Canada’s Productivity Summit What We Heard Report

Canada’s productivity is falling, with serious implications for this country’s economic well-being and resilience, global competitiveness and living standards. In 2024, productivity declined to 2017 levels, while in the last decade, Canadian families saw the slowest growth in real disposable income since the 1990s recession. This productivity slowdown affects many areas of public policy, including health care, education, infrastructure, agriculture and technology.

No one single factor is responsible for the decline in productivity. Rather, the causes include weak capital investment, low levels of business innovation and policies that hinder interprovincial and international trade, along with red tape, overlap, inefficiencies, and uncertainties in Canada’s tax and regulatory systems.

A lag in technology is another big contributor to the decline. For example, only 6.1 per cent of Canadian firms use artificial intelligence — a level the U.S. reached in 2018. Business spending on research and development accounts for just one per cent of Canada’s GDP, which is half of what other OECD members spend. Other contributing factors include regulatory uncertainty and slowness in issuing project approvals, interprovincial trade restrictions and a tax system that discourages risk-taking. Companies that are risk averse tend to cling to their status quos, avoiding the adoption of new technology and shying away from innovation that could increase their competitiveness in the global marketplace. Meanwhile, a cumbersome regulatory environment discourages new businesses from entering markets, deters foreign investment and spurs Canadian innovators to relocate to the United States.