Some of the key areas in which Canada has been underperforming include labour productivity and energy production, according to Mr. Cross.
Current trends within Canada’s economic landscape, including reduced energy production, low labour productivity, and policy stagnation, show a “habitual” underachievement, an economic expert told MPs in a recent parliamentary committee meeting.
“Underachieving has become habitual in Canada over the past decade as we have ignored or even been outright contemptuous of entrepreneurship and innovation,” Philip Cross, a former chief economic analyst at Statistics Canada and a senior fellow at the Macdonald-Laurier Institute, said at a meeting of the
House of Commons finance committee on Oct. 5.
According to Mr. Cross, some of the key areas in which Canada has been underperforming include labour productivity and energy production, which he said are less robust when compared to the United States.
While the United States has seen a
40 percent increase in oil and gas production since 2017, driven by technological advancements in fracking and higher energy prices, Canada’s progress has been considerably more modest, with only a 10 percent gain to its credit, he said. Mr. Cross attributed this disparity to regulatory uncertainties and constraints in pipeline capacity.
Mr. Cross added that despite its increase in oil and gas production, the United States has managed to achieve substantial reductions in greenhouse gas emissions. He said the U.S. emissions have decreased by 14 percent from the 2005 baseline, while Canada’s progress in this regard has been limited to a 5 percent reduction.
“Canada’s attempt to straddle the middle of the road between the opposing lanes of faster economic growth and lower emissions led to it being run over in both directions. We have achieved little economic income growth without lowering emissions significantly,” Mr. Cross said.
Ottawa has introduced a number of policies aimed at reducing fossil fuel use, including the proposed Clean Energy Regulations
released on Aug. 10, which requires net-zero emissions in the electricity grid by 2035. This has been met with strong opposition by the provinces of Alberta and Saskatchewan who say it’s not achievable if they are to maintain reliable electrical grids.
In addition to his concerns about energy production, Mr. Cross also highlighted pressing issues regarding labour productivity. Despite a significant number of workers leaving their jobs during the COVID-19 pandemic, particularly in low-wage service sectors like accommodation, food, and retail, he noted that there are no immediate concerns about labour shortages. He said although there were expectations that these workers might transition to higher-paying jobs or enhance their skills through education, the aggregate labour productivity in Canada has not shown improvement.
Mr. Cross said Canada’s labour productivity has deteriorated notably since early 2021, with eight consecutive quarters of decline.
Statistics Canada’s June report shows a 0.6 percent decline in the labour productivity of Canadian businesses in the first quarter of 2023, mirroring the decrease observed in the previous quarter. This marks the fourth consecutive quarterly decrease in labour productivity, the report said.
Mr. Cross said that this productivity decline can’t be solely attributed to the pandemic, pointing out that labour productivity in the United States has fared better than in Canada. In the United States, labour productivity in the non-farm business sector saw an increase of 3.5 percent in the second quarter of 2023, reported the
U.S. Bureau of Labor Statistics in September.
