Bank of Canada’s unproductive productivity speech

March 28, 2024| Blog
By Matthew Mendelsohn

Why did the Senior Deputy Governor of the Bank of Canada give a speech on productivity that could have been given in the 1990s?

I just read the speech from the senior deputy governor of the Bank of Canada that says that Canada’s long-standing poor performance on productivity is an “emergency.” As far as I can tell, there was not one real idea in that speech, and almost nothing that hasn’t been said for 30 years.

And then the Public Policy Forum, which is about to do its annual Growth Summit, re-posted the speech claiming that their summit would focus on “fixing productivity once and for all.”

The narrowness and orthodoxy of the Bank and our public discourse on these issues is a problem.

I hope the PPF panels will have new insights. The presence of Indigenous leaders is great. Labour and climate perspectives add value. Global perspectives are important. But it seems a lot is missing.

Reading the speech, and looking at the topics of the panels, I have a few questions:

Where is childcare? Where is housing? And particularly, will there be a critique of investor activity in residential real estate that absorbs so much Canadian capital and I would assume impacts our productivity numbers? (I would guess that some of the panelists have personally contributed to this problem). Where is public transit and the impact of gridlock and commutes on productivity?

Where is a reflection on how the structure of capitalism has changed dramatically and is dominated by a few American-based platforms that generate huge profits from surveillance, data, IP, scale, GAI, and anti-competitive behaviour? How much of our productivity gap with the US is explained by these tech giants? Where is a reflection on the role of private equity, which is transforming many sectors?

“And what about wealth distribution? I don’t want to live in a country where our productivity goes up marginally but ¾ of our grandchildren are serfs. I really don’t want my grandkids to be serfs.”

And why do so many of our firms innovate on skimming fees from consumers, rather than doing real innovation on products, processes or price?

And what about wealth distribution? I don’t want to live in a country where our productivity goes up marginally but ¾ of our grandchildren are serfs. I really don’t want my grandkids to be serfs.

These issues were absent from the speech and, to my friends at PPF, prove me wrong! I hope you can orchestrate discussions that don’t sound like the ones I listened to in the 1990s (and participated in during the 00’s)!

At least no one seems to be talking about the importance of lowering corporate taxes to increase productivity anymore, because that was clearly BS. So I guess that’s good!

These are not my areas of professional expertise (although I did do a paper for a federal task force on productivity in 1999 I think!), but it strikes me that we need to come at these issues with fresh ideas, fresh voices and fresh questions.

Changing narratives Productivity Wealth inequality What we’re exploring

Share with a friend

Related reading

BlogThe Ownership Solution
overhead shot of burnaby BC refinery

You can’t be sovereign if you don’t own anything

Gas station giant Parkland is already shedding Canadian employees in the wake of TX-based Sunoco’s recent takeover of the Canadian fuel chain, which owns 15% of our gas stations and a key refinery in Burnaby, B.C. These layoffs were a predictable outcome of Ottawa's decision not to flex its new regulatory muscle through the Canada Investment Act to quash foreign investment deals that pose an economic security threat. As SCP chair Jon Shell writes, there’s a real danger that the government will continue this sell-off of Canadian companies to foreign investors—and that this sell-off will be considered a “win” for the government’s economic growth strategy. This would be a mistake.

Blog
Busy downtown Canadian street corner

Reflections on Budget 2025: Economic growth alone won’t save us

Budget 2025 includes hopeful initiatives that will deliver real benefits to working Canadians at this time. In this reflection, SCP CEO Matthew Mendelsohn explains that, strategically, we really like the Budget’s focus on industrial strategy, some tentative steps on making more capital available to a wider diversity of Canadians and commitments to loosen the grip that our oligopolistic sectors have over our economy.  However, we are concerned by the lack of a strategic approach to providing more working people and young people a path to wealth, ownership and economic security. While the Budget responds to the wish list that corporate Canada has articulated for several years, there are no guarantees that they will indeed step up to invest—or that those investments will produce growth that benefits working people and communities.   

BlogThe Ownership Solution

Budget 2025 did not extend the $10M capital-gains exemption for sales through EOTs

We share the disappointment felt across Canada’s business and advisory community that Budget 2025 did not make the $10 million capital gains exemption for sales through Employee Ownership Trusts (EOTs) a permanent feature of Canada’s tax system. The current incentive, passed only in 2024 with an expiry set for December 2026, means that the business community has not had adequate time to act on this opportunity or build adequate momentum for this promising succession model. In this statement, Employee Ownership Canada responds to the Budget and reaffirms its strong commitment to working with government and partners to make the capital gains exemption permanent, ensuring employee ownership trusts remain a viable, long-term option for Canadian businesses.

Skip to content