A new report by the C.D. Howe Institute found that Canada is lagging behind other Organization for Economic Co-operation and Development (OECD) countries when it comes to bringing in business investment.

According to the study, Canada’s business investment is 50 cents per worker compared to every dollar invested in the United States. 

“Business investment is so weak that capital per member of the labour force is falling, and the implications for incomes and competitiveness are ominous,” wrote researchers. 

Report author William Robson says that the data shows businesses see lower opportunity when investing in Canada which will weaken growth and living standards. 

“Investment per available worker lower in Canada than abroad tells us that businesses see less opportunity in Canada, and prefigures weaker growth in Canadian earnings and living standards than in other OECD countries,” said Robson. 

The rate of investment per worker is the lowest it has been in over 20 years. 

When it comes to OECD countries, Canada saw 73 cents of new investment for every dollar in the average OECD nation excluding the US. 

OECD countries are projected to see $20,400 in new investment per worker in 2022, meanwhile Canada will only see $14,800 per worker. 

Researchers pointed to a fall in spending in the energy and gas industry due to the 2014 oil crash as one of the reasons behind the disconnect. 

Prime Minister Justin Trudeau has implemented several anti-energy policies during his tenure. In May, Alberta’s court ruled the Liberal “no more pipelines” law, Bill C-69, unconstitutional. The bill overhauled how major infrastructure projects are reviewed and approved. 

Additionally, the amount of investment going into residential properties has impacted how much investment is available for businesses. 

Uncompetitive corporate taxes are also a major issue with researchers advocating reducing the corporate tax from 15% to 13% by 2025. 

During the last election, Trudeau campaigned to raise the corporate tax even further to 18%. Although the Liberals have yet to follow through on the move, during the last federal budget a tax hike was announced for banks and insurance companies. 

“Regulatory uncertainty” from federal and provincial governments has also played a big role in dissuading investment. 

“The prospect that Canadians will find themselves increasingly relegated to lower value-added activities relative to workers in the United States and elsewhere, who are raising their productivity and earnings faster, should spur Canadian policy makers to action,” the report read. 

+ posts

Journalist and Senior Research Fellow

We’re asking readers, like you, to make a contribution in support of True North’s fact-based, independent journalism.

Unlike the mainstream media, True North isn’t getting a government bailout. Instead, we depend on the generosity of Canadians like you.

How can a media outlet be trusted to remain neutral and fair if they’re beneficiaries of a government handout? We don’t think they can.

This is why independent media in Canada is more important than ever. If you’re able, please make a tax-deductible donation to True North today. Thank you so much.