Industry and Technology Committee on Sept. 24th, 2025

[Parm Bains, Liberal, Richmond East—Steveston, BC]

Thank you for your time and for your work.

[The Chair, Liberal, Ben Carr]

Thank you very much, Mr. Bains.

Colleagues, what we'll do here is go to Madam Dancho for two and a half minutes or so.

She will be followed by Mr. Ste‑Marie, who will have around a minute and a half, and then Ms. O'Rourke will have the floor for two and a half minutes.

The floor is yours, Madam Dancho.

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

Thank you.

I'm just following up on my earlier line of questioning.

I'm sure you're familiar with this. In February 2025, Australia passed a scams prevention framework, which required banks, telcos and digital platforms “to prevent, detect, disrupt, respond to and report scams”.

ACMA—they are Australia's CRTC, as I'm sure you know, their telecom and media regulator—can now issue legally enforceable rules to carry out audits and impose multi-million dollar fines for non-compliance.

Would we require legislative change for you to have those powers? Would you find them useful in enforcing the directives you've put forward?

[Scott Hutton]

The first answer is we do not have those legislative powers right now. Our regime in this domain is very much a civil one, and it's meant to address spam—the annoyance and the nuisance of it—and regulate how legitimate companies deal with Canadians, customers and consumers on that front. That's what we do primarily in that domain.

We are in contact with ACMA—we chat with them often enough—so we're following up with them to see how they will be implementing this and what the effect of that new law will be in that domain, but we are not in that business right now.

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

Thank you very much for that.

I think in terms of the effects so far, since just February 2025, there's been a 26% decrease in fraud and scams, the only decrease being experienced in the world. They're doing something right. I don't know if it's the right fit for Canada, but I appreciate the further insight you're able to provide today. It certainly gives us a bit of a foundation to work on, should we move forward with the study on this.

Thank you.

[The Chair, Liberal, Ben Carr]

Okay, we're just getting time back all over the place here.

Mr. Ste‑Marie, you have the floor for two minutes.

[Gabriel Ste-Marie, Bloc, Joliette—Manawan, QC]

People are watching less of traditional cable television, especially younger people, who are consuming more and more content online. They're often doing so on platforms managed by large foreign conglomerates.

How can we ensure a certain fairness in the market and ensure that Canadian producers can compete with those giants and succeed?

Does that have to be done through new government legislation? Can you intervene right now to restore balance?

[Vicky Eatrides]

We have an answer.

[Scott Shortliffe]

Yes, that's the big question for us today.

As I mentioned, we had some public hearings. I can't talk about the results, because the CRTC is currently studying that, but we asked that exact question.

We also wonder what the right balance is between digital media and traditional media. We recognize that they have different strengths and weaknesses and that it's not about imposing exactly the same thing on digital companies like Netflix and all the other digital platforms.

We're currently looking at how we can contribute to a comprehensive system that includes digital and traditional media, as well as what would constitute the right level of requests. We asked all these questions at a public hearing that lasted three weeks and where there were more than 500 interventions.

That's really our concern right now, and I hope to come back to you in the near future with the results.

[The Chair, Liberal, Ben Carr]

Thank you, Mr. Ste‑Marie.

Ms. O'Rourke, you have the floor for two and a half minutes.

[Dominique O'Rourke, Liberal, Guelph, ON]

Thank you, Mr. Chair.

I really liked Mr. Ste‑Marie's question. Having worked at Groupe Média TFO, I know that there are excellent Franco-Ontarian and Canadian producers across the country. It's important to support them so that we have Canadian productions that talk about our stories, because that's part of our sovereignty.

That said, my question is on a completely different topic.

I wanted to tack on to my colleague's question about the broadband fund, because you talked about the importance of access to e-learning in rural and remote areas, and in the Arctic, which is also a sovereignty issue about having Canadians live across the territory.

I'm wondering if you could expand on just how critical it is for individuals, for businesses and for the provision of e-health, which is more and more prevalent. Tell us just how critical this expansion of access to telecommunication is for rural and remote communities, which can often be more affordable places to live than the larger cities.

[Vicky Eatrides]

I don't think it is dramatic to say that in some cases it's a matter of life and death. We heard that in Whitehorse as well, where there was a situation where, because of a lack of connectivity, an elder was lying on the floor and couldn't access any sort of telecommunication services because of a failure in connectivity.

I mentioned that last week we were in Winnipeg. Scott and I were there with a couple of others in the north end of Winnipeg, and we were just hearing the very human stories about how people cannot find employment, they don't have connectivity, they don't have devices in many cases, or they can't apply for jobs. It comes down to people, and the impact is significant. Again, I'm sure committee members hear these troubling stories all the time.

[Dominique O'Rourke, Liberal, Guelph, ON]

Through you, Mr. Chair, when you have these conversations, are you also talking with businesses that would like to establish in smaller centres if they had that kind of connectivity, so that they also would be able to do business with the world?

[Vicky Eatrides]

The broadband fund is a big part of that. A lot of that is working with municipalities and provinces. We work closely with ISED on that. Companies build. They get out there and they build, because we're able to fund that.

For sure, we're able to bring companies in to help build this connectivity that's so desperately needed by communities.

[The Chair, Liberal, Ben Carr]

Thank you very much, Madam O'Rourke.

Colleagues, that concludes our first hour of today's meeting.

Thank you very much to the representatives from the CRTC for being here. There was certainly a swath of different topics there, and I think it's always interesting because the beauty of these committees and appearances like this is the opportunity for members of Parliament to bring back the very grassroots things they are hearing from constituents and pose those questions to folks who are senior in these departments and making important decisions that have ramifications for them. It was quite useful to hear from you today. We appreciate your time and look forward to the next time we have the chance to speak with you.

Colleagues, we are going to suspend briefly. It will take about five minutes for us to turn over, and then we will begin our productivity study.

[The Chair, Liberal, Ben Carr]

Colleagues, we're going to go ahead.

We have with us, from the C.D. Howe Institute, Mr. William Robson, president and chief executive officer.

I wanted to start on a personal note, actually. Whenever I see C.D. Howe's name, I feel a bit of pride. The reason is that my great-uncle, David Golden, not only was the first Jewish deputy minister in Canadian history but, more importantly, served as deputy minister under C.D. Howe in the post-war years. That's a little piece of family history that my father always ensured we were aware of. When I see the name C.D. Howe, I always think of my great-uncle David. I thought I would use that to help us transition into this second round.

Mr. Robson, I understand you have made yourself available to us on quite short notice, so we are appreciative of that.

I'm going to turn the floor over to you for upwards of five minutes, sir, for introductory remarks, at which point we will then go into some questioning from the various parties around the table here. If you at any point have issues with your headset, please let us know. I may try to very gently interrupt should I feel as though we're starting to go over the allocated time.

With that, Mr. Robson, I'll turn the floor over to you for five minutes to introduce yourself and your expertise on the matter.

Thank you very much.

[William Robson, President and Chief Executive Officer, C.D. Howe Institute]

Thank you for having me here. Congratulations to the technical crew, who did such a good job connecting us.

Allan Levine has a book that's just about to come out on the dollar-a-year men, so if you're interested in reading more about the accomplishments of your ancestors and C.D. Howe himself, there's a great new source coming out.

To get to the business here, I hope that my remarks and answers to your questions will help your work. The stagnation of Canadian productivity and Canadians' real earnings and living standards is a critical topic. I congratulate the committee for taking it on.

I'll gladly answer questions on any aspect. In my opening remarks I want to focus on business investment, because investment has been so weak for a decade that the stock of capital per worker in Canada has been falling. If we don't turn that around, the sustained improvements in productivity and earnings and living standards we all want to see and that motivate this committee's work will not happen.

The capital I'm focusing on is built capital. That means non-residential buildings and engineering, machinery and equipment—M and E—plus intellectual property products. Other types of capital matter, and the efficiency that we use our capital with matters, but the built capital is absolutely critical. If you look around the world, high-income countries have lots of built capital, lots of non-residential structures, M and E and intellectual property products per worker. Low-income countries have little built capital per worker.

The crux here is that over the past decade our investments in these types of capital in Canada have not kept pace with depreciation and have not kept pace with population growth, so the capital stock per worker has fallen. You won't find anything like that since the days of C.D. Howe.

This institute publishes an annual report that compares investment per worker in Canada with the past and with other countries. The international comparisons matter for many reasons. One reason is that if we saw other developed countries also investing less, we might take comfort that we weren't standing out in a bad way or losing ground against countries that are equipping their workers better, but that's not what we find. Even when we're looking only at the more developed countries—so leaving out rapid industrializers like China and India—we see gaps between investment per worker abroad and in Canada that have widened over the past decade. The contrast with the United States, which is, as everyone knows, our closest neighbour, our biggest trading partner and also our fiercest competitor, is very alarming.

Comparing investment across the two countries is not straightforward. In Canada, we have tended to invest more in non-residential structures. That's partly because our economy is more natural resource-focused, but the gap in our favour in that area has narrowed. We invest less in intellectual property products, which the two countries don't measure in exactly the same way. That gap has widened.

I focus on M and E in particular, though, because the types of capital there are more straightforward to compare—vehicles, industrial machinery and electronic equipment, such as you were discussing in your previous session. Those tend to be more similar between the United States and Canada, and it's more salient because M and E investment is critical to making so many of the tradeable products that are vulnerable to U.S. protectionism. We want to be as competitive as possible in those areas.

Now here's an area where U.S. businesses have invested more for as long as we have. In terms of numbers, if you go back 30 years, for example, and adjust for purchasing power, as we do in our report, you'll see U.S. investment in machinery and equipment in Canadian dollars was about $5,600 per worker annually, and in Canada it was $2,800. If you compare those numbers, you'll see that for every dollar of new M and E investment enjoyed by the typical U.S. worker, the typical Canadian worker was getting about 51¢ back then.

Over the next decade and more, we closed the gap. By 2008, business investment in M and E stood at about $7,000 Canadian per U.S. worker, and the Canadian figure was $4,400, so it was better. For every dollar of new M and E per U.S. worker that year, Canadian workers got 63¢.

However, the change since then is that U.S. investment is up and ours is down. In the second quarter of this year, the most recent data we have, U.S. businesses invested in M and E at an annual rate of nearly $12,800 Canadian per worker, and the equivalent Canadian figure was $4,100. If you compare those, for every dollar of new M and E for every U.S. worker, on average, the Canadian worker was getting only 32¢.

Witnesses' opening remarks should not exceed five minutes, so I'll wrap up. I'd be glad to respond to questions about why this is happening and what we can do about it.

I do want to underline that I focused on built capital and especially the gap between machinery and equipment investment per worker in the U.S. and Canada, because it's such a key indicator of our recent attractiveness to investment and our prospects for productivity in the future.

If U.S. businesses are equipping their workers at triple the rate that we are, that's an annual gap of about $8,500 in M and E alone. We've got a big problem. Everyone will remember—it will probably be in your report—that Bank of Canada senior deputy governor Carolyn Rogers said 18 months ago now that Canada had a productivity emergency and it was “time to break the glass”. Things have gotten worse since then, and I hope this committee's work will help us find the hammer.

Thank you again for having me with you today. I look forward to your comments and your questions.

[The Chair, Liberal, Ben Carr]

Thank you very much, Mr. Robson.

Mr. Falk, the floor is yours for six minutes to start us off.

[Ted Falk, Conservative, Provencher, MB]

Thank you, Mr. Chair.

Thank you, Mr. Robson, for your attendance here at committee today. I appreciate your comments and the insight that you and your organization provide.

In a recent report that you co-authored, you suggested that “The Carney government is poised to post a massive deficit of over $92 billion during this fiscal year”. As you know, this is almost double what has been forecasted by the government itself.

The independent Parliamentary Budget Officer also recently told the government operations and estimates committee that he doesn't “know that the government currently has [any] fiscal anchors, which...causes...a considerable degree of concern”, or at least it should.

Given these realities, can you communicate to the committee whether your projection of the federal deficit has risen?

[William Robson]

We haven't updated since we did those numbers, which were based on a variety of sources, including some platform commitments that may or may not come to pass.

To tie this together with the topic of investment and productivity, I am concerned that the growth of government spending and government borrowing over the past decade had something to do with the fact that our investment rates have been so low.

During most of that time, the economy was operating at capacity. We've got a bit of slack now, but for most of that period, as the high inflation that we endured for a while illustrated, the economy was pretty much working at capacity. If the economy is working at capacity, for every dollar you spend in a given area—it could be government, and it could be other things as well, like consumption and residential housing—it's necessarily going to come from somewhere else you otherwise might have been able to invest.

When I look at the low investment rates in Canada over the period we've been talking about, I do think that some crowding out as a result of the growth of government spending and the amount of borrowing that was absorbing saving probably had something to do with it.

When I look at the fiscal trajectory, I have a few things in mind. One of the things I have in mind—and I hope we'll get to this—is the possibility that we could make some tax changes that I think would be helpful for investment.

In addition to that, and as a precondition, it would be nice to have government taking up a bit less of the share of funds that's available in the economy every year, because we do need more investment and it has to come from somewhere. A smaller government would make a bit more room for higher investment.

[Ted Falk, Conservative, Provencher, MB]

Okay.

Getting back to my question, you predicted that there would be a $92-billion deficit. Is that a number that you still stand behind?

You also indicated in that report that you used a more optimistic Bank of Canada scenario and that there was a more pessimistic one. If you were to look at the worst-case scenario that was also provided by the Bank of Canada, where would that land you as far as a deficit projection?

[William Robson]

I can follow up with a number if that's of interest to you, because we did use the more optimistic projection, as you point out.

We have not updated those numbers. I look forward to the fall budget. I hope that we will see numbers that are less than those, but that was the best we could do with the information we had at the time.

[Ted Falk, Conservative, Provencher, MB]

Okay.

When you look at the reluctance of Canadians to invest in workers, is it actually a machinery and equipment investment that's missing, or is it an outflow? You made one comment that you think the economy is actually functioning at capacity. Is it because we're doing low-value-added work, and is the part that we're missing the high-valued manufacturing?

[William Robson]

Look around the world to see the countries that have high levels of capital per worker and high incomes. Certainly, when you look at the countries that are in that favourable position, you do see that the capital endowment tends to be reflected in high productivity and high wages, with workers who are, essentially, using tools that are newer and more up to date than ours. It seems to be a very strong rule of economic development that an essential precondition is that you have a good endowment of capital per worker.

I think that Canadian business investment has fallen in a number of areas as a result of many circumstances. For the sake of highlighting one that I think we can do something about, I'll highlight taxes. People say a lot of things about Canada being a colder climate, with a population that's dispersed in certain ways and more risk averse.... Those things may all be true, but why did it get worse over the last little while?

One reason we've seen U.S. investment leap ahead in the last few years, going back to their tax reform of 2017, is that they did some important tax changes that made domestic investment more rewarding. Some of the investment that we saw in the United States after that tax reform probably did come from Canada, because it was designed to repatriate capital. When people have looked at the investment performance of businesses on either side of the border following those reforms, it seems clear that U.S. businesses were investing more. Canadian companies in similar lines of work did not seem to do the same thing, so it's very likely that some investment from Canada went south of the border to pursue those opportunities.

[Ted Falk, Conservative, Provencher, MB]

Since Mr. Carney became our Prime Minister, we've seen $60 billion of investment flee our country and end up in other jurisdictions, primarily in the United States. Do you think that's driven because of government policy or legislation—very punitive bills, like Bill C-69—which prevent resource development in our country? What would you attribute that to?