The following is the Executive summary of the OECD assessment and recommendations, taken from the Economic Survey of Canada 2006 published on 26 June 2006.
Canada’s economic performance has been excellent in almost all respects and Canadians continue to enjoy among the highest living standards in the OECD. The economy is undergoing significant structural change in response to soaring commodity prices, expanding oil and gas production and exchange rate appreciation and has so far shown a remarkable capacity to adjust.
Looking ahead, the key challenges for all levels of government will be to lift productivity growth and to maintain sustainable fiscal and social policies to deal with the pressures arising from population aging. Some broad re-orientations of policy should underpin the strategy.
Improve the overall business environment. Businesses currently face high marginal effective tax rates on investment. At the same time governments offer a wide range of subsidies, special programmes and policies which are intended to help businesses but which inhibit competition in a number of sectors. A better approach would be to create a level playing field across Canada by lowering taxes on corporate investment, reducing subsidies and tax expenditures, and fostering vigorous competition in all markets.
Foster innovation. More economically efficient framework conditions for enterprises would also stimulate innovation and should be the top priority in the innovation strategy. Beyond that, special measures such as tax breaks to encourage business R&D should be re-examined and more emphasis placed on developing those literacy and other general skills that some Canadians appear to be lacking.
Ensure fiscal arrangements are efficient. Federal-provincial arrangements should reinforce accountability for outcomes. Ensuring the durability of the 2004 Health Agreement without renegotiation will play a key role. An immediate priority is to revamp the equalisation system. This is particularly relevant as Canada will likely face significant regional and industrial adjustments in response to continued high oil prices.
Tackle disadvantage and strengthen social development. Policies need to promote greater economic independence for low-income families by tackling the negative effects of income and benefit claw-backs, so as to make the shift from welfare to work, or earning additional market income, more attractive. Social policies need to deal more effectively with the underlying causes of poverty, especially by raising literacy skills and continuing to promote educational attainment. Moving towards free early education for all three and four year-olds may also pay social and economic dividends in the longer run. This could be complemented by more affordable access to childcare, especially for lower-wage working parents.
How to obtain this publication
The Policy Brief (pdf format) can be downloaded. It contains the OECD assessment and recommendations, but not all of the charts included on the above pages.
The complete edition of the Economic Survey of Canada 2006 is available from:
For further information please contat the Canada Desk at the OECD Economics Department at firstname.lastname@example.org. The OECD Secretariat's report was prepared by Deborah Roseveare and Annabelle Mourougane under the supervision of Peter Jarrett.