Money & the World
The Wealthsimple Debates: We Grilled Three Parties on Money, Tech, and Jobs
Wealthsimple founder Mike Katchen sat down with Conservative, Liberal, and NDP officials days before the election to find out where they stood on jobs, education, technology and our favourite topic: the future.
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When Justin Trudeau called a snap election last month, it threw the Canadian political world into disarray. Ahead of that election, now just a few days away, we put out an invitation: come talk to us, and tell our magazine readers (and one and a half million clients) where you stand on issues important for those of us who want to create a future with more opportunity in Canada. Issues like jobs, creating an economy built for everyone, and, of course, technology. And we came at it with a strange objective for politics: figure out what we all have in common, so we can build that future. In the frantic days before the election, not every candidate or party could accommodate our interview requests, but we were happy that three major parties did.
Here’s a (condensed and edited) version of Wealthsimple founder and CEO Mike Katchen’s conversations with the Conservatives (CPC), Liberals (LPC), and the New Democratic Party (NDP).
Erin O’Toole: Conservative Leader. Member of Parliament for Durham, Ontario
Sean Fraser: Liberal. MP for Central Nova and former Parliamentary Secretary to the Deputy Prime Minister and Minister of Finance
Peter Julian: New Democratic Party. House Leader for the NDP and MP for New Westminster-Burnaby, in British Columbia
Mike Katchen of Wealthsimple: Thank you for your time. I believe that for our clients — now several million Canadians — this will be an interesting opportunity to hear from you. First, what’s the biggest thing you’ve been hearing on the campaign trail these past few weeks?
Erin O’Toole (CPC): The cost-of-living challenges is the biggest thing I’m hearing about from people across the country. There’s been a housing crisis in the Vancouver region and in the GTA (Greater Toronto Area) for a number of years. But the problem touches all parts of the country now. Inflation impacts individual households, especially those of seniors and low-income families, but it also affects restaurants and small businesses. Their suppliers have raised costs, and they don’t have a lot of room in margin as they try to recover lost business from the pandemic. That’s why my team launched Canada’s Recovery Plan, a roadmap to get people working and to deal with some of the challenges we’re facing as a country. We’re really the only ones with a number of plans to tackle that cost-of-living crisis head on.
Sean Fraser (LPC): It’ll come as no surprise that people are looking for really serious plans on how we’re going to end the pandemic, but also how we’re going to strengthen some of the services and programs that have shown themselves to be vulnerable over the course of the last year and a half. People are looking to see a strengthened public health-care system. They’re looking to make sure that we’re doing more to fight climate change, and they’re looking to make sure that we’re making life more affordable for families.
Peter Julian (NDP): The climate crisis has hit British Columbia hard. We lost over 700 people in the heat dome this summer, and forest fires are burning across the province. We also have an affordability crisis, accentuated by COVID. People are struggling to make ends meet, housing prices have gone through the roof, and price gouging is rampant. Take cell phone and data plans: Canada has no regulation, and, as a result, Canadians pay among the highest rates in the world. Bank and credit-card fees are similarly high, as is the cost of medication. Ten million Canadians struggle to afford their doctor-prescribed medication, which is why the NDP brought forward public universal pharmacare. We see increasing inequality and the crisis of affordability as one of the country’s major issues.
At Wealthsimple, our mission is to help Canadians achieve financial freedom through investing. One problem to that end, in our view, is that a few powerful banks dominate Canadians’ financial services. I’d love to hear your thoughts on the opportunities ahead to shake up the financial-services sector to benefit Canadians.
O’Toole (CPC): Open banking [in which customer financial data can be securely shared with financial tech companies] is a very important commitment of ours, which is why I was the first candidate to come out in support of it this election. I want to make sure that people own their financial footprint, in terms of their banking-services information, and can easily use technology to save, plan, and invest. It dovetails very nicely with the type of innovation that Wealthsimple has brought as a leader in this space.
We want to see more competition in the financial-services sector and in a lot of areas, to bring down rising costs. We’re open to foreign investment in wireless and cellular, for example. Because if competition can lead to lower prices and create more options for consumers, that’s a win, no matter the industry. We’ve been calling out big grocery for similar reasons. We want to use competition law, which I used to practice in, in the private sector to rein in abuse of dominant positions. Because, from financial services to the grocery store to internet and cellular service, we want to see more competition and lower prices. … If I’m fortunate to gain the trust of Canadians and become Prime Minister, I look forward to continuing these dialogues with your clients and your leadership team. We need to partner with risk-takers, with entrepreneurs, with people building opportunity and building wealth within the country, and learn from them in many ways.
Fraser (LPC): Look, we don’t have enough time to cover all of my thoughts on this issue. [Open banking] is such an exciting opportunity for the Canadian economy, such an opportunity for companies in the fintech space, but, most importantly, it’s such an opportunity for Canadians who have limited options when it comes to the kind of banking that they can do and the protection of their personal finances. I think that the stage is set for explosive growth in this sector. As we move toward open banking, what I don’t think there’s an appreciation of yet is that there’s actually a greater opportunity [for new technology] to protect the financial security of Canadians, to avoid data-scraping websites and to avoid some of the uncertainty — you can actually choose to share which information that you want to share with your service providers. [That’s] actually going to empower the users. By providing access to different platforms, we can create an opportunity for competition.
Julian (NDP): At the beginning of the pandemic, the big banks got an unprecedented $750 billion — that’s billion with a B — in liquidity supports, with no conditions attached. They didn’t have to lower credit-card fees or lines of credit. They didn’t really have to do anything; the money was given to them. So, while the big banks reaped record profits, my constituents were being gouged with fees, with no recourse. At the same time, the big banks refuse to work with a whole swath of people, particularly low-income Canadians, which forces them, in many instances, to turn to predatory lenders, who charge 500% or 600% in annual interest. It’s unbelievable to me that you can legally do that in Canada, but that’s the case. Our banking system needs to be overhauled, and we need to create more competition to drive down prices. That’s why open banking is so important. We need to provide a way for consumers to protect themselves and their information, and not be gouged by the big banks.
Last spring, Wealthsimple raised $750 million in capital investment, which, to our knowledge, is the largest private technology investment in Canada’s history. What can the country do to attract more capital to grow the economy and spur development?
O’Toole (CPC): We’ve watched with great interest the success that Wealthsimple and a number of start-ups have had raising capital. And we want to encourage more companies to scale up and remain in Canada to develop their IP and innovation. One way we’re going to do that is take a Patent Box approach, by implementing an advantageous tax treatment for intellectual property developed and exploited here. We’re going to have flow-through shares [a tax-based financing incentive] that would bring a lot of private capital off the sidelines here in Canada and use it for scale-ups and for some green innovation. We don’t want the government to choose winners and losers, as it currently does with the Innovation Superclusters Initiative. But we do want the government to have a role in supporting R&D and in making sure that the SHRED process [the Scientific Research and Experimental Development Tax Credit] isn’t all caught up in consultants and transferring that R&D money elsewhere. Also, something I hear regularly across the board, including from entrepreneurs, is that they get more traction selling into government procurement cycles in Europe and in the U.S. than they do in their own country. So we want to update procurement policies as well.
Fraser (LPC): That’s a big question. I’ll restrict — in the interest of time — my commentary to the tech sector. First, we need to provide a regulatory framework that will create an appetite for people to look at Canada as a premier destination of choice when they’re looking where to invest. The second thing that we need to do is to put financial incentives in place for the companies who are going to be making those investments. And, if I can add a part three, it’s that we need to offer companies a skilled workforce that will allow them to grow when they reach the point where they’re growing so fast. [In other words] they’ll need skilled people to turn potential into actual growth. We’re trying very, very hard to create incentives for people to go back to school, to take on that degree or diploma, to make sure that people have access to the skills they need to take part in the 21st-century economy. This is actually something that [we’ve been] working on since back in 2015.
Julian (NDP): One of the biggest drivers could very well be a federal government that’s ready to reinvest in Canadians. Conservatives and Liberals tend to work within the tax system, saying that if you lower corporate taxes or allow more overseas tax savings, that will somehow contribute to more investment. And that’s not the case for the kind of durable investment we want to see in Canada. It’s often public investments that make such a difference. Take universal health care. That’s a public investment that gives Wealthsimple and other Canadian companies a $3,000-per-employee competitive advantage vis-à-vis an American competitor in terms of hiring. [Because Canadian companies don’t have to carry employee health-care costs, as they do in the States.] The same goes for pharmacare. These sort of public investments is one reason why the NDP has been talking about opening the doors to post-secondary-education college, university, and trade school, by providing for a $20,000 forgivable loan, doubling the grant system, and eliminating the federal government’s profit from student loans. Our belief is when you see substantial public investment in the right areas, you attract private investment, which is so important, and work to build an economy where nobody is left behind.
One final point: we are pushing for a guaranteed livable, basic income for seniors and people with disabilities [a disproportionally large number of whom live in poverty]. Lifting these people out of poverty will enhance local economies and lead to a higher quality of life for everybody in a community, as well as benefit businesses nationwide.
In our view, access to education is another ingredient beyond innovation in shoring up Canada’s future economy. That’s why we launched the Wealthsimple Foundation, to help every Canadian access the Canada Learning Bond, a $2,000-per-child grant that the government will add to RESPs regardless of personal contributions. How might your government improve access to educational opportunities for the next generation?
O’Toole (CPC): As someone who has benefited from the support of teachers and a great education, I firmly believe in expanding access to education. To that end, we want to be a dependable partner with the provinces, since education is an area more in provincial jurisdiction. But, in terms of our policies, we want to make sure that there’s access to student loans and extend that into skilled trades and other areas. That will be a focus, as will be giving the next generation the ability to access the housing market and to work and have opportunity here in Canada. But, I’ll tell you, if your clients take anything away from this interview it’s that Canada’s runaway deficits are an obstacle toward such prosperity. The country is spending $424 million a day more than it’s bringing in. And that’s going to be on your clients’ shoulders. We have to restore fiscal balance while helping people through the next few years. That’s the goal of Canada’s Recovery Plan. We want the next generation to have the same access to the housing market, solid jobs, and rising wages, regardless of where they live in the country.
Fraser (LPC): One of the things that drives me wild is the lack of understanding among Canadians that the greatest business solutions that exist might be locked in the mind of a child who can’t afford to go to school. These students tend to be from underrepresented and marginalized communities who disproportionately live in poverty, and who don’t have role models in their lives who have gone through university. And when we don’t allow people from low-income backgrounds to experience a first-rate education, it’s not just that kid who misses out over the course of their life — it’s every single one of us. Because we miss out on the cure for cancer, or the next innovative tech solution. By ensuring that everybody can access education, we are pouring gas on the fire of an economy that is ready to light up.
[One of the biggest changes] I can point to in this regard is that we doubled the Canada Student Grant program. This is a non-repayable grant for people who come from low-income backgrounds that immediately reduces their tuition costs. And we’ve now gotten to a spot where it covers about 90% of the average tuition in Canada for students who benefit from the program. We’ve made some changes to the student-loan program as well. And, going forward, some of the programs that we’re talking about is permanently eliminating the interest on student loans. This would save about a million young Canadians somewhere in the ballpark of $3,000. When it comes to the cost of college or university, we’re saying right now that students will not need to pay back their student loans until they earn at least $50,000 a year. This is going to allow more kids coming out of college or university to say, “You know what? I’m going to explore an opportunity to take an internship in the industry that I actually want to work in, rather than just taking the first job that’s available.” I’m convinced that some of these changes I’ve laid out are going to make a big difference for the industry that you work in.
Time did not allow Peter Julian to respond to this question. You can read about NDP's education platform here.
Interviews were edited for clarity and concision.
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