Business
Business investment key to addressing Canada’s productivity crisis
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From the Fraser Institute
By Tegan Hill
The Bank of Canada’s senior deputy governor Carolyn Rogers recently raised the alarm on Canada’s productivity crisis, saying “it’s an emergency—it’s time to break the glass.” But to address Canada’s productivity problem, which is contributing to our stagnant living standards, we must first address Canada’s weak business investment.
For perspective, Canada’s economic growth in the fourth quarter of 2023, as measured by per-person GDP, a common indicator of living standards, was $58,111, which is slightly less than it was at the end of 2014 at $58,162 (after adjusting for inflation). That means that over roughly the last decade, Canadian living standards have not increased. Indeed, our economic problems span well beyond the pandemic. In the five years prior to 2019 (the last pre-COVID year), Canada’s per-person GDP (inflation-adjusted) was the 4th weakest out of 38 advanced countries.
Unfortunately, prospects for the future are dim. According to the OECD, Canada will record the lowest rate of per-person GDP growth among 32 advanced economies over roughly the next 40 years. Countries such as Estonia, South Korea and New Zealand are expected to pass Canada and achieve higher living standards by 2060.
Given that growth in productivity—essentially, the value of economic output per hour of work—is key to higher living standards, it’s no surprise that Rogers and other analysts are raising alarms. But what’s at the heart of our productivity crisis?
Put simply, weak business investment. While the federal and many provincial governments have prioritized immigration and bigger government in an effort to stimulate productivity growth and grow our economy, they’ve ignored business investment, which has significantly declined in recent years.
From 2014 to 2022, inflation-adjusted total business investment (in plants, machinery, equipment and new technologies but excluding residential construction) in Canada declined by C$34 billion. During the same time period, after adjusting for inflation, business investment per worker declined (on average) by 2.3 per cent annually. In contrast, business investment per worker grew (on average) by 2.8 per cent annually from 2000 to 2014.
While business investment has generally declined in Canada since 2014, in other countries, including the United States, it’s continued to grow. As a result, Canada’s GDP per hour worked—a key measure of productivity growth—is among the lowest in the OECD.
Think of it this way; when businesses invest in physical and intellectual capital they equip workers with the tools and technology (e.g. machinery, computer programs, artificial intelligence) to produce more and provide higher quality goods and services, which fuels innovation and higher productivity. Because Canada has lower levels of investment in tools and technology, our workers are less productive.
But here’s the good news. Governments across Canada can enact policies to help stimulate business investment, productivity gains, and ultimately, stronger economic growth. The key is to reduce onerous regulations, rein in high government spending, and create a pro-growth tax environment that makes Canada a more attractive place for business to locate and invest. These policies have a proven track record of improving business investment in Canada. For its part, the Trudeau government can prioritize pro-growth policies when it tables the federal budget next week.
Clearly, without a change in the investment climate and stronger productivity growth, the economic outlook looks grim. Fortunately, Canadian governments can respond to this emergency with pro-growth policy reform.
Author:
Business
Trump and fentanyl—what Canada should do next
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From the Fraser Institute
During the Superbowl, Doug Ford ran a campaign ad about fearlessly protecting Ontario workers against Trump. I suppose it’s effective as election theatre; it’s intended to make Ontarians feel lucky we’ve got a tough leader like Ford standing up to the Bad Orange Man. But my reaction was that Ford is lucky to have the Bad Orange Man creating a distraction so he doesn’t have to talk about Ontario’s high taxes, declining investment, stagnant real wages, lengthening health-care wait times and all the other problems that have gotten worse on his watch.
President Trump’s obnoxious and erratic rhetoric also seems to have put his own advisors on the defensive. Peter Navarro, Kevin Hassett and Howard Lutnick have taken pains to clarify that what we are dealing with is a “drug war not a trade war.” This is confusing since many sources say that Canada is responsible for less than one per cent of fentanyl entering the United States. But if we are going to de-escalate matters and resolve the dispute, we should start by trying to understand why they think we’re the problem.
Suppose in 2024 Trump and his team had asked for a Homeland Security briefing on fentanyl. What would they have learned? They already knew about Mexico. But they would also have learned that while Canada doesn’t rival Mexico for the volume of pills being sent into the U.S., we have become a transnational money laundering hub that keeps the Chinese and Mexican drug cartels in business. And we have ignored previous U.S. demands to deal with the problem.
Over a decade ago, Vancouver-based investigative journalist Sam Cooper unearthed shocking details of how Asian drug cartels backed by the Chinese Communist Party turned British Columbia’s casinos into billion-dollar money laundering operations, then scaled up from there through illicit real estate schemes in Vancouver and Toronto. This eventually triggered the 2022 Cullen Commission, which concluded, bluntly, that a massive amount of drug money was being laundered in B.C., that “the federal anti–money laundering [AML] regime is not effective,” that the RCMP had shut down what little AML capacity it had in 2012 just as the problem was exploding in scale, and that government officials have long known about the problem but ignored it.
In 2023 the Biden State Department under Anthony Blinken told Canada our fentanyl and money laundering control efforts were inadequate. Since then Canada’s border security forces have been shown to be so compromised and corrupt that U.S. intelligence agencies sidelined us and stopped sharing information. The corruption went to the top. A year ago Cameron Ortis, the former head of domestic intelligence at the RCMP, was sentenced to 14 years in prison after being convicted of selling top secret U.S. intelligence to money launderers tied to drugs and terrorism to help them avoid capture.
In September 2024 the Biden Justice Department hit the Toronto-Dominion Bank with a $3 billion fine for facilitating $670 million in money laundering for groups tied to transnational drug trafficking and terrorism. Then-attorney general Merrick Garland said “TD Bank created an environment that allowed financial crime to flourish. By making its services convenient for criminals, it became one.”
Imagine the outcry if Trump had called one of our chartered banks a criminal organization.
We are making some progress in cleaning up the mess, but in the process learning that we are now a major fentanyl manufacturer. In October the RCMP raided massive fentanyl factories in B.C. and Alberta. Unfortunately there remain many gaps in our enforcement capabilities. For instance, the RCMP, which is responsible for border patrols between ports of entry, has admitted it has no airborne surveillance operations after 4 p.m. on weekdays or on weekends.
The fact that the prime minister’s promise of a new $1.3-billion border security and anti-drug plan convinced Trump to suspend the tariff threat indicates that the fentanyl angle wasn’t entirely a pretext. And we should have done these things sooner, even if Trump hadn’t made it an issue. We can only hope Ottawa now follows through on its promises. I fear, though, that if Ford’s Captain Canada act proves a hit with voters, the Liberals may distract voters with a flag-waving campaign against the Bad Orange Man rather than confront the deep economic problems we have imposed on ourselves.
A trade dispute appears inevitable now that Trump has signaled the 25 percent tariffs are back on. The problem is knowing whom to listen to since Trump is openly contradicting his own economic team. Trump’s top trade advisor, Peter Navarro, has written that the U.S. needs to pursue “reciprocity,” which he defines as other countries not charging tariffs on U.S. imports any higher than the U.S. charges. In the Americans’ view, U.S. trade barriers are very low and everyone else’s should be, too—a stance completely at odds with Trump’s most recent moves.
Whichever way this plays out Canada has no choice but to go all-in on lowering the cost of doing business here, especially in trade-exposed sectors such as steel, autos, manufacturing and technology. That starts with cutting taxes including carbon-pricing and rolling back our costly net-zero anti-energy regulatory regime. In the coming election campaign, that’s the agenda we need to see spelled out.
How much easier it will be instead for Canadian politicians to play the populist hero with vague anti-Trump posturing. But that would be poor substitute for a long overdue pro-Canadian economic growth agenda.
Business
Trudeau billed taxpayers $81,000 for groceries in one year
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By Ryan Thorpe
Prime Minister Justin Trudeau billed taxpayers for $157,642 in household food expenses over a two-year period, according to access-to-information records obtained by the Canadian Taxpayers Federation.
“The fact that Trudeau spent more on food than what the average Canadian worker makes in an entire year is outrageous,” said Franco Terrazzano, CTF Federal Director. “Here’s a crazy idea: how about the prime minister pays for their own groceries like everyone else.”
Trudeau billed taxpayers $81,428 in 2022-23 and $76,214 in 2021-22, the latest years for which records are available.
The CTF filed an access-to-information request seeking “records showing total spending on household groceries for Prime Minister Justin Trudeau.”
The Privy Council Office released records to the CTF showing Trudeau expensed $188,864 for “food and food preparation” during the 2021-22 and 2022-23 fiscal years.
Taxpayers were forced to pay $157,642 (or 83 per cent) of the total cost.
For the sake of comparison, the average Canadian family spent a combined $29,989 on groceries during the 2022 and 2023 calendar years, according to Canada’s Food Price Report.
That works out to an average grocery bill of $288 per week.
Meanwhile, Trudeau billed taxpayers for an average of $1,515 in household food expenses per week – five times more than what the average family spends.
“The prime minister reimburses amounts related to food based on Statistics Canada data on household spending, which is adjusted using the consumer price index to account for inflation,” according to the records.
In 2022-23, Trudeau racked up $97,645 in grocery expenses, with taxpayers forced to pay $81,428.
In 2021-22, Trudeau racked up $91,218 in grocery expenses, with taxpayers forced to pay $76,214.
“Expenditures include all food related expenses incurred by the Prime Minister’s Residence,” according to the records. “In addition to household groceries, it also includes food expenditures for events that are hosted at the residence.”
The records do not make clear how much was spent on personal groceries versus event-related expenditures.
“It’s one thing for the prime minister to bill taxpayers for government business, but taxpayers shouldn’t be on the hook for a single cent of the prime minister’s personal groceries,” Terrazzano said. “The current policy needs to change, the government needs to improve transparency on this spending and anyone who wants to be the next prime minister needs to commit to not billing taxpayers for their personal groceries.”
The prime minister’s annual salary is $406,200. The average Canadian worker’s annual salary is about $70,000, according to Statistics Canada data.
Taxpayers also paid for Trudeau’s personal chef. The prime minister’s personal chef took home an annual, taxpayer-funded salary between $68,468 and $79,234.
Between 2015 and 2022, taxpayers were on the hook for an average of $57,538 per year for Trudeau’s household groceries, according to previous reporting from the National Post.
The Official Residence for Canada’s prime minister is 24 Sussex. But Trudeau has lived at Rideau Cottage – a two-storey, 22-room mansion on the grounds of Rideau Hall – since becoming prime minister in 2015.
However, Trudeau’s meals have continued to be prepared at 24 Sussex, then shipped to Rideau Cottage via courier, according to the National Post.
“While Canadians have been tightening their belts during a cost-of-living crisis, Trudeau was sparing no expense,” Terrazzano said. “The prime minister’s salary is nearly six times more than the average Canadian’s and he lives in a taxpayer-funded mansion, so surely he doesn’t need to stick taxpayers with huge grocery bills.”
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