The Business Council of Canada represents chief executives and entrepreneurs of 150 leading Canadian companies in all sectors and regions of the country. Our member companies employ 1.4 million citizens, account for more than half the value of the TSX, and contribute a larger share of federal corporate taxes, exports, corporate philanthropy, and private sector investments in R and D.
The Canadian economy is stuck in low gear. From 1960 to 2000, GDP growth averaged 3.7%. Since the start of the century, this pace has slowed markedly to 1.7%. Governor Poloz recently noted that Canada's growth of potential output is expected to be around 1.5% for the next number of years. In this environment, the federal government must do everything possible to increase Canadian competitiveness and grow the economy. With budget 2017, the government has an important opportunity to build on our country's economic strengths. We recommend taking the following four actions.
First, grow the economy through trade. Trade has long been a powerful engine for Canadian growth. The best way to spur the economy is to position Canada as one of the world's most open and global markets. The timely implementation of trade agreements with the European Union and the members of the TPP would give Canada preferential access to more than 60% of the global economy, nearly 90% of our country's existing export markets, and three of the world's four largest economies.
At the same time, Canada must continue to strengthen the North American marketplace. North American prosperity can be enhanced by modernizing borders through the adoption of data-driven traceability of goods, enhanced information-sharing in exchange for more substantial benefits for trusted traders, and investments in much needed border infrastructure.
Canada should develop a comprehensive China strategy. Efforts to eliminate trade and investment barriers will give Canadian companies a competitive advantage in China, which is our second largest two-way trading partner.
According to a study that we recently produced by economists Laura Dawson and Dan Ciuriak, a Canada-China free trade deal would generate $7.8 billion in additional economic activity within 15 years and support approximately 25,000 jobs.
Second, leverage infrastructure investments. A competitive economy requires world-class infrastructure to connect businesses to customers around the globe. We recommend the government prioritize projects that have a direct and measurable impact on the Canadian economy. This includes productivity and trade-enhancing projects, such as investments in ports, rail, roads, and airports. Given the important role the energy industry plays in the Canadian economy as a source of jobs and tax revenue, infrastructure that delivers resources to tidewater must be a top priority.
Given the government's vision for robust regulatory and consultative processes for seed approvals of major infrastructure projects, it is important that funding is adequate to the task and conditional upon these processes being completed in a timely fashion
Third, we need to foster innovation. A more innovative economy is critical to Canada's prosperity. There are a number of programs that should be aligned and coordinated under the government's innovation agenda. This includes programs to support the development of talent, policies that help businesses grow in Canada, and simplification of federal supports for business R and D.
Importantly, in some cases, the best thing the government can do is stay out of the way, allowing business owners to decide for themselves where and how to invest in new products and processes.
Fourth, we need comprehensive tax reform. A competitive tax system will strengthen Canada's ability to attract jobs and investment. After a decade of progress in reducing the tax burden on business investment, Canada has recently fallen behind in terms of tax competitiveness. In 2012, according to the global tax competitiveness report, our country had the 19th highest tax burden on new business investments among 34 OECD countries. By 2014, Canada had ranked in 14th place, in large measure because other countries had instituted significant reforms.
By simplifying and modernizing the tax code, Canada could spur new investments, promote job creation, and significantly reduce the cost to government of administering the tax system. We believe that the overarching objective of tax reform should be to reduce preferences, broaden the tax base, and lower rates to position Canada as a global investment destination.
Let me conclude by underlining that in this uncertain economic environment, prudent fiscal management can set Canada apart from other advanced economies and create a stable environment for business investment and job creation. While running deficits in the short term can stimulate growth, we recommend that the federal government set a goal of achieving a 25% debt-to-GDP ratio by 2021. Among other benefits, this will bolster the government's capacity to respond in the event of another serious downturn, while addressing long-term challenges such as Canada's aging population.
With that, I conclude, and am happy to answer any questions.