Toronto's next mayor should be the candidate with the most credible plan for creating jobs.
But unlike their counterparts running in the provincial election, mayoralty candidates can't promise tax dollars to subsidize massive new investments. The only tax revenue that cities have is the property tax. So there isn't a lot mayors can do in terms of fiscal action.
Moreover, today's unemployment is unlike previous economic downturns. Judging from the soaring stock market, these should be the good times. But they are not; we are seeing economic growth that's not generating a meaningful number of new jobs. Young workers are taking the biggest hit. Toronto's youth unemployment rate is close to 20 per cent.
One of the smartest chief executive officers in America, Google's Eric Schmidt, says that job scarcity will be the biggest public policy issue for the next two or three decades.
Why is this happening? We are still suffering the hangover of the obscene American subprime mortgage crisis and Nobel prize-winning economist Paul Krugman argues persuasively that major government stimulus will be needed for years to come.
But we are also seeing healthy companies shedding workers and technology is to blame. A recent McKinsey report noted that IBM's Watson computer diagnoses cancers with much higher levels of speed and accuracy than skilled physicians do. The same software combined with robotics, 3D printing and myriad other innovations will eliminate jobs throughout the workforce.
Our mayor must understand the key to job creation is entrepreneurship. Canada needs to become an innovation economy and with Toronto at the centre. Close to 80 per cent of new jobs come from companies five years old or less. Entrepreneurship requires innovation, money, partnerships and above all, entrepreneurs.
Our college and university graduates want to create businesses, but we lack a fertile environment for them. There is hardly any angel funding. Venture capital is tiny and doesn't invest in early stage companies.
Banks and most pension funds don't do venture investment.
There are good initiatives, such as Toronto's MARS, to help overcome this. And some programs for government support exist -- but they are feeble compared to what's needed.
Our next mayor can make a difference in five ways.
1. Advocate. Our mayor can campaign for tax changes at the federal and provincial levels of government that would benefit cities. But she or he has to get this right. Research shows lower corporate taxes won't lead to job creation, but rather bigger profits and wealth for a few individuals. And Canada already has one of the lowest corporate tax rates in the western world.
A more sensible law would be to extend Canada's unique Flow Through Shares. They have an excellent track record of encouraging investors to fund exploration in minerals and energy. Because exploration is high-risk and the new companies have no assets, the government allows individual investors to purchase shares, where the write-off flows through back to them right away. A similar concept applied to early stage technology and bio-tech companies would trigger a wave of angel investments.
2. Convene. We need our city to become the start-up capital of the world. Our mayor should launch a Start-Up Toronto initiative, convening a huge summit of universities, businesses, government officials, non-governmental organizations and others. S/he can curate initiatives across the city that can kick-start entrepreneurship.
3. Partner. Toronto needs new kinds of partnerships, and a mayor who can connect ideas with the people who have the hustle and savvy to make things happen. Toronto is already one of the best places for investment and our mayor needs to be like the best U.S. mayors, beating the bushes around the world.
We also need new partnerships with the province and federal government to get the funds for big infrastructure projects. The cities we are competing with in the U.S. get big funding for important projects. Fully 80 per cent of the funding for Big Dig that buried Boston's waterfront expressway was from the federal government. We need a rethinking of federalism. As urbanist Richard Florida says, "Toronto needs the resources of a province to become a truly global city."
4. Streamline. Small businesses should be able to access city hall online. And we need to clear the deck, eliminating unnecessary red tape for entrepreneurs and businesses. For two years the Great Gulf Group has been working on a massive new development for Toronto's docklands. City planners have been very helpful. But our mayor needs to get involved and work closely with developers like this to safeguard the public's interests but also to expedite municipal processes.
5. Champion. Who will be the entrepreneur's mayor, celebrating initiatives such as Ryerson University president Sheldon Levy's plan for up to 20 per cent of students to graduate with their own startup? Who will champion Toronto's young entrepreneurs?
This article originally appeared in The Toronto Star.
Don Tapscott is an adjunct professor at the Rotman School of Management, University of Toronto and Executive Director of its Global Solutions Network program. His most recent book is Macrowikinomics: New Solutions for a Connected Planet. @dtapscott