Ontario’s productivity has stalled because of the skills gap and lack of both private and public sector investment, according to a task force that annually assesses the province’s competitiveness.
Headed by influential business thinker Roger Martin, the Task Force on Competitiveness, Productivity and Economic Progress was created in 2001 to monitor Ontario’s performance compared to other provinces and U.S. states.
'What I would say is we’ve got all the basics and we don’t do the last 10 per cent that we have to do' - Roger Martin
Its 12th annual report concludes the province is not living up to its economic potential. In fact, it still stands 19th among 28 global peers, the same ranking it achieved 12 years ago.
“Clearly, Ontario is falling behind its competitors,” the report concludes. “This story is a result of more than a decade of missed opportunities, wasted potential, and complacency on the part of business leaders and policymakers.”
Corporate taxes have been cut to record low levels, and the marginal tax rate on investment has improved substantially, but there has not been a corresponding increase in investment in the province, Martin said.
Ontario is emerging from a culture of protectionism and that can take a long time, he said in a recent interview with CBC’s Lang & O’Leary Exchange.
Hangover from protectionism
“I think we have this long hangover of being a protected market for a long time where there was not any motive to innovate. We could wait and see what somebody else does across the border and then we’ll do it here.” he said.
“We’ve got to get that long game in the economy that we only win, we only prosper as an the economy if you’re trying to do new different things first, before anybody else.”
While the information technology sector has received a shot of cash, technology investment has grown even faster in U.S. states over the past five years.
Companies are sitting on cash and failing to invest in equipment, R&D, software, patents and other productivity tools, Martin said in his report, but every year more executives are adopting a more competitive mindset, the task force report says.
“The way I think about competition – competition is like a good trainer – it will train you, It will give you feedback, it helps you get better,” Martin said..
- Ring of Fire delay highlights need for mining infrastructure
The report highlights the Ring of Fire, an area rich in chromite northeast of Thunder Bay, as a potential growth engine for the province.
But development there has been stalled by lack of infrastructure support by the provincial government, specifically a road to improve access, Martin says. Cliff Natural Resources recently pulled out of the area, saying development was taking too long.
Gaps in youth education
Another area that the province should tackle is youth education, he said.
With youth unemployment standing at 16.9 per cent, Ontario needs to address the lack of skills among young workers.
“I’ve come to the view that the No. 1 thing, if I were to have government do one thing, it would be to make innovation education mandatory in K through 12 so you could not graduate from secondary school without having systematic education in innovation,” Martin said.
“Ontario should also reform its training routes for skilled trades to help increase both the quantity and quality of skilled tradespeople,” his report concludes.
Ontario has a good economic foundation, but needs adjustment to improve its growth potential, Martin told CBC.
“If you look back at all the things that you’ve invested in as a province over a long period of time, they’ve mainly been good things – the education system, the good health care, the good industries, a great key city in Toronto for Ontario,” he said.
“What I would say is we’ve got all the basics and we don’t do the last 10 per cent that we have to do.”