UMVA has learned that Canada is facing a severe investment crisis, with a stark disparity between Canadian investments abroad and foreign investments within the country.
The gap between Canadian investment abroad and foreign investment in Canada has more than doubled since 2014, with Canadian firms and pension funds investing significantly more abroad than foreign companies are investing in Canada.
Canadian firms investing abroad can be a sign of global competitiveness, but it raises pressing questions: Why are returns consistently perceived to be stronger abroad than in Canada? Why are Canadian companies investing so much more abroad than foreign companies are investing here?
Ultimately, it's a question of public policy, with companies lacking confidence to invest in Canada due to high taxes, overregulation, and deteriorating government finances.
Canadian firms are also investing less at home, with investment in machinery and equipment – the tools, robots, and assembly lines that drive productivity – falling by 3.3% between 2014 and 2024, despite population growth and modest economic growth.
Investment per worker has plummeted, with Canadian companies investing roughly $20,900 per worker in 2014, dropping to just $17,600 in 2024, and business investment per worker in Canada is only 55 cents for every dollar invested in the US.
Comparing Canada to other countries reveals even more concerning numbers: business investment in Canada per worker, adjusted for inflation, fell by 16% between 2014 and 2024, while business investment in the US rose by 26% over the same period.
Canada is trailing the United Kingdom, the European Union, and much of the Organisation for Economic Co-operation and Development (OECD) in business investment, and research and development spending by Canadian businesses has collapsed to 57% of the OECD average.
A startling statistic reveals that Amazon alone now spends almost three times more on research and development than Canada's entire business sector combined.
Reversing these trends won't be easy, and more government spending is not the answer; only the private sector can reverse the decline, but that won't happen without major policy changes from Ottawa and the provinces.
To reverse these trends, governments must take bold action: lowering corporate taxes, reducing taxes on upper-income earners, scrapping the industrial carbon tax, and cutting job-killing regulations – half-measures won't work.
