Canada’s productivity challenges

 Theo Argitis and Michael Gullo testify at Industry Committee on Canada’s productivity challenges

Mr. Chair, Honourable Members,  

Thank you for the opportunity to appear before this Committee.  

We are here today on behalf of the Business Council of Canada, which represents CEOs of over 170 leading Canadian enterprises across all sectors of the economy. Together our members employ more than 2 million Canadians, and their companies are responsible for most of this country’s private-sector exports, investments, and corporate philanthropy.  

The Business Council has one central mission: to help build a stronger, more competitive and more prosperous Canada. And we view productivity and investment as absolutely foundational to achieving that mission. 

You have already heard during your previous hearings for this study about Canada’s disappointing productivity record. It has been well covered in the data. I won’t repeat the statistics except to underscore the core message they send. For more than a decade, Canada has not been investing at the pace required to keep our economy competitive or to sustain the rising living standards Canadians expect. 

In short, our productivity crisis is really an investment crisis. Our industries, and our workers are capital starved.  

We often talk about productivity as if it is an abstract economic concept. But productivity is simply the measure of how much value we create with the time, skills and capital we have. When we invest in better machinery, modern technology, advanced equipment, training and innovation, people produce more, wages rise and businesses grow. When investment stalls, productivity falls and incomes stagnate. That is what has been happening in Canada. 

So at the heart of the productivity challenge is an investment challenge. 

The fundamental question for this Committee, and for policymakers more broadly, is straightforward: 

What is holding back investment in Canada? 

What is causing companies to hesitate, to delay, or to choose other jurisdictions? 

The barriers are well known, and you’ve heard them all. They include insufficient infrastructure to move goods and power the economy, regulatory and permitting systems that are too slow and unpredictable, and broader uncertainty that makes long-term commitments harder. Our tax system meanwhile is not competitive enough to compensate for these weaknesses. And I’m sure we’ll be talking about many of these issues over the next hour. 

But before I conclude, let me say a word about the recent federal budget. It contains a number of measures that point in the right direction: steps toward a more competitive tax system, signals around improving the regulatory landscape, renewed efforts to attract talent, and additional financing for major projects. These are all positive moves. 

Our concern is that the pace of change still isn’t fast enough to break out of the low-investment trap the economy has fallen into. After a decade of underinvestment and uncertainty, we need more than incremental progress. 

Canada has enormous strengths. We have the resources the world needs, the talent to lead in advanced industries, and the institutions to support long-term growth. What we need now is urgency and a focus on enabling private-sector investment at scale. The cost of inaction is continued stagnation. The reward for boldness is a stronger, more productive economy that delivers rising incomes and enduring opportunity for Canadians. 

Thank you, Mr. Chair. I would be pleased to take your questions.