From Stagnation to Strength: Interim Report of the Economic Growth Council

For those who have missed seeing my parliamentary work, I’m presenting a summation of a large project that I was asked to undertake on behalf of the Official Opposition – to identify the root causes of Canada’s economic stagnation and propose practical solutions to unleash the countries full economic potential and bring it back from its position as economic laggard of the developed world. Please let me know any thoughts you have.

The Conservative Leader asked me, with co-chairs Rick Perkins, former MP from Nova Scotia, and Gaétan Malette, MP from northern Ontario, to consult Canadians and write a better plan for Canada’s economy. On January 31, we delivered the outline of our interim report.

Identifying the Problem

Put simply, a decline in productivity translates into a decline in prosperity – for individuals, for businesses, and for the government which loses the revenue needed to provide desired services and support to Canadians.

Canada should be the easiest place in the world to start a business, raise capital, and protect your digital, financial and property rights.

Instead, many Canadians are rightly worried about their jobs, their income, their food bill, their ability to buy or rent a suitable home, and their future prospects.

Defining Six Priority “Buckets”

Our input led to identifying six categories under which productive policy amendments fit. Note that some detailed policy initiative impact more than one category. This objective provides focus and structure to a new plan.

Priority 1: Role of Federal Government in the Economy

The government regulates too much. KPMG estimates a 37% increase in regulations since 2006. A focused Task Force must identify inefficiencies, reduce government regulatory burden, eliminate wasteful or duplicative programs, and infuse Competition as a primary mandate. This includes reducing business burden from CRA.
Government is pushing tax burden onto taxpayers. Personal taxes are rising faster than inflation. Businesses are choosing other jurisdictions. We need to simplify and re-balance.
Government taxes entrepreneurs badly. We are losing start-ups and entrepreneurs to other jurisdictions. We need to restructure taxation.
End duplicative programs and reduce corporate grants.
Normalize Indigenous consultation.

Priority 2: National Sovereignty

Economic Independence = National Sovereignty. We must re-assess government invention, innovation and commercialization funds that lead to jurisdictional ‘leakage’ – funds going to other nations.
Almost half of Canadian defence procurement goes to foreign countries. This spending is not optional, but should be used to build Canadian capacity.
Modernize the financial sector: ensure transactions are governed by Canadian law; enable a choice of transaction methods; a more competitive banking sector; and reduce unnecessary regulatory burden.

Priority 3: Trade

Trade Instability threatens our future.
A 10% tariffs on exports to the U.S., would result in 150,000 jobs lost, 1% decline in GDP, 1% inflation increase, and loss of 10% business investment.
Re-instate a permanent Canada sector trade advisory groups of private sector industry experts;
Present a consistent auto policy to stabilize and grow manufacturing capabilities in Canada;
Build Canadian added value in advanced manufacturing;
Remove the Industrial Carbon Tax.

Priority 4: Intellectual Property

A modern economy requires that we own and commercialize what we create.
Canada is lagging behind. We currently file about 25,000 patents a year. US has grown from 200,000 a year to over 600,000 and China has grown from very few in the 1990s to 1.8 million a year.
30% to 50% of government funds for innovation actually go to foreign controlled entities. We must fix this leakage; and reclaim funds if an asset is sold to a foreign buyer.

Priority 5: Access to Capital

Without capital, there is no growth. The US venture capital (VC) market is roughly 25–50 times larger annually than Canada—and continues to dominate globally. In 2024, the US market was $149–150 billion compared to Canada’s ~$5.7 billion USD equivalent.
VC returns in Canada are approx. 10% compared to US 11.7%
Canada has experienced an outflow of capital to the US of $2.5 trillion while receiving an inflow of capital of only $1.5 trillion: a net investment outflow of $1 trillion of capital
We must reverse over-regulation of the economy, build an investment climate that pays off, examine the potential application of flow through shares for other industries, and motivate large Canadian pension funds to increase domestic investment.

Priority 6: Natural Resources

Canada has an astounding wealth of renewable and non-renewable resources’ –agriculture, fisheries, forestry, minerals and oil and gas. A large part of Canada’s GDP and exports are dependent on our resource development.
Canada is unique in the world for implementing policies that diminish our resource sector, or any competitive advantage we have.
In a world where strategic assets are key, Canada needs to ensure its resources hold their advantage.
We must build export infrastructure, rebuild investor trust and confidence in infrastructure construction, remove all taxes that make Canadian production of its resources less competitive, end jurisdictional overlap in regulations – one project, one regulator – and set strict timelines.
Normalize Indigenous consultation.
Regulations to control emissions cannot be anti-competitive weights.
Transportation to markets is key; and diversity of customers is imperative to prevent buyers from dictating prices
Remove anti-competitive regulatory and tax measures

NEXT STEPS

The Economic Growth Council is now in the process of furthering the detailed policy options that support these directions, keeping in mind the following principles.

To reverse Canada’s position as the economic laggard of the developed world economies:

Build Competition as primary driver of public policy
Reduce excessive government regulation and involvement in the economy
Reduce the tax burden on Canadians and businesses
Generate more consumer choice in federally regulated industries
Restore fiscal balance in the economy by shrinking the federal government’s spending as a percentage of GDP
Create stronger national security through an integrated approach of defense, security, trade, Intellectual Property, Artificial Intelligence and data sovereignty

THE PRESENTATION ON VIDEO

See the presentation of the interim report at the Conservative convention on January 31 – about 30 minutes on YouTube.

IN THE NATIONAL POST

Donna Kennedy-Glans wrote in the Post on February 7 about the Council’s work, and some of my additional thoughts on democracy and collaborating with the government. Click here to see the story:

National Post story