Beyond the recovery
In the Report, the Institute reaffirmed that Canada’s economy is among the world’s most successful. But continues to trail against the United States. The Institute reports that Canada’s GDP per capita trailed the US by $9,300 or 17 percent in 2009, essentially unchanged from the 2008 gap of $9,400 in constant (2009) dollars.
The Report identifies some positive developments in Canada’s competitiveness, such as the way we tax business investment. However, some other factors continue to be troublesome. Huge federal and provincial deficits will necessitate fiscal belt tightening. The Institute is concerned that governments will cut back severely on their investments in education – which happened the last time they attacked their deficits. We need to avoid repeating that mistake.
In addition, protectionist sentiments are growing in the United States and elsewhere, and we should be working to combat them. The Report applauds the leadership Ontario and Quebec have shown in encouraging the federal government to launch trade negotiations with the European Union. And it urges pursuit of other trade expansion opportunities with countries like China and India.
The Institute also calls for new approaches to Canada’s innovation agenda. It argues that increasing exposure to international trade will add pressure on our businesses to become more innovative. But it also criticizes current government approaches that over emphasize invention – new-to-the-world discoveries often driven by scientific curiosity – and under emphasize true innovation – the creation of products, services, or processes that create net new value for customers.
The 2020 Prosperity Agenda for Canada
- Attitudes: remain determined to close the prosperity gap
- Investments: continue investing in people for Canada’s competitiveness; and increase business investment in information and communication technology
- Motivations: implement announced changes in Ontario’s and British Columbia’s sales and corporate tax structures and encourage governments in Saskatchewan, Manitoba, and PEI to follow their lead; lower marginal effective tax rates for lower income Canadians
- Structures: balance our public innovation strategies; continue to encourage federal efforts to expand international free trade agreements; keep the friendly pressure on our US neighbours to resist protectionist impulses and, in fact, look for even more opportunities to expand our trade; and step up our efforts to increase trade with China and the European Union