Canada risks facing ‘lost decade of productivity if economic growth is not prioritized: Coalition co-chairs tell House of Commons Finance committee

Persistent economic weakness is threatening to undermine Canada’s future prosperity, say Coalition for a Better Future co-chairs.

While the pandemic created new challenges that disproportionately impact lower-income Canadians, inflation continues to grow and take a toll on all Canadians. “We have an aging population, weak business investment and poor productivity,” Coalition co-chair Lisa Raitt told the House of Commons Finance Committee on September 25.

“​​On the most important measures of living standards – output per capita, labour productivity and equality – we’re going in the wrong direction.”

Raitt referenced the Coalition’s Scorecard, which measures 21 internationally recognized metrics that track Canada’s progress in several economic areas. If the targets for inclusive and sustainable growth are met by 2030, the Coalition believes Canada will be a global leader in a number of areas. But growth is not happening quickly enough.

“For example, on a per capita basis, our economy has not only stalled but is contracting. Real GDP per capita has fallen four straight quarters, and we are producing less per person today than in 2018,” Raitt said. “On labour productivity, the amount of output generated per hour worked looks even worse. That metric has fallen 11 of the last 12 quarters, and productivity numbers in the first half of this year are below what they were in the final six months of 2014. If things don’t change, we’ll soon be talking about a lost decade of productivity.”

Coalition co-chair Anne McLellan also noted that for Canada to succeed, the conversation about business investment must include transitioning to a net-zero economy.

“Achieving net zero by 2050 is one of the core beliefs of each of the Coalition members, even though members will choose different tools to reach this goal,” she said. “We welcomed the series of tax measures in this year’s budget to incentivize green investment, but the tough part is still to come.”

She called on the government to urgently move on its net-zero plans, including providing certainty for industry around carbon pricing and implementing the government’s commitment to streamline regulatory approval procedures. 

“These measures are necessary and urgently needed for businesses to have certainty, to prioritize and to plan,” she said.

It’s also important to ensure Indigenous communities are part of the solutions, Raitt said.

“As policies and projects are being put into place, we need to make sure that Indigenous communities are part of the equation,” she said. “I know there’s a lot of discussion in the government right now, with respect to loan guarantees for Indigenous people in these large resource projects. I would just encourage and urge people to move more quickly so that we can get to the point where the projects can go ahead, and economic Indigenous reconciliation can be a real thing.”

Members of the House of Commons Finance Committee meet on September 25 with Coalition for a Better Future co-chairs, Hon. Anne McLellan and Hon. Lisa Raitt

McLellan noted another key demographic that needs to be part of the equation is young Canadians. “Young people think that Canada is doing well, in terms of being an equitable society and sharing economic opportunities, but they think we’re moving way too slowly when it relates to meeting the climate change challenges. And unfortunately, they are not particularly positive about their own long-term economic prospects,” she told the committee.

The Finance committee is holding pre-budget consultations in advance of the 2024 budget. Raitt told MPs that “Canada’s future prosperity goes through rural communities.” 

This means putting a rural lens on all growth policies, whether it is access to broadband, immigration, job creation or infrastructure. “On business investment either in rural Canada or urban Canada, we really have to do better,” Raitt said.

Noting that Canada is lagging in R&D investments and training and skills development to support the green economy, McLellan added that collaboration is needed to drive economic growth. “There is an awful lot of work that has to be done by the governments and the private sector and civil society working together, and we better get with it,” she said.

Raitt added that economic growth should not be a partisan issue. “We hear from all of our members that they would like to see party lines set aside to work together and make real progress on the issues facing our country.”