Supplementary Report,
Productivity With A Purpose: Increase The Standard Of Living Canadians
Scott Brison, MP
Progressive Conservative Critic for Finance, Revenue Canada, and the Treasury Board

The main flaw in our economic situation today is the very lackluster performance of our productivity in absolute, as well as relative terms. Since 1973, productivity growth in Canada has averaged a mere 0.3 percent per year. At this rate, our standard of living will take 231 years to double. Compare this with productivity growth from 1960 to 1973 of 2.0 percent per year, allowing Canadian's standard of living to double in only 35 years.

The P.C Party of Canada recommends that the government:

• Lower personal income tax rates
• Eliminate "deficit reduction" surtaxes
• Reduce corporate tax levels to be competitive with our trading partners
• Adopt the principles of the Mintz Report by having:
• A corporate tax system that is neutral and treats all industries as consistently as possible (eliminate non neutrality)
• Corporate taxes which are, to the greatest extent possible, based on profitability (reduce taxes on capital)
• Reduce the capital gains tax:
• Currently, Canada's capital gains taxes are approximately double those of the United States.
• This tax disparity is a key factor in the "brain drain" trend; particularly in the high tech sector where stock options are utilised increasingly in compensation packages.
• Reductions in the capital gains tax rates in the U.S. have had a minimal impact on government revenue, and have spurred economic growth by unlocking huge amounts of investment capital.
• There is an inextricable relationship between investment levels and productivity. We are failing to attract foreign investment into our economy. In 1985, Canada's share of foreign direct investment was 8.9% of the world total. By 1995, this share had declined to 4.4%. A one billion dollar increase in foreign direct investment is estimated to create approximately 45,000 new full time job opportunities and generate approximately $4.5 billion in gross domestic product in a five year period.
• EI Reform
• Further reductions in E.I premiums, which as a payroll tax have a negative impact on employment growth.
• Reforming E.I programs to better reflect regional needs in terms of seasonal employment, as well as training and retraining of the unemployed.
• Trade Policy
• Actively pursue trade agreements with Mercosur nations (Paraguay, Uruguay, Argentina, Brazil) consistent with the goals of the Miami Summit in order to further increase trade in the Americas.
• Letting the market work
• Implement a "Regulatory Budget", which would detail estimates of the total cost of regulation, including the government enforcement costs and the costs of compliance to individual citizens and businesses. It should also include a risk/benefit assessment of the regulation to enable cost-benefit analysis by parliamentarians.
• Implementation of a five year sunset clause on all regulations to ensure relevancy and benefit of regulations in a current context.
• Cost Recovery Program: The federal government should impose a moratorium on any increase or introduction of new fees under its cost recovery program. The government should also adopt a new framework for implementing regulatory fees to ensure uniform, consistent and fair application of regulatory fees across the government. Furthermore, that the government establish a central oversight and appeal mechanism for user fees.
• Inter-provincial trade barriers: The government, in co-operation with the provinces should reduce and eliminate inter-provincial trade barriers, which serve to deny Canadians the free-flow of goods and services across provincial boundaries, costing Canadians billions of dollars annually.
• The introduction and application of new technologies by Canadian small and medium sized businesses through tax credits, is particularly important for those businesses with export potential. This will help them add value to products before they leave Canada, which means more manufacturing jobs for Canadians and increased productivity.
• Spending estimates of government: Restore effective parliamentary scrutiny of government spending estimates to ensure that all public spending will be targeted to areas that are needed.
• Public Sector issues
• Approximately 40% of Canada's economy is represented by the public sector. Currently there is no quantitative measurement of productivity within the public sector. The government should move to implement methods by which to gauge quantitatively productivity within the public service.