Canada needs its own productivity commission

TORONTO—Canada has been increasing the size of its economy by bringing in many people from other countries, not by increasing our capacity for innovation, productivity, and wealth creation. This has created the illusion of growth. Many of these new arrivals have been crucial in meeting our country's many daily needs. But on a per capita basis, immigration has created the illusion of growth; however, per capita GDP is shrinking so much on a per capita basis that we are less well off than we were a few years ago. The reality is that Canada faces huge challenges in restructuring our economy, building a new economy where innovation and productivity generate real increases in per capita well-being in the form of rising incomes and in wealth generation to address the competing demands of health care and an aging society, the transition to a green economy with net-zero emissions, investments in education and skills training, and the demands for rising spending on defence and national security. There are many reasons for Canada’s failure to advance to a new economy, one where innovation and productivity will enable us to meet our future needs for sustained well-being in a way that is sustainable and equitable. But a fundamental reason is a serious lack of objective analysis of where we are today, the kind of future challenges we face both domestically and globally, and what we need to do for a better future. At the political level we lack informed debate, and are fed, instead, aspirational wishful thinking that we are already world leaders, or get transactional policies that are unrelated to any serious articulation of a national strategy. We have wishful thinking that we can have low taxes and high-quality public services at the same time, avoiding hard choices. One answer, I believe, is to create some form of national productivity commission that can provide the independent and expert analysis of what we need to do, and how. Here, we can learn from the Europeans, though their experience shows that implementation of good advice also requires politicians brave enough to take the advice. As one former European leader once remarked, “we know what we have to do, but how would we get re-elected?” In 2016, the European Union urged member countries to establish national productivity boards, stressing that enhancing economic growth to sustain a widely shared decent standard of living would ultimately depend on improving output performance. Since then, 21 member-states have established such boards, the latest being Sweden, which established its Swedish Productivity Commission last year. The problem for Europe was that innovation and investment had slowed while the competitive environment worldwide had intensified. Canada faces the same issues, perhaps even more so. The purpose of national productivity boards is to inform the national debate by tracking developments in competitiveness, investment, innovation and output, and conducting unbiased research by top experts with recommendations on ways to improve economic performance and competitiveness. All this work would be publicly available. To be effective, national productivity boards have to be independent. The Swedish Productivity Commission is one part of an ambitious Strategy for Sweden’s Trade, Investment and Global Competitiveness unveiled late last year. The document outlines in broad terms the issues, priorities, and opportunities Sweden faces—the kind of report that's completely absent in Canada. The report also does something else we don’t see in Canada. The strategy’s objectives are to be achieved by 2030, and it promises that by 2026 there will be an evaluation of progress, and analysis of what remained to be done. We need to have our own productivity commission, one that would provide the tracking and analysis of where we stand, and what needs to be done. For example, the world of artificial intelligence and where Canada fits in is an obvious area in need of much greater exploration and understanding. A report from Goldman Sachs late last year on the impact of AI on geopolitics and world power warned that “generative AI marks a transformational moment that will influence the course of markets and alter the balance of power between nations.” The biggest impact would be on economic growth, with generative AI potentially raising global GDP by seven per cent or almost US$7-trillion. Generative AI is a paradigm-shifting innovation, the Wall Street bank analysts said, with ChatGPT the fastest-adopted technology in history. Today there are two AI superpowers: the United States and China. But they are not the only countries shaping the AI future. The Goodman Sachs report pointed to what it called non-great powers with the capacity in AI, and increasingly the will to assert themselves on the world stage, naming in particular Britain, the United Arab Emirates, Israel, Japan, the Netherlands, South Korea, Taiwan, and India as key players. Surprisingly, given our boasting that we are a world leader in AI, Canada was not mentioned. While we excel in AI in our university training and research, it may be that our role has been largely to train talent and do fundamental research that benefits other countries. Canadian-trained talent can be found working in AI centres around the world. And while we can boast of homegrown AI patents, many of these are owned by multinationals using our talent in Canadian-based R&D branch plants. A productivity commission could provide us with the kind of AI roadmap we need, and show how AI could be used build Canadian firms with AI products and services that can compete in world markets. One potential candidate to start it off with high standards is Mark Carney. He is an unlikely future prime minister. But the former governor of the Bank of Canada—and Bank of England—has the disciplined mind and broad experience needed to set a far-reaching research agenda, and to impose the necessary high standards for analysis. We need a more successful Canada rather than fading away as the tired old man in a North American attic. Productivity achieved sustainably with the benefits shared fairly is the answer. David Crane can be reached at crane@interlog.com. The Hill Times

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Canada needs its own productivity commission

We need to build a new economy where innovation and productivity make real increases in per capita well-being in income and wealth generation to address the demands of health care, achieving net-zero emissions, education, and more defence spending.

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