Carney’s top priority should be raising productivity, says David Dodge

Prime Minister Mark Carney speaks at a press conference in Ottawa. Photo by PATRICK DOYLE/AFP via Getty Images files

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“Growth is the key thing for this government,” he said in a recent interview with the Financial Post’s Larysa Harapyn. But it won’t come easy.

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Dodge said that Canada has gone through the last 15 years with essentially no increase in productivity or in the average income of workers.

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“The key objective is to reverse that, and reverse that at a time that will be very difficult,” he said.

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Canada is currently facing more barriers to its exports due to United States President Donald Trump‘s on-again, off-again tariffs. But it must not let that stop it from making investments that will allow it to grow, Dodge said.

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The threat of a looming recession is another challenge facing Canada’ economy.

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“Whether it ends up being a recession or whether it ends just being a period of ultra-low growth in the world … that makes the job of raising productivity here in Canada even more important,” Dodge said.

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And it’s not just Trump’s tariffs that will slow down Canada’s economic growth, but a range of his other policies, according to Dodge.

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“[Trump] has a real impact on the global economic growth, on economic growth in the United States and inevitably then, on us,” he said.

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The slowing economy will also have an impact on the Bank of Canada‘s monetary policy, but Dodge expects only a small reduction in interest rates over the next 12 months.

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“We’re already in the neutral range on interest rates,” he said. “The Bank of Canada will cope.”

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Now the economy is in the hands of the government, Dodge said.

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“The big levers of macroeconomic policy are with the government, not with the bank,” he said.

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Dodge said that one way to raise productivity is by encouraging innovation, particularly in technology and energy.

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“Tech is the route to higher productivity,” he said. “That is absolutely critical.”

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The government’s role in that is to build infrastructure for businesses to facilitate raising productivity and making investment more profitable, he said.

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“We have the talent and we have the resources,” Dodge said. “The issue is to ensure that governments — federal, provincial and local — don’t create barriers to making those investments.”

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Dodge added that Canadians will also have to restrain their consumption in order to release the resources for the investment needed to raise productivity and incomes.

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“That’s the road ahead,” he said. “It’s not a very pleasant road because in the end, we’re going to collectively, as a nation, have to save more, we’re going to have to invest more.”

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