Jerome Gessaroli joined me on Inside Policy Talks to discuss Canada’s investment climate, the government’s recent Canada Investment Summit, and whether it is more symbolic or substantive. 

The summit put the focus squarely on mobilizing long-term private capital, with the government setting an ambition of catalysing $1 trillion in total investment over five years. The feds have also begun changing the project-approval system: recent reforms exempt sectors from the Impact Assessment act aiming to reduce duplicative reviews, establish a one-window approach for federal approvals, and through Bill C-39, move toward a one-year timeline for federal decisions. Greater tax certainty for billion-dollar investments is another part of that effort.

Following up the summit with a suite of reforms aimed at expediting project approvals will go a long way. Ultimately, the success of these measures will be whether investors think that the underlying business environment is attractive enough and will last into the future.

Prior to the summit, Canada actually posted a record year for foreign direct investment, but much of it failed to find suitable projects for investment, not translating therefore into the productivity enhancing innovation that follows its deployment into business activity in Canada. Much of it sits, rather, in Canadian pension funds that invest all around the world. 

A look at the business environment therefore, requires we look beyond headline investment announcements to the cumulative effect of taxation, regulatory layering, project approvals, internal trade barriers and policy uncertainty. It also means asking whether governments have become too accustomed to compensating for an unattractive investment environment through subsidies, tax credits and public financing rather than fixing the underlying conditions – an approach the Carney government has taken in multiple sectors, especially housing.

The recent changes to project approvals reduce duplication, improve predictability and make it easier for commercially viable projects to proceed. Now the same logic, we argue, needs to extend much further across the regulatory system and, importantly, into comprehensive tax reform.

Other formats available here.