Industry and Technology Committee on Nov. 24th, 2025

[Gabriel Miller]

I think the first point—and probably the most important—is the one you just made, which is that, pretty consistently in surveys of employers, the skills they're looking for are skills that are not as much narrowly technical but are about the broad ability of a student and a new employee to exhibit leadership, communicate with colleagues and work across cultural boundaries. These are all skills associated in many ways with education in the humanities and social sciences.

I'd also say that our research agenda is going to be desperately in need of insights from these disciplines. I think we can see what's happening globally right now. There's obviously the technical capacity to develop new products. There is the ability to market and sell them, but there's also the cohesion of your society and the ability to address political, social and economic challenges. If those systems break down, our ability to create prosperity and to benefit from it is very much limited.

I'll just finish with this. I think the picture that's coming into view is that we're going to need well-rounded, adaptable people. The kids who are studying philosophy or history are also going to need to be exposed to AI so that we have people coming out who are ready to jump into the workforce and who also have underlying skills that can serve them well throughout their careers.

[John-Paul Danko, Liberal, Hamilton West—Ancaster—Dundas, ON]

Thank you.

I'm changing the subject here.

Mr. Estill and Mr. Tapp, you both spoke about GDP being problematic as a measure of productivity. I want to give you two examples and then ask you to comment.

The first is that the valuation of AI and tech companies is often based on speculation. They have these massive valuations, but they don't actually produce anything. Therefore, on paper, they have high productivity, but in reality they're not making anything. Cryptocurrencies would be an extreme example of what I would consider a pretend economy.

Also, if you're strictly measuring productivity based on GDP, there's an incentive to build bad products. An example would be, in the housing industry, if I'm building minimum-code products that constantly need repairs and upgrades over their life cycle versus building a high-quality product initially. Productivity over the long run would be higher if you're building a lower-quality product.

I'd like either of you to comment on those scenarios in terms of measures of productivity.

[Stephen Tapp]

I think economists developed the concept of GDP maybe 100 years ago. There were limitations and problems back in the 1920s, and there are limitations and problems with it now. I wouldn't say that it is the be-all and end-all. I think that even in my remarks I said that we should also be looking at the distribution of overall income and the risk around that—the financial risks that other people face. That's why our index of economic well-being takes into account 28 different indicators, as opposed to GDP being the sole one.

With regard to the point you make, which is likely the case for the tech sector and the measurement of the tech sector, there is a very big difference between Canada and the U.S. Meta, Google, Amazon and Netflix—all of these places that are headquartered in Silicon Valley—have massive valuations and smaller footprints or numbers of workers. Therefore, the revenue per worker is quite high.

I would be interested.... We haven't done this work yet, but Statistics Canada did a study where it looked at the tech sector between the U.S. and Canada. It's not surprising that measurements like GDP and productivity in the U.S. tech sector massively outpace Canada. It would be interesting to look at X tech sector and even at X energy—and we've done that work before—to see what the difference is for the median or average sector or the average person across Canada if you exclude some of those.

I do think you're right that, with the U.S. numbers, there is some exceptionalism in their GDP per worker, and a large part of that is coming from just one small area around California.

[The Chair, Liberal, Ben Carr]

Thank you very much.

Witnesses, I appreciate your insight and your guidance here for us.

Mr. Estill, I just have to say before we go that I was a big fan of the movie Wayne's World, which, of course, is notorious for its selective placement of advertising. I want to simply note that you've taken a page out of that book with that big flag behind you here. I suddenly have an urge to watch Austin Powers and Wayne's World. I just thought I'd give you some credit for that. I'm always happy to see Canadian companies highlighted.

Witnesses, thank you for your time.

Colleagues, I'm going to suspend very briefly before we turn over to the next round.

[The Chair, Liberal, Ben Carr]

Colleagues, we're going to resume our meeting and get things under way.

We have some new witnesses with us today, three of whom are joining us virtually, and one is here in the room.

Appearing as an individual, we have Richard Dias, global macro strategist. Welcome Mr. Dias.

From the CCTT network, the college centres for technology transfer, we welcome Ludovic Soucisse, chief executive officer, and Nancy Déziel, chair of the board of directors.

From the Bank of Canada, we have Eric Santor, who is an adviser to the governor.

Mr. Santor, I will turn the floor over to you first, for introductory remarks of up to five minutes.

Mr. Soucisse and Ms. Déziel, which one of you will give the presentation?

[Ludovic Soucisse, Chief Executive Officer, Réseau des CCTT]

I will.

[The Chair, Liberal, Ben Carr]

Then, Mr. Dias, we'll turn the floor over to you.

Mr. Santor, the floor is yours.

[Eric Santor, Advisor to the Governor, Bank of Canada]

Thank you very much.

Hello. Thank you for having me here today.

I'll begin with where we are. To be blunt, Canada's productivity record is not great. This is not news to anybody here. This poor performance is not something we can blame on one or two sectors of the economy, or on any particular region. It's a widespread problem across the economy and across the country. We're also getting worse. Over the past five decades, Canada's productivity has deteriorated more than that of other G7 countries, and our performance is particularly bad when compared to our nearest neighbour.

Why does this matter? Productivity allows the economy to grow when resources are limited. It supports higher wages without fuelling inflation. When productivity is rising, everyone benefits from a higher standard of living.

However, as the deputy governor, Nicolas Vincent, said in a speech just last week, Canada right now is “caught in a vicious circle”. Because productivity is lagging, businesses can't increase wages as much as they otherwise would. Slower wage growth means weaker consumption. He said, “faced with [tepid] demand...businesses are...less [likely] to invest in new equipment or technology”. He also said that sagging wages also make it “harder [for employers] to keep our best workers in Canada and to attract...talent from [abroad].”

As the senior deputy governor, Carolyn Rogers, said, we are facing a productivity “emergency”.

While we may all want a quick fix, the reality is that it won't be easy. We need to create the conditions that spur business investment. We need to encourage risk-taking, innovation and growth.

We must ensure that our workers have the skills they need to create maximum value.

I will conclude with an obvious point: The Bank of Canada has no direct influence on productivity, but it can play a role in encouraging public dialogue on the issue.

Canada has not always lagged in productivity. In the 1960s and the 1970s, we were a leader.

We don't need to stay in this productivity purgatory. If businesses, governments and Canadians all pull in the same direction, we can escape the vicious circle that Vincent mentioned and reclaim our productivity edge.

The other crucial role the bank plays is keeping inflation low, stable and predictable. There's a lot of uncertainty out there right now. When businesses are confident that inflation will remain low and stable, it makes it easier for them to invest in new technologies, in factory expansions or in the training that could ultimately improve their productivity.

Thank you.

[The Chair, Liberal, Ben Carr]

Thank you very much, Mr. Santor.

Mr. Soucisse, you have the floor for five minutes.

[Ludovic Soucisse]

Thank you very much.

Mr. Chair, ladies and gentlemen of the committee, thank you very much for welcoming us here today.

My name is Ludovic Soucisse, and I am the president and chief executive officer of the Réseau des Centres collégiaux de transfert de technologie, or CCTT network.

I am accompanied by Ms. Nancy Déziel, chair of the CCTT network’s board of directors. She is also chair of the board of directors of the Canada Foundation for Innovation, and executive director of the National Centre for Electrochemistry and Environmental Technologies, or CNETE, a CCTT in Shawinigan.

We are pleased to contribute to the committee’s work today.

As the previous speaker said, Canada is going through a difficult period, a productivity crisis. Productivity has been declining or stagnating for many years, which particularly affects SMEs, or small and medium-sized enterprises, which make up the vast majority of Quebec’s industrial fabric, which differs from province to province. The vast majority of exporting companies are SMEs. They account for 50% of the country’s private GDP. They structure our supply chains and are particularly vulnerable to tariff measures and the current economic climate.

KPMG described the situation as a wake-up call to improve productivity in the country. Too many companies told the firm that they wanted to review their competitiveness, and more than half said they wanted to move their investments to the United States to protect their access to the market. In a context such as this, it is important to note that exporting companies are the ones most determined to innovate in order to find new markets. We must therefore take this crisis and turn it into opportunities for our SMEs.

The CCTT network is made up of 59 specialized centres, where 2,000 researchers and experts cover the strategic sectors at the heart of our economy, namely advanced manufacturing, energy, agri-food, the digital sphere, critical materials, clean technologies, cybersecurity, artificial intelligence and health technologies.

The figures speak for themselves when it comes to the CCTTs’ ability to help our SMEs. Each year, our 59 centres work on 13,000 projects with more than 6,000 businesses and organizations. With a combined turnover of $200 million, our CCTTs represent more than $1.5 billion in economic benefits. In 2023-24 alone, they worked on more than 1,040 new products for the benefit of clients and more than 600 processes to improve the productivity of our businesses. They also developed more than 240 patents, licences and declarations of invention in collaboration with businesses. The unique feature of Quebec’s college technology transfer centres is that intellectual property is transferred to businesses, which is good for productivity and for keeping intellectual property in the country.

CCTTs are key partners for our SMEs in automating production, improving processes, reducing operating costs, developing new exportable products, obtaining certifications to enter new markets and optimizing supply chains.

We have three recommendations for the federal government.

First, we recommend including applied research in major federal innovation programs in order to explicitly integrate innovation centres, such as CCTTs, into productivity support programs.

Second, we recommend rolling out a Canada-wide rapid support program for SMEs to increase the productivity of thousands of businesses, prevent production transfers to other countries, including the United States, and equip our businesses to access new markets.

Third, we recommend using the government’s broad defence industrial strategy to support SMEs in their contributions to supply chains, particularly by promoting applied research and technology transfer in the development of dual-use technologies.

In Quebec, our centres have the tools, infrastructure, experts and network to act quickly. All that is missing are more incentives to specifically target our SMEs. The majority of policies are focused on large companies. By targeting our SMEs and the CCTTs that can support them, we have a better chance of improving the productivity of our economy.

We have the tools, infrastructure, experts and national network to act quickly. All that is missing are incentives for Canadian SMEs.

Thank you.

[The Chair, Liberal, Ben Carr]

Thank you very much, Mr. Soucisse.

Mr. Dias, the floor is yours for five minutes.

[Richard Dias, Global Macro Strategist, As an Individual]

Thank you very much.

Good morning, everybody. It's an honour and a privilege to be here. I want to thank the members of this committee for the opportunity to share my views on addressing what the Bank of Canada calls an “emergency”, and what I would describe as the single biggest problem that Canada faces.

It's also Canada's biggest opportunity. Our recent record is so poor, there's nowhere to go but up. I would also add that solving Canada's emergency is a rare thing, a panacea, and improving it will also solve many of the problems Canada faces—inflation, high debt, poor health care outcomes, the vulnerability to volatile trading partners and, what I'm most interested in, improving the standard of living of working-class Canadians from coast to coast.

What is productivity? To quote the Bank of Canada, “productivity is a way to measure how efficiently inputs, such as labour and capital, are used to produce a good or service. There are several measures of productivity, but labour productivity is [most common]. This measure is calculated by dividing the value of goods and services produced by the amount of labour [required] to produce them. At a national level, labour productivity is expressed by dividing gross domestic product...by total hours worked.”

Now that we understand the definition of productivity, flawed as it may be, how can we improve it? These are my recommendations.

Number one, we need to strengthen human capital. We need to expand training and re-skilling to help workers adopt new technologies and move into higher-value roles, and we need to better align Canada's immigration system with the goal of improving productivity by focusing on attracting and retaining high-waged, high-skilled labour.

Number two, we need to strengthen competition to drive innovation and efficiency. Competition is a major driver of productivity, as cited by the Bank of Canada, but many Canadian markets remain highly concentrated. To do this, we need to be open to foreign competition sectors like telecom, transportation and financial services. We need to reduce interprovincial trade barriers. We need to remove growth disincentives so small and medium-sized firms can scale, and we need to encourage more exports from the sectors that are the most productive.

Number three, we need to encourage firms to grow and, obviously, improve market expansion. Canada has too few large firms, and we need to shape our tax and regulatory systems to help them scale rather than stay small. Number two and number three seem in conflict, but they're not. Essentially, Canada tends to protect its big firms and hobble its small and medium ones, and we need to end that perversion.

Number four, we need to build a more supportive policy and regulatory environment. Policy-setting strongly shapes productivity outcomes, naturally. Some of you may not like to hear this, but as it stands, Canada is a bad place to invest, as demonstrated by the massive net outflows of Canadians and their money. We need to reduce taxes so that the incentives to invest here can compete on a global stage. The Trump 2017 tax cut really hurt Canada, and it's something we don't discuss enough. We need to reduce the regulatory burden around emissions, shifting to a more holistic approach to protecting the environment, including biodiversity, clean rivers and lakes, etc.

Number five, we need to improve business investment in capital, technology and intellectual property. This is by far the biggest issue. There is just not enough private sector investment in Canada. We need to incentivize the private sector to invest more in machinery and plant equipment, increase spending on intellectual property and upgrade infrastructure for scaling and market access. Canada must reverse its chronic private sector underinvestment to improve labour force productivity.

Finally, there must be an admission that although the role of government is absolutely vital to solving this problem, it is also limited. On several important and tangible measures, the federal government is as involved in the economy as it has been in a generation, and the results have been mixed, to say the least. Unfortunately, Ottawa cannot solve this problem on its own, but it can, and I believe it should, create the environment in which the private sector can invest and flourish. This will improve labour productivity growth, and ultimately improve the standard of living of working-class people.

Thank you. I'm at your disposal for questions.

[The Chair, Liberal, Ben Carr]

Wonderful. Thank you very much, witnesses, for your introductory remarks.

We'll now go into our line of questioning.

Madame Dancho, the floor is yours for six minutes.

[Raquel Dancho, Conservative, Kildonan—St. Paul, MB]

Thank you, Mr. Chair, and thank you to the witnesses for their testimony so far.

I have a few questions for you, Mr. Santor.

Of course, you're the adviser to the Governor of the Bank of Canada, Tiff Macklem. There have really been two concerning visuals coming from the Bank of Canada in recent months and years. The first, of course, was when Mr. Macklem, just last month, while providing a press conference update, said that what's most concerning is that, “[u]nless we change some other things, our standard of living as a country, Canadians, is going to be lower than it otherwise would have been”. He did this sort of visual where he showed what it was going to be like before, and what it's going to be like now. It was quite a stark warning, I think, for parliamentarians.

Then, of course, there was the statement by Ms. Rogers in March 2024. You mentioned Ms. Rogers in your opening comments. She is, of course, the senior deputy governor of the Bank of Canada. She said, “You’ve seen those signs that say, 'In emergency, break glass.' Well, it’s time to break the glass.” She was, of course, referring to Canada's productivity issues.

Those are two very clear warnings that we're hearing from the Bank of Canada.

Then, of course, your colleague, Mr. Vincent, the external deputy governor of the Bank of Canada, said, “Deep down, Canada’s affordability problem is really a productivity problem.... To make things more affordable, we need to raise our income. And the way to grow our income is by increasing productivity.” Just so Canadians understand, productivity means their standard of living, really, when we talk about it.

Do you feel that enough is being done? In fact, you mentioned that our productivity was great in the 1960s and 1970s. Would you say that Canada is doing enough to return us to that 1960s and 1970s productivity, or should we be doing more, and if so, what should we be doing?

[Eric Santor]

What's been highlighted by Ms. Rogers and by Governor Macklem has identified the problem, and this is where we begin. The diagnosis of the problem is very important, so we have to look back and think about how we got here. Productivity is a very complicated issue. Many things contribute to productivity. The things that need to happen.... There are signs that things are in the right direction, such as diagnosing the problem and the fact that it's being talked about—this committee speaks to that. This is very useful.

We need to be thinking about many different things that have happened. This is a multi-faceted problem, and there are many things that need to be done to resolve the issue. In these speeches, we've highlighted several of the things that have contributed to the slowdown of productivity but that, at the same time, can benefit productivity growth going into the future.

For example, one of these things, and it was mentioned in the last session, is that the regulatory burden in Canada has increased dramatically. StatsCan produced a paper on this, noting the rapid rise in regulations over the last...in the pre-COVID era, which has reduced the level of investment in the country. The question then becomes, do we have the right amount of regulation? What can we do to make regulation as effective as possible, and make sure that it enhances the ability to invest? That would be one thing, for example.

Another issue that was mentioned in Carolyn Rogers' speech was the link between competition and productivity. We know that, overall, competitive markets tend to be positively correlated with innovation and investment, and therefore with productivity. The OECD has written on this subject for quite some time, about the issues facing competition in the Canadian economy. They propose measures—we're not the ones proposing measures—and think about how we can enhance competition inside the Canadian economy. In particular, it's important to make sure that the competition.... There's innovation, investment and productivity growth. When you target certain industries, certain sectors, that have network effects inside the economy, they can be particularly beneficial. That was highlighted recently in a speech as well.

I'll stop there.

[Raquel Dancho, Conservative, Kildonan—St. Paul, MB]

Thank you.

I appreciate that you brought up business productivity. The Fraser Institute put out some analysis on this, and they said that from 2017 to 2024 our business productivity decreased by 0.6%, whereas that of the U.S. increased by over 10% at the same time.

Of course, we've seen significant capital outflows over the last decade, but in particular since Mr. Trump 2.0 came along, as we know. In fact, it was the National Bank of Canada economist Warren Lovely who said earlier this year, “The cumulative outflow over the latest five-month period is in fact unprecedented”. He was referring to the capital outflow.

The Americans are doing something that's attracting a lot of Canadian dollars to invest in their economy. What sorts of things could we be doing or should we be doing to reverse that or at least keep the Canadian investment here? How can we incentivize that?

[Eric Santor]

Certainly, the U.S. experience gives us some things to think about. The first one is the degree of regulation inside the economy. Again, there's a balance. You need to have the right amount of regulation. You don't want to overdo it in either direction. That's something important, as we pointed out in a recent speech.

The other part, of course, is what's coming from large investments in AI and digitalization in general. Certainly, the U.S. is leading in this dimension globally. We have to look at that experience and think about what we can do to make sure that AI is being used, adopted and developed inside the Canadian economy. This is something that needs to be looked at very closely, and we need to think about how can we benefit from this technology. This is a general-purpose technology that has wide application across different elements of the economy. We have to ask ourselves, do we have the right environment, and are we doing the right things to make sure that we're encouraging that kind of innovation and investment in the digital space?

[Raquel Dancho, Conservative, Kildonan—St. Paul, MB]

Thank you.

It's not just the Americans who are doing a bit better than we are. In fact, I believe Canada has experienced the worst per capita GDP growth in the G7 over the last 10 years. It seems that other countries are also doing a bit better than we are in some of these ways. Is it like the U.S., with digitization and AI? What are they doing that we're not?

[Eric Santor]

There are many different things that go into it. Comparing across many different countries is very difficult, in the sense that there are many different aspects or cyclical features that affect an economy. For example, we had an oil price shock in 2015 that had major implications for our oil sector, and other countries didn't have that. We have to start thinking about what other countries are facing.

The business productivity issue in Canada, as we've described, is an emergency, so we need to be addressing it.

[The Chair, Liberal, Ben Carr]

Thank you very much, Ms. Dancho.

Mr. Bardeesy, the floor is yours for six minutes.

[Karim Bardeesy, Liberal, Taiaiako'n—Parkdale—High Park, ON]

Thank you, Chair.

I'll start with Mr. Santor and a question about business investment. I believe one of the objectives of interest rate policy is to play a role in the business investment choices that are subsequently made.

Can you speak to how the bank tracks and evaluates how business investment is done in response to interest rate decisions that are made by the bank?

[Eric Santor]

To the extent that business investment is tracked as part of the national accounts and feeds into our assessment of where the economy is and where the economy is going in our forecast, we track it very carefully. The means by which monetary policy affects the economy through the transmission mechanism, through its impact on demand and also through the cost of capital is something that we follow closely.

However, the specific characterization of how it works is not the domain of this discussion. This is the conduct of monetary policy, which is the responsibility of the governing council of the bank, and you should refer these questions to them.

[Karim Bardeesy, Liberal, Taiaiako'n—Parkdale—High Park, ON]

I want to pick up on a couple of Ms. Dancho's questions about differential productivity numbers. In the last panel, we had a chance to look at technology adoption as one of the variables that potentially affect productivity. Do you have any perspectives on technology adoption in Canada as a variable in terms of our productivity performance?

[Eric Santor]

Absolutely. Technology adoption is actually at the core of productivity growth. In the current context, the adoption of not just AI but also digitalization and automation is a very important thing to consider. The question then becomes, are we creating the conditions and the environment for companies to take those risks, to make those investments and to innovate by adopting new technologies? Again, that goes back to broader issues around regulation, competition and so on.

[Karim Bardeesy, Liberal, Taiaiako'n—Parkdale—High Park, ON]

I have a few questions for Mr. Soucisse and Ms. Déziel.

You mentioned the role of SMEs in the country’s economic growth, but in this session, as in others, the lack of large companies has been cited as one of the reasons for Canada’s weak economic growth.

Could you suggest some policies that would both help SMEs and encourage the creation of large companies?