Refusal to use economic strategies makes more SNC-Lavalin scandals inevitable

As long as the federal government continues to take a hands-off approach to the economy and to use P3s and other privatization schemes, there is a good possibility we will see a repeat of the SNC-Lavalin scandal. What’s needed is a change in direction.

Ottawa (01 Mar. 2019) — Many Canadians were upset and angry after the testimony this week of former minister of justice Jody Wilson-Raybould before the House of Commons Standing Committee on Justice and Human Rights. For people who believe everyone should be equal under the law, the idea that a large corporation is able to use its size and role in the economy to avoid criminal prosecution is deeply disturbing.

But the fact that the federal government is trying to prevent SNC-Lavalin from being convicted of corruption-related charges is an inevitable consequence of the hands-off approach to the economy taken by successive governments. Instead of implementing economic strategies to help build an economy that includes all Canadians, governments have felt that important decisions about how our economy works should be left in the hands of the private sector.

The problem with this approach is that it contributes to the problem of many sectors of the economy being dominated by companies that are so big that if they fail or move operations out of Canada, it will do significant damage to the economy as a whole.

Privatization contributes to over dependence on a few large corporations

What has made it even harder to say no to large corporations is the way privatization leaves governments overly dependent on a handful of companies. The cost of bidding on contracts for P3 privatization schemes and for many contracts for outsourced services excludes smaller firms from bidding. This means that for many large contracts there are only a small number of bids.

Because the number of bids for many P3 privatization schemes, or outsourcing contracts, is already low, excluding one corporation from bidding will mean there will be little competition for many privatization contracts. This will further increases the cost of privatization. It also means many large corporations in the privatization industry have become too big to fail.

Change needed in federal government approach to economy and public services

As long as the federal government continues to take a hands-off approach to the economy and to use P3s and other privatization schemes, there is a good possibility we will see a repeat of the SNC-Lavalin scandal. What’s needed is a change in direction.

That means delivering services publicly instead of relying on costly contracting out. It means ending the practice of subsidizing P3 privatization schemes. And it means developing an economic strategy that recognizes that governments have a role to play in building strong economies.

Learn from successes elsewhere and in Canada

Many of the world’s most successful economies have used economic strategies to encourage sustainable growth. These strategies bring together government, labour, business and academia to look at what’s needed to build a strong economy over the long term.

In addition to helping build an economy where we aren’t overly dependent on one employer, economic strategies provide a way to address other problems we face. Many of the jobs being created today are poorly paid, part-time or temporary. Economic strategies provide the means to look at how we can create good jobs that help reduce income inequality. By encouraging a long-term approach, economic strategies also provide a much better chance of building a green economy than the current focus on short-term profit taking.

Canada has used economic strategies in the past, and the times when governments were willing to use economic strategies generally coincided with periods of rapid growth. Now, the need to prevent a repeat of scandals like the one involving SNC-Lavalin, means we have one more reason to use them again.