Federal, provincial and territorial finance ministers are holding a pre-budget meeting in Ottawa on Sunday. This ought to be a momentous occasion. Sadly, though, it will likely be something far less than that.

It’s a shame that in a federation such as ours, in which intergovernmental collaboration is essential to economic success, the federal government has too often abdicated its leadership role.

With falling oil prices, struggling European economies and geo-political risks related to Russia and the Middle East, the economic outlook could hardly be fuzzier. And amid this uncertainty, we urgently need a frank and honest discussion between our finance ministers about the economic challenges we face.

More likely, the ministers will forgo heated debate for something more cordial. They will say that things are OK for the Canadian economy, and that we are muddling along. Growth is moderate but sustained. The labour market continues to recover but very slowly. Yes, the Governor of the Bank of Canada has warned us about household debt and housing prices that look high relative to incomes, but still: everything is fine.

In a frank and honest discussion, however, someone might point out that the Canadian economy is not firing on all cylinders and that we are failing to address major long-term issues. This is the discussion we need.

Some of these issues cannot be ignored any longer. For instance, will any provincial or territorial finance minister confront Joe Oliver, their federal counterpart, about income stagnation? Data on Human Resources and Social Development Canada’s site shows that median after-tax incomes for all families (or real GDP per capita) has been virtually flat since 2007. Debt feels very heavy when incomes are stagnating.

Or what about income inequality? The New Canadian Income Survey on the Statistics Canada website shows that 4.7 million people or 13.8 per cent of our population lived with low income in 2012 (income less than half of the median of all households). That is a troubling number that should worry all Canadian political leaders.

Will any minister raise Canada’s dismal performance on jobs? HRSDC’s latest Report on Plans and Priorities shows that planned spending on major skills and employment programs is flat or declining over the next few years. Why are we taking resources out of federal labour market training at a time of weak employment and participation rates and of aging demographics?

Our finance ministers are smart. They know that faster growth is going to require higher investment rates and sustainable public finances. But the reality is that Canada is falling down on capital investments in both the private and public sectors. Business capital investment has grown a weak 2 per cent over the past two years. That is not boosting the investment rate. Meanwhile, government capital investment has declined 2 per cent over the same period, and that is after the 2009-10 fiscal stimulus. This is not a recipe for boosting growth.

Why do we continue to pursue an approach that stunts growth now and for the future? Is this public sector mismanagement? Or, is this an effort to achieve a balanced budget that allows for spending on current goods or services (for my generation that votes) at the cost of capital goods for future generations (our children and grandchildren that do not yet vote)?

And what about infrastructure spending? Will the ministers confront Oliver about the 2013-14 Public Accounts for Infrastructure Canada, which show the federal government is not getting planned transfers on infrastructure out the door. Last year, $640 million was left unspent on a range of infrastructure programs. What will this mean for future Canadians?

The austerity approach set out in the 2012 federal budget will succeed in generating a balanced budget, but at a cost: slower growth and degraded public services like support for veterans. Meanwhile, the government is responding to its improved fiscal situation not by raising the investment rate, but by cutting taxes further.

Analysis by the Parliamentary Budget Office (and Finance Canada) indicates that the federal fiscal structure is sustainable. This is largely because Ottawa has reduced the growth escalator on health transfers, downloading the problem to the provinces. Provincial governments, already struggling under increased pressure caused by slow growth, have a long-term fiscal gap they will have to address.

Given all of these challenges, the finance ministers’ meeting ought to be a pivotal moment. The temptation to focus primarily on oil prices must be avoided. If we want economic growth to raise incomes, address inequalities and ensure essential public services, we are going to have to raise the investment rate in Canada. There’s no other way.

Loading... Loading... Loading... Loading... Loading... Loading...

Yes, as a frank and honest discussion will reveal, this means some sacrifices in the short-term for a better long-term future. It also means all levels of government working together under Ottawa’s leadership.