Former Bank of Canada governor talks global volatility in Saskatoon


Former central bank chief Stephen Poloz says companies, individuals likely to bear more risk as government capacity wanes.

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Stephen Poloz, former governor of the Bank of Canada, predicts rising global volatility in his latest book, The Next Age of Uncertainty.

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Poloz was in Saskatoon this week to give a talk at the University of Saskatchewan’s College of Law. He spoke to Postmedia about the economic challenges he sees ahead.

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How do you think Saskatchewan is positioned to handle the coming changes for the global economy?

Well, first of all, the prediction that we’re in for a more volatile future would be independent of how well prepared you might be for it. You might be more resilient than anybody else — and I would say that’s probably the case for Saskatchewan — but it doesn’t change the fact of macro volatility; Lots of interest rate fluctuations, booms and busts in the economy, lots of financial volatility. That’s essentially the prediction that comes from a framework that looks at the longer term forces that are acting on the economy.

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But ask yourself, what can you do to prepare yourself? Well, you want to invest in resilience. And some of the stressors that are coming our way are things that Saskatchewan is well positioned to contribute to. So, you know, the three-legged stool of existence; food, water and energy. Saskatchewan has an endowment that starts it in a strong place on two of those; food being an obvious one, and not just food production, but also one of the main ingredients, fertilizer production. And the other leg of the stool is energy; I think we’ll be forced to consider growing our reliance on nuclear energy in the future, and, of course, Saskatchewan is well-positioned for that, too.

Do you think our political system can deliver solutions?

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No. I’m not all that confident on that question.

Like, let’s look at the pandemic: Governments, not just in Canada, but governments in general did a really good job of buffering that for people. You can quibble with whether this, that or the other thing was perfect, but that’s from people who weren’t in the middle, in the fog of war, you know, getting it done.

I think, especially for fiscal action, it was extremely well done, all around the world. So take that, and you may ask, ‘well, why can’t they just keep doing that?’ The answer is that the demands being put on governments are growing substantially. First, you have a huge debt legacy from what we just did. That’s a burden that has to be dealt with as we go forward. And secondly, the fiscal drag coming from an aging population will cause the fiscal outlays to continue to grow, you know; Health care, elder care, the other draws on the system.

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So, all that combined with divisive or polarized politics, which is a clear trend in the world. And I think at its root, it comes from rising income inequality, the sense that some people are being left behind by technology, well, that’s just going to get worse.

That’s why, in my book, I argue that it will be companies and individuals who will deal with risk, not governments to the extent they did in the past.

Overall, how optimistic are you for Canada’s ability to weather the next decade?

I’m actually quite optimistic about Canada, because it has such a strong starting point. And such a diverse, diverse economy, strong education system, great workforce. So, we have all of the ingredients to do really well to build our own resilience, invest in it, and be more prepared for this future.

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But I think what’s maybe missing is the ability to provide clarity, you know, so that businesses can invest with confidence for longer term investments, they can decide they’re going to make a major investment that involves a project, and they have clarity on the process they need to follow. We often aren’t very clear about these things, right?

We we need to find ways to provide more certainty to businesses, and then I think they’ll invest in the things that keep us more resilient and strong throughout this more challenging future.

Questions and answers have been edited and condensed.

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