We gathered Canada’s experts to solve Canada’s productivity problem. Here’s our complete coverage of everything they said
2:30 p.m.
The view from the Official Opposition
What’s the view of Canada’s productivity crisis from the Official Opposition? We are now hearing from Adam Chambers, Member of Parliament for Simcoe North. He is the shadow minister for Canada Revenue and a member of the House of Commons Standing Committee on Finance. He is also a leading policy thinker within the Conservative Party.
Chambers is being interviewed by PPF Fellow Sean Speer, Editor-at-large at The Hub. Speer was also a senior economic advisor to former Prime Minister Stephen Harper.
Speer wants to start by diagnosing the problem. If economic stagnation is the biggest challenge facing Canada, do we have the ability to do something about it, he asks.
Chambers says the short answer is yes. He adds,“We all believe there are things we can do to improve the economic output of the country.There’s policy objectives and choices that the government can make. But there’s also a process. The development process, if you believe there is a productivity crisis, the machinery of the government doesn’t really reflect that.”
On productivity, he says, “How many mandate letters have the words productivity in them?” If you care about the outcome, your entire process should be designed around that outcome… What gets measured gets done.”
He adds, “There’s a budget next week, he notes. Will it have a GDP per capita measure in it? The last budget did not.”
Building on the issue of productivity, he says “There are lots of opportunities on the policy side that could help with productivity. But we should demand from the machinery of the government a big focus on it.”
Sharing his views on the government’s work, he says “This government has applauded itself for introducing gender-based analysis for everything they do. Maybe every decision this government makes should also have a productivity lens too.
Speers says Chambers is arguing for a mindset shift in public policy circles. That we’ve neglected questions of economic output and productivity growth. He wants to know how we came to underemphasize economic output and productivity and how you think we need to address that underemphasis,” Speers asks.
Look at the past decade. How did we get here? As an example, the new PM says Canadians should be known for resources and resourcefulness. I think we’ve missed an opportunity to deliver to the world what is being asked of us: resources.
Investment dollars have flowed elsewhere. And by the way, he says, the extractive sector is highly productive.
Speers asks about a speech Pierre Poilievre gave in which he said his focus would be the interest of working class Canadians. How is the Conservative Party thinking about economic and public policy in general?
I believe this to be true: the biz interests in Canada have Canada’s interests at its core.
What needs to happen? Provide an idea, but then build a coalition of employees and Canadians that agree with the idea, says Chambers. “We can’t assume economic decisions will get made in a vacuum without the input of Canadians.”
Take for example the decision on capping the excise tax on alcohol. Union and corporate interests came to the government and said we don’t think you should do this. “Employee and employer interests aligned on government policy. That’s a pretty easy decision to make.”
Speer takes an audience question. Is something not working right in Ottawa. Can we expect greater efficiency in the federal government under a Conservative government?
The size of the public service has grown substantially. But government has had a challenge executing on other areas.
Speer asks Chambers to talk about some of the policy areas the Conservative Party is looking at.
“I’m supposed to say ‘axe the tax, build the homes,’” he jokes, to some laughter in the room.
Chambers says he gives the current government credit for being ambitious. But not great on its follow through. He hopes to see the next government reprioritize on things that are squarely in the federal government’s wheelhouse, especially defence. That’s a personal view, not party policy, adds.
Speers says that he’s hearing a greater focus on priority setting and that there needs to be a rebalancing or shift of priorities and that productivity will be a focus of a Poilievre government.
“We need to bring more people along in the policy-making process than we have in the last 30 years.” That will result in a broader consensus before decisions get made.
That’s all from the Growth Summit! Thanks for following along. Keep following PPF on LinkedIn for more in the coming days.
1:40 p.m.
How can we use federalism to promote productivity?
The next panel is somewhat unprecedented. It features four secretaries to cabinet. We’re hearing from:
-Ray Gilmour, Deputy Minister and Secretary to Cabinet with the Government of Alberta
-Laura Lee Langley, Deputy Minister of the Office of the Nova Scotia Premier, Deputy Minister of Treasury Board, Clerk of the Executive Council, and Head of the Nova Scotia Public Service.
–Shannon Salter, Deputy Minister to the Premier, Cabinet Secretary and Head of the B.C. Public
-John Hannaford, Canada’s 25th Clerk of the Privy Council and Secretary to the Cabinet.
The panelists are all grappling in one way or another with how to bring greater productivity to the public service, from using tools like AI, to better collaboration with other levels of government.
The discussion kicks off with intros from moderator Brett House, a PPF Fellow, a professor at Columbia University, and a former Deputy Chief Economist at Scotiabank.
What are some of the areas where federal and provincial collaboration are working, House asks the panel.
“Whenever we’re involved in a major emergency we have great interaction not only with Ottawa but other provinces as well,” says Gilmour. Good or bad, he said, “We get to see it on a fairly regular basis,” he says.
Alberta has also seen billions in investments that wouldn’t have happened without federal collaboration, he said, citing an airport and plane industry.
“There’s lots of examples where it works very well and the cooperation is showing the results.”
On what the province is doing on regulations, Langley highlights “What we are focusing on is regulatory reforms and alignment. We have Regulatory Reform and Service Excellence in Nova Scotia that helps increase productivity and also helps ease things for people moving to the province. We are Working with sister provinces to harmonize and align the regulations to make sure if you are moving goods across provinces, you don’t have to stop and change trucks.”
Salter begins by noting that B.C., liek other provinces, had a historic wildfire season. And we’re likely headed for another one, she adds. Salter credits support from the feds and other provinces to coordinate resources.
She echoes comments about the need for greater investment. “The scale is too big for the province to capitalize on its own.” It needs the feds to make an impact in this incredibly competitive environment to attract investment, she says.
Housing, for instance, is just such an emergency and imperative in B.C., says Salter. It’s an area where there has been strong collaboration with the federal government.
That is one real strength in a federation. “It can be helpful to think of the federation as 13 labs where we can try ideas and take the very best of what we’re learning together,” says Salter.
From an Ottawa perspective, Hannaford says, “We need to acknowledge that the context in which we are operating is incredibly complicated.”
“Inherent in every federated system is there are always going to be different approaches. But I’m struck by how capable we are,” he says, referring to the response to COVID.
“As you look forward to some of the challenges we have – geopolitical, environmental – there’s also all sorts of opportunities for mustering our strengths.”
House says productivity is more of a chronic problem so how do we leverage some of that creativity to an ongoing issue.
Hannaford says “We need to have a shared sense of what it is we’re trying to fix.”
AI is one of those challenges that will have profound effects on productivity “and is moving super fast as well.”
“These are real opportunities for us to be working in the federation generally as to application for technology,” he said.
About learning lessons from being the Clerk Lee says, “On Federalism, it is important to ask have we grown with the trends? We can’t boil the ocean. In our province, it’s important to look at what we can do together? Is there a continuum we can lean into?”
Gilmour says, “We always succeed when we get pulled together.”
But it’s more challenging to find commonalities for ongoing issues.
“No two province’s economies are driven by the same factors or variables. You can’t say this square peg goes into this hole. It’s an opp to work together and land on some of those common factors to allow us to expand,” he said.
How can we do even better, House asks.
Salter says there is a public education challenge, in part. But there are three key areas governments could do better.
First, reducing internal trade barriers and recognizing credentials. “These are things we need to do to make this a good place to invest. It needs to be table stakes.”
Second is immigration. “We know we need to attract the brilliance and diversity of people around the world.” Foreign credential recognition is part of that.
Third is being strategic about investment. We see success where provinces and the feds “agree strategically on a few sectors where we have a competitive advantage,” says Salter.
Hannaford says the list of challenges is compressing. He mentions the anticipated wildfires this summer and the geopolitical issues facing the country. “We are pretty good at rising to challenges. If we start at what i is we’re up against, and what the solutions are to address those things that becomes a bit of an opportunity for us. I don’t think it is a simple short-term and long-term solution any more. Timelines have become more compressed.”
Gilmour is asked how we institutionalize those collaborative conversations.
“The big thing is we need to talk about productivity more because the standard of living in tis country has dropped and we need to get it back.” We do need to make it a priority to make capital investment.”
“The other thing is to be able to operate the policies that we implement.”
Implementation takes more work to operationalize than develop a policy.
“Policy rarely goes sideways on itself. It goes sideways on how it gets implemented and how it moves forward,” he said. “It’s not easy with the pace things are happening these days.”
Langley, on the relationship between provinces and federal government says, “We need to have crunchy conversations that don’t destroy the relationship. But if we are feeling that we are not having a safe environment to address some issues then we need to look at it. It’s not just for the conversation between the provinces and the federal government but also between provinces.”
On Atlantic provinces, she highlights: “For Atlantic Canadians, we can do so much better together especially in health care. We all need doctors, nurses, paramedics and better systems. Why would we not pull those resources and have the very best for our population?”
Langley says, “We need to be brave enough to have these conversations to see what kind of a difference it can make for Canadians. We need to see what Candians want and need.”
How do we ensure that best examples of success get implemented, asks House.
There is space for better mechanisms to share information, says Salter. We are all our own little countries in our minds, she says about provincial focus.
That’s a bunch of complaining, she jokes. There is a huge space for more conversations, she says. There isn’t great sharing of what works and doesn’t work.
Interprovincial connections and relationships between deputies matter. “We all have shared problems,” she says. Shamelessly steal each other’s ideas.
Langley shares, “We are a small province and we can try things. We can scale them up if it works out.”
On policy work, she adds, “Policy development needs to happen holistically, We are in the Westminster system so we have all faced silos. We have appointed 4 executive Deputy Ministers and they were intended to lead policy discussions including infrastructure, finance and economy dn for convening relationships.So far, the experiment is helping us. Other Atlantic provinces have been reached out and told about what we are doing.”
Interprovincial trade barriers
In Alberta, Gilmour said, “We dropped 80 or 90 percent of our restrictions we had across the country. The driver was, how can we present the province to the world to be one of the best to attract investment and enhance our productivity to go forward.”
The province’s red-tape reduction, “wasn’t focusing on one industry or two. We’ve eliminated about 33 per cent of our regulatory burden over the last four years – how easy is it to understand, is it technically workable? It was just a mindset at the time of the government, we’re going to open up and do everything to be as competitive as we can,” he said.
Salter is in agreement about the need to cut restrictions, especially around credentialing: “Everyone sees this has to be the way of the future.” By 2030 B.C. will have a million job vacancies. We can’t get the people we need to support an aging population.
Administrative burden needs to be eased too, urgently, she adds. Adding rules and regulations and forms is common, but rarely is there stepping back to consider the burden.
Hannaford gets the last word on systems that work well federally and internationally.
“What’s being described is critically important because of the international environment we’re in,” he says.
“We are in a different environment for trade. The globalization project is different now than it was 15 or 20 years ago. If we have barriers internally holding us back, that has an international competitiveness consequence. That kind of structural reality should have us thinking creatively right now.”
“Ultimately we are operating in a world that is just much harder,” he finishes.
If you want to hear more from John Hannaford, he was a recent guest on WONK.
1:08 p.m.
Untangling immigration and productivity
Canada could once rely on an expanding work force to fuel growth. Immigration brings in-demand skills, entrepreneurship and fills labour gaps. But is Canada’s immigration system still set up to be a driver of productivity?
We’re hearing next from two experts on Canadian immigration.
Rupa Banerjee is the Canadian Research Chair of Economic Inclusion, Employment and Entrepreneurship of Canada’s Immigrants at TMU.
Mikal Skuterud is a professor in the Department of Economics at the University of Waterloo and the Director of the Canadian Labour Economics Forum.
What is the relationship between immigration and productivity, Banerjee asks Skuterud.
Skuterud says immigration does have the potential to boost economic growth. But what that potential is “it’s pretty clear it hinges on trying to attract and retain the top minds of the world…. To make the population smarter. But we’ve moved very much away from that. We’ve moved toward an immigration system that doesn’t move toward skill in recent years. I see that as being a big problem.”
Labour shortages are an opportunity. “The way we think about how economies work is backward. Economies are very organic, very good at repairing themselves, that happens through price adjustments and preparing incentives. We need to think about letting the markets deal with labour shortages. How do you do that? You make your workers more efficient by investing in tech that makes them more efficient.”
We need to start using our immigration for driving growth. Let’s…focus on immigration to drive the jobs of the future for Canada.
Banerjee asks: If you had the magic wand right now what changes would you implement?
Prior to 2019 we had a great system for economic immigration. We’re prioritizing lower-skilled workers, truck drivers and farm workers over computer workers.
“We’re so obsessed with these labour shortages we’ve sort of turned the whole thing upside down.”
What about caps on foreign students, asks Banerjee.
“I worry about caps. Putting a cap on any policy dimension. Social planning and economy doesn’t always work so well. Get out of the way and let labour markets do what they’re good at.”
International students graduating from the computer science program at the University of Waterloo are doing remarkably. But the number of those students have been declining. But down the road at Conestoga College they’re exploding.
“We need to get back to a singular focus on attracting talent. If you care about productivity” that’s what we need to do.
You can also catch Rupa Banerjee on this episode of WONK, explaining the evolution of Canada’s immigration system and what’s gone wrong.
11:50 a.m.
Is AI the answer to Canada’s productivity issues?
Our next panel is on the landscape of AI and how we use it to gain productivity advantages; moderated by Shingai Manjengwa, a leading AI educator and thinker and the head of AI education at chainML, a research and development firm. She is joined by panelists:
Simon Kennedy, Deputy Minister, Innovation Science and Economic Development, Sue Paish, CEO of Digital (one of Canada’s global innovation clusters), and Chris Barry, President, Microsoft Canada.
AI is seen as both a threat – a potential killer of white collar jobs and a security risk – and a massive opportunity. It is a transformative technology.
Kennedy sets the stage. “The tech is very powerful. A general purpose technology that will have a transformative impact.”
But when you look at the speed of its development, he says, “it’s important to note that Canada has traditionally been slower to adopt technology than a lot of our peers.”
Plus, there are fears being raised about our adoption of AI, like concerns about misinformation and existential fears about building smart machines. It will also require vast amounts of power and tech. Who controls that, asks Kennedy.
“Fundamentally we’re talking about people being more efficient in the work they’re doing. The implications for AI in that regard are pretty profound. We’re already seeing this play out in some of the products we’ve released to market,” says Barry.
“What (AI) allows folks to do is concentrate on higher order thinking.”
Barry acknowledges, however, there are concerns about job losses, but he cites typing pools as one example of a lost job that has been engineered up.
Sue Paish on the adoption of AI says, There is an “opportunity for Canada. In the U.S. 60% of companies are exploring AI and only 37% of companies in Canada have adopted AI so far.”
On what Digital does, she says, “Digital helps small Canadian companies get comfortable with the adoption and development of technologies.”
The challenge we have is that Canadian SMEs can’t sit on the side and wait for the AI playbook to come out.
Manjengwa asks: Where do we need to put more emphasis and work harder?
The fundamental problem of tech adoption is many years old, says Kennedy. When business had to do it as a matter of survival, they did it during the pandemic. But generally it is not happening quickly.
“The worry will be if you don’t start taking action, you’re going to be left behind.”
“If you are a board or a CEO, you need to worry about the risks,” says Kennedy. But if you’re not looking at adopting this technology and moving forward, “someone else will take advantage of it and eat your lunch.”
Manjengwa says Microsoft has been integral in getting businesses up and running over the pandemic but what’s happened to that momentum?
“Some organizations embraced the concept that maybe we can be more forward in the adoption of technology,” said Barry, who said that Microsoft supports regulation of AI.
“Forty per cent of people saving half an hour a day is an 8 per cent lift in productivity,” he said.
Sue Paish on how to look at the issue states, “Let’s just look at how sports is looked in Canada. ‘Own the Podium’ – we want to come first. Having an attitude of owning the podium in the adoption of AI is what we need. We don’t want to come second or third. That’s not going to help us achieve productivity”
On the world view about Canada, she says, “Other countries want to work with Canada, We are trusted. We have world leading R&D which is critical when you look at AI. We also have a demographically diverse population. However, people will not work with us if we are going to be slow.”
On Canada’s work on AI, Paish highlights, “We have world leaders and companies of AI in Canada. We need to feel prouder.If we wait for the government to solve it, we’ll all retire. It’s on us.”
Regulating AI
Kennedy: Where do we need to go next? Looking at adoption, firepower, and on the regulatory front, he says.
Compare it to electricity, he explains: You have many codes and standards. A big accumulation of regulations that has developed over decades. As there should be, he says. It’s very dangerous.
AI should be the same, he adds. Regulatory schemes will be developed to bring along more certainty. It’s a fast moving technology and we can’t predict everything it will touch. We need to start with a basic prescription.
On the regulatory framework, Kennedy says: “The state is nowhere near ready to pronounce on all the details. I think we’re not bad in terms of being out of the gate with something reasonable and sensible… that will evolve over time.”
Sue Paish agrees on the need to have “clear pragmatic regulation.” She stresses, “we need a harmonized regulatory environment for AI. It is a regulatory issue for SMEs in Canada who have to navigate 13 different regimes and find spaces outside of Canada to do business.”
Barry says it is also true that as we woke up this morning there are 700 million people in this world who don’t even have electricity. In the U.S. by 1930, about 90 per cent of America was electrified but large swathes of rural was not,” he said. There was almost a roadshow developed to sell rural communities on the idea of electrification.
“We need people to be getting their hands on this technology. There’s a democratizing force to it,” he said.
His call to action: “If you’re not using these tools on a daily basis you should. Largely it is about how to write a good query to get the answers you need to be effective. Exposure alone will help bring down the mystification of technology,” says Barry.
Paish ends on a positive note, giving another example of how tech adoption in Canada is helping the country: “Getting an ultrasound in rural Canada takes thousands of dollars. With homegrown technology development, now a handheld ultrasound, infused with AI can help interpret the scans in rural Canada.”
Last word to Kennedy.
What’s so exciting about a major development like AI are the big policy questions that it brings to the fore and the societal shifts it will bring, he says.
“We have the ability to determine how we use the technology. We can make sensible choices.”
To check out PPF’s interview with Shinghai (or was it a bot?!) listen to this episode of PPF’s flagship podcast WONK: Why we shouldn’t fear AI
And if you want to learn more about AI and its opportunities and challenges, check out our course AI Policy Compass.
The Growth Summit is breaking for lunch! We’ll be back with more coverage soon….
11:30 a.m.
How housing is hurting productivity
We’re sticking with the housing question and its impact on productivity. The next panel is moderated by Zi-Ann Lum, from POLITICO. She is joined by experts Ramtin Attar, the Co-Founder & CEO, Promise Robotics and the former Head of Autodesk Technology Centre in Canada, and Ana Bailao, the Head of Affordable Housing and Public Affairs at Dream Unlimited Corp, as well as former Deputy Mayor of Toronto.
The lack of affordable housing has become a major drag on economic growth, quality of life and health in Canada. It can even impact innovation and entrepreneurship.
Attar’s company embodies both. Promise Robotics was founded to help the building industry address labour shortages. He uses tech that is the basis for builders to create housing factories.
“I started doing work on housing when we could barely get a headline about affordable housing,” says Bailao. Much has changed.
Lum flags the CMHC report that 3.5 million homes need to be built by 2030.
“Before we had a supply issue we had a productivity issue. Most people realize that construction had negative productivity over the last four decades.”
“When we think about the industrial opportunityfor an entire sector we think there is a massive opportunity,” he said.
Bailao says “the amount of capital needed for 3.5 million homes is quite concerning, scary. We need private sector and public sector involved to attract the capital that is needed.”
We need much more to change and quicker approvals, she adds. “Labour shortage is in the minds of everybody and needs to be dealt with.”
“When you look at what does it take to build a home: 50 percent is labour, 30 percent is taxes and fees, 20 percent is land,” she explains. “Everything has skyrocketed. The math is not working right now.”
We need a two-track approach. Policy that gets that math to work and structural changes, in zoning for instance. If not: “Next year we are going to be in a worse position if we don’t.”
Lum asks what will lower the square foot cost of construction. 22 trades are required to build one single-family home.
“We don’t take a wastebin into the site. There’s no wastebin. We need to make up for a century of missed opportunity for an industry that has not industrialized,” says Attar.
“Capital often seems to be the problem but the world is always thirsty for transformative stories and that’s what catalyzes capital.”
AI in homebuilding
Emerging uses for AI in home building “AI has the potential to really transform automation.”
“We’re creating a robot with the greatest toolbelt that can analyze a design and say I know how to put this floor together, I know how to put this wall together,” he said.
“We think the next gen of AI is how we manipulate the world. How do we create an AI system with a great tool belt around it?”
And what about the different ways that people are living now, asks Lum.
Bailao says giving people options is essential. Financing is needed for projects that give people options and regulatory processes need to be simplified. Everyone wanting a single-family home is no longer the reality.
Does the narrative around the housing crisis need to be reframed to grow the manufacturing sector, asks Lum.
Attar wonders why we’re not doing the same for housing that we’re doing for EVs.
“Within housing there are two things that work. One is modernization of the industry, how we develop labour for the future. We don’t only have a labour shortage, we have a skill shortage,” he said.
“Construction is one of those areas that not only addresses housing but where we could place a big bet that could be a big trading opportunity,” said Attar. It’s something he thinks we could take out to the rest of the world.
On the opportunities ahead, Bailao says: “The way we are building our communities, addressing climate change and mobility. This is an opportunity we cannot afford to miss.”
Getting purpose-built rentals fast-tracked should be a focus, she adds.
11:10 a.m.
A Q&A with the Minister of Housing, Sean Fraser. New measures coming, he says.
Canada’s housing shortage has become a big drag on productivity. Without enough housing and without the industry that surrounds it, growth is a big challenge. The government of Canada has, lately, been spending billions trying to boost housing supply across the country.
We’re hearing now from the housing minister himself, Sean Fraser, in conversation with Lisa Raitt, a former cabinet minister and the co-chair of the Coalition for a Better Future.
Raitt takes the stage and says that Fraser is just busy casting a vote in the House before he joins. She jokingly volunteers to cast his vote for him. Both agree that would not go over well.
She asks about the minister’s remarks in Ottawa in the last week.
“We need to acknowledge we are in a housing crisis. It is throttling our economic potential,” he says.
On what we need to do: “Build more homes by reducing the cost of building homes.”
“Everybody I chat with who are younger than me are rarely talking about owning a home. There is a deficit of hope among young people,” he says.
“People are happy to rent but there are others who want to own a home and raise a family. It’s incumbent on us to provide that. It’s my job to help people achieve home ownership”
One of the items recently announced by the government is around manufactured housing. People might think, “I don’t want to live in a trailer,” says Raitt.
“The homes that are manufactured today don’t look like the ones of a number of years ago. A national home design catalog can show to people what the homes in the future can look like.” These are spacious homes with amenities in a walkable distance.
“We are not saying traditional homes will not be built but we can build homes with different designs,” he says.
Raitt asks him to draw the link to productivity.
It’s the biggest bottleneck, he says.
Productivity is a problem we can solve collectively with the right measures to build homes. “We need to grow the Canadian homebuilding workforce. We need to train the workforce to build more homes.”
And Canada needs to target programs to attract the people who can build homes.
Construction is the lowest-cost barrier to enter the industry, he says.
Raitt: “You said, ‘we’re building.’ But the federal government doesn’t build. You need to work with provinces and territories and First Nations.” We need to work together, she says. So why is the government telling municipalities how to build?
Fraser says there is good alignment when working on a housing catalog and tax policies. “You will never get everyone to agree on everything. But we all agree we need to build more homes. The differences are in how we do it.”
“We can’t tell cities to do something because we don’t have the authority but we can incentivize their decision-making.”
On the federal government’s role in student housing, the Minister says, “We made a major change to the apartment construction loan program. We made student housing eligible under it.”
Fraser says the government will be releasing a full plan to solve the housing crisis tomorrow.
It will build on the announcements and work so far, he says. There will be support for homebuilding factories, measures to build affordable housing stock, and additional measures, to be shared later today, to make it easier to get into the market for the first time.
How long do I have to wait to find out if my taxes are going up, quips Raitt.
Fraser add that he has not lost sight that he is also the Minister of Infrastructure.
“We don’t want to build storage units for people. We want to build complete communities. It demands that we invest in recreational facilities, community assets.”
10:24 a.m.
Who’s leading the way?
The next question on the agenda is around leadership and productivity. What role do business and business leaders have in boosting productivity? And what does the productivity crisis look like from the CEO’s chair?
POLITCO’s Luiza Savage is moderating the discussion with Ehren Cory, CEO of the Canada Infrastructure Bank, Murad Al-Katib, President and CEO of AGT Food and Ingredients Inc., and Victoria Lee, the President & CEO of Fraser Health.
Savage begins by noting Canada’s long history of struggling with productivity – 23 years at least in her experience as a Canadian journalist on the beat.
She takes an informal poll of the audience. What’s the cause of the productivity gap? Is it a failure of private sector leadership? Many hands. Who doesn’t think it’s a problem? No hands!
Where does the blame lie? Cory says there are two sides. We need to be connected with transit and trade and Internet connectivity. So “government has a bigger role than average just given our starting point as a country that is vast” and trade-dependent, he explains. On the other hand, the private sector isn’t making big bets, he says.
Victoria Lee says it’s both – the private and public sector.
In health care, she says, “There are so many opportunities in terms of productivity and innovation. The policies to enter the market, the barriers are very high,” she said.
“On the private sector there’s a lack of imagination, collaboration in making those bold moves,” she said.
Al-Katib says the “regulatory burden is part of the reason we have a productivity gap.”
“There is a general failure of the capital markets within the Canadian system.”
“We need to recognize that Canada is a producing nation, and one that needs to export. That means we need to invest,” he says.
Speaking to the role of leadership in productivity, Lee says public organization is often seen as a cost centre. But, “Health is wealth,” she said.
“How do we actually introduce more wealth through our health? One is around data and how do we liberate health data. In health we’re very healthy in terms of that currency. If we empower the data to go to individuals, users, then we can get there,” she said.
“Eighty per cent of costs in health care are the people we’re investing in and it’s an investment that will actually mobilize growth in the future. We need to pay attention more and more to retention, recruitment and redesign of our health systems.”
What is the role of the CEO, Savage asks Al-Katib. He says you need to really define what productivity means to your organization. How do we pick our niche? How do we scale it to meet the needs of customers?
“You can either be dinner or you can be a diner,” he says. “I want to be able to eat other companies.”
In his sector, agriculture, “we’ve shown gains in productivity and economic output. How many sectors deliver $40 billion in new exports in a three year period? It’s early adoption, digitization, AI. It’s all at the farm.” And that creates wealth.
Scale is a big deal, he stresses. It is not enough to say I’m going to start a business so someone can buy me. “You have to find investors and capital sources that support the vision of scaling.”
Cory concurs that investment requires scale. And that requires a lot of clarity.
People who are trying to build companies need “clarity of the rules of the game they’re playing, and how capital markets work.”
People who are focused on public policy are thinking about how to create the necessary clarity to fuel growth, explains Cory. “The playing field has to be clear, then people can make good decisions.”
Savage asks the panelists to rank the performance of the public and private sector. Nobody gets higher than a C.
Murad Al-Katib is also one of the honourees at PPF’s Testimonial Dinner Honour Roll. Read more about his basement-to-billions story.
9:57 a.m.
The new chief economist of the OECD weighs in
An OECD projection shows very clearly that Canada would see the slowest growth in real GDP per capita of any advanced economy from 2020 to 2060.
This chart has been a subject of much hand-wringing and worry.
On a special episode of PPF’s signature podcast WONK, released this week, we’re talking to Alvaro Santos Pereira, the incoming Chief Economist of the OECD, the Paris-based organization often described as the think tank of developed economies.
Dr. Pereira, a dual citizen of Canada and Portugal, underscores the importance of the productivity challenge ahead:
“Canada has been worse than other advanced economies. And so this is the big thing., especially for Canadians if we want to maintain one of the most dynamic countries in the world. It’s absolutely crucial that we have the Canadian economy growing faster and having a stronger productivity performance, because otherwise living standards in Canada won’t be able to accompany the rising living standards, say, in the United States or other parts of the OECD.
But he also offers a note of optimism that Canada will not end up dead last in 2060:
“Even though it’s my own research for my department, I don’t believe … forecasting for Canada in 2060 for one simple reason. I know Canadians, if they see a problem, they’ll try to fix it. There will be a lot of debates and there is already a lot of debate. But I strongly believe that given the alarming trends, we will do something about it. Canadians will do something about it. Business sector, the government, the provincial governments, families will get together and entrepreneurs will get together and we’ll fix the problem.”
Listen to his full conversation with host Edward Greenspon as he delves into the challenges Canada faces and what it needs to focus on to escape its productivity slump.
9:50 a.m.
What’s really going with productivity?
The headliner panel at the productivity summit is drilling down on some of the big questions that Canada is now grappling with: How bad is the problem? What needs to be done to fix it?
On the stage we have the heavy-hitters in the productivity debate:
-Trevor Tombe, an economics professor the the University of Calgary;
-Carolyn Wilkins, Senior Research Scholar at Princeton University & former Senior Deputy Governor of the Bank of Canada);
-Kaylie Tiessen, an economist at Unifor;
-Dan O’Brien, Chief Economist at the Institute of International & European Affairs; and -Moderator Heather Scoffield from the Business Council of Canada
Moderator Heath Scoffield kicks off the panel stressing that productivity is not just numbers, it’s about our way of life. How critical is the issue? First up is, University of Calgary economist Trevor Tombe about the urgency in the question about productivity.
He says Canada’s had a productivity challenge for a couple of decades. Part of that is our small population.
“What makes this moment different is the scale of the challenge and the speed at which our situation has worsened, combined with the importance of addressing it,” he said.
Canada ranks about 30 per cent below the U.S. in productivity numbers. We’re about 15 per cent below the G7.
Canada’s productivity today compares most closely with Spain. In the North American context, the amount produced in Ontario is closest to Alabama. “It’s worsening at a speed that is unexpected,” said Tombe. “The challenge is growing and growing very quickly.”
“In terms of disposable income that we see in Canada per person, that’s effectively stagnant. It’s grown by less than 2 per cent over two years. Canada has never seen slower labour productivity growth than we are seeing now.”
Tombe points out we’re not in a recession. “What makes this moment different is the global environment we’re operating in. There’s a huge amount of uncertainties,” he said.
Building on Tombes’ comments, Carolyn Wilkins, senior researcher at Princeton University, says, “We have geopolitical tensions, we have COVID waking up many, many countries… we need to reduce our dependency on single points of failure.”
She talks about political headwinds – geopolitical issues. We need to build our own supply chains in a way that makes up for those losses and efficiency.
We need to become more efficient and other countries are finding ways of doing that, she said. “If we miss that boat, we miss that boat not just for tomorrow or the next day, but for many years,” said Wilkins.
We’re also up against demographic change. The aging population will put an incredible burden on health care. “If we’re going to afford all those investments to meet those challenges, we need to up our game,” she stressed. “We need to attract domestic capital and international capital to do it.”
Kaylie Tiessen, an economist at Unifor, echoes concerns about the sense of urgency around productivity. But reminds us that “the purpose of improving productivity is about improving quality of life.”
“We need to be playing a longer game, not a short game in terms of thinking about where we want to go.”
Tiessen says to think about the health sector as an example. “We compare Canada’s health-care sector to the U.S. health sector. By GPD per hour worked, the U.S. is more productive, but Canada produces better health outcomes. We need to make sure we’re not moving toward a system that looks to be more productive, but is actually producing more wealth for a certain group of people.”
Also the childcare sector. “It doesn’t produce a lot of direct productivity but it enables productivity.”
Beware of the numbers game, she says.
Dan O’Brien, Chief Economist at the Institute of International & European Affairs shares the sense of urgency and said, “There is no doubt as the data is showing from the last 10 years that Canada’s productivity is down.”
On sharing lessons from the EU to tackle productivity, he said, “(There is) No magic bullet. Productivity is a complicated issue. We have seen a downward trend in the rich world in the last decade.”
He highlighted what Italy and Ireland are doing that may serve as starting points for Canada. Brien said, “Italy had an investment problem. However, since the pandemic there has been an increase in capital spending, by 30%. Similarly, the EU has borrowed a lot of money and did extra spending on investments. Yet to see how it impacts productivity.”
On a potential pathway for Canada, he questions, “So can Canada increase the public investment and subsidies to businesses?”
Sharing Ireland’s example, he says “Low corporation tax has worked for Ireland.
On another pathway for Canada, he questions, “Canada falls amidst the middle of the pack when it comes to corporation taxes. Is that something Canada wants to work with?”
The resource sector plays a role in Canada’s productivity crisis, says Tombe. The oil sector falling off a cliff.
“The outlook for oil prices going forward led firms to reevaluate where they think we were heading down the line,” he said.
“The drop in oil prices is a part of it, but it is not the dominant factor in productivity,” he said.
Wilkins says our other strengths, including agriculture and mining.
“To advance there you also need to have a regulatory environment, a project approval or an investment, plan that has a fair degree of certainty,” she said.
“The oil price shock didn’t help but certainly for investment in those areas, the common element is really in part the regulatory environment.”
Scoffield points to the pandemic as leading to a potential “epiphany in productivity.” Companies would invest heavily in robotics and digitalization to keep things going.
“Has that happened?” she asks. No, says Tiessen.
“My hope was that we would build back better.” An equitable and more productive economy, she says.
When thinking about tech being adopted in certain sectors, we hear from members that they are not considered when tech is adopted by employers, she says. “What the system that is created causes is frustration for everybody. It creates a system that is more miserable than productive.”
Talk to workers and consider them right from the beginning, she says.
Dan O’Brien asks everyone to look at the positives. “It looks like from the outside that Canada has a lot of fundamental strengths when we look at the G7,” he says.
Scoffield moves into the discussion of solutions.
Solutions
“How do we take this urgency, this new understanding of productivity to make it better,” Scoffield asks.
Tombe says “we need to go back and rethink some of these older ideas. One that is probably meaningful is to recognize Canada is an incredibly decentralized country. Provinces are incredibly important. The challenge is we don’t have a lot of coordination across governments.”
“We need something to better coordinate regulatory decisions across jurisdictions.”
“Perhaps we need to think about creating a new arms length agency. We used to have a National Productivity Council…. something like that that puts productivity centre stage … to call out decisions governments take that make matters worse. We should stop making things worse with decisions we take.”
Wilkins says there’s so many levels of government in so many different regulations, that provinces need to get together on. “There’s so many areas that cause interprovincial barriers to trade to people and goods that reduce our productivity, that reduce our incomes. We need an infrastructure plan, a long-term infrastructure plan that sets priorities. When we do it we need to think big projects because that’s where the money is going to channel to.”
Noting that Australia has such a plan, Wilkins points out there are models out there.
“We need Canadians to want this just as much as people in this room do,” she said.
“We all need to get that on the agenda as a priority.”
Kaylie Tiessen offers her three solutions to focus on: Industrial strategy and a high wage strategy. And third, competition policy and corporate concentration, she says. “Dealing with abuses of dominance and things that confuse profit with productivity.”
Scoffield asks the panelists to speak to the ways in which business, specifically, can raise its productivity.
“It’s really hard for small businesses to adopt and trade workers. Programs that train small businesses to figure out how they can manage production or train workers…. These are huge opportunities for small and medium enterprises,” said Wilkins.
“This is an area where there is so much hope and it’s so frustrating to see more isn’t done there,” she said.
Dan O’Brien highlights three ideas that can help tackle the productivity issue, 1. A National Productivity Council certainly helps keep the agenda on point. 2. Competition policy- EU has a centralized competition function which is helpful in domestic and foreign competition. 3. Crushing high school dropout rates is essential. We need to focus on bringing down the rate of high school dropouts.
9:01 a.m.
How to understand the productivity problem
PPF President and CEO Edward Greenspon, in his opening remarks, talks about his education on Canada’s productivity problem, and points to some essential reading on the topic:
“I have been struck for years by the difficulty of discussing productivity,” he says. Governments have struggled to communicate that this is about helping not harming people.
“In the past couple of years, I have read two things that broke through the barriers,” he says. The first was a paper written for PPF by Don Wright, the former Secretary of cabinet in British Columbia. “Don, who is a PPF Fellow and is with us today, and laid out in quite vivid detail the toll that weak productivity has on Canadians.”
Don explains that “it used to take about 25 years for real wages to double in Canada. Now it takes 300 years for real wages to double in Canada. Imagine what it does to hope, to optimism. A population that believes take home pay will double in its working lifetime and can see that their house will be worth more, or a mortgage will be gone, or their retirement will be better off, or their kids actually will be better off. That is a confident population, and we need to put the pieces in place to get back to that, because that is all about productivity.”
The second encouraging thing was a column in the Globe and Mail by Tony Keller who wrote about how Canada and Finland have the same GDP per capita. But the Finns get there with 200 fewer hours work a year than Canada. “As Tony said, as we work harder; they work smarter.”
“We could move to a 4½-day workweek if we were as productive as the Finns,” says Greenspon.
The payoff from productivity improvement is big and broad, he says. “So let’s get on with fixing it once and for all.”
8:48 a.m.
8:31 a.m.
Indigenous economic reconciliation
Kicking off the day is the second annual Indigenous Ownership and Economic Reconciliation Breakfast, with opening remarks from JP Gladu, the founder and principal of Mokwateh, and the former head of the influential Canadian Council for Aboriginal Business.
We’re hearing from an all-female panel:
-Chief Sharleen Gale, Board Chair at theFirst Nations Major Projects Coalition & Chief of Fort Nelson First Nation;
-Jaimie Lickers, Senior Vice President, Indigenous Markets, CIBC; and
-Penny Favel, Vice-President Indigenous Relations, Sustainability at Hydro One
Moderator Katie Feenan starts the discussion with a question to Chief Gale about the experience of Indigenous people with growth.
The reality of residential schools and their impact is an important consideration, says Chief Gale. “I think about who I was as a little girl growing up. In highschool I worked in a mill. I had to work three jobs to get through highschool.”
On her work as Chief she says, “it’s been very, very challenging. I think about our people in every decision I make.” But a clear lesson has been that equity ownership in major projects is “ the path forward,” she says.
She stresses the importance of communication and businesses building a meaningful relationship. “When you do this process it’s really important to talk to First Nations on Day 1 of the project.”
Business needs to allow communities to go through the process to make an informed decision, she adds. They need to have time for their members to sit at the table and really analyze projects for the many generations to come.
Penny Favel explains that partnership with Indigenous communities is essential.
On infrastructure, she says, “linear infrastructure doesn’t just benefit from Indigenous partners it needs to be built with them. Linear infrastructure is unique as it tends to have a lot of communities.”
On equity in projects, Favel says, “If the Chiefs tell me something, I advocate for it. The Chiefs tell me if you want us to be partners it needs to be 50-50. This is not difficult, if you want to be partners it’s 50/50. Don’t bicker back and forth on whether it should be 70-30, 60-40.”
She says the most important thing is, “It’s not about how much equity we will give but about being partners. They don’t need a non-Indigenous person going in and saying we have solved your problem.”
On when is the right time to consult for projects, Favel echoes Chief Gale’s comments: “Industries need to go earlier. Not when you are starting the project but when you are planning the project. You will get better outcomes.”
On Hydro One’s approach, she says, “We are in the community even before the project gets started. Going in 18-20 months before the project and asking, ‘Can we have a chat with you about your priorities’. And guess what you hear? Infrastructure.”
On what companies can do, Favel says “We need to work on being better partners and we need to go in early to be better partners.”
Asked about what she’s looking for in next week’s budget, Jaimie Lickers says, “Any federal government loan guarantee program has to be sector-agnostic and it has to operate at the speed of projects — not just the speed of business, but the speed of projects. If we can’t do that the value proposition of a loan guarantee program will be impaired. That is key.”
On the energy transition
Chief Gale says we need to fast-track processes and think differently to get where we need to go. Shared decision-making on the land for her people and the government will be important.
There used to be deaf ears in discussions, where environmental and land use concerns of First Nations were ignored. “I do see things shifting. But we have a lot of work to do. As First National we are ready to do the work.”
Favel adds that “the energy transition in Ontario is happening fast from an electricity perspective. However, the only conversations are around regulatory and legal perspectives.”
On retaining Indigenous talent, she says, “Guess what’s the biggest pool of talent is? Indigenous people! We want people to be proud of working in companies like Hydro One.”
Jaime Lickers addresses the “dramatic underrepresentation of Indigenous voices in the business and finance space.”
“We need more. We need our communities to also support the pipeline that we’re trying to develop of young Indigenous people that want to be in business and finance. Our institutions will all be better for that increased representation.”
JP Gladu closes the conversation: “Economic reconciliation is Canada’s competitive edge.” Having regulatory processes going through in a timely manner is fundamental.
“Equity is a form of consent,” he says. “When we’re partners at the table with you we’re probably not going to be blocking roads we going to be paving and widening roads.”
If you want to hear more from Gladu on the impact of Indigenous business in Canada, he was a guest on PPF’s podcast WONK.
7:55 a.m.
Watch today’s #CanadaGrowthSummit live on CPAC here.
Thursday, 7:33 a.m.
Growth Summit 2024 starts now. PPF Media will be reporting live throughout the day from the Metro Toronto Convention Centre. We’ll have highlights from all the speakers as they delve into what the Bank of Canada recently called a national ‘emergency’: Canada’s lagging productivity.
Why has productivity become such a long-standing problem in an advanced economy like Canada’s? What does Canada need to focus on to fix the problem?
We’ll be looking at the impact of housing, AI and immigration, among many other topics. And we’ll have speakers including Privy Council Clerk John Hannaford, Chief Charleen Gayle, Board Chair at FNMPC & Chief of Fort Nelson First Nation, economist Trevor Tombe and Carolyn Wilkins, Senior Research Scholar at Princeton University and Former Senior Deputy Governor of the Bank of Canada. See the full roster here.
If you want a quick primer on what productivity is, how it’s measured and why it matters so much, check out this edition of PPF Explains, written by economists Robin Shaban and Laura Adkins-Hackett.
Tuesday, 2:20 p.m.
Both of PPF’s signature events are sold out. We’re excited to welcome a full house to the Metro Toronto Convention Centre this Thursday. Follow along here to hear from our roster of esteemed speakers and expert panel guests.
Here’s a taste of what’s in store. Watch our highlights from 2023.
