Where to begin? I might as well start from my beginning. MP Solberg commented today on the Statistics Canada report on productivity growth in Canada. Here are the facts from the Stats Can release.
In 2004, Canadian businesses recorded their worst performance in labour productivity growth in eight years as both economic activity, hit by the rising Canadian dollar, and the number of hours worked increased in tandem for a second year in a row.
Productivity growth in Canadian businesses was a flat 0.0% last year. During the fourth quarter alone, productivity rose a marginal 0.2% from the third quarter. The gain was due almost entirely to growth in gross domestic product (GDP) as the number of hours worked edged up only 0.1%.
...Productivity grew faster among American businesses during the last three months of 2004 than it did among their Canadian counterparts because economic output in the United States increased at a faster rate. At the same time, the number of hours worked rose about 0.1% in both countries.
...The different productivity performance between the two nations was in growth of real GDP. Growth in output among American businesses surpassed that of Canadian businesses for the second consecutive quarter.
In Canada, GDP growth in the business sector slowed to 0.3%, less than half what it was in the third quarter (+0.7%). The slowdown was due to a decline in exports of goods and services, which were down for a second consecutive quarter.
On the American side, GDP growth slowed slightly from 1.1% to 1.0% between the third and the fourth quarter. Output in the United States has grown at rates higher or equal to 1.0% since the second quarter of 2003.
As stated in the article, "productivity growth is a key factor determining the living standard of Canadians." Here is MP Solberg's take.
...David Emerson, the Industry Minister, told the media today that they are putting plans in place to deal with this. Oh good. They are starting to deal with it now, after the jobs have been lost and the investment has been driven out, and after 30 years of per capita output stuck at 85% of US levels, which translates into lower Canadian living standards and fewer jobs. Of course the Libs have said that enhancing our productive capacity is "very, very important" many times before and then did nothing.
This is probably the biggest under reported story in the country today. Canada could be the most prosperous nation in the world if we would just reduce key taxes, streamline spending, educate our people better, build better infrastructure and cut away uneccesary bureaucracy and red tape. And if we can become the most prosperous nation then we can afford to help those people who really are struggling. But you can't redistribute the income before you earn it.
It may have been under reported but the National Post did weigh in. And I am sure that it is no coincidence that the Post also had an article on the success that "New Europe" is having with a flat tax policy (see here).
...represents a blow to the Liberal government and its Finance Minister, Ralph Goodale, both of whom have repeatedly sung the praises of how well the Canadian economy has performed compared to its industrialized peers. Observers indicate the latest budget, approved by Parliament this week, provides few of the measures needed to boost this economic measure.
The Globe and Mail let
this story pass but they do have a related article from last week regarding the declining Canadian standard of living. Both articles quote from the same source though, Dale Orr, managing director of Global Insight Canada. Here is what he had to say last week.
...In the first comprehensive economic forecast since last week's federal budget, Global Insight (Canada) Ltd. says Canada's standard of living had slipped to 84 per cent of that in the U.S. by the end of 2004 from 87 per cent two years earlier. That three-percentage-point increase in the gap reversed a 1999-2002 trend, when it narrowed to 13 percentage points from 17.
...The U.S. economy is expected to outpace its Canadian counterpart this year and next, which Mr. Orr forecasts will expand the standard-of-living gap by another 1.6 percentage points. That means the gap will have widened by 4.6 percentage points over the four-year period, or 35.4 per cent of the initial 2002 gap of 13 percentage points.
Which brings us around full-circle. Thank goodness that the Liberals have fixed this problem with the $16/year tax break!
