Amidst concerns over Canada’s stagnant economy, the University of Calgary’s School of Public Policy convened a summit, dubbed Canada’s Productivity Summit, on Oct. 16.
Alberta Premier Danielle Smith delivered the keynote, in which she called on the provinces, policymakers and industry to address Canada’s pressing productivity challenges together.
“Every government at every level in this country needs to be pulling in the same direction,” Smith told a hometown audience. “There are too many regulatory roadblocks and too much red tape — too many barriers to the free movement of goods and services and labour.
“When you add all this together, all these impediments, it’s virtually impossible to get anything built in Canada these days,” Smith said.
A stronger, more efficient economy requires more flexibility from other governments, according to Smith.
“Alberta’s pushing back, but in the end, without support from Ottawa and more cooperation among the provinces, there’s only so much we can do. These conditions will continue to scare off investment until they’re improved.”
Stagnation nation
Relative to the citizens of other developed nations, Canadians are getting poorer — and have been for the past decade.
Between 2002 and 2014, Canada’s economic growth, as measured by GDP per capita, was in line with other OECD countries, according to a July study by the Fraser Institute think tank. However, from 2014 to 2022, Canada ranked 28th among 30 countries for growth in GDP per capita.
“Canada’s productivity isn’t growing the way we want it to,” Smith told the Calgary audience, “especially when we compare our numbers with other prosperous nations who are leaving us in the dust.”
At 0.6 per cent a year, Canada’s average GDP per capita growth rate was roughly a third of the US economy’s growth rate in the same period.
Breakout province
At about $71,000 a year, Alberta has the highest GDP per capita of any province — considerably higher than Ontario’s $54,000 or Quebec’s $48,000 GDP per capita.
Still, Smith believes the province would be far more prosperous if federal policy allowed Alberta to maximize the potential of its resource sector.
“We have to remember that during the darkest days of the last decade, well over $100-billion worth of Canadian energy projects were cancelled, one after another after another.
“These lost opportunities we may never get back,” said Smith. “Now, Alberta is a resilient place, and investment is returning to our energy industry. But if that growth-killing dynamic is repeated in every province across Canada, it’s easy to grasp the scale of this emergency.”
Smith says the economic conditions in other jurisdictions are “far worse” than those in Alberta.
“For six months this year, Alberta companies created 90 per cent of all the private sector jobs in Canada,” she said. “So that suggests that one of Canada’s biggest growth industries right now is government jobs. And that’s a clear indicator of an economy in big trouble.”
Broad, cross-sector deregulation is necessary to stimulate Canada’s economy, and it requires the willingness of other leaders — at both the federal and provincial levels — to make investment more attractive to private industry, according to Smith.
“None of us can solve this problem on our own, and we will only solve it by working together as a federation, as a partnership of governments and thinkers and industries and change makers.”
Padding the coffers
In a fireside chat following her keynote, Smith addressed the question of overdependence on natural resources.
“I don’t think the economy as a whole is suffering from not being diversified enough,” said Smith. “I think that the provincial government suffers from being too reliant on its resource revenues to fund the day-to-day expenses.”
Alberta is projecting a $2.9-billion surplus for the current year. At present, surpluses are being split between debt repayment, savings or one-time spending. Smith noted that the province has started reinvesting in its Heritage Savings Trust Fund, which was established by Premier Peter Lougheed in 1976.
“[W]hen you look at the nations of the world that now have the ability to fund productivity improvements in their economy, most of them are ones with sovereign wealth funds, whether it’s Norway, whether it’s the United Arab Emirates, whether it’s Qatar or others.”
Towards the end of the chat, Smith lamented the failure of previous administrations to transfer resource revenues to the fund.
“[W]hen we think about what we could have done just with the simple strategy of reinvesting our income, we could already have a fund that was $250 billion. But we believe that by doing it now and investing it appropriately, we could get to $250 billion by 2050.”
