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Montreal’s economy lagging, study shows

The Montreal skyline

Graham Hughes/The Canadian Press

Montreal is about to celebrate its 375th anniversary, but Quebec's economic engine is not aging gracefully. So alarming is its decline that a group of business leaders is pleading for urgent action.

"Montreal has been slowly decelerating for 15 years, and now it shows. Another 10 years of this and we will be in clear and present danger," said Jacques Ménard, chairman of BMO Nesbitt Burns and president of the Bank of Montreal in Quebec.

"The 'Quebec Model' is not poverty," he said, referring to the province's social programs. "Solidarity is nice – bravo! But we need to give ourselves the means to be even more generous."

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Mr. Ménard's stark comments are inspired by a report he commissioned in 2012 to the Boston Consulting Group (BCG). The banker says his initiative is apolitical, and BCG worked pro bono to produce a 161-page report that is based partly on interviews with 57 Montreal leaders.

The study, to be released Tuesday, draws an unflattering portrait of Montreal. Compared with Calgary, Edmonton, Ottawa, Toronto and Vancouver, the city's performance in the past 15 years pales.

Montreal had the slowest GDP growth, at 37 per cent versus 59 per cent, on average, for those five Canadian cities. It had the highest unemployment rate, at 8.5 per cent, on average, compared to 6.3 per cent in those cities. And its demographic growth rate was half that of those Canadian cities.

But the report recounts how seven cities rebounded after rough times and doesn't give into pessimism. Based on knowledge learned in Boston, Manchester, Melbourne, Philadelphia, Pittsburgh and Seattle, the study points to directions Montreal could take to rebrand and revitalize itself in the next decade.

"This is a call to action," Mr. Ménard said. "This was done elsewhere and we can do it."

Montreal's problems are often attributed to its intricate political organization. This has been an enduring debate since Montreal boroughs merged in the early 2000s, only to see a number of them de-merge in 2006 following referendums. But looking at Boston and its numerous city halls, Mr. Ménard believes that, while Montreal's governance could be better, the city's structure is not the issue. "It's all about leadership," he said.

After his first 100 days in power, Montreal mayor Denis Coderre has brought a new resoluteness to a city hall long mired in corruption scandals. "Mayor Coderre will play a key role, but this isn't something he will be able to do alone," Mr. Ménard said. All the business and cultural leaders will need to back the city's turnaround.

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One problem that plagues Montreal is its lack of powers and of fiscal resources. "Montreal has as much economic levers as the city of Mascouche (population 42,000)," deplored Mr. Ménard.

Montreal, he argued, needs an acknowledgement of its importance akin to the Toronto Act of 2007, by which Ontario recognized the role the city plays in the province's prosperity.

But Montreal holds little sway over provincial and federal politics. "The reality is that elections are never won or lost in Montreal. But at some point, elected officials will need to realize that Quebec and Canada's economic recovery goes through Montreal," Mr. Ménard said.

With 3.8 million people, the greater Montreal area represents 53 per cent of Quebec's GDP. More than 80 per cent of the province's R&D is also conducted Montreal.

In his last budget, Quebec Finance Minister Nicolas Marceau reinstated a $25-million annual payment and extended $125-million to Montreal initiatives with an eye to the city's 375th anniversary, in 2017.

But Montreal also needs to seize the opportunities that lie ahead. The federal government is pressing on with the reconstruction of the Champlain bridge. And Quebec is about to inaugurate Montreal's two new super-hospitals.

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"These are not only service centres, but research institutes that could innovate and produce patents, and it would be a shame not to capitalize on this," Mr. Ménard said.

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About the Author
Chief Quebec correspondent

Sophie Cousineau is The Globe and Mail’s chief Quebec correspondent. She has been working as a journalist for more than 20 years, and was La Presse’s business columnist prior to joining the Globe in 2012. Ms. Cousineau earned a master’s degree in journalism from the University of Illinois and a bachelor’s degree in economics and political science from McGill University. More

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