I am going to be direct: governments should be reliant on the success of business, not the other way around. When small and medium-sized enterprises grow, governments collect revenue, communities prosper and public services become sustainable. When business growth slows, governments do not “make up the difference” with programs. They simply redistribute a shrinking pie, more slowly and at a higher cost.
Canada’s productivity problem is now undeniable. The Bank of Canada has warned that Canada has seen no productivity growth in recent years and has slipped significantly versus peers over the past decade (Bank of Canada, March 2024). Statistics Canada shows the Canada–U.S. labour productivity gap widening over time: Canada’s business-sector productivity was about 83 per cent of the U.S. level in 2002 and about 73 per cent by 2019, reflecting slower growth here (Statistics Canada, January 2025).
We should be asking hard questions about why we have fallen behind. One of them is how we have chosen to “support” business investment.
Canada has developed a habit of leaning on grants, discretionary programs, application-driven funding and government-selected priorities. Grants can help in narrow cases, but as a model for competitiveness, they are too often slow, uncertain and heavy on compliance. Businesses do not scale by filling out forms. We scale by making fast decisions, deploying capital, hiring talent and putting new products into the market.
Private capital moves quickly because it must. Equity, retained earnings and growth financing reward execution and punish delays. A grant system can unintentionally reverse that discipline.
Instead of competing to win customers, too many firms end up competing to win approval. Instead of pivoting quickly, they wait for intake windows, program criteria and administrative processing. When a large bureaucracy becomes the gatekeeper of investment, we should not be surprised when we get less urgency, less risk-taking and fewer results.
That is why we believe we need a major pivot toward tax credits and investment incentives that are fast, firm and success driven. Governments at both the provincial and federal level share the same goal as business: a stronger, more competitive economy. Aligning policy tools with how capital actually moves is a practical place to start.
Canada already relies heavily on tax incentives, particularly in R&D. The problem isn’t the existence of tax credits, it is that too much of our broader economic strategy still leans on slow, discretionary programs that delay decisions, replace fast-moving private capital and reward process over performance. Policies that are automatic, predictable and tied to real investment, such as Alberta’s capital investment tax credits, are better aligned with how businesses actually grow.
Government should set a competitive foundation: predictable rules, efficient regulation and incentives that reward investment and results. Alberta has taken steps to modernize and reduce unnecessary regulatory burden through its Red Tape Reduction framework. That kind of focus matters because time is a cost.
If Canada wants to reverse decline, we should stop treating grant programs as the centre of the economic toolkit. Grants are slow capital. Tax credits are faster capital, because they follow business decisions, reward action and scale with success.
The bottom line is simple: prosperous governments are built on prosperous businesses. Let’s start designing policy like we actually believe that.