Having lived in both countries, I know Canada and Australia share many traits in common – strong historical ties to Great Britain, language, culture, high standards of living and vibrant economies are among the most obvious. So I was flabbergasted to learn recently from my oldest son Andrew, an economist who works for the Australian government in Canberra, that Aussie productivity has outstripped Canada’s.
According to nationmaster.com, the average GDP per capita in Australia was $67,035.57 (in U.S. dollars) in 2012, which ranked fifth in the world. Canada, by contrast, sat in eighth spot at $52,218.99 – a difference of 28 per cent.
Other numbers reinforce the argument that Australia has surpassed Canada when it comes to worker productivity.
According to a 2016 study by the Ottawa-based Centre for the Study of Living Standards, business labour productivity in Australia increased at an annual rate of 2.33 per cent between 1994 and 2013, more than a full percentage point above the rate in Canada during the same period. Australia’s relative labour productivity level jumped from 96 per cent of Canada’s mark in 1995 to 108.6 per cent nearly two decades later.
What might account for such a dramatic shift?
I believe several factors are at work.
Climate: Canada’s weather is much more extreme, with temperatures in many parts of the country ranging from minus-30 degrees Celsius in the dead of winter to plus-30 in the heat of summer. That impacts our economic output in a myriad of ways, from straining our transportation networks to driving up infrastructure costs.
Bureaucracy: Canadian governments at all levels don’t seem to be able to do anything without first conducting lengthy and costly studies, which, at least in my experience, hardly anyone ever bothers to read. According to the Organization for Economic Co-operation and Development, Australia also has lower product market regulation and fewer barriers to trade and investment than Canada.
Fitness: From my observations, Australians are far more focused on making physical activity a priority in their daily lives.
Dependence on the U.S. market: Canada is largely a branch plant economy that exports more than 70 per cent of its goods to a single trading partner, the United States. Our federal government has spent billions propping up foreign-owned entities such as Chrysler and General Motors, but inexplicably would not lift a finger to save Ottawa’s own tech icon, Nortel. Meanwhile, Australia is not nearly as dependent on any one foreign market and has benefited immensely from expanding trade relationships with fast-growing Asian economies such as China.
Lack of confidence: No one would ever accuse Aussies of being timid. We Canucks, on the other hand, tend to say “sorry” even before we are.
I’m sure there are many other factors at play as well. So how can Canada go about closing this gap with Australia, not to mention its neighbour to the south?
Here are my suggestions.
Get fit: If Canadians did nothing other than increase their average levels of physical fitness and cut out smoking as well as abuse of alcohol and drugs, this would improve their personal productivity and significantly lower national health care costs.
Reform the education system: Develop more apprenticeship programs starting in middle school and teach kids much more about finance and entrepreneurship, starting when they are young. We should create high schools for the arts, for the technological arts and for apprenticeships, with curricula tailored to the interests and capabilities of individual students to get their imaginations and innovation engines running from an early age.
Improve on-the-job training: At most companies in Canada right now, training seems to go something like: “Welcome to Acme Inc. Here’s your chair, this is your computer, good luck!”
Eliminate government red tape: Simply cutting the number of bureaucrats by 30 per cent at all levels would be a good start in my view.
Make tertiary education free: This is something the Australians used to do. In fact, they paid me to pursue my PhD at the Australian National University.
Overhaul our national transportation, communications and energy infrastructure: The fact that in much of the country the Trans-Canada Highway is a dangerous two-lane goat trail is a disgrace; in addition, our Internet speeds are abysmal compared with, say, South Korea’s; plus, we need a national energy grid extending gas, oil and hydro power across the entire nation.
Tear down inter-provincial barriers to trade and services: With the new Canada Free Trade Agreement, the provinces appear to be heading in the right direction.
Combat inefficient marketing boards and “supply management” systems: The Australian dairy industry abolished its milk production quotas nearly 20 years ago, resulting in greater economies of scale and a jump in exports.
Put round pegs in round holes and square pegs in square holes: That is, improve labour mobility to put people in jobs they are passionate about and actually know how to do.
Some additional ideas:
Launch programs on how to start and manage a personal business for life.
“Sponsor” every would-be Tobias Lütke with $5,000 to create a business, no questions asked. It doesn’t take many entrepreneurs to radically change the prospects of a village, town, city, county or nation.
Develop a national mentoring/coaching program for entrepreneurs.
Make capital more accessible to everyone, not just the rich, so more folks can build businesses and own their own property.
Reduce the complexity of municipal zoning regulations, which are paralyzing development of Canada’s cities.
Register every business and organization with Google Maps and Google Search.
Create more affordable housing through methods such as legalizing coach houses and tiny houses in municipalities across Canada.
Take a page from many firms in Silicon Valley and give employees at least one three-day weekend a month where they learn a new skill or work on a project of their choosing.
Create 1,000 new festivals across the nation by sponsoring every fledgling Mark Monahan with $5,000, again no questions asked.
Develop a real international marketing program to attract more experiential tourists to our beautiful country.