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It doesn’t have to be this way. A from the Competition Bureau has some novel ideas on how to make air travel in Canada more accessible and affordable: Reduce user fees, improve airport access for smaller carriers, and, perhaps most ambitiously, allow complete foreign ownership of Canadian airlines. Ushering in new competitors — American, European, as well as new Canadian airlines financed by foreign investment — would be a great place to give Canadians some choice, they argue.

“The old school thinking that protecting domestic airline companies would promote the economic and national interests seems to serve no one other than the owners of these oligopolies,” one person told the Bureau during their consultations.

Alas, the Bureau’s report has landed with a thud. Even this new government, with its promises to fundamentally remake the Canadian economy, has been mum about taking on the rules, regulations, laws, and structural barriers that leave a nation of 40 million people with six big banks, five big grocers, three-and-a-half telecommunications companies, two companies which market large farm equipment, and a single movie theatre chain which boasts 75 per cent of box office revenues in Canada.��

This dominant market position has meant these major corporations can raise prices, worsen services, and not worry about customers fleeing to a competitor — because choice will always be limited. If it feels like we get a raw deal in Canada, it’s because we so often do.

We’ve had the luxury of this predictable cycle for so long because of our remarkable integration and collaboration with the world’s primary economic superpower. That has meant that we could afford to be inefficient. But, as we know, that enormous comparative advantage is over. So we’ve got to make some changes.

Canada could undergo shock therapy: It could undergo mass deregulation, throw open the doors to foreign competition, end all supports to small businesses and farms, cancel all consumer protection laws, and so on. Ottawa could try and make the libertarians blush to scratch the itch for radical change; but the ensuing change would almost certainly be too chaotic to be good.

The more you think about this route, the more that an uncomfortable truth comes into view: Canada’s status quo comes with real benefits. Our air travel, frustrating and expensive as it is, means we maintain consistent air service to some pretty remote communities, even if those routes are unprofitable. Supply management, for all the trade headaches it causes, does keep our poultry and dairy industries local. Our sovereign, profitable, and risk-averse banking sector kept the country solvent during the 2008 financial crisis.

It’s this grey space between opportunity and cost that has kept government after government paralyzed by indecision. Particularly now, as the country is whipped up in a sense of nationalism, the prospect of opening to foreign competition — particularly from American firms — feels mismatched.

But there are two things we could do that could have major, immediate, and measurable benefits, and we could do it without delivering ourselves to our hegemon neighbour.��

In their book “The Big Fix,”��researchers Denise Hearn and Vass Bednar, argue that there are some very specific levers we could pull to let more upstarts in the market and provide a real challenge to our legacy players — providing real choice while spurring the old guard to do better.

“Unfortunately, there are only a handful of examples of Canada standing up to monopolists, a larger indictment of Canada’s historical approach to regulating markets,” the pair write. But, they go on, “we know our values and can stand up to corporate power when we choose.”

They suggest that the prime minister ought to make improving competition the responsibility of every single person in government, captained by a competition czar and carried out by a better-financed and empowered Competition Bureau. This proposed regime could obsess over market centralization and predatory business practices. It could take aim at monopolists like Ticketmaster, responsible for jacking up concert prices, or multinational landlords. It could more aggressively block mergers in already-uncompetitive industries.

The Bureau, for example, is currently investigating whether algorithmic pricing — the use of software to raise or lower prices, or adapt prices to particular customers — could essentially automate price fixing without the need for businesses to explicitly collude. In the United States, the Federal Trade Commission and Department of Justice have sued corporations engaged in algorithmic pricing. In Canada, it’s not clear what power the Bureau has to stop this predation.

Unfortunately, Ottawa hasn’t seemed terribly interested in taking on these oligopolists. Instead, its��solution to this uncompetitive, unproductive, high-cost, low-service environment is always the same: subsidies. Ottawa has, more and more over time, tried to spend its way out of economic ills. It’s not working.

In his book, “At the Trough,” Laurent Carbonneau calculates that the Trudeau government doled out about $33 billion in corporate subsidies last year, not including any lingering COVID-19 supports or funding to reduce businesses CO2 emissions.

“This corporate welfare state … has not delivered on its stated objectives of promoting economic growth and social welfare,” he argues, asking: “How has Canada spent so much public money to achieve so little for so long?”

Honda, for example, was promised $5 billion in federal and provincial subsidies to expand its plant in Alliston, Ontario: But Honda abruptly put those plans on hold earlier this year, announcing plans to move production to America instead. Battery factories have gone , funding for AI and innovation has and has subsidized while the same oligopolies that we ought to be fighting have been

Carbonneau’s solution is pretty direct: Just stop. Instead of handing out cash, Ottawa could use its procurement system, loan programs, and direct support for research and development to help firms develop innovations that could be commercialized globally — which “could then be taxed and reinvested by home governments.”

Independent crown corporations, tasked with supporting Canadian industry while also turning a profit, are infinitely preferable to having ministers wander around the country handing out novelty cheques.

The fact is, government is a terrible investor — but it’s a great provider of services. Or, at least, it should be. But over recent decades, particularly as its corporate giveaways have gotten more lavish, our services have worsened. Our value proposition to private industry should be offering an efficient and seamless immigration process for foreign talent and hard workers, great public transit, reliable and fast interprovincial trains, excellent public education to support research and innovation, and so on.��

There are models for how to do this well. Carbonneau points to countries like Taiwan, which have managed to finance innovation at relatively little cost to the government. Taipei, for example, funds a national network of science parks — micro-cities where technology companies can set up shop in proximity to other innovators. While the government manages services, businesses still pay rent: Meaning only successful companies can stick around.

Prime Minister Mark Carney has signalled he gets it. He says he wants the government funding capital projects, like new homes, while reducing its operational spending, like business subsidies. But there are reasons to be skeptical, too. Carney also promoted François-Philippe Champagne, who spent years lavishing these subsidies onto industry, to be his finance minister and marching orders for his replacement on the industry file, Mélanie Joly, look much the same as before.

Inertia is a powerful force. It will be easy to leverage our national brands as symbols of Canadian resistance and to use public dollars to chase private success. As we face one of the most uncertain eras in our country, we will be inclined to become more protectionist than ambitious.

But inertia has a huge cost. The more we wait, the more entrenched the positions of Bell, Loblaws, and Air Canada become. The more we keep the gravy train going, the less fiscal room we have to fix the things that make us unproductive and uncompetitive. We need to stop seeing every failed business or closed factory as a place to pour finite public dollars.

Mark Carney is enjoying a sunny honeymoon and Canadians are fanning out across the country, imbued with a new national pride. If he wants to take advantage of the moment, now is the time to promote competition and end corporate welfare.

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