicants are placed in a pool and are ranked Saskatchewan businesses increase the prospects of higher immi- among their peers based on their scores. The highest scorers gration levels to the province. This will enable them to meet work- receive invitations to apply for permanent resident status from force objectives in a manner not previously possible. CIC. Invitees who submit their permanent residence applica- Saskatchewan businesses look to enhance their competitive tions within 60 days will receive permanent resident status in six standing by attracting high-calibre immigrants. Ample research months or less in 80 per cent of cases. illustrates this case. For example, a 2013 Conference Board study found that immigrants have a marked impact on trade WHAT DOES IT MEAN diversification in Saskatchewan.3 FOR SASKATCHEWAN BUSINESS? Much of Express Entry’s success depends upon employer Immigrant unemployment and underemployment are challenges engagement. Express Entry does, after all, provide employers in Canada. Yet Saskatchewan has demonstrated how to success- with increased latitude to attract and select skilled immigrants. fully integrate newcomers into the workforce. Saskatchewan had Employers steering clear of Express Entry is a real possibility. the lowest unemployment rate in Canada in 2014 at 3.7 per cent, Some will be reluctant to hire applicants without the ever-elu- compared to the national average of 6.9 per cent. Last year, the sive “Canadian experience.” Others will find six months to be average unemployment rate of landed immigrants in too long of a wait. This is, however, less likely to be the case in Saskatchewan and Manitoba was 4.8 per cent compared to 7.4 Saskatchewan than in other parts of the country given the per cent nationally.1 The wage gap between immigrants and the province’s insatiable appetite for labourers. Canadian-born population is lower in Saskatchewan than in any Equally imperative to Express Entry’s success is CIC’s ability other province in the country. to meet its processing standard of providing permanent resident Despite the success of immigrants in Saskatchewan, some sec- status to successful applicants in six months or less. In business, tors have struggled to attract more immigrants, hurting business six months can be an eternity. However, compared to current outcomes. In a Leaders Roundtable on Immigration meeting held processing times, which can often take years, six months is a sig- by the Conference Board in Saskatchewan this past October, nificant improvement. According to the 2011 census, the top Regina Chamber of Commerce CEO John Hopkins explained three source countries of immigrants to Saskatchewan were the that businesses in the province are hitting the proverbial wall due Philippines, the U.K., and the U.S. At time of writing, the aver- to labour shortages. This is resulting in lost business opportuni- age application processing time for immigrants from these three ties, including some being forced to close or relocate. countries is between 12 to 40 months for provincial nominees Saskatchewan’s labour market challenges are known. With a and between 20 to 34 months for federal skilled-worker appli- low unemployment rate, growing economy, and aging working cations.4 Should CIC deliver on its stated processing standard, population, Saskatchewan needs people. Despite substantial Express Entry will lessen complaints that Canada’s immigration investments being made to enhance the skills of its existing system is not responsive enough. population, including of its First Nations communities, While it does not present a catch-all solution to Saskatchewan does not have a large enough population to fill all Saskatchewan’s labour market challenges, Express Entry repre- of its labour market gaps. This explains why immigration is vital sents a new era in Canadian immigration and a step in the right to Saskatchewan’s future economic prospects. According to direction. Using its newfound influence, the Saskatchewan busi- Statistics Canada, Saskatchewan’s population is projected to ness community should enthusiastically embrace the game- grow over the next 25 years, with net migration being the main changing potential of Express Entry. n driver of this growth.2 Other than through provincial nominee programs, provinces 1 Labour force characteristics of immigrants in Saskatchewan and Manitoba are aggregated by Statistics Canada. such as Saskatchewan have had little ability to influence new- 2 Statistics Canada, Population Projections for Canada (2013 to 2063), Provinces and comer settlement powers. The Saskatchewan Immigrant Territories (2013 to 2038), 2014. 3 Parkouda, Michelle, The Influence of Immigrants on Trade Diversification in Nominee Program (SINP) is a major reason permanent resident Saskatchewan, 2013. arrivals to the province have grown nearly six-fold in recent 4 Applications submitted on or after June 26 2010. Citizenship And Immigration years. In 2012, the number of permanent resident arrivals sur- Canada, Processing Times – Permanent Residence – Economic classes, 2015. passed 11,000, compared to about 2,000 arrivals in 2005. When dependants of provincial nominees are factored in, the SINP The Conference Board of Canada’s National Immigration Centre (NIC) is a major five-year initiative that will develop an evidence-based National Immigration accounted for nearly 77 per cent of permanent resident arrivals Action Plan to help improve Canada’s immigration system. For more information to the province in 2013. on how to become involved, visit: www.conferenceboard.ca/nic
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THE ART AND SCIENCE OF EFFECTIVE DECISION-MAKING
by Ross Roxburgh Executive Director, Niagara Institute
The pace of change in Saskatchewan is evident. Saskatchewan must often be made with incomplete data and only partial is forecast to continue to grow in 2015 at a muted rate with low information. unemployment and sustained population growth. Demand will Over the years, Discovery Learning Inc. has been, and continue to grow for the province’s agricultural and energy remains, a central source for sound, evidence-based thinking resources despite current volatility. But growth and change about decision-making. The hallmarks of their approach can carry both opportunities and risks. How can Saskatchewan’s be thought of as two primary pillars: first, who is responsible for leaders ensure that they are making the right decisions that making the decision; second, whether the decision will be a will generate lasting prosperity for the province’s citizens and shared one or not, based on the degree to which the leader businesses? chooses to consult and where the ultimate accountability for Leadership today is more important than ever as uncertainty the decision lies. and discontinuous change become the only certainties. Leaders Before looking more closely at the decision-making styles are challenged to position their organizations for success in available to the leader, it is important to note that research by what has been described as a VUCA world (an acronym which Discovery Learning Inc. reveals very little correlation between speaks to a world characterized by its volatility, uncertainty, strong decision-making skills and personality, gender, or man- complexity, and ambiguity; the work of Bob Johansen speaks agement level. Further, recent research from sources such as more fully to the need by leaders to be ready for this reality). The Center for Creative Leadership highlights the fact that While much is unknown and flux and shift become the new leaders are increasingly going to need to work more collabora- norm, one thing remains central to the leader’s role: decisions tively in the face of more and more complexity within the envi-
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ronment and greater and varied expectations by stakeholders. impact can extend well beyond a discrete area in the service of Based on Discovery Learning’s model, with decision styles the organization. Such potential outcomes can include: displayed along a continuum, you find at one end the leader • better management of approaches to complex issues where relying fully on his or her judgment, based on a full under- multiple generations are involved; standing of the situation, confidence in having all of the neces- • improved ability by the organization to work more effectively sary information and no need to consult more broadly or at the individual, team, unit or division and whole organiza- solicit ideas. The next three decision-making approaches each tion level; have the leader retain the right and the intention to make the • conscious effort to ensure that culture change becomes part decision; what changes is the increasing degree at each level to of the organization mindset; and which the leader seeks input (whether from one or several other • a more agile and resilient organization as other leaders posi- individuals), the time spent in exploring suggestions, talking tion and manage the required changes. about possible actions, building on ideas and developing a consensus while still making the final decision. In the fifth These ideas are intended to promote further thinking and are in approach, the decision is made with all key stakeholders no way either complete or prescriptive. Our intention is to stim- through a consensus-building process. ulate important conversations and dialogue as Saskatchewan’s Therefore, the decision regarding how to make a decision leaders wrestle with both the art and the science of decision- becomes key in the leader’s fast-paced world! making. While the model is a useful one (as it helps the leader to The final word goes to a thoughtful columnist and author, achieve clarity as she or he balances time, required informa- Harry Eyres of The Financial Times. In a column that looks at tion, degree of engagement required and whether compliance the challenging times we live in, Eyres speaks to the general or commitment is paramount), leaders are also choosing to reader, but his words may hold some wisdom for leaders of our integrate the power of the model with other approaches in organizations as well: “One definition of being an adult is hav- order to develop a broader range of options when challenged ing to act in the midst of uncertainty, with no final knowledge with making decisions critical to the growth and development of the costs of action or inaction.” of their organizations. One of the fastest-emerging sources of such support is found in the work of professional coaches. REFERENCES AND FURTHER READING: Our experience has shown that over the past few years, Some of the deepest and most thoughtful work in the area of courageous and insightful leaders are utilizing coaching expert- decision-making has been done by Discovery Learning Inc.; ise to ensure that their choice of approach to making important their website is www.discoverylearning.com. decisions is as informed and considered as it can possibly be. On leadership in a VUCA world, see Johansen, B., Leaders So what is it that the coach can provide, while being respect- Make the Future: Ten New Leadership Skills for an Uncertain ful of the leader’s clear accountability for decision-making? World. San Francisco: Berrett-Koehler Publishers, 2009. Recent research by the Conference Board of Canada (CBoC) For a more extensive discussion of the role of coaching in highlights several key points related to coaching in North organizations, see Best Practices and Trends in Coaching: An American organizations; two of the more important of these Interview with Ross Roxburgh and Sandra Oliver. Ottawa: The relate to our topic: Conference Board of Canada, 2015. n • coaching is increasingly being used by leaders to improve skills related to decision-making, delegation, focus and stress reduction, as well as to develop a broad range of business The Conference Board of Canada’s Niagara Institute offers programs which skills and competencies; and enhance the quality of leadership in private- and public-sector organizations, as well as custom and advisory services, and executive coaching. This article is • clear results for the organization can be linked directly to produced in partnership with the Saskatchewan Institute, a major research successful coaching relationships. initiative that helps private- and public-sector leaders sharpen their vision for Saskatchewan’s future and find solutions to the challenges they need to address. For So how might Saskatchewan’s leaders integrate coaching into more information, visit www.conferenceboard.ca/si. their approach to decision-making? Or, stated differently, where The theme of leadership will be explored in depth at the Saskatchewan Forum might their decisions be strengthened and include overall impact 2015 on May 26–27 in Saskatoon. The forum will highlight Saskatchewan’s on the organization, often beyond the specific issue at hand? leadership role in the world, in Canada, and within its own borders. It will Again, CBoC research reveals some of the areas in which address how Saskatchewan can take full advantage of its leadership position in many sectors and what kinds of policy and planning decisions are required now Saskatchewan leaders can thoughtfully integrate coaching. to capitalize on the province’s knowledge, experience, investments, and future What is key is that the leader is intentional as to where positive leadership needs. For more information, visit www.conferenceboard.ca/conf/sask.
49 The Conference Board of Canada Saskatchewan Institute
Insights. Understanding. Impact.
Saskatchewan Institute.
The Saskatchewan Institute is a major initiative of The Conference Board of Canada. Its work focuses on issues of particular importance to Saskatchewan, but also has an impact on policy and society throughout the rest of Canada. The Institute brings together the Conference Board’s full range of expertise in economic analysis and forecasting, public policy research, and organizational performance to address themes of leadership, governance, innovation, competitiveness, and more.
Working with partners in Saskatchewan, the Institute produces research to help public and private sector leaders sharpen their vision for Saskatchewan’s future and find solutions to the challenges they face.
Contact the Institute Attend the Saskatchewan Forum Roger Francis, Director, Saskatchewan Institute www.conferenceboard.ca/conf/sask Tel.: 306-241-7714 [email protected]
www.conferenceboard.ca/si
50 About The Conference Board of Canada We are: • The foremost independent, not-for-profit, applied research organization in Canada. • Objective and non-partisan. We do not lobby for specific interests. • Funded exclusively through the fees we charge for services to the private and public sectors. • Experts in running conferences but also at conducting, publishing, and disseminating research; helping people network; developing individual leadership skills; and building organizational capacity. • Specialists in economic trends, as well as organizational performance and public policy issues. • Not a government department or agency, although we are often hired to provide services for all levels of government. • Independent from, but affiliated with, The Conference Board, Inc. of New York, which serves nearly 2,000 companies in 60 nations and has offices in Brussels and Hong Kong. Snapshots of Saskatchewan: The SaskBusiness Series
Contains articles originally published by the SaskBusiness magazine between April 2012 and May 2015.
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® The Conference Board of Canada and the torch logo are registered trademarks of The Conference Board, Inc. Forecasts and research often involve numerous assumptions and data sources, and are subject to inherent risks and uncertainties. This information is not intended as specific investment, accounting, legal, or tax advice. The findings and conclusions of this document do not necessarily reflect the views of the external reviewers, advisors, or investors. Any errors or omissions in fact or interpretation remain the sole responsibility of the Conference Board of Canada.
Sask Business is the province’s premier source for positive business news regarding Saskatchewan’s industry sectors and overall economy. It is the longest-running business publication in Saskatchewan. First published in 1979, it has been produced by Sunrise Publishing since 1993.
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