The Business Council of British Columbia (BCBC) has renewed its call for the federal government to create a productivity commission to help address what it calls "Canada’s terrible productivity performance that is eroding our standard of living."
The call comes days after Carolyn Rogers, senior deputy governor of the Bank of Canada, warned that productivity has become a national “emergency.”
Her speech followed three years of falling Canadian labour productivity, or the output per hour worked.
The BCBC has bemoaned Canada's declining productivity for many years.
BCBC's former executive vice-president Jock Finlayson told BIV six years ago that business productivity on average in Canada, and in B.C., was about 26 per cent lower than in the U.S.
“We’ve always lagged [behind] the U.S. in productivity, but the gap has widened over time,” he said.
Finlayson added at the time that the U.S. had a higher per capita gross domestic product (GDP) than Canada because American companies invested more per worker than do their Canadian counterparts. He has brought up the problem of flagging productivity many times in the intervening years.
David Williams, BCBC’s vice-president of policy, today explained that “productivity is what drives real incomes and living standards over the long run, which is why it’s so important to Canada’s prosperity.”
He pointed at his own 2021 peer-reviewed study that found that if Canada’s labour productivity growth had not slowed by half after 2000, the average Canadian worker would be earning more than $13,000 more annually today.
Lacklustre productivity growth explains much of the income gap between Canada and other countries in the Paris-based Organisation for Economic Co-operation and Development (OECD), he said. In 2022, Canada’s income per person was $54,000, well below Australia, at $59,300 in Canadian dollars, and the U.S., at $74,200 when converted into Canadian dollars.
“Working smarter as a country means we can all enjoy a standard of living that is rising rather than going sideways, or falling," Williams said. "That’s especially important for young people as they strive to build a future. Canada needs a statutory agency, like the Bank of Canada or the Parliamentary Budget Office, tasked with providing independent policy advice to government on structural policies that can help improve productivity.”
The BCBC's idea is for Canada to create a commission similar to one that Australia established in 1998.
Australia’s Productivity Commission operates under legislation and has a public budget. It has conducted public inquiries on issues such as airport regulations, tariffs, electricity networks, supply chains, patent licensing, retirement incomes and veteran’s compensation.
“With the 2024-25 federal budget expected to be released on April 16, the alarm bells couldn’t be ringing any louder," said BCBC president and CEO, Laura Jones. "BCBC hopes to see indicators in the budget that the government is taking the situation seriously and has a plan to respond to the country’s productivity crisis.”
