Navigation

Institute calls for “Dead Cash” to live again

Released February 28th, 2013

Press Release, February 27, 2013

Institute calls for “Dead Cash” to live again

New research by the Institute for Competitiveness & Prosperity shows companies are hoarding cash on their balance sheets and calls on government to push companies to bring their “dead cash” back to life.

Toronto – There is a lively public debate about the “dead cash” problem in Canada. People are asking if companies are holding excessive amounts of cash and cash equivalents in reserve. After touching on this issue in the Eleventh Annual Report of the Task Force on Competitiveness, Productivity & Economic Progress, A push for growth, the Institute for Competitiveness & Prosperity has taken a deeper look at the dead cash issue to offer a way forward.
The White Paper demonstrates that Canadian corporations’ cash and cash equivalents are at an all-time high. Canadian corporations are now holding more cash than is optimal, and therefore the cash has been dubbed “dead” by many commentators. The Institute found that the three main drivers of the increase in the proportion of liquid assets are: long-term deleveraging, net working capital change, and cash flow uncertainty. Accumulating cash is often a rational response to economic uncertainty, but Canadian corporations are now holding an excess of approximately $45 billion.
The White Paper recommends that government push corporations to bring some of the “dead cash” back to life and invest the excess cash in productivity-enhancing areas that will narrow Ontario’s persistent prosperity gap. Specifically, the Institute proposes a time-sensitive tax credit for investment in software and machinery and equipment, areas where Ontario lags far behind North American peers. Furthermore, the Institute recommends that companies should benchmark innovation investment, an initiative that could help change the culture of Canadian corporations.

“The excess cash on corporate balance sheets represents a lost opportunity for the Ontario economy,” said Roger Martin, Chair of the Task Force on Competitiveness, Productivity & Economic Progress and Dean of the Joseph L. Rotman School of Management at the University of Toronto.  “I advocated for tax changes so that corporations could invest that money, not so that it could sit idly on the sidelines.”


About the Institute
The Institute for Competitiveness & Prosperity is an independent not-for-profit organization established in 2001 to serve as the research arm of Ontario’s Task Force on Competitiveness, Productivity and Economic Progress. The Institute is supported by the Ontario Ministry of Economic Development and Innovation. Working Papers published by the Institute are primarily intended to inform the work of the Task Force. In addition, they are designed to raise public awareness and stimulate debate on a range of issues related to competitiveness and prosperity.

The complete report can be downloaded directly from:

For more information contact Jamison Steeve, Executive Director of the Institute for Competitiveness & Prosperity at 416.946.7585