Canada's poor productivity record might be the fault of a complacent business culture, a new TD Bank report suggests.

Canadian governments have done the right things to promote productivity, TD economics adviser Don Drummond says in the report, entitled The Productivity Puzzle, released on Thursday. And yet Canada's productivity rate has been declining since the 1970s.

"Key elements of Canada's history and industrial structure may have nurtured a complacent business culture," Drummond suggests.

A key metric of improving a country's standard of living, loosely speaking, productivity is the amount of economic value produced per hour of work. Canada's lax performance is frequently cited by the Bank of Canada in its policy pronouncements.

Cutting corporate taxes and keeping inflation in check have helped boost productivity in most other developed nations, but Canada's GDP output per capita has slipped from 5th in the world to 11th over the past 20 years.

"It is perplexing that substantive policy reforms moving in the right direction have been met by slowing business sector productivity growth," Drummond said.

Though he acknowledges it's difficult to prove and as contentious a claim as saying Canadian businesses are fundamentally timid, Drummond underlined just how key productivity is to a nation's quality of life in the report.

Up until 1973, Canada averaged four per cent gains per year in productivity. That fell to an average of 1.6 per cent per year between 1973 and 2000 and has averaged an anemic 0.7 per cent ever since.

"If Canada wishes to maintain its place as one of the world’s richest countries, productivity growth must improve," Drummond said.

Productivity is often understood to be working harder or working longer, "but nothing could be further from the truth," Drummond said. In effect, it's deriving more output from the same amount of time and effort. "It's unambiguously a positive thing," he said.

Governments have done their part, so Canadian workers and businesses must somehow get better at using new technologies and best practices from around the world to boost economic output.

Drummond noted recent research from the Institute of Competitiveness and Prosperity which suggested differing opinions on the importance of education might be to blame. The group found differences in the level of education recommended to obtain to become a senior manager at U.S. versus Ontario-based firms.

With an entire generation of senior management set to retire as the Baby Boomers age, future growth in GDP per capita will likely only come from increasing work effort or improving productivity.

"The only sensible option is to improve productivity," Drummond said.