Natural Resources Can Help Fix Canada’s Economic Problems: REPORT

Report Highlights

• Canada is facing significant economic challenges that include declining living standards, regulatory uncertainty, and weak business investment

• The Canadian economy is struggling and it is not keeping pace with the economies of our peers

• Canada’s natural resources sector is an absolute powerhouse and shouldn’t be overlooked; the country is blessed with a vast wealth of resources that account for a large share of jobs and the economy

• Natural resources can advance economic reconciliation by continuing to support Indigenous businesses, equity partnerships, and employment

• Canada must urgently balance regulatory reforms… while enabling economic growth to keep the country competitive on a global scale

• Canada’s natural resources sector overwhelmingly contributes to the economy at large, including:

• $464 billion to real gross domestic product (GDP)

• Supports 3 million jobs nationwide (2023)

• Represents 21% of the national economy (2023)

• Accounts for 15% of employment from coast to coast – or roughly one-in-seven jobs

• Offers annual wages that pay $25,000 above the national average (2023)

• Has labour productivity levels that are 2.5x greater than that of the overall Canadian economy

• Responsible for $377 billion in exports, accounting for nearly 50% of Canada’s merchandise exports (2023)

• Created a $228 billion trade surplus – critical for offsetting trade deficits in other sectors of the economy

• Canada is the second-least productive country in the G7, far behind the USA --- Earlier this year, the Bank of Canada (BoC) said this was an “emergency,” with our country’s productivity barely increasing at all over the past decade

• Labour productivity is defined as the amount of GDP created per hour worked. Productivity is closely linked to a country’s prosperity and long-term standard of living (GDP per capita). Rising productivity increases wages, lowers prices, and increases tax revenues to support government spending.

• Canada’s stagnating productivity has contributed to the fifth consecutive quarterly decline in GDP per capita

• Burdensome regulations are causing delays, increasing costs, and creating uncertainty, hindering investment and growth in the natural resources sector

• Excessive regulation and high taxes are eroding Canada’s competitive advantage and deterring investment into the natural resources sector

• The natural resources sector used to account for one-third of investment in Canada in 2015, but today accounts for under one-fifth

• Canada’s global business activity rankings are abysmal:

• 36th in registering property

• 64th in obtaining construction permits

• 100th in contract enforcement

• 124th in getting electricity hooked up

The Link Between Natural Resources & Canada’s Standard of Living

“The natural resources sector is a significant part of the Canadian economy, with benefits being felt by other sectors throughout the supply chain,” says Andrew DiCapua, Senior Economist with the Canadian Chamber of Commerce’s Business Data Lab (BDL) and the report’s lead author.

“It’s the second-largest sector and in 2023 paid annual compensation nearly $25,000 above the average,” DiCapua continues via quotes from the Chamber’s press release.

“The sector can do this because of its productivity prowess, which is closely linked to the country’s prosperity and long-term standard of living. This is why increasing investment in high-productivity sectors, particularly within natural resources, is an obvious remedy to our productivity challenges.”

According to the BDL, supporting and investing in Canada’s natural resources sector is part of the solution to solving the country’s lagging productivity compared to its peers, a developing crisis noted by the Bank of Canada earlier this year.

Additionally, the International Monetary Fund (IMF) has stated that “boosting Canada’s lagging productivity and raising living standards should be a top priority for the country,” which, according to the report, can be accomplished by advancing the development of its vast wealth of natural resources.

How Natural Resources Can Underpin an Economic Comeback

Given the sector’s massive economic impact, it’s easy to see why a stronger natural resources sector could help turn Canada’s economy around.

For example, boosting labour productivity is linked to higher wages and economic growth; the natural resources sector is a powerhouse in this respect, with oil and gas, for example, averaging $356 GDP/hour worked and compensation of $94/hour for its workforce.

To sustain and enhance Canada’s economic productivity, capital investment in high-productivity sectors – particularly those related to natural resources – must be boosted to improve the country’s economic well-being.

Furthermore, advancing the development of natural resources can also help to advance economic reconciliation with Indigenous communities, helping First Nations to become self-sustaining. Statistics show that Indigenous Peoples earn significantly higher wages working in the oil and gas sector, for example, than the average Indigenous worker ($140,400 vs $51,120), nearly twice as much working in mining ($93,600), and above average in forestry ($56,100).

The BDL’s policy recommendations to unlock the potential of Canada’s natural resources sector include:

1. Adopt a comprehensive natural resources strategy
2. Accelerate economic reconciliation with First Nations
3. Prioritize efficient, timely, and predictable regulatory approval processes
4. Promote policy stability
5. Expedite delivery and practicality of investment tax credits
6. Prioritize the economic competitiveness of Canada’s resource industries
7. Commit to long-term investment through a Canada trade infrastructure plan
8. Strengthen global trade relationships
9. Promote public awareness and support for resource development

Canadians Need More Natural Resource Development!

Canadians have long relied on natural resource development to create good jobs, generate public revenues, and support the economy at large. But the sector could do so more for our country if we just let it by introducing supportive policies and reducing red tape.

With growing global demand for oil, natural gas, food, lumber, minerals, metals – all of which Canada has vast supplies – it makes practical sense to continue to develop our natural resources and ensure a prosperous economy for Canadians and a strong economic future for our children.

Join us today to learn more about why the world needs more Canadian natural resources and how these sectors play an overwhelming role in our daily lives.

SOURCES:

_{1 - https://chamber.ca/news/investing-in-natural-resources-sector-a-solution-to-canadas-productivity-problem-report-says/}