Good morning, Mr. Chairman, distinguished committee members, and fellow presenters. I am pleased to be with you today to represent Certified Management Accountants of Canada. CMA Canada has delivered a consistent message to this committee over the past six years: Canada's productivity performance must be improved. Productivity growth is paramount to improving Canadians' standard of living. If we're going to ensure that we have the necessary resources available to invest in areas that improve our quality of life, Canada's productivity performance must be improved.
We have lagged behind most other industrialized countries for 25 years. The impact of poor productivity growth on individual Canadians is startling and disturbing. The median real earnings of Canadian workers have not grown in a quarter of a century. This is clearly not a recent phenomenon linked to the economic downturn we've experienced. Canada's productivity performance is a long-term challenge.
As we see promising signs that we are coming out of the global recession that has inevitably caught Canadians in its grip, CMA Canada believes it is wise to take a long-term view of Canada's economic performance. Measures aimed at improving the key drivers of productivity--namely human capital, physical capital, and innovation--are steps that could be taken today to set the course for a prosperous future.
In our written submission to you we focus primarily on innovation, or what we call creativity, because it represents the extraction of value from the other two components of productivity--human and physical capital--through inventiveness.
We recommend three specific measures for your consideration. The first is no surprise, that investing in information and communications technology, or ICT, supports creativity. ICT in the workplace has a significant impact on productivity growth. It helps us do things smarter.
The last several budgets included sound initiatives aimed at this objective. We believe the introduction of an ICT adoption tax credit targeted at small and medium-sized businesses is a logical step towards encouraging investment in technology. Wouldn't it be wonderful if some of these smaller businesses became Canada's next international success stories?
One feature of this tax credit that is of special importance would be to permit expenditures on ICT training to be eligible. I don't think I need to convince you of the critical need for education and training to stimulate creativity.
Our second recommendation is directed at business research and development. The scientific research and experimental development tax credit is a key public policy measure encouraging innovation. Moreover, the SR and ED program is well-known in the business community. It is delivered through the tax system rather than a less predictable government grant, and it has a low cost of program delivery with well-established procedures.
While the program is generally recognized as being generous, Canada continues to underperform in business research and development. Our proposal is to enhance the SR and ED tax credit by extending to claimants of all sizes the refundability provision currently available only to smaller businesses. The objective is to encourage all of our companies to make better use of this program and thereby help drive greater innovation in Canada.
As an alternative, the government could permit larger claimants to apply the tax credit against other federal government levies such as EI premiums.
Mr. Chairman, our third and final recommendation is aimed at combatting the counterfeiting and piracy of intellectual property. To put it bluntly, counterfeiting and piracy of intellectual property places Canadians at risk of harm to their health and personal safety. It discourages creativity and reduces tax revenues. Protecting IP rights also promotes innovation and should therefore be encouraged. It's one of the most important steps to increase the level of financial and human resources aimed at combatting illegal activity. Specifically, greater resources should be provided to the Canadian Border Services Agency, the RCMP, the Department of Justice, and Health Canada. These departments and agencies are in the front of the fight against IP piracy.
In conclusion, CMA Canada believes that Canada's lagging productivity performance requires serious attention. Measures aimed at improving the key drives of productivity--mainly human capital, physical capital, and innovation--are steps that could be taken today to set the course for a prosperous future.
Mr. Chairman, I thank you and your colleagues for your interest and I look forward to responding to any questions you may have.