Stop, Start, Continue: How We Can Regain Canada’s Competitive Advantage

A stop, start, continue analysis is often used to determine how a team or individual in a workplace can improve their performance. But it’s also a useful exercise for figuring out how we can get Canada’s economic competitiveness back on track. 

What is economic competitiveness?

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Economic competitiveness is Canada’s ability to compete against other global players for international talent, trade and investment. It’s also linked to a country’s wealth and prosperity, which determine standard of living.

What happened to Canada’s competitiveness?

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There are a lot of factors that have contributed to our decline in this area — low productivity, high inflation, unreliable supply chains, nation-wide skills gaps, not enough housing… But instead of focusing on how we ended up here, let’s look at what we can stop, start and continue doing to grow our competitiveness once again.

Stop

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• Stop adding taxes. The way to fix Canada’s economic competitiveness is not through more spending on government programs — spending fuelled by new taxes — it’s by enabling private-sector businesses to do business because government spending simply cannot replace private-sector innovation or investment. The government frequently talks about encouraging business investment, yet at the same time, adds new rules, regulations and taxes that make it more time-consuming and costly to do so.
  In the 2023 International Tax Competitiveness Index, Canada ranked 24 out of 38 countries for corporate taxes. Under our complex tax system, businesses have less resources to invest back in their business (hiring more people or producing better products for Canadians) because they’re putting their time and money towards making sure they’re paying the right amount of tax to the government. Government shows no sign of reducing the tax burden or simplifying the system, choosing instead to move forward with the retroactive Digital Services Tax.
• Stop ignoring threats to our supply chains. Strikes at ports, railways, airports and borders halt the flow of goods to market, damaging Canada’s economy and hurting our reputation as a reliable place to do business, both of which make us less competitive on the global stage. Yet government has voted for more frequent and longer strikes by rushing to pass the anti-replacement worker legislation that prevents organizations in sectors like trucking, rail, ports, telecom and air transportation to provide a basic level of service, preserving critical functions for Canadians. 
• Stop the misalignment between immigration and regional and sectoral labour needs. A report from RBC found that, despite the fact that immigration has been responsible for all labour force growth in the past decade, it hasn’t been able to counteract the impact of Canada’s aging population or the shortages in the job markets because the skills immigrants are bringing with them and the fields of study international students are choosing are not in alignment with the long-term needs of our economy. To address this misalignment, government and educational institutions need to work with businesses and communities to determine which skills, credentials and education should be prioritized.

Start

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• Start applying an economic and competitiveness lens to regulations. When creating and implementing new regulations, sufficient consideration isn’t given to how they will impact businesses. If an economic lens were applied, regulations would become more manageable for businesses, supporting economic growth and our global competitiveness by increasing investment, growth and jobs.
• Start investing in long-term trade infrastructure. We need reliable ports, bridges, roads and railways to transport our goods to Canadians and our customers abroad. Committing to a strategy like the Canada Trade Infrastructure Pan will help us build and maintain our trade infrastructure, ensuring the smooth flow of goods and services.
• Start expediting foreign qualification recognition for immigrants. After all, it doesn’t make sense to choose individuals based on the skills, education and credentials they possess and that our economy needs if we then prevent them from working in their fields upon arrival. Expedited recognition will help address the urgent labour needs of priority sectors like agriculture, childcare, construction, healthcare and transportation, and allow qualified newcomers to fully participate in our economy right away. 

Continue

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• Continue reducing interprovincial barriers. It’s easier for Canadian businesses to trade with Europe or the United States than within Canada. While the government has made progress streamlining internal trade and removing interprovincial barriers, more needs to be done. Especially considering that we stand to benefit from a potential 8% increase in GDP growth if this issue is addressed.
• Continue incentivizing business adoption of AI. Given AI’s potential to help address our productivity problems, Canadian businesses should be at the forefront of adoption — not sitting on the sidelines. Government can help stimulate adoption by ensuring our AI regulation is proportionate and risk-based, and by fully leveraging private sector partners when allocating the new $2.4 billion in AI funds announced in the 2024 Budget.
• Continue being open to the movement of people. It may be time for a new strategy, but there’s no doubt that Canada needs immigration. Given our low birth rates and aging demographics, immigration is the only way we’ll be able to fill our skills gap and grow our economy. 

Overall, the most important things the government can do to help Canada’s competitiveness is to stop getting in the way of businesses doing business, start focusing on growth driven by the private sector, and continue collaborating and partnering with Canada’s vibrant business community.