Commentary
The other day I met with the owner of a fast-growing business who was lamenting that the country in which he’d built his company and raised his family was sending him signals that his work wasn’t valued.
So Canada is now losing yet another business to the United States, taking all the jobs and tax dollars that come with it. And not because the owner particularly wants to go.
If the taxes are higher, the regulations are worse, government doesn’t attempt to retain you, and customer and order volume surges abroad, you really have no choice but to leave.
These types of moves are happening far too often. A recent KPMG survey found that almost half of Canadian manufacturing firms have either moved some or all production to the United States, or are at least seriously planning it.
During my campaigns for elected office I spoke to so many business owners who were doing the same. A lot of them already had one foot out the door, opening plants abroad that would have been opened here in Canada if our conditions were better.
Given the tariff conflicts and the front-page tension between Canada and the United States, some people may chastise these business leaders and accuse them of picking sides. That’s not a productive response, though. This problem is really the culmination of many years of poor policies, and we only have ourselves to blame.
A major report just released by the C.D. Howe Institute titled “The Productivity Blueprint: An Agenda for Higher Living Standards in Canada” attempts to address a lot of what ails the economy.
“Canadians’ living standards have fallen behind those of other advanced economies,” the comprehensive report explains. “From 2014 to 2024, real GDP per capita, a common measure of living standards, grew just 3.5 percent in Canada, the slowest among nine peer countries and far behind the United States, where it grew 20.2 percent.”
For those wondering if the recent tariff spat is to blame, the report says no: “In March 2024, Bank of Canada Senior Deputy Governor Carolyn Rogers called Canada’s poor productivity a “break the glass” moment. That warning came before the latest US administration’s tariff threats and heightened geopolitical instability. With Canada’s economy facing these external pressures alongside its longstanding underperformance, addressing the country’s lagging productivity is more urgent than ever.”
While productivity metrics aren’t the same as business retention, the lack of productivity compared to the United States is a key impediment to growth.
The C.D. Howe Institute offers an ambitious slate of dozens of policy proposals to remedy what ails us. Here are a few, in no particular order:
- Pursue “big bang” tax reform, collapsing personal income tax to three brackets, replacing most credits with a $10,000 basic allowance, and cutting the general corporate tax rate to 10 percent;
- Restore program spending to its 2003–2020 share of GDP, reducing spending by roughly $66 billion by 2030;
- Require bilingual service at Air Canada and airports only where numbers warrant, and end Air Canada’s requirement to keep its head office and maintenance centres in set cities;
- Remove the remaining barriers to trade between provinces, such as the lack of mutual recognition for services and differing trucking rules on vehicle weight, size, and bridge clearances;
- Streamline data centre approvals and invest in AI infrastructure access;
- Raise admission standards for international students;
- Require stronger math skills for teacher certification.
There was a time when reading this report and its recommendations would have been an invigorating breath of fresh air. Nowadays it’s just despairing.
The despair is not because there’s anything wrong with the report. Quite the contrary. It’s because it’s all so on point and obviously needed and yet the hill to climb to make it happen feels immense.
Take the proposal around improving interprovincial trade, which has been discussed for decades. Last year, as the American president began implementing tariffs and discussing making Canada the 51st state, Canadian officials said they’d finally make good on tearing down the barriers.
To the credit of Prime Minister Mark Carney, the feds did introduce the One Canadian Economy Act which means a certification in one province is now valid for a federal job in any province without recertification. That hasn’t been recognized across the provinces, though, and many other barriers remain.
If we’re only going to score a partial win on a proposal everyone agrees on now more than ever and which we’ve been mapping out for decades, then how will we go full steam ahead with the other proposals?
Reforms like AI data centre support and reducing language rules for non-bilingual regions should be done, but they will require immense political capital to respond to the inevitable protests.
Perhaps Carney will venture to spend that capital. After all, he is riding high in popularity polls and the public places a lot of trust in him to make decisions regarding business and the economy.
As the C.D. Howe Institute notes, we’ve been stagnant for a decade. If we don’t enact these sorts of reforms soon, Canada will see even more businesses leave the country and things will only worsen.
Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.
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