Well I see that the rightwing propagandists wasted no time in blaming Adscam for Canada’s lagging productivity numbers. While the idea that even a few hundred million dollars would have an impact on a trillion dollar economy is laughable, it did prompt me to further explore why Canada’s productivity is declining.

The Certified General Accountants Association of Canada cites a number of reasons for it.

“Canada’s dwindling productivity growth can be attributed to low rates of capital investment, weak investment in higher education, poor quality of math and science education at the secondary level, a reduction in employer-supported job training, barriers to private-public partnerships, restrictive government policies inhibiting the market openness of Canadian businesses, and the cost of complying with excessive regulations by small and medium-sized enterprises,” stated Rock Lefebvre, vice-president of research.

“Institutional corruption and inefficiency, particularly within government, has also had a decidedly negative impact on productivity and competitiveness.”

Of these reasons, the two that stand out the most are “low rates of capital investment” and “weak investment in higher education”.

The former has been written about almost exclusively by Jim Stanford.

Corporations have not stepped up their economic “effort” in response to the substantial federal corporate tax reductions which have already been implemented since 2001. The share of after-tax available cash flow (called “gross savings” in Statistics Canada’s national flow-of-funds statistics) which is reinvested in fixed capital assets in Canada by non-financial businesses in Canada has fallen dramatically since 2001–from almost 100 percent of available funds to only two-thirds of available funds in 2004. Corporations are using their available funds (boosted by record before-tax profits and continuing corporate tax reductions) to pay off debt, disburse dividends and/or to invest in capital assets in foreign countries. They are not, in general, reinvesting their incremental funds in the Canadian economy.

The latter however–as it relates to productivity–has not been dealt with by the media.

Canada’s investment in education has declined significantly over the past decade or so. According to the most recent OECD report, Canada’s total spending–both private and public–in education declined (Canada is one of the few OECD nations to report a decline in education spending) from 7% of GDP in 1995 to just under 6% in 2003.

Click on image to enlarge.

The lack of capital investing by Canada’s corporations–despite reaping record profits–and decreased spending on education are the key reasons for Canada’s declining productivity.

Update: For the stupid people in the room, the CGA does cite corruption as a reason for Canada’s declining productivity.

“Institutional corruption and inefficiency, particularly within government, has also had a decidedly negative impact on productivity and competitiveness.”

This however, refers to both corruption and inefficiency inside and outside of government. Furthermore, within government it refers to all levels–federal, provincial and municipal–of government. The rightwing propagandists however, have read it as this:

The Conservative government Wednesday accepted the findings of a study by accountants that the Liberal sponsorship scandal was an added drag on Canada’s lagging productivity.

The sponsorship scandal is a relatively insignificant part of the overall factor the CGA stated, not the sum total of it as these dishonest hacks would have you believe. By itself the impact of the sponsorship scandal on Canada’s productivity is so insignificant that statistically it would amount to zero.

Update II: The third reason–”poor quality of math and science education at the secondary level”–cited by the CGA doesn’t hold water according to the OECD factbook.

While this doesn’t cover science it’s clearly obvious that–as far as mathematics go–Canadians are not receiving a substandard education as the CGA contends. So clearly this cannot be a factor in Canada’s declining productivity.

Update IIa: Oops. It seems the OECD Performances on the mathematics scale in PISA 2003 only covers up to age 15. So it’s not a good indicator of education at the secondary level.

Udate III: The actual report from the CGA. Most of their recommendations are quite reasonable and don’t just parrot the usual rightwing barking point that more tax cuts are needed.

KEY RECOMMENDATIONS TO INCREASE CANADA’S PRODUCTIVITY

Invest in Human Capital

Make excellence in math and science skills a priority at the secondary level.
Increase government investment in higher education.
Provide career advice at the secondary and post-secondary levels to promote interest in science and engineering.
Create aggressive incentives, such as tax credits, for employer-supported training to address shortages of skilled workers.
Render independent study more enticing by introducing more generous tax credits.

Encourage Efficiency and Innovation in Small and Medium-sized Enterprises (SMEs)

Promote innovation and technological growth by importing innovations from other countries.
Expand the Industrial Research Assistance Program (IRAP) which provides technical and business-oriented advice to SMEs on adopting new technologies, extends financial support to firms that demonstrate growth-oriented behaviour, and allow SMEs access to a wide range of networks to foster technology growth.
Encourage business to specialize in high-productivity tasks while outsourcing low-productivity tasks which may not be economically optimal in consideration of Canadian compensation costs or the makeup of the staffing complement.

Government, lenders and firms must:

introduce mechanisms which facilitate access to capital and reward firms for pursuing efficiency; and
look to maximize organizational efficiency, consider outsourcing low-productivity activities to alternate or foreign suppliers and make direct foreign investments.

Improve Institutional Efficiency in Government

Increase transparency and accountability in government.

Reduce the Burden of Regulatory Requirements

Regulations surrounding public-private partnerships need to be reduced, streamlined and simplified as they serve as a fertile environment for the evolution of utility patents in Canada and allow for new inventions to be brought more easily to market.
The federal government should substantially reduce foreign ownership restrictions with the goal of eliminating them completely over the next five to ten years.

James Bow thinks it’s time to get rid of elected school board trustees. After reading his argument for it I have to say I agree with him.

Oh my, this election, despite the win by the Conservatives, is turning into a nightmare for the conservative liars. Hot on the heels of their lie about liberal bias dominating our media and how this translates into negative coverage of the Conservative Party all the time being debunked by the new McGill study comes this result from the Student Vote exercise that debunks their lie that our education system is brainwashing students with leftwing ideology.

To sum up what the Student Vote program was about, it simply held an election where students were the participants. They first learned about our democratic process, the party platforms and local candidates then come election day, they held a vote of their own.

There were over 400,000 students participating in this learning experience and the results were rather surprising. Blogging Party of Canada has created a table of the results for you to see. But here is how the 3 major federal parties did.
CP: 31.5%
LP: 21.9%
NDP: 23.2%

So how can it be that the Conservative Party received the highest share of the popular vote by these students when, according to conservative pundits, our education system is nothing more than a leftwing indoctrination centre? Clearly our children must be getting all points of political view in their studies or else the results wouldn’t be so diverse.

So another conservative lie is put to rest and it should now be clear to everyone that when a conservative starts talking about political bias it means nothing more than they’re about to lie to you.

Another blunder for the “you peasants don’t pay enough” conservatives.

The cost of getting a professional degree in Ontario soared in the wake of deregulation, with the tab for medical school quadrupling and law-school fees nearly tripling, Statistics Canada said Tuesday.

In a new study looking at the impact of rising tuition fees, the government agency also said the sharp increase also went hand-in-hand with changes in who was attending professional schools during the period, with students from families in the middle of the socio-economic spectrum less likely to pursue those career paths.

For the record, has any instance of deregulation ever led to lower costs for the public like the conservatives claim as their main selling point?