Growth rate of cap­i­tal in­vest­ment in Canada hits 40-year low

The Southwest Booster - - OPINION -

The growth rate of cap­i­tal in­vest­ment in Canada—par­tic­u­larly in the im­por­tant ar­eas of equip­ment, ma­chin­ery and in­tel­lec­tual prop­erty—has slowed to a 40year low, neg­a­tively af­fect­ing liv­ing stan­dards for work­ers and over­all eco­nomic growth, finds a new study re­leased to­day by the Fraser In­sti­tute, an in­de­pen­dent, non-par­ti­san Cana­dian pub­lic pol­icy think-tank.

“The ev­i­dence is clear—the in­vest­ment cli­mate in Canada is de­te­ri­o­rat­ing, par­tic­u­larly for the cor­po­rate sec­tor, which has im­pli­ca­tions for worker pros­per­ity and liv­ing stan­dards,” said Steven Glober­man, Fraser In­sti­tute se­nior fel­low and co-au­thor of Cap­i­tal In­vest­ment in Canada: Re­cent Be­hav­iour and Im­pli­ca­tions.

The study finds that the growth rate of over­all in­vest­ments in Canada be­tween 2015 and 2017 was the low­est since 1970. Over­all, gross fixed cap­i­tal for­ma­tion—a com­mon mea­sure of in­vest­ment—grew by only 2.5 per cent from 2015 to 2017, com­pared to 19.3 per cent growth from 2010 to 2015, and 25 per cent growth be­tween 2005 and 2010.

“Pol­i­cy­mak­ers across Canada should con­sider a more favourable tax treat­ment of busi­ness in­come and cap­i­tal gains, which would en­cour­age more in­vest­ment, spur pros­per­ity and ben­e­fit work­ing Cana­di­ans,” Glober­man said.

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