The House of Commons Industry and Technology committee met to study Canada’s productivity gap and competitiveness. Appearing as witnesses were Michael R. Veall (professor, as an individual), Michael Graydon (CEO, Food, Health and Consumer Products of Canada), Namir Anani (President and CEO, Information and Communications Technology Council), Frances Donald (Senior Vice-President and Chief Economist, Royal Bank of Canada), Theo Argitis (Senior Vice-President, Policy, Business Council of Canada), and Michael Gullo (Vice-President, Policy, Business Council of Canada).
Professor Veall urged the committee to avoid panic, arguing Canada’s productivity performance is similar to comparator countries except the U.S., which has exceptionally fast growth. He recommended not interfering with pension plan investments, knocking down interprovincial barriers, using tariffs sparingly, increasing the GST/HST to encourage saving and investment, postponing the electric vehicle mandate, focusing on fewer and more highly skilled immigrants, raising the age for public pension receipt, and speeding the arrival of automatic personal income tax returns.
Michael Graydon said his sector, Canada’s largest manufacturing employer, faces a tipping point due to high operating costs, regulatory drag and uncertainty, with 23% of members expecting to remove products from the market within two years. He called for modernizing regulations to reduce duplication, upgrading port and rail infrastructure, and sustaining competitive tax measures like the productivity superdeduction, arguing that converting even part of the 55% of imported centre-store goods to domestic production would create jobs and drive growth. He disagreed with the government’s retaliatory tariffs against the U.S., calling them a mistake.
Namir Anani outlined five pillars for a national productivity strategy: accelerated technology adoption, skills and workforce readiness, commercialization and IP retention, innovation-ready regulations, and enhanced competition. He stressed that only 10% of Canadian companies are aware of the importance of artificial intelligence, and recommended a program similar to the U.S. small business innovation research program, a refined SR and ED regime that rewards commercialization, and a national scale-up fund. He agreed with Graydon on the need for regulatory certainty but emphasized that competition drives innovation.
Frances Donald argued that slower population growth will make productivity gains more critical, as fewer workers will need to produce more output. She noted that while Canada’s economy has been resilient overall, regions like southwestern Ontario are suffering deep recessions from the trade shock, limiting appetite for structural reforms there. She advised the committee to “pick a corner and start cleaning,” recommending a parallel track of costless measures like deregulation and more costly investments, and identified construction as the sector with the greatest potential for easy productivity gains.
Theo Argitis characterized Canada’s productivity crisis as an investment crisis, with business investment per worker stagnating over the last decade. He said the recent federal budget contains positive steps but is too incremental to break the low-investment trap, and called for more ambition on tax, regulatory and infrastructure policy. He noted that while Canada’s marginal effective tax rate advantage over the U.S. has improved slightly, it remains insufficient to offset other negatives, and warned that rising debt without productivity-enhancing investment risks a vicious cycle of higher interest rates and slower growth.
Michael Gullo highlighted Canada’s opportunity to capitalize on global demand for energy, critical minerals and food, arguing that a whole-of-government approach is needed to unlock $150 billion in GDP growth by 2035. He said innovation policy requires a significant “shot in the arm,” as Canada’s R and D investment is among the lowest in the OECD and research efforts often fail to commercialize. He recommended creating an advanced research agency modelled on the U.S. DARPA system, and noted that institutional arrangements to de-risk private-sector investment are lacking.
During questions, Graydon elaborated that regulatory costs, including single-use plastics rules and front-of-pack labelling, add billions in costs and push production to the U.S., and that his sector lacks a clear government home. Anani said blockchain and quantum computing offer broad productivity benefits and that Canada is well positioned in quantum research but must act quickly. Donald agreed with the need for sector-specific policies, noting that investment in housing has not led to productivity gains. Argitis and Gullo said Bill C-5 is better than nothing but does not fix the underlying approvals system, and they offered to provide follow-up material on permitting reform. The committee did not debate procedural motions or votes.
AI-generated summary — may contain errors; verify against the official evidence.