Mr. Chairman, committee members, fellow witnesses, ladies and gentlemen, I'm very pleased to be with you this morning to represent the Certified Management Accountants of Canada, also known as CMA Canada. Thank you for inviting us.
In our submissions to this committee over the past six years, we have consistently advocated for policies aimed at stimulating the growth of productivity. According to experts, the essential components of productivity are human capital, physical capital, and innovation. We prefer to focus on innovation, or what we call creativity, because it represents the extraction of value from the other two components, namely, physical capital and human capital, through inventiveness.
CMA Canada believes that increasing productivity growth is Canada’s top economic challenge. Why? Because a country’s productivity is linked closely to the standard of living of its citizens.
Unfortunately, CMA Canada’s productivity record over the past decade has been underwhelming. In fact, according to a recent report prepared by TD Bank, throughout 2000 to 2009, productivity growth slowed further, to a depressing 0.7% per year. This most recent decade has bordered on catastrophe.
Steps must be taken to improve productivity. CMA Canada recommends that the committee focus its attention on three areas to drive innovation and creativity: one, post-secondary education; two, basic skills training; and three, investment in research and development.
Very few investments provide the economic benefits that education does. A major part of our future success as a country is linked to developing and maintaining a highly skilled workforce. In particular, boosting innovation will depend on increasing an individual's skills within the so-called STEM disciplines: science, technology, engineering, and math.
Therefore, CMA Canada encourages the federal government, either on its own or in partnership with provincial governments, to make selected investments in post-secondary education designed to boost the creative capacity of students entering the business community. Initiatives could include grants or tax incentives that would encourage more companies to participate in creating co-op and internship opportunities, fellowship programs providing work experience, scholarships to students at the undergraduate, graduate, and post-doctoral levels, with a particular focus on the STEM disciplines, and grants or tax incentives permitting university and college faculty to spend up to one year in an industry position, thereby increasing business-academe collaboration.
Mr. Chairman, as many as 40% of working Canadians lack the basic literacy skills needed to participate in a knowledge economy. Poor basic skills act as a drag on economic growth. Literacy skills, as well as basic and intermediate numeracy skills and problem-solving skills, are essential to expanding creative capacity. Therefore, CMA Canada recommends that the Government of Canada invest, either directly or in partnership with provincial and territorial governments, as well as in collaboration with private sector partners, in literacy, numeracy, and problem-solving skills programs.
Our third and final recommendation is with regard to investing in research and development. On this front, CMA Canada is pleased that the federal government announced two weeks ago the appointment of a panel of experts to consult with Canadians on how the government can cultivate business investment in research and development. A long-standing and serious issue for Canada is the relative lack of investment in R and D by our business sector. CMA Canada intends to participate in this important review.
A key public policy tool encouraging investment in innovation is a scientific research and experimental development tax credit. There is room for a further enhancement of this program that will encourage business participation. We believe the program would be improved by extending the refundability provision of the SR and ED tax credit, currently available only to smaller businesses, to claimants of all sizes. This would encourage smaller businesses to grow and also would recognize the innovation advantage of larger companies. As an alternative, the government could permit larger claimants to apply the tax credit against other federal government levies, such as EI premiums.
In closing, Mr. Chairman, we are well aware that the Government of Canada is running a large deficit and that budget 2010 announced austerity measures for the years ahead. Nevertheless, we urge the committee to take a long-term view of Canada's fiscal condition. As our recommendations to you indicate, CMA Canada believes that the focus should be on long-term outcomes that will benefit Canadians.
Thank you very much. I look forward to your questions.