2 weeks Ago By Chris Varcoe, Calgary Herald
Canada has a persistent productivity problem that will require some savvy solutions. Canadian business leaders think they have part of the answer: lean into the country’s prolific natural resources industries, from agriculture and forestry to mining, oil and natural gas. A new report by the Canadian Chamber of Commerce says a comprehensive national strategy is needed to promote resource investments.
Growth in these high-wage industries will boost productivity in sectors where the country holds a competitive advantage over many other countries, such as in minerals — think gold and potash — oil and natural gas, forestry and food products. “We really need to lean into our strengths as a country,” report author Andrew DiCapua said in an interview Monday. “We are lucky to live in a country (where) we have abundant natural resources .
. . We should be trying to find ways to attract investment to supercharge the sector.
” In the report released last week, the national business group says this approach should include streamlining government regulations, the need for timely approval of major projects and policy stability. It also recommends speeding up the delivery of investment tax credits for projects that cut emissions, and adopting a trade infrastructure plan to ensure the country has sufficient roads, ports and energy transmission lines for accessing resources in remote areas. The natural resources sector is the second largest in Canada, paying compensation last year that was $25,000 more than the national average, the study found.
Growing these sectors could increase Indigenous employment and contribute to economic reconciliation. “With Canada facing significant economic challenges — below trend growth, declining living standards, regulatory uncertainty and weak business investment — the Canadian economy is not keeping pace,” said DiCapua, a senior economist at the chamber. “The main recommendation here is to create regulations, policies and create regulatory certainty — or rather clarity — so that investment can be attracted into this crucial sector.
” Economists, business leaders and the Bank of Canada have highlighted the country’s productivity woes for years, but the level of concern is growing. As TD Economics pointed out in a report last week, Canadians’ standard of living, as measured by real GDP per person, was lower last year than in 2014. Earlier this year, Bank of Canada senior deputy governor Carolyn Rogers issued one of the most forceful warnings, calling this a “break the glass” moment in case of an emergency.
Labour productivity measures how much an economy produces for each hour worked, and boosting it means finding ways for people to “create more value during the time they’re at work,” she said during a speech last March. “This is a goal to aim for, not something to fear,” Rogers said. “When a company increases productivity, that means more revenue, which allows the company to pay higher wages to its workers without having to raise prices.
Ultimately, higher productivity helps the economy generate more wealth for everyone.” However, as the chamber report points out, Canada faces a declining standard of living amid weak productivity and investment. Trevor Tombe, an economist with the University of Calgary’s School of Public Policy, notes real GDP per person last year in the United States was 43 per cent higher than in Canada.
This year, it’s set to produce almost 50 per cent more per person, double the gap seen between 1990 and 2015, he said Monday. Finding a series of solutions is critical. This is where investment into natural resources can play a part.
Last year, three million jobs — directly and indirectly — were tied to Canada’s natural resource industries, contributing more than $460 billion to GDP, making up about 21 per cent of Canada’s economy, according to the chamber. The productivity of workers in the natural resource sectors is 2.5-times that of those in the broader Canadian economy, the report found.
Canada is a trading nation and resources make up a huge part of our exports, said Deloitte Canada CEO Anthony Viel. Last year, Canadian natural resources were responsible for $377 billion in exports. “It’s a strength for us in bridging this productivity gap, probably our biggest lever to pull to have the most impact on Canada’s productivity,” he said in an interview.
“It’s a critical piece of the puzzle that we as Canadians have, that some other jurisdictions don’t have.” A key question is how to get more investment into these growth areas. One solution would be to make it simpler to get much-needed infrastructure projects across the finish line.
(Think of the decade-plus odyssey to .) The chamber report warns that barriers to resource investment are holding back growth, and that prioritizing “timely and predictable” regulatory approvals for projects is essential. “We have what the world needs: critical minerals, food and energy.
Let’s send it to the rest of the world,” said Calgary Chamber of Commerce CEO Deborah Yedlin. “Let’s not get stuck in a regulatory quagmire that causes companies to say, ‘I’m going to find another place to invest.’ ” The provincial government, which is sponsoring a productivity summit next month, organized by the U of C’s School of Public Policy, has also been voicing concerns about the issue.
Finance Minister Nate Horner said the current productivity challenge spans all sectors. Spurring more investment into natural resources must be part of any credible strategy to bolster Canada’s productivity, he said in a statement. “Oil and gas is far and away the most productive sector in the Canadian economy,” added Tombe.
“Canada has a comparative advantage in resources and has from its very beginning. And it shouldn’t shy away from that.”.
