Thank you, Mr. Chair.
I would like to thank you for inviting us to discuss issues that significantly affect the quality of life of all Canadians.
One of these issues is productivity. This topic may seem harsh and difficult, but it has real implications. For example, lagging productivity means that Canadians work more hours per week than Germans. However, their incomes are no higher than the incomes of Germans.
The further we fall behind, the more our quality of life declines. Canada ranks sixth among the G7 countries in terms of productivity. The value produced by a Canadian worker averages $53.3 per hour. The G7 average is $63.9, over $10 more per hour. In the United States, hourly productivity exceeds $70 per hour. In short, the United States simply isn't in the same league as us.
Unfortunately, the gap is widening. Canada is completely off track. We've had 13 consecutive quarters of declining productivity. Right now, we're back to 2016 productivity levels.
One factor that explains our relatively low productivity is the lack of private investment. In Canada, private investment in human capital averages $17,000 per worker per year. In the United States, the figure is closer to $27,000. Roughly speaking, this amounts to an annual investment gap of $200 billion compared to our American neighbours. Clearly, it's far-fetched to think that government investment could fill such a huge gap. This would amount to about 40% of Canada's budget, which is absurd.
As a result, we must focus on creating a tax and regulatory framework that encourages and increases investment in Canada. The last thing needed at this stage is to increase taxes on investments. When you tax something, you get less of it.
Let me be even less subtle. The recently proposed measure to increase the capital gains inclusion rate amounts quite simply to shooting ourselves in the foot. It's the opposite of what needs to happen. Any elected official who cares about the standard of living of Canadians and raising that standard should try to block the measure or overturn it at the earliest opportunity.
Canada's future prosperity and rising standard of living over time are vital to mobility and social cohesion. The current situation is particularly concerning.
Another topic at hand today is competition. The economic literature is quite clear on this topic. In a given industry, no number of competing companies is better than another number. Rather, it's always better everywhere to have fewer barriers to entry, and a regulatory framework that allows competition and that doesn't artificially raise prices.
For example, in the case of the telecommunications industry, spectrum auctions may be a practical way to increase government revenue. However, these auctions are ultimately paid for by all Canadian consumers.
In short, it would be futile for the Canadian government to attempt to control the number of companies active in a given industry, or to prevent transactions, particularly for companies looking to gain efficiencies. However, the government should conduct a rigorous exercise to take stock of all the barriers to entry created by Canada's regulatory framework, with a view to removing these barriers in a systematic and orderly manner.
Thank you for your attention. We look forward to your questions.