Solving Canada's Productivity Puzzle

Actionable Insights from Andrew Coyne

Nova Scotia and Canada are in a productivity crisis that affects our economy, our standard of living, and our future growth and prosperity.

The OECD predicts that Canada’s per capita GDP growth will rank last among OECD economies over the next 40 years, while a recent report ranks Nova Scotia last in GDP per capita among all other Canadian provinces and U.S. states.

Halifax Partnership hosted Carolyn Rogers, Senior Deputy Governor at the Bank of Canada, at an event last March, where she highlighted Canada’s long-standing, poor record on productivity. She also underscored the urgency of this issue, while framing its importance by saying: "Higher productivity should be everyone’s goal because it’s how we build a better economy for everyone.”

At Halifax Partnership’s Productivity Puzzle launch event on April 3, political journalist Andrew Coyne, addressed the pressing issues of Canada's productivity crisis during his keynote presentation, “For some time, it’s been clear there is something not quite right with Canada’s economy, specifically in regard to economic growth,” says Coyne. “It’s become conventional to talk of Canada being in a growth crisis. With the return of Donald Trump to power in the United States, one might almost say it’s become a growth emergency.”

As we face economic uncertainty driven by unpredictable international relations and shifting trade dynamics, there has never been a more crucial time to tackle Nova Scotia’s productivity crisis. The Productivity Puzzle is a series of events, discussions, and research designed to highlight and spark a broader conversation around the significance of productivity, why it matters for Nova Scotians, and how improving it will strengthen our economy and improve our lives.

Improving productivity doesn’t require one big solution, but instead practical changes on many fronts – from taxation to labour to regulation - that will compound into significant improvement over time. Now is the time for the government, the private sector, and institutions to implement new strategies to overcome the productivity crisis throughout Canada and foster sustainable economic growth.

So, what can be done?

Here are the top actionable insights that Andrew Coyne suggested to address Canadian productivity and boost our economy:

1. Implement comprehensive tax reforms with the purpose of reducing barriers to investment. Andrew Coyne shared that sweeping tax reform is necessary to eliminate distortionary tax preferences and lower marginal tax rates. Tax reform - from eliminating special tax preferences and exemptions to abolishing corporate income tax - could stimulate both consumer spending and business investment, driving productivity growth.
2. Boost labour supply for economic growth. “Mobilizing every spare person-hour of labour” through initiatives like supporting prolonged employment for older adults, sustaining high immigration, and integrating underrepresented groups into the labour market will significantly contribute to economic growth.
3. Enhancing competition across sectors is essential for driving innovation and productivity. This includes dismantling interprovincial trade barriers and encouraging businesses to innovate and improve efficiency continually. The elimination of business subsidies is also a key factor here, as they can distort market signals and lead to inefficient allocation of resources.
4. Remove investment barriers to fuel productivity. Investment is a critical driver of business growth and prosperity. Policies that streamline regulatory processes and reduce bureaucratic red tape will also encourage more robust investment.

Together, these strategies could ensure Canada remains dynamic and resilient, contributing to sustained economic growth and mitigating disruptive economic pressures, particularly U.S. trade actions.

Canada’s economic future and long-term prosperity hinge on fixing the structural barriers undermining productivity. The time for solutions is now.  

Ready to dive deeper into these insights?

Join us on June 5 for the second event in this initiative, ‘Breaking Down Barriers: Unlocking Canada’s Economic Potential’ hosted in collaboration with the School of Public Policy at the University of Calgary and the Public Policy Forum. This impactful, half-day forum will explore how breaking down trade and competition barriers — both within Canada and across borders — can lay the groundwork for stronger productivity, rising incomes, and sustainable growth. Learn more and register here.