Canada's Strategic Challenges Series: Global Shifts and Canada's Future (LPL1-V60)

Transcript: Global Shifts and Canada's Future

[00:00:08 Text appears on screen: "Canada's Strategic Challenges Series – Global Shifts and Canada's Future".]

Narration: On September 22nd, 2025, Anil Arora, former Chief Statistician of Canada, spoke at a session of the Geopolitics and National Security Development Program for federal government executives. In the discussion, Mr. Arora provided his perspectives on the primary economic, demographic, and social challenges that Canada will face over the coming decades, and his advice to the public servants who will be addressing them head on in their work.

[00:00:46 Text appears on screen: "Geopolitics, National Security, and Canada's Future – Technology, Trust, Demographics, and Global Power Shifts – Anil Arora".]

[00:00:52 Text appears on screen :

« Canada faces pressure from multiple converging forces:

• Weak productivity growth (Organization for Economic Co-operation and Development: among worst in 2023)
• Demographics: higher dependency ratios (Statistics Canada projections)
• Trust erosion: declining public confidence (Edelman Trust Barometer)
• Global power shifts: United Nations, G7/G20, World Trade Organization, World Health Organization, effectiveness declining
• Rising U.S. trade volatility, supply chain vulnerabilities

These forces impact our economy, society, and sovereignty. »]

Anil Arora (Former Chief Statistician of Canada): So, this is kind of what I'm going to talk a little bit about in that top 10. I'm going to talk a little bit about the weak productivity that we're seeing. I'm going to talk a little bit about, as Danielle said, demographic trends. I'm going to talk a little bit about the trust erosion and truth decay a little bit, global power shifts and the whole multilateral fora and its collapse essentially, and obviously, what's going on with our major economic partner to the south and what does it mean for us going forward? And there isn't a part of our society, economy, our well-being, and where we go that isn't impacted by the kinds of changes that we're seeing. So, in a sense, what got us here ain't going to get us there, right? So, we're going to have to figure out new ways of doing things. And in a sense, there is no playbook, right? So, we're going to have to make up a little bit of that playbook. It doesn't mean that we have to abandon everything, but we're going to have to look at it through these optics, right? So, next slide, please.

[00:02:02 Text appears on screen :

« Indicator 1: Labour Productivity

• Why it matters: Engine of long-run growth and fiscal capacity
• Recent signal: Organization for Economic Co-operation and Development Canada is experiencing serious productivity declines
• Implication: Need policies that accelerate business digital adoption, AI investment, and regulatory reform
• Source: Organization for Economic Co-operation and Development, 2023 Productivity Report ».]

So, first of all, as I said, productivity in general, you've heard this many, many times, so it's basically, how much input do you put in to get a unit of output, right? And what we've been seeing, and not unique to Canada but what we've been seeing is that the difference between that input and output, which is kind of what we use to then invest in our standard of living, in the kind of structures, social and other structures, that we've got, societal structures, that is narrowing and narrowing. And so, in other words, we don't have the wealth. We don't have that to be able to re-invest it. And so, we find ourselves in this deficit constantly. And so, many have said productivity isn't everything, but it's almost everything if you want a country that's going to continue to prosper. So, we want Canada not just to grow big and influential, we want it to grow big and rich, and so that we can actually sustain the way of life and what we're used to. And unfortunately, we've been seeing, for the last 20 years, steady declines. So, productivity in itself has various components to it. So, it's labour productivity, so how much input of labour do you put in to get that output? There's capital investment to get that input, and then there's something called multi-factor, which is like, we don't know, so I'm just going to have this grab bag and we're going to throw everything in it from training to how do you structure yourself to management theory to you name it, right?

So, there's a couple of theories which I think have some pretty good significance, which is one, that productivity isn't getting better because we're now starting to exhaust our natural capital, right? So, we've kind of gone past a number of tipping points where it's really hard, whereas in the past, when you transitioned from coal to gas, well, those systems that were negatively impacted by coal got a chance to recover, those ecosystems and jobs and communities and so on. But as we transition now, we've now gone past some of those tipping points and we're now starting to see the negative returns on having, the same thing with the care economy that's associated with aging. We have to now put a lot of our effort, and Armine's going to talk about both sides of that coin, demographics and so on, where now it takes quite a bit of energy to deal with an aging population, and how is it that we can get that kind of return on it, not just in a negative way as well? There's some very positive components to that as well. So, we need the kind of policies that accelerate that kind of business, digital adoption, A.I., which holds this promise, and to see how we can actually use it to perhaps shift that equation that we've got. Next slide, please.

[00:05:09 Text appears on screen :

« Indicator 2: Gross Domestic Product Growth Outlook

• Why it matters: Growth underpins jobs, fiscal revenues, and resilience
• Recent signal: International Monetary Fund forecasts show low-single digit gross domestic product growth for 2024-2025
• Implication: Strategic fiscal policy: invest in skills, green/critical minerals infrastructure, and digital adoption
• Source: International Monetary Fund, 2024 Canada Outlook ».]

Look, the growth outlook is not rosy. We're talking about 1% or sub-1% growth in our GDP. We're talking about organization after organization that's consistently said that we're not seeing anything in the 2, 3, 4, 5% growth for quite some time yet, and it's interesting that you're also seeing this kind of shift in the world where you've got India now which has consistently been growing at 6, 7%, from a small base guarantee, but you're seeing a lot of countries, especially in the industrial side, in the developed world, seeing very, very, very small growth. So, it's not like we're just going to find this massive shift and we're going to start growing at 3, 4, 5, 6% again. So, in other words, that productivity issue which is leading to the slow growth, we're not seeing anything that's on the horizon that's going to shift that equation in a fundamental way, in a quick way. Next slide, please.

[00:06:15 Text appears on screen :

« Indicator 3: Demographics

• Why it matters: Aging increases health care and pension costs, straining fiscal capacity
• Recent signal: Statistics Canada: 65+ population share rising steadily through 2050
• Implication: Reform pensions, health, and strengthen lifelong learning and immigration strategy
• Source: Statistics Canada, Population Projections 2023 ».]

There's more stuff on the slide. You can read it. You can go into more in the details. Demographics, right? I mean, we are an aging society. That's with immigration, I have to say. So, we are consistently aging, our median age continues to go up, and we are, as you know, now reacting to a public sentiment which says, I don't know if immigration is the right answer because all these other issues of housing and education and so on come with high immigration. And as you know, most countries have thickened their borders, well, you saw some of the protests in the U.K. and the U.S., here in Toronto, where people are like, no, we're not going to let more people in. So, on the one hand, you've got this aging problem. We've got the dependency ratio, in other words, the people who are not in the labour market who have to be supported by those who are in the labour market, and that ratio has come down in a very significant way. So, there's only so much that people who are working can pay in terms of taxes and so on. And then, there's the non-tangible costs or insignificant costs which are there for people who have to now care for the aged, and it largely falls to women and women who've already got their own kids to worry about and jobs and so on. So, the pressure that that has is also very, very significant. And so, there's a penalty that we pay in terms of aspirations and so on. So, demographics, and this is not going away, we're still going to be looking at the baby boomer generations, still going to have to make their way through and that's still going to take us 20, 30 years before we get to a differing of ratios. Next slide, please.

[00:08:04 Text appears on screen :

« Indicator 4: Immigration and Labour Supply

• Why it matters: Immigration can offset aging but requires skill management
• Recent signal: Support for immigration has declined, significant negative implications because of policy mismatches in fields such as housing, skills, and education
• Implication: Align immigration with skills demand, housing, education, and integration support
• Source: Immigration, Refugees, and Citizenship Canada ».]

Obviously, I talked a little bit about this. Immigration can offset, but the support is at some of the lowest levels that we've seen, and some of it is unfair but I think it is the reality and I think politicians do have to listen to public sentiment, and then so they have to make tough choices. And of course, in a global context as well, you have to make some of these things. And even with the immigrants that we do get in, we already have a massive problem with skills mismatches, and you can hear every Uber driver telling you about how. That sentiment has changed quite dramatically in the last 10, 15 years. Before, it was like, yeah, no, I got to double down, I got to work really hard, and my kids will do better and so on. Now, it's like, I can't wait to leave. So, it's a very different sentiment. The cost-of-living ratios that we can get into in terms of what it takes to buy your first house and compared to your income, before, it was like three, four times. Now, it's like 20 times. The time that it took to pay off the mortgage, that's how long it takes to save for your down payment, especially the young, and it's no wonder that they're either forgoing or delaying unions and not having kids. Our fertility rate is now down to 1.25. You need 2.1 for replacement. So, we're not going to just have kids and grow, immigration isn't exactly the panacea, and that demographic component does have a huge impact on our domestic burden as well as the kind of input that you have to have. Again, I don't want to put a whole negative side to this because the aged population do contribute in a very significant way. The caring economy does have a huge impact on our GDP, but it does have some implications for us. Next slide, please.

[00:10:08 Text appears on screen :

« Indicator 5: Research and Development (R&D) and Innovation

• Why it matters: Innovation drives competitiveness and sovereignty
• Recent signal: Canadian gross domestic expenditures on research and development declining with respect to Canadian gross domestic product and G7/Organization for Economic Co-operation and Development countries, Business expenditures on research and development are one of the lowest in G7 (20-year decline) and very few firms invest in R&D at scale, Higher education expenditures on research and development are okay but narrowing, Poor relative intellectual property/patent record
• Implication: Focus R&D in high-impact/growth sectors, A.I. governance and scale-up capacity
• Source: Statistics Canada, World Intellectual Property Organization ».]

R&D and innovation, so you hear about everybody saying, well, we haven't put enough into R&D, we aren't stimulating the kind of ideas and ideation and so on, and some of that is true. We are seeing government investments in R&D, in real terms, they've increased but not keeping up with GDP or not keeping up with our per capita. So, governments haven't been investing, but the business investments in R&D are really, really problematic. We are quite out of line with G7. Some of that is because of just the size of the firms that we've got. Go back to 1980s, if you look at, was a Canadian firm in the top one or two in the world in terms of dominant in an industry like mining or whatever? We used to have 19 or 20 of them. Today, we have three. So, we just don't have the kind of scale. And when you don't have the scale, well, where do you put the R&D? And then, of course, multinationals will move their R&D literally at the speed of light to wherever it is that they get best treatment. And so, that's also not great, and our educational investments in R&D are also narrowing now in terms of the relationship with other countries and so on, and I think you've heard many, many people say how we have such a poor regime when it comes to protecting IP and protecting, especially in the digital world, the intellectual capital that you need to grow and enforce what is yours. In fact, many have argued that we've been too lax and have given that advantage away to others for pennies on the dollar. So, I think there's something to be said about R&D, but again, it's not the only thing that's going to do it. We're going to have to figure out how to how to link government, educational institutions, skills and training, and the business world to see where it is that we can get the returns on these investments. Next slide, please.

[00:12:12 Text appears on screen :

« Indicator 6: Public Trust in Institutions

• Why it matters: Trust underpins legitimacy of tough decisions
• Recent signal: Edelman Barometer: declining trust in government, media, and business
• Implication: Build transparency, oversight, and communications
• Source: Edelman Trust Barometer 2024 ».]

And if that wasn't enough, public trust in institutions is at an all time low. If you've been following the Edelman Trust Barometer, the last survey that they did internationally showed that citizens don't trust anybody, like they don't trust CEOs, they don't trust governments, they don't trust NGOs. Before, there was, yeah, okay, we trust the government a little more during crisis moments and we trust CEOs more because they have our best interests at heart and they're going to make these differences. Now, they don't trust anybody. And in fact, even more disturbing is that two-thirds of the youth in Canada say that it's okay to become violent and to physically go up against institutions or organizations or people that don't agree with you. Now, I'm not saying that they're all going to actually do it but there's just that sentiment. I've never seen those numbers. So, it's not just, this isn't working for me, but it's okay to take up actions that are violent in nature. That's scary. So, how do we rebuild these tensions that we're seeing? That's a real problem. Next slide, please.

[00:13:31 Text appears on screen :

« Indicator 7: U.S. Trade Exposure

• Why it matters: U.S. is Canada's dominant partner; policy shifts have direct impacts
• Recent signal: 20% of gross domestic product depends on goods exports to U.S., 76% of all goods export go to the U.S.; 50% imports from the U.S., 94% of motor vehicles and parts; 90% of energy goes to U.S.
• Implication: Diversify markets, build resilient supply chains
• Source: United States Trade Representative, Reuters, 2023 ».]

Okay. So, obviously, I don't think I need to tell you, all of you have been following the Canada-U.S. relationship. 20% of our GDP is dependent upon that relationship. 75%, 76% of our exports go there largely in the form of energy and autos and manufacturing and parts. 50% of the imports that we've got come from the U.S. So, we are integrated and dependent upon that supply chain relationship that is North-South, not easy to exactly untangle and say, we're going to become sovereign. Even diversifying our markets, we've been saying that for 30 years, 40 years. We've brought it down a bit, there's no question about it, but not exactly a panacea or something that's just going to happen overnight. Next slide, please. Almost at 10.

[00:14:27 Text appears on screen :

« Indicator 8: Supply Chain Integrity, Energy Sufficiency, and Critical Minerals

• Why it matters: Sovereignty tied to secure supply chains, energy infrastructure, and critical mineral access
• Recent signal: Global race for energy (artificial intelligence), resilient and integrated supply chains and critical minerals intensifies
• Implication: Accelerate secure domestic capacity and allied partnerships
• Source: Government of Canada, 2023 Strategy ».]

So, this sovereignty that's related to supply chain integrity, energy infrastructure, even our critical mineral access, we're going to have to think about these things in a very different way. Anything that you do, you're going to have to add this notion of security, safety, and sovereignty to it, not easily done, right? Obviously, you're seeing a global race for energy. So, even A.I. takes huge amounts of energy. What are we going to be? Are we going to be a taker? Are we going to be a player? Are we going to house? Are we going to build? So, there's also the physical infrastructure that we're talking about. I think you heard the Prime Minister say that A.I. data centres that are sovereign are also going to be part of that infrastructure spend recently. So, we're going to have to think about both. We're going to have to think about our physical infrastructure as well as our digital infrastructure, and we're going to have to think about things like security and sovereignty as part of it, and yet know that 20% of our GDP, 75% of our trade are dependent upon our partner to the south. So, it's a careful dance, right? Without stepping over toes and so on. Next slide, please.

[00:15:42 Text appears on screen :

« Indicator 9: Cybersecurity and Defence

• Why it matters: Attacks on hospitals, utilities, transportation infrastructure, government services, financial institutions rising, Global instability and weakening of global consensus institutions
• Recent signal: Frequency and severity of cyber incidents escalating, domestic and international conflicts creating new fault lines
• Implication: Investments in national defence, cyber defence, standards, partnerships, lack of domestic capacity and successful track record
• Source: Canadian Centre for Cybersecurity, 2023 National Cyber Threat Assessment ».]

So, obviously, I don't have to say a whole lot more. I think you heard, right? Europe was down, there was a cybersecurity incident just over the weekend, but you're seeing this over and over and over again to the point where people become desensitized in a sense, like yeah, another cyber, but these are very real challenges that we face. It doesn't build trust between public and institutions when your data and your assets and your convenience of services are impacted by this. So, on the one hand, while we've got more digital, more A.I., we've got the cyber incidents that continue to increase, obviously defence we've talked about over and over again about how we have let that sector erode to the point where we can't even control our own borders. And so, it's now going to be a heavy lift in terms of building that defence component and hopefully some economic spinoffs. And our track record there, not great, right? We're not great at building big things and projects on time and on budget and so on. So, we're going to have to figure out how to get better at these things and build capacity, build a better track record if we're going to play in the club, if you know what I mean. All right, next slide, please.

[00:17:03 Text appears on screen :

« Indicator 10: Inequality and Youth Unemployment

• Why it matters: Inequity reduces social cohesion and opportunity, Decreasing trust in longstanding institutions exacerbates policy effectiveness, Misinformation and disinformation create new players of influence
• Recent signal: Youth unemployment worsening in 2024-2025, Media and social media
• Implication: Create targeted youth skills and job pathways
• Source: Statistics Canada, Labour Force Survey ».]

So, look, inequality is a big issue financially as well as just being able to socially have influence over systems and so on. So, it's not just an economic issue but this inequality of influence is also creating some real tensions in our social structure. I talked about the immigration dialogue, even though I would say that most of the facts go in the other direction. So, misinformation, disinformation, echo chambers, the whole social media, they further are exacerbating. And at the international level, look at consensus mechanisms, G7, what does that really mean, right? G20, UN, they're all struggling. WHO, WTO, they're all struggling, so this kind of post-Bretton Woods structure. So, who do you even go to, to say, this is our stance and can we build some kind of consensus on it? And then, secondly, make it stick, right? Talk about Paris21, etc., so inequality writ large within the country and as well in terms of allyship and who do you actually work with to make some of these things happen. Youth, I just want to single them out, real problem right now in terms of unemployment. In Toronto, for example, well over 20% of the youth, one-in-five, want a job, they're ready, and can't get one. What does that mean for their view and outlook for the future in their ability to contribute and be part of society? And guess what? They've also said, I'm not afraid to voice it, and you're seeing some of that in the States, you're seeing some of that in Europe, but it's not a foreign concept in Canada as well, media, social media, as I said, just exacerbating some of these things. So, how do you create the kind of skillsets? How do you create opportunities for that next generation? And it's not just an important issue for them. It's an important issue for their parents, it's an important issue for their grandparents. So, it creates major angst in society. Next slide, please.

[00:19:20 Text appears on screen :

« Policy Directions for Canada

• Productivity and innovation push (digital adoption, artificial intelligence, R&D)
• Workforce and immigration strategy
• Sovereign supply-chain resilience
• Digital and cyber governance
• Social cohesion and trust ».]

So, what are some of those areas that we are going to have to put a lot of focus on? I talked a little bit about productivity and innovation. I talked a little bit about our workforce and immigration strategy. How do we get those supply chains and that resilience in the way in which we can build on our economy both physically and digitally, and social cohesion and trust rebuilding, which is not exactly an easy component? I think that was it. Is there one more slide?

[00:19:54 Text appears on screen :

« Leadership Actions Needed

• Signal clear national strategy linking technology, skill, sovereignty
• Cross-portfolio governance breaking down data and knowledge silos
• Rapid capability (artificial intelligence safety, supply chains, physical and digital infrastructure, cyber units)
• Trust-first approach (oversight, transparency, public engagement)
• Increased ambition, empathetic, and courageous leadership focused on delivery
• Exceptional communications, data literacy, and system-wide thinking ».]

So, some real challenges for leaders, how do you kind of have a clear national strategy that links all these things together? How do you work across our silos and break them down, break the knowledge and break the kind of insights that are built and think more from a systems perspective? How do you build capability and safety at the same time, both, as I said, physically and digitally? How do you get to a trust-first type of an approach where you have that kind of oversight, transparency, and the engagement, genuine engagement? For a long time, public servants have been sitting around tables and only inviting people with voices they want to hear. That's got to stop if we're going to truly build the kind of inclusive structure that we need. Increased ambition, I think there's one thing that I just want to put out there, which is if people don't want to do big things at this moment, guess what? We're going to be takers, right? So, how do you increase that level of ambition? And with that comes a risk-taking ability and leadership, and how do you bring empathy and how do you actually build teams that want to work on really tough things? So, leadership has never been needed like today, and you're going to have to be exceptional communicators. You're going to have to be literate in the digital world and you're going to have to start to think about system-wide thinking, not easy challenges but all doable.

And I think that was the last slide, right? Surprise. There we go. Thank you.

Narration: The Canada School of Public Service hosts exciting and insightful events, workshops, and courses on geopolitics and national security. To learn more, contact the following e-mail address.

[00:21:53 The following e-mail address is shown: gnslp-pagsn@csps-efpc.gc.ca]

[00:22:03 The CSPS logo appears on screen.]

[00:22:09 The Government of Canada logo appears on screen.]